Intrinsic value of Hill International, Inc. - HIL

Previous Close

$2.69

  Intrinsic Value

$0.23

stock screener

  Rating & Target

str. sell

-91%

Previous close

$2.69

 
Intrinsic value

$0.23

 
Up/down potential

-91%

 
Rating

str. sell

We calculate the intrinsic value of HIL 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 0.1

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  494
  505
  518
  533
  549
  566
  586
  607
  629
  653
  679
  707
  736
  767
  800
  835
  872
  912
  953
  997
  1,043
  1,092
  1,143
  1,197
  1,254
  1,314
  1,378
  1,444
  1,514
  1,588
Variable operating expenses, $m
  507
  518
  532
  546
  563
  581
  600
  622
  644
  669
  689
  717
  747
  779
  812
  848
  886
  926
  968
  1,012
  1,059
  1,109
  1,161
  1,216
  1,274
  1,335
  1,399
  1,466
  1,537
  1,612
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
  507
  518
  532
  546
  563
  581
  600
  622
  644
  669
  689
  717
  747
  779
  812
  848
  886
  926
  968
  1,012
  1,059
  1,109
  1,161
  1,216
  1,274
  1,335
  1,399
  1,466
  1,537
  1,612
Operating income, $m
  -13
  -13
  -14
  -14
  -14
  -14
  -15
  -15
  -15
  -16
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
EBITDA, $m
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
Interest expense (income), $m
  12
  2
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
Earnings before tax, $m
  -15
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -21
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
Tax expense, $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
Net income, $m
  -15
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -21
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47

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
  299
  306
  314
  323
  333
  343
  355
  368
  381
  396
  412
  428
  446
  465
  485
  506
  529
  553
  578
  604
  632
  662
  693
  726
  760
  797
  835
  875
  918
  962
Adjusted assets (=assets-cash), $m
  299
  306
  314
  323
  333
  343
  355
  368
  381
  396
  412
  428
  446
  465
  485
  506
  529
  553
  578
  604
  632
  662
  693
  726
  760
  797
  835
  875
  918
  962
Revenue / Adjusted assets
  1.652
  1.650
  1.650
  1.650
  1.649
  1.650
  1.651
  1.649
  1.651
  1.649
  1.648
  1.652
  1.650
  1.649
  1.649
  1.650
  1.648
  1.649
  1.649
  1.651
  1.650
  1.650
  1.649
  1.649
  1.650
  1.649
  1.650
  1.650
  1.649
  1.651
Average production assets, $m
  43
  44
  46
  47
  48
  50
  52
  53
  55
  57
  60
  62
  65
  68
  70
  74
  77
  80
  84
  88
  92
  96
  101
  105
  110
  116
  121
  127
  133
  140
Working capital, $m
  50
  51
  52
  54
  55
  57
  59
  61
  64
  66
  69
  71
  74
  77
  81
  84
  88
  92
  96
  101
  105
  110
  115
  121
  127
  133
  139
  146
  153
  160
Total debt, $m
  41
  46
  51
  56
  62
  69
  76
  84
  93
  102
  112
  123
  134
  146
  158
  172
  186
  201
  216
  233
  251
  269
  289
  309
  331
  354
  378
  403
  430
  458
Total liabilities, $m
  188
  192
  197
  203
  209
  216
  223
  231
  239
  249
  258
  269
  280
  292
  305
  318
  332
  347
  363
  379
  397
  416
  435
  456
  477
  500
  524
  550
  576
  604
Total equity, $m
  111
  114
  117
  120
  124
  128
  132
  137
  142
  147
  153
  159
  166
  173
  180
  188
  197
  206
  215
  225
  235
  246
  258
  270
  283
  296
  311
  326
  341
  358
Total liabilities and equity, $m
  299
  306
  314
  323
  333
  344
  355
  368
  381
  396
  411
  428
  446
  465
  485
  506
  529
  553
  578
  604
  632
  662
  693
  726
  760
  796
  835
  876
  917
  962
Debt-to-equity ratio
  0.370
  0.400
  0.430
  0.470
  0.500
  0.540
  0.580
  0.620
  0.660
  0.690
  0.730
  0.770
  0.810
  0.840
  0.880
  0.910
  0.940
  0.980
  1.010
  1.040
  1.070
  1.090
  1.120
  1.150
  1.170
  1.190
  1.220
  1.240
  1.260
  1.280
Adjusted equity ratio
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372
  0.372

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -15
  -16
  -16
  -17
  -17
  -18
  -18
  -19
  -20
  -21
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
Depreciation, amort., depletion, $m
  10
  10
  10
  10
  10
  10
  10
  11
  11
  11
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
Funds from operations, $m
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -15
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -26
  -27
  -29
  -31
  -33
  -35
Change in working capital, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
Cash from operations, $m
  -7
  -7
  -7
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -40
  -42
Maintenance CAPEX, $m
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
Cash from investing activities, $m
  -5
  -5
  -5
  -5
  -5
  -6
  -7
  -7
  -7
  -7
  -7
  -7
  -9
  -9
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -12
  -14
  -14
  -15
  -15
  -17
  -17
  -18
  -18
Free cash flow, $m
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -61
Issuance/(repayment) of debt, $m
  4
  4
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  13
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
Issuance/(repurchase) of shares, $m
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  22
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  61
  64
Cash from financing (excl. dividends), $m  
  21
  22
  24
  26
  27
  29
  30
  32
  34
  35
  32
  33
  35
  38
  41
  42
  45
  48
  51
  54
  57
  60
  64
  67
  71
  74
  78
  82
  88
  92
Total cash flow (excl. dividends), $m
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
Retained Cash Flow (-), $m
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -22
  -23
  -24
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -61
  -64
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
  -8
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -22
  -23
  -24
  -26
  -27
  -29
  -31
  -33
Discount rate, %
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
  -7
  -7
  -6
  -6
  -6
  -5
  -5
  -5
  -4
  -4
  -4
  -4
  -3
  -3
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  89.5
  80.0
  71.3
  63.4
  56.3
  50.0
  44.2
  39.1
  34.5
  30.4
  27.5
  24.7
  22.3
  20.0
  17.9
  16.0
  14.3
  12.7
  11.3
  10.1
  9.0
  7.9
  7.0
  6.2
  5.5
  4.9
  4.3
  3.8
  3.3
  2.9

Hill International, Inc. is a professional services firm. The Company provides program management, project management, construction management and other consulting services primarily to the buildings, transportation, environmental, energy and industrial markets worldwide. It operates in Project Management Group segment. The Project Management Group segment provides construction and project management services to construction owners worldwide. Its services include project management oversight, troubled project turnaround, staff augmentation, project labor agreement consulting, commissioning, estimating and cost management, labor compliance services and facilities management services. The Company’s clients include the United States federal government, the United States state and local governments, foreign governments and the private sector.

FINANCIAL RATIOS  of  Hill International, Inc. (HIL)

Valuation Ratios
P/E Ratio -7.3
Price to Sales 0.3
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 14
Price to Free Cash Flow 15.5
Growth Rates
Sales Growth Rate -5.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -92.9%
Cap. Spend. - 3 Yr. Gr. Rate -24.2%
Financial Strength
Quick Ratio 13
Current Ratio 0.4
LT Debt to Equity 161.4%
Total Debt to Equity 163.6%
Interest Coverage 1
Management Effectiveness
Return On Assets 6.9%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital -7.7%
Ret/ On T. Cap. - 3 Yr. Avg. -2.5%
Return On Equity -18.8%
Return On Equity - 3 Yr. Avg. -6.2%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 31.1%
Gross Margin - 3 Yr. Avg. 32.4%
EBITDA Margin 3.3%
EBITDA Margin - 3 Yr. Avg. 7.2%
Operating Margin -0.2%
Oper. Margin - 3 Yr. Avg. 2.7%
Pre-Tax Margin -0.4%
Pre-Tax Margin - 3 Yr. Avg. 2.3%
Net Profit Margin -3.6%
Net Profit Margin - 3 Yr. Avg. -1.2%
Effective Tax Rate -300%
Eff/ Tax Rate - 3 Yr. Avg. -77.1%
Payout Ratio 0%

HIL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HIL stock intrinsic value calculation we used $484 million for the last fiscal year's total revenue generated by Hill International, Inc.. The default revenue input number comes from 0001 income statement of Hill International, 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 HIL stock valuation model: a) initial revenue growth rate of 2% 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 6%, whose default value for HIL is calculated based on our internal credit rating of Hill International, 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 Hill International, 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 HIL stock the variable cost ratio is equal to 102.7%.

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 HIL 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 Hill International, Inc..

Corporate tax rate of 27% is the nominal tax rate for Hill International, 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 HIL 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 HIL are equal to 8.8%.

Life of production assets of 10.9 years is the average useful life of capital assets used in Hill International, 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 HIL is equal to 10.1%. 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 - $109.075 million for Hill International, 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 55.557 million for Hill International, 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 Hill International, Inc. at the current share price and the inputted number of shares is $0.1 billion.

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