Intrinsic value of InfraREIT, Inc. - HIFR

Previous Close

$21.14

  Intrinsic Value

$3.06

stock screener

  Rating & Target

str. sell

-86%

Previous close

$21.14

 
Intrinsic value

$3.06

 
Up/down potential

-86%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as HIFR.

We calculate the intrinsic value of HIFR 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 0.9

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  320
  494
  739
  1,073
  1,514
  2,081
  2,793
  3,667
  4,719
  5,961
  7,402
  9,049
  10,907
  12,978
  15,259
  17,750
  20,447
  23,345
  26,439
  29,726
  33,200
  36,858
  40,697
  44,715
  48,913
  53,290
  57,848
  62,590
  67,522
  72,647
Variable operating expenses, $m
  29
  37
  48
  63
  83
  110
  142
  183
  231
  288
  340
  416
  502
  597
  702
  817
  941
  1,074
  1,216
  1,367
  1,527
  1,695
  1,872
  2,057
  2,250
  2,451
  2,661
  2,879
  3,106
  3,342
Fixed operating expenses, $m
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
  81
  82
  84
  86
  88
  90
  92
  94
  96
  98
  100
  102
  105
  107
  109
  112
  114
  117
  119
Total operating expenses, $m
  92
  102
  114
  131
  152
  181
  214
  257
  306
  365
  419
  497
  584
  681
  788
  905
  1,031
  1,166
  1,310
  1,463
  1,625
  1,795
  1,974
  2,162
  2,357
  2,560
  2,773
  2,993
  3,223
  3,461
Operating income, $m
  228
  393
  625
  942
  1,361
  1,901
  2,579
  3,411
  4,413
  5,596
  6,982
  8,553
  10,323
  12,297
  14,472
  16,846
  19,417
  22,179
  25,129
  28,262
  31,574
  35,062
  38,722
  42,554
  46,556
  50,729
  55,075
  59,597
  64,299
  69,186
EBITDA, $m
  341
  560
  869
  1,289
  1,844
  2,560
  3,459
  4,562
  5,890
  7,458
  9,278
  11,359
  13,707
  16,322
  19,205
  22,352
  25,759
  29,420
  33,330
  37,482
  41,872
  46,494
  51,345
  56,423
  61,727
  67,258
  73,018
  79,011
  85,242
  91,719
Interest expense (income), $m
  34
  52
  96
  160
  250
  373
  535
  743
  1,005
  1,326
  1,713
  2,169
  2,699
  3,304
  3,987
  4,748
  5,587
  6,502
  7,493
  8,558
  9,696
  10,903
  12,180
  13,525
  14,936
  16,413
  17,955
  19,564
  21,239
  22,982
  24,795
Earnings before tax, $m
  177
  297
  465
  692
  988
  1,366
  1,835
  2,406
  3,087
  3,883
  4,813
  5,854
  7,019
  8,309
  9,724
  11,259
  12,915
  14,686
  16,571
  18,567
  20,671
  22,882
  25,198
  27,618
  30,143
  32,774
  35,511
  38,358
  41,317
  44,391
Tax expense, $m
  48
  80
  126
  187
  267
  369
  496
  650
  833
  1,048
  1,300
  1,581
  1,895
  2,244
  2,625
  3,040
  3,487
  3,965
  4,474
  5,013
  5,581
  6,178
  6,803
  7,457
  8,139
  8,849
  9,588
  10,357
  11,156
  11,986
Net income, $m
  129
  217
  340
  505
  721
  997
  1,340
  1,757
  2,253
  2,834
  3,514
  4,273
  5,124
  6,066
  7,098
  8,219
  9,428
  10,721
  12,097
  13,554
  15,090
  16,704
  18,394
  20,161
  22,005
  23,925
  25,923
  28,001
  30,161
  32,406

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
  3,265
  5,045
  7,545
  10,947
  15,444
  21,233
  28,500
  37,423
  48,154
  60,822
  75,528
  92,340
  111,301
  132,426
  155,709
  181,127
  208,643
  238,213
  269,789
  303,323
  338,771
  376,097
  415,272
  456,279
  499,110
  543,773
  590,285
  638,678
  688,996
  741,295
Adjusted assets (=assets-cash), $m
  3,265
  5,045
  7,545
  10,947
  15,444
  21,233
  28,500
  37,423
  48,154
  60,822
  75,528
  92,340
  111,301
  132,426
  155,709
  181,127
  208,643
  238,213
  269,789
  303,323
  338,771
  376,097
  415,272
  456,279
  499,110
  543,773
  590,285
  638,678
  688,996
  741,295
Revenue / Adjusted assets
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
  0.098
Average production assets, $m
  2,978
  4,600
  6,880
  9,982
  14,084
  19,362
  25,989
  34,125
  43,911
  55,463
  68,873
  84,204
  101,494
  120,758
  141,990
  165,168
  190,260
  217,224
  246,018
  276,597
  308,922
  342,959
  378,683
  416,076
  455,134
  495,861
  538,275
  582,404
  628,288
  675,979
Working capital, $m
  16
  25
  38
  55
  77
  106
  142
  187
  241
  304
  377
  462
  556
  662
  778
  905
  1,043
  1,191
  1,348
  1,516
  1,693
  1,880
  2,076
  2,280
  2,495
  2,718
  2,950
  3,192
  3,444
  3,705
Total debt, $m
  1,777
  2,964
  4,632
  6,901
  9,901
  13,762
  18,609
  24,560
  31,718
  40,168
  49,976
  61,190
  73,837
  87,927
  103,457
  120,411
  138,764
  158,488
  179,549
  201,916
  225,560
  250,456
  276,586
  303,937
  332,506
  362,296
  393,320
  425,598
  459,160
  494,043
Total liabilities, $m
  2,178
  3,365
  5,032
  7,302
  10,301
  14,162
  19,010
  24,961
  32,119
  40,569
  50,377
  61,591
  74,238
  88,328
  103,858
  120,812
  139,165
  158,888
  179,949
  202,316
  225,960
  250,857
  276,987
  304,338
  332,907
  362,697
  393,720
  425,998
  459,560
  494,443
Total equity, $m
  1,087
  1,680
  2,512
  3,645
  5,143
  7,070
  9,491
  12,462
  16,035
  20,254
  25,151
  30,749
  37,063
  44,098
  51,851
  60,315
  69,478
  79,325
  89,840
  101,006
  112,811
  125,240
  138,286
  151,941
  166,204
  181,076
  196,565
  212,680
  229,436
  246,851
Total liabilities and equity, $m
  3,265
  5,045
  7,544
  10,947
  15,444
  21,232
  28,501
  37,423
  48,154
  60,823
  75,528
  92,340
  111,301
  132,426
  155,709
  181,127
  208,643
  238,213
  269,789
  303,322
  338,771
  376,097
  415,273
  456,279
  499,111
  543,773
  590,285
  638,678
  688,996
  741,294
Debt-to-equity ratio
  1.630
  1.760
  1.840
  1.890
  1.930
  1.950
  1.960
  1.970
  1.980
  1.980
  1.990
  1.990
  1.990
  1.990
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
  2.000
Adjusted equity ratio
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  129
  217
  340
  505
  721
  997
  1,340
  1,757
  2,253
  2,834
  3,514
  4,273
  5,124
  6,066
  7,098
  8,219
  9,428
  10,721
  12,097
  13,554
  15,090
  16,704
  18,394
  20,161
  22,005
  23,925
  25,923
  28,001
  30,161
  32,406
Depreciation, amort., depletion, $m
  113
  167
  243
  347
  483
  659
  880
  1,151
  1,478
  1,863
  2,296
  2,807
  3,383
  4,025
  4,733
  5,506
  6,342
  7,241
  8,201
  9,220
  10,297
  11,432
  12,623
  13,869
  15,171
  16,529
  17,943
  19,413
  20,943
  22,533
Funds from operations, $m
  242
  384
  583
  852
  1,205
  1,656
  2,220
  2,908
  3,731
  4,697
  5,810
  7,080
  8,507
  10,091
  11,831
  13,725
  15,770
  17,962
  20,297
  22,774
  25,387
  28,136
  31,017
  34,031
  37,176
  40,454
  43,866
  47,415
  51,104
  54,938
Change in working capital, $m
  6
  9
  12
  17
  22
  29
  36
  45
  54
  63
  73
  84
  95
  106
  116
  127
  138
  148
  158
  168
  177
  187
  196
  205
  214
  223
  232
  242
  251
  261
Cash from operations, $m
  236
  375
  570
  835
  1,182
  1,627
  2,184
  2,863
  3,677
  4,634
  5,736
  6,996
  8,412
  9,986
  11,715
  13,598
  15,632
  17,814
  20,140
  22,606
  25,210
  27,949
  30,821
  33,826
  36,962
  40,230
  43,633
  47,173
  50,853
  54,677
Maintenance CAPEX, $m
  -62
  -99
  -153
  -229
  -333
  -469
  -645
  -866
  -1,138
  -1,464
  -1,849
  -2,296
  -2,807
  -3,383
  -4,025
  -4,733
  -5,506
  -6,342
  -7,241
  -8,201
  -9,220
  -10,297
  -11,432
  -12,623
  -13,869
  -15,171
  -16,529
  -17,943
  -19,413
  -20,943
New CAPEX, $m
  -1,117
  -1,623
  -2,279
  -3,102
  -4,101
  -5,278
  -6,627
  -8,136
  -9,786
  -11,552
  -13,410
  -15,331
  -17,290
  -19,264
  -21,232
  -23,178
  -25,092
  -26,964
  -28,794
  -30,579
  -32,325
  -34,037
  -35,723
  -37,393
  -39,058
  -40,727
  -42,414
  -44,129
  -45,884
  -47,691
Cash from investing activities, $m
  -1,179
  -1,722
  -2,432
  -3,331
  -4,434
  -5,747
  -7,272
  -9,002
  -10,924
  -13,016
  -15,259
  -17,627
  -20,097
  -22,647
  -25,257
  -27,911
  -30,598
  -33,306
  -36,035
  -38,780
  -41,545
  -44,334
  -47,155
  -50,016
  -52,927
  -55,898
  -58,943
  -62,072
  -65,297
  -68,634
Free cash flow, $m
  -943
  -1,347
  -1,863
  -2,497
  -3,252
  -4,120
  -5,089
  -6,139
  -7,246
  -8,382
  -9,522
  -10,631
  -11,685
  -12,661
  -13,542
  -14,313
  -14,965
  -15,493
  -15,895
  -16,174
  -16,335
  -16,385
  -16,334
  -16,191
  -15,965
  -15,668
  -15,309
  -14,899
  -14,445
  -13,957
Issuance/(repayment) of debt, $m
  824
  1,187
  1,667
  2,269
  3,000
  3,861
  4,848
  5,951
  7,158
  8,450
  9,808
  11,214
  12,647
  14,090
  15,530
  16,954
  18,353
  19,723
  21,061
  22,367
  23,644
  24,896
  26,130
  27,351
  28,569
  29,790
  31,024
  32,278
  33,562
  34,883
Issuance/(repurchase) of shares, $m
  282
  376
  493
  628
  776
  930
  1,080
  1,215
  1,320
  1,384
  1,383
  1,325
  1,190
  969
  655
  245
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,106
  1,563
  2,160
  2,897
  3,776
  4,791
  5,928
  7,166
  8,478
  9,834
  11,191
  12,539
  13,837
  15,059
  16,185
  17,199
  18,353
  19,723
  21,061
  22,367
  23,644
  24,896
  26,130
  27,351
  28,569
  29,790
  31,024
  32,278
  33,562
  34,883
Total cash flow (excl. dividends), $m
  163
  216
  298
  400
  524
  671
  839
  1,027
  1,232
  1,452
  1,669
  1,908
  2,152
  2,398
  2,643
  2,885
  3,388
  4,230
  5,166
  6,193
  7,309
  8,511
  9,796
  11,161
  12,603
  14,122
  15,714
  17,379
  19,117
  20,927
Retained Cash Flow (-), $m
  -411
  -593
  -832
  -1,133
  -1,498
  -1,927
  -2,420
  -2,971
  -3,574
  -4,219
  -4,897
  -5,598
  -6,314
  -7,035
  -7,753
  -8,464
  -9,163
  -9,847
  -10,515
  -11,167
  -11,804
  -12,430
  -13,045
  -13,655
  -14,263
  -14,873
  -15,489
  -16,115
  -16,756
  -17,415
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
  -248
  -377
  -535
  -733
  -973
  -1,257
  -1,581
  -1,945
  -2,342
  -2,767
  -3,228
  -3,690
  -4,162
  -4,637
  -5,111
  -5,579
  -5,775
  -5,616
  -5,348
  -4,973
  -4,495
  -3,919
  -3,250
  -2,494
  -1,659
  -751
  226
  1,265
  2,361
  3,511
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
  -228
  -315
  -403
  -493
  -579
  -654
  -713
  -749
  -761
  -749
  -717
  -662
  -593
  -517
  -437
  -359
  -274
  -192
  -129
  -83
  -50
  -29
  -15
  -7
  -3
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  76.8
  61.3
  50.5
  42.8
  37.0
  32.7
  29.5
  26.9
  25.0
  23.5
  22.4
  21.6
  21.0
  20.6
  20.4
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3
  20.3

InfraREIT, Inc. is a real estate investment trust. The Company is engaged in owning and leasing rate-regulated transmission and distribution (T&D) assets in Texas. It leases its T&D assets to Sharyland Utilities, L.P. Its assets are located in the Texas Panhandle near Amarillo, the Permian Basin in and around Stanton, Central Texas around Brady, Northeast Texas in and around Celeste and South Texas near McAllen. As of December 31, 2016, its T&D assets consisted of approximately 54,000 electricity delivery points, approximately 815 circuit miles of transmission lines, approximately 40,500 circuit miles of distribution lines, 57 substations and a 300 megawatt high-voltage direct current (DC) Tie between Texas and Mexico (Railroad DC Tie). As of December 31, 2016, its T&D assets in each of its leases included S/B/C Lease, McAllen Lease, competitive renewable energy zone (CREZ) Lease, Stanton Transmission Loop Lease and Electric Reliability Council of Texas (ERCOT) Transmission Lease.

FINANCIAL RATIOS  of  InfraREIT, Inc. (HIFR)

Valuation Ratios
P/E Ratio 18.5
Price to Sales 5.4
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 7.5
Price to Free Cash Flow -8.6
Growth Rates
Sales Growth Rate 13.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.3%
Cap. Spend. - 3 Yr. Gr. Rate -9.9%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 103.1%
Total Debt to Equity 124.3%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 3.6%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 2.1%
Return On Equity 7.3%
Return On Equity - 3 Yr. Avg. 5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 87.8%
EBITDA Margin - 3 Yr. Avg. 72.3%
Operating Margin 59.9%
Oper. Margin - 3 Yr. Avg. 50%
Pre-Tax Margin 40.7%
Pre-Tax Margin - 3 Yr. Avg. 25.9%
Net Profit Margin 29.1%
Net Profit Margin - 3 Yr. Avg. 18.3%
Effective Tax Rate 1.4%
Eff/ Tax Rate - 3 Yr. Avg. 3.1%
Payout Ratio 0%

HIFR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HIFR stock intrinsic value calculation we used $200 million for the last fiscal year's total revenue generated by InfraREIT, Inc.. The default revenue input number comes from 0001 income statement of InfraREIT, Inc.. 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 HIFR stock valuation model: a) initial revenue growth rate of 60% 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 HIFR is calculated based on our internal credit rating of InfraREIT, Inc., 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 InfraREIT, Inc..
    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 HIFR stock the variable cost ratio is equal to 11.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $62 million in the base year in the intrinsic value calculation for HIFR 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 InfraREIT, Inc..

Corporate tax rate of 27% is the nominal tax rate for InfraREIT, Inc.. 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 HIFR 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 HIFR are equal to 930.5%.

Life of production assets of 40.4 years is the average useful life of capital assets used in InfraREIT, Inc. 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 HIFR is equal to 5.1%. 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 - $676.701 million for InfraREIT, Inc. - 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 43.998 million for InfraREIT, Inc. 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 InfraREIT, Inc. at the current share price and the inputted number of shares is $0.9 billion.

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