Intrinsic value of Hudson Technologies - HDSN

Previous Close

$0.96

  Intrinsic Value

$4.28

stock screener

  Rating & Target

str. buy

+346%

Previous close

$0.96

 
Intrinsic value

$4.28

 
Up/down potential

+346%

 
Rating

str. buy

We calculate the intrinsic value of HDSN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 0.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.21
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
Revenue, $m
  153
  167
  181
  196
  211
  227
  244
  261
  279
  297
  317
  337
  358
  380
  402
  426
  451
  476
  503
  531
  561
  591
  624
  657
  692
  729
  767
  808
  850
  894
Variable operating expenses, $m
  125
  136
  146
  158
  169
  181
  194
  207
  221
  235
  242
  257
  273
  290
  307
  325
  344
  363
  384
  405
  428
  451
  476
  501
  528
  556
  585
  616
  648
  682
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  125
  136
  146
  158
  169
  181
  194
  207
  221
  235
  242
  257
  273
  290
  307
  325
  344
  363
  384
  405
  428
  451
  476
  501
  528
  556
  585
  616
  648
  682
Operating income, $m
  28
  31
  35
  38
  42
  46
  50
  54
  58
  62
  75
  80
  85
  90
  95
  101
  107
  113
  119
  126
  133
  140
  148
  156
  164
  173
  182
  192
  202
  212
EBITDA, $m
  39
  42
  46
  50
  53
  57
  62
  66
  71
  75
  80
  85
  91
  96
  102
  108
  114
  121
  127
  134
  142
  150
  158
  166
  175
  184
  194
  204
  215
  226
Interest expense (income), $m
  1
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
Earnings before tax, $m
  19
  21
  24
  26
  29
  31
  34
  37
  40
  43
  54
  57
  61
  64
  68
  72
  76
  80
  85
  89
  94
  99
  105
  110
  116
  122
  128
  135
  142
  149
Tax expense, $m
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  15
  16
  16
  17
  18
  19
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  35
  36
  38
  40
Net income, $m
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  40
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  85
  89
  94
  98
  103
  109

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  352
  383
  416
  449
  485
  521
  559
  599
  640
  682
  727
  773
  821
  871
  923
  977
  1,034
  1,093
  1,155
  1,219
  1,286
  1,357
  1,430
  1,507
  1,588
  1,672
  1,760
  1,853
  1,949
  2,051
Adjusted assets (=assets-cash), $m
  352
  383
  416
  449
  485
  521
  559
  599
  640
  682
  727
  773
  821
  871
  923
  977
  1,034
  1,093
  1,155
  1,219
  1,286
  1,357
  1,430
  1,507
  1,588
  1,672
  1,760
  1,853
  1,949
  2,051
Revenue / Adjusted assets
  0.435
  0.436
  0.435
  0.437
  0.435
  0.436
  0.436
  0.436
  0.436
  0.435
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.435
  0.435
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
  0.436
Average production assets, $m
  44
  48
  52
  57
  61
  66
  70
  75
  81
  86
  92
  97
  103
  110
  116
  123
  130
  138
  145
  154
  162
  171
  180
  190
  200
  211
  222
  233
  246
  258
Working capital, $m
  77
  84
  91
  98
  106
  114
  122
  130
  139
  149
  158
  168
  179
  190
  201
  213
  225
  238
  252
  266
  280
  296
  312
  329
  346
  364
  384
  404
  425
  447
Total debt, $m
  186
  205
  225
  246
  268
  290
  314
  338
  363
  390
  417
  445
  475
  506
  538
  571
  606
  643
  681
  720
  762
  805
  850
  898
  947
  999
  1,054
  1,111
  1,170
  1,233
Total liabilities, $m
  217
  236
  256
  277
  299
  321
  344
  369
  394
  420
  448
  476
  506
  536
  568
  602
  637
  673
  711
  751
  792
  836
  881
  928
  978
  1,030
  1,084
  1,141
  1,201
  1,263
Total equity, $m
  135
  147
  160
  173
  186
  200
  215
  230
  246
  262
  279
  297
  315
  334
  354
  375
  397
  420
  443
  468
  494
  521
  549
  579
  610
  642
  676
  711
  749
  788
Total liabilities and equity, $m
  352
  383
  416
  450
  485
  521
  559
  599
  640
  682
  727
  773
  821
  870
  922
  977
  1,034
  1,093
  1,154
  1,219
  1,286
  1,357
  1,430
  1,507
  1,588
  1,672
  1,760
  1,852
  1,950
  2,051
Debt-to-equity ratio
  1.380
  1.400
  1.410
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.490
  1.500
  1.510
  1.510
  1.520
  1.520
  1.530
  1.530
  1.540
  1.540
  1.540
  1.550
  1.550
  1.550
  1.550
  1.560
  1.560
  1.560
  1.560
  1.570
Adjusted equity ratio
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384
  0.384

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  16
  17
  19
  21
  23
  25
  27
  29
  31
  40
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
  85
  89
  94
  98
  103
  109
Depreciation, amort., depletion, $m
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
Funds from operations, $m
  25
  26
  28
  30
  32
  35
  37
  39
  42
  44
  44
  47
  50
  53
  56
  59
  63
  66
  70
  74
  78
  82
  86
  91
  95
  100
  106
  111
  117
  123
Change in working capital, $m
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
Cash from operations, $m
  18
  20
  21
  23
  25
  27
  29
  31
  33
  35
  35
  37
  40
  42
  45
  47
  50
  53
  56
  60
  63
  66
  70
  74
  78
  82
  86
  91
  96
  101
Maintenance CAPEX, $m
  -2
  -2
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
New CAPEX, $m
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
Cash from investing activities, $m
  -6
  -6
  -7
  -7
  -7
  -8
  -9
  -9
  -9
  -9
  -11
  -11
  -11
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -18
  -18
  -20
  -20
  -22
  -22
  -24
  -25
  -26
Free cash flow, $m
  12
  13
  15
  16
  17
  19
  20
  22
  23
  25
  25
  26
  28
  30
  32
  34
  36
  39
  41
  44
  46
  49
  51
  54
  57
  61
  64
  67
  71
  75
Issuance/(repayment) of debt, $m
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  62
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  19
  19
  20
  21
  22
  23
  23
  24
  25
  26
  27
  28
  30
  31
  32
  33
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  62
Total cash flow (excl. dividends), $m
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
  88
  92
  97
  102
  107
  112
  118
  124
  130
  137
Retained Cash Flow (-), $m
  -12
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -16
  -17
  -18
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -35
  -37
  -39
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  19
  21
  22
  24
  25
  27
  29
  31
  33
  35
  35
  37
  39
  42
  44
  47
  50
  52
  55
  58
  62
  65
  69
  72
  76
  80
  84
  89
  93
  98
Discount rate, %
  9.00
  9.45
  9.92
  10.42
  10.94
  11.49
  12.06
  12.66
  13.30
  13.96
  14.66
  15.39
  16.16
  16.97
  17.82
  18.71
  19.65
  20.63
  21.66
  22.74
  23.88
  25.07
  26.33
  27.64
  29.03
  30.48
  32.00
  33.60
  35.28
  37.05
PV of cash for distribution, $m
  18
  17
  17
  16
  15
  14
  13
  12
  11
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Hudson Technologies, Inc. is a refrigerant services company. The Company's products and services are primarily used in commercial air conditioning, industrial processing and refrigeration systems, and include refrigerant and industrial gas sales, refrigerant management services consisting primarily of reclamation of refrigerants and RefrigerantSide Services performed at a customer's site, consisting of system decontamination to remove moisture, oils and other contaminants. In addition, the Company's SmartEnergy OPS service is a Web-based real time continuous monitoring service applicable to a facility's refrigeration systems and other energy systems. The Company's Chiller Chemistry and Chill Smart services are also predictive and diagnostic service offerings. The Company sells reclaimed and virgin (new) refrigerants to a variety of customers in various segments of the air conditioning and refrigeration industry, and sells industrial gases to a variety of industry segments.

FINANCIAL RATIOS  of  Hudson Technologies (HDSN)

Valuation Ratios
P/E Ratio 3.6
Price to Sales 0.4
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 4.4
Price to Free Cash Flow 5.7
Growth Rates
Sales Growth Rate 31.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 18
Management Effectiveness
Return On Assets 11.3%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 11.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.9%
Return On Equity 13.7%
Return On Equity - 3 Yr. Avg. 7.2%
Asset Turnover 1
Profitability Ratios
Gross Margin 29.5%
Gross Margin - 3 Yr. Avg. 20.9%
EBITDA Margin 19%
EBITDA Margin - 3 Yr. Avg. 10.9%
Operating Margin 17.1%
Oper. Margin - 3 Yr. Avg. 8.5%
Pre-Tax Margin 16.2%
Pre-Tax Margin - 3 Yr. Avg. 7.5%
Net Profit Margin 10.5%
Net Profit Margin - 3 Yr. Avg. 5%
Effective Tax Rate 35.3%
Eff/ Tax Rate - 3 Yr. Avg. 40.9%
Payout Ratio 0%

HDSN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HDSN stock intrinsic value calculation we used $140.38 million for the last fiscal year's total revenue generated by Hudson Technologies. The default revenue input number comes from 0001 income statement of Hudson Technologies. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our HDSN stock valuation model: a) initial revenue growth rate of 9.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9%, whose default value for HDSN is calculated based on our internal credit rating of Hudson Technologies, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Hudson Technologies.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of HDSN stock the variable cost ratio is equal to 82.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for HDSN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Hudson Technologies.

Corporate tax rate of 27% is the nominal tax rate for Hudson Technologies. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the HDSN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for HDSN are equal to 28.9%.

Life of production assets of 18.4 years is the average useful life of capital assets used in Hudson Technologies operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for HDSN is equal to 50%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $123.453 million for Hudson Technologies - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 42.403 million for Hudson Technologies is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Hudson Technologies at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Hudson Tech: 2Q Earnings Snapshot   [06:32PM  Associated Press]
▶ New Strong Sell Stocks for July 17th   [Jul-17-18 08:06AM  Zacks]
▶ New Strong Sell Stocks for July 6th   [Jul-06-18 09:25AM  Zacks]
▶ Hudson Tech: 1Q Earnings Snapshot   [May-09-18 07:24PM  Associated Press]
▶ Hudson Tech reports 4Q loss   [Mar-07-18 05:17PM  Associated Press]
▶ Should You Buy Hudson Technologies Inc (undefined:HDSN) Now?   [Dec-12-17 07:44AM  Simply Wall St.]
▶ Best-In-Class Undervalued Stocks   [08:02AM  Simply Wall St.]
▶ November Top Growth Companies   [Nov-10-17 11:02AM  Simply Wall St.]
▶ Hudson Tech tops 3Q profit forecasts   [Nov-08-17 05:30PM  Associated Press]
▶ Wall Street Rallies Ahead of Fed Minutes   [Oct-11-17 04:42PM  GuruFocus.com]
▶ Company News For Oct 11, 2017   [09:46AM  Zacks]
▶ At $7.53, Is It Time To Buy Hudson Technologies Inc (HDSN)?   [Oct-06-17 10:19AM  Simply Wall St.]
▶ Why Shares of Hudson Technologies, Inc. Popped 31% Today   [Aug-10-17 12:02PM  Motley Fool]
▶ Hudson Tech tops Street 2Q forecasts   [Aug-09-17 10:10PM  Associated Press]
▶ Hudson Tech beats 1Q profit forecasts   [May-03-17 05:39PM  Associated Press]

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