Intrinsic value of Helix Energy Solutions Group, Inc. - HLX

Previous Close

$8.00

  Intrinsic Value

$2.72

stock screener

  Rating & Target

str. sell

-66%

Previous close

$8.00

 
Intrinsic value

$2.72

 
Up/down potential

-66%

 
Rating

str. sell

We calculate the intrinsic value of HLX 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 1.2

 

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
  755
  772
  792
  814
  839
  866
  896
  927
  962
  999
  1,038
  1,080
  1,125
  1,173
  1,224
  1,277
  1,334
  1,394
  1,457
  1,524
  1,595
  1,670
  1,748
  1,831
  1,918
  2,010
  2,106
  2,208
  2,315
  2,427
Variable operating expenses, $m
  503
  514
  527
  542
  559
  577
  596
  618
  641
  665
  691
  720
  749
  781
  815
  851
  888
  928
  971
  1,015
  1,062
  1,112
  1,164
  1,219
  1,277
  1,339
  1,403
  1,471
  1,542
  1,617
Fixed operating expenses, $m
  203
  208
  212
  217
  222
  227
  232
  237
  242
  247
  253
  258
  264
  270
  276
  282
  288
  294
  301
  308
  314
  321
  328
  335
  343
  350
  358
  366
  374
  382
Total operating expenses, $m
  706
  722
  739
  759
  781
  804
  828
  855
  883
  912
  944
  978
  1,013
  1,051
  1,091
  1,133
  1,176
  1,222
  1,272
  1,323
  1,376
  1,433
  1,492
  1,554
  1,620
  1,689
  1,761
  1,837
  1,916
  1,999
Operating income, $m
  49
  50
  52
  55
  58
  63
  67
  73
  79
  86
  94
  102
  112
  122
  133
  145
  157
  171
  186
  202
  218
  236
  256
  276
  298
  321
  345
  371
  399
  428
EBITDA, $m
  162
  166
  171
  177
  184
  192
  201
  212
  223
  236
  249
  264
  280
  297
  316
  336
  357
  380
  404
  430
  457
  486
  517
  550
  585
  622
  661
  702
  746
  792
Interest expense (income), $m
  19
  24
  25
  25
  26
  28
  29
  30
  32
  33
  35
  37
  39
  41
  43
  46
  48
  51
  54
  57
  60
  63
  67
  70
  74
  78
  83
  87
  92
  97
  103
Earnings before tax, $m
  25
  25
  27
  28
  31
  34
  37
  41
  46
  51
  57
  64
  71
  79
  87
  97
  107
  118
  129
  142
  155
  170
  185
  202
  219
  238
  258
  279
  302
  326
Tax expense, $m
  7
  7
  7
  8
  8
  9
  10
  11
  12
  14
  15
  17
  19
  21
  24
  26
  29
  32
  35
  38
  42
  46
  50
  54
  59
  64
  70
  75
  82
  88
Net income, $m
  18
  19
  19
  21
  22
  25
  27
  30
  34
  37
  42
  46
  52
  58
  64
  71
  78
  86
  94
  104
  113
  124
  135
  147
  160
  174
  188
  204
  220
  238

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
  2,260
  2,312
  2,371
  2,438
  2,512
  2,593
  2,681
  2,777
  2,880
  2,990
  3,109
  3,235
  3,369
  3,512
  3,663
  3,824
  3,994
  4,174
  4,363
  4,564
  4,776
  4,999
  5,234
  5,482
  5,742
  6,017
  6,306
  6,611
  6,931
  7,268
Adjusted assets (=assets-cash), $m
  2,260
  2,312
  2,371
  2,438
  2,512
  2,593
  2,681
  2,777
  2,880
  2,990
  3,109
  3,235
  3,369
  3,512
  3,663
  3,824
  3,994
  4,174
  4,363
  4,564
  4,776
  4,999
  5,234
  5,482
  5,742
  6,017
  6,306
  6,611
  6,931
  7,268
Revenue / Adjusted assets
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
Average production assets, $m
  1,853
  1,896
  1,944
  1,999
  2,060
  2,126
  2,199
  2,277
  2,361
  2,452
  2,549
  2,652
  2,763
  2,880
  3,004
  3,136
  3,275
  3,422
  3,578
  3,742
  3,916
  4,099
  4,292
  4,495
  4,709
  4,934
  5,171
  5,421
  5,683
  5,959
Working capital, $m
  28
  29
  29
  30
  31
  32
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
  49
  52
  54
  56
  59
  62
  65
  68
  71
  74
  78
  82
  86
  90
Total debt, $m
  456
  472
  490
  511
  534
  559
  586
  616
  647
  682
  718
  757
  799
  843
  890
  939
  992
  1,047
  1,106
  1,168
  1,233
  1,302
  1,375
  1,451
  1,532
  1,617
  1,706
  1,800
  1,899
  2,003
Total liabilities, $m
  698
  714
  733
  753
  776
  801
  829
  858
  890
  924
  961
  1,000
  1,041
  1,085
  1,132
  1,182
  1,234
  1,290
  1,348
  1,410
  1,476
  1,545
  1,617
  1,694
  1,774
  1,859
  1,949
  2,043
  2,142
  2,246
Total equity, $m
  1,562
  1,597
  1,639
  1,685
  1,736
  1,792
  1,853
  1,919
  1,990
  2,066
  2,148
  2,235
  2,328
  2,427
  2,531
  2,642
  2,760
  2,884
  3,015
  3,154
  3,300
  3,454
  3,617
  3,788
  3,968
  4,158
  4,358
  4,568
  4,789
  5,022
Total liabilities and equity, $m
  2,260
  2,311
  2,372
  2,438
  2,512
  2,593
  2,682
  2,777
  2,880
  2,990
  3,109
  3,235
  3,369
  3,512
  3,663
  3,824
  3,994
  4,174
  4,363
  4,564
  4,776
  4,999
  5,234
  5,482
  5,742
  6,017
  6,307
  6,611
  6,931
  7,268
Debt-to-equity ratio
  0.290
  0.300
  0.300
  0.300
  0.310
  0.310
  0.320
  0.320
  0.330
  0.330
  0.330
  0.340
  0.340
  0.350
  0.350
  0.360
  0.360
  0.360
  0.370
  0.370
  0.370
  0.380
  0.380
  0.380
  0.390
  0.390
  0.390
  0.390
  0.400
  0.400
Adjusted equity ratio
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  18
  19
  19
  21
  22
  25
  27
  30
  34
  37
  42
  46
  52
  58
  64
  71
  78
  86
  94
  104
  113
  124
  135
  147
  160
  174
  188
  204
  220
  238
Depreciation, amort., depletion, $m
  113
  116
  119
  122
  126
  130
  134
  139
  144
  150
  155
  162
  168
  176
  183
  191
  200
  209
  218
  228
  239
  250
  262
  274
  287
  301
  315
  331
  347
  363
Funds from operations, $m
  131
  134
  138
  143
  148
  154
  161
  169
  178
  187
  197
  208
  220
  233
  247
  262
  278
  295
  313
  332
  352
  374
  397
  421
  447
  475
  504
  534
  567
  601
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
Cash from operations, $m
  131
  134
  137
  142
  147
  153
  160
  168
  176
  186
  196
  207
  219
  231
  245
  260
  276
  292
  310
  329
  350
  371
  394
  418
  444
  471
  500
  531
  563
  597
Maintenance CAPEX, $m
  -111
  -113
  -116
  -119
  -122
  -126
  -130
  -134
  -139
  -144
  -150
  -155
  -162
  -168
  -176
  -183
  -191
  -200
  -209
  -218
  -228
  -239
  -250
  -262
  -274
  -287
  -301
  -315
  -331
  -347
New CAPEX, $m
  -37
  -43
  -49
  -55
  -61
  -66
  -72
  -78
  -84
  -91
  -97
  -103
  -110
  -117
  -124
  -132
  -139
  -147
  -156
  -164
  -173
  -183
  -193
  -203
  -214
  -225
  -237
  -250
  -263
  -276
Cash from investing activities, $m
  -148
  -156
  -165
  -174
  -183
  -192
  -202
  -212
  -223
  -235
  -247
  -258
  -272
  -285
  -300
  -315
  -330
  -347
  -365
  -382
  -401
  -422
  -443
  -465
  -488
  -512
  -538
  -565
  -594
  -623
Free cash flow, $m
  -17
  -22
  -27
  -31
  -35
  -39
  -42
  -45
  -47
  -49
  -51
  -52
  -53
  -54
  -55
  -55
  -55
  -55
  -54
  -53
  -52
  -51
  -49
  -47
  -44
  -41
  -38
  -34
  -30
  -26
Issuance/(repayment) of debt, $m
  16
  16
  18
  21
  23
  25
  27
  30
  32
  34
  37
  39
  42
  44
  47
  50
  53
  56
  59
  62
  65
  69
  73
  77
  81
  85
  89
  94
  99
  104
Issuance/(repurchase) of shares, $m
  14
  17
  22
  25
  29
  31
  34
  36
  38
  39
  40
  41
  41
  41
  41
  40
  40
  38
  37
  35
  33
  30
  27
  24
  20
  16
  11
  6
  1
  0
Cash from financing (excl. dividends), $m  
  30
  33
  40
  46
  52
  56
  61
  66
  70
  73
  77
  80
  83
  85
  88
  90
  93
  94
  96
  97
  98
  99
  100
  101
  101
  101
  100
  100
  100
  104
Total cash flow (excl. dividends), $m
  12
  11
  13
  15
  16
  18
  19
  21
  22
  24
  26
  27
  29
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  79
Retained Cash Flow (-), $m
  -32
  -36
  -41
  -46
  -51
  -56
  -61
  -66
  -71
  -76
  -82
  -87
  -93
  -99
  -105
  -111
  -117
  -124
  -131
  -139
  -146
  -154
  -162
  -171
  -180
  -190
  -200
  -210
  -221
  -233
Prev. year cash balance distribution, $m
  88
  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
  69
  -25
  -28
  -32
  -35
  -38
  -42
  -45
  -49
  -52
  -56
  -60
  -64
  -68
  -72
  -76
  -80
  -85
  -90
  -95
  -100
  -106
  -111
  -117
  -124
  -130
  -137
  -144
  -152
  -154
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  66
  -23
  -24
  -26
  -27
  -28
  -28
  -28
  -28
  -27
  -27
  -25
  -24
  -23
  -21
  -19
  -18
  -16
  -14
  -12
  -10
  -9
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
Current shareholders' claim on cash, %
  98.8
  97.3
  95.6
  93.6
  91.5
  89.3
  87.1
  84.8
  82.6
  80.5
  78.4
  76.4
  74.6
  72.8
  71.2
  69.7
  68.3
  67.0
  65.9
  64.9
  64.0
  63.2
  62.5
  61.9
  61.5
  61.2
  60.9
  60.8
  60.8
  60.8

Helix Energy Solutions Group, Inc. is an international offshore energy services company. The Company provides services to the offshore energy industry, with a focus on well intervention and robotics operations. The Company operates in three segments: Well Intervention, Robotics and Production Facilities. Its Well Intervention segment includes the Company's vessels and equipment used to perform well intervention services primarily in the Gulf of Mexico and North Sea regions. Its Robotics segment includes remotely operated vehicles (ROVs), trenchers and ROVDrills designed to complement offshore construction and well intervention services, and operates chartered ROV support vessels. Its Production Facilities segment includes the Helix Producer I (the HP I), a floating production vessel, the Helix Fast Response System (the HFRS), and its ownership interest in Independence Hub, LLC (Independence Hub).

FINANCIAL RATIOS  of  Helix Energy Solutions Group, Inc. (HLX)

Valuation Ratios
P/E Ratio -11.9
Price to Sales 2
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 24.7
Price to Free Cash Flow -6.6
Growth Rates
Sales Growth Rate -29.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -41.9%
Cap. Spend. - 3 Yr. Gr. Rate -10.5%
Financial Strength
Quick Ratio 5
Current Ratio 0.1
LT Debt to Equity 43.5%
Total Debt to Equity 48.8%
Interest Coverage -4
Management Effectiveness
Return On Assets -2.8%
Ret/ On Assets - 3 Yr. Avg. -3.1%
Return On Total Capital -4.1%
Ret/ On T. Cap. - 3 Yr. Avg. -4.3%
Return On Equity -6.3%
Return On Equity - 3 Yr. Avg. -6.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 9.6%
Gross Margin - 3 Yr. Avg. 18.9%
EBITDA Margin 8%
EBITDA Margin - 3 Yr. Avg. -2.2%
Operating Margin -13.5%
Oper. Margin - 3 Yr. Avg. -11.3%
Pre-Tax Margin -19.3%
Pre-Tax Margin - 3 Yr. Avg. -21.4%
Net Profit Margin -16.6%
Net Profit Margin - 3 Yr. Avg. -17.7%
Effective Tax Rate 13.8%
Eff/ Tax Rate - 3 Yr. Avg. 20.1%
Payout Ratio 0%

HLX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HLX stock intrinsic value calculation we used $740 million for the last fiscal year's total revenue generated by Helix Energy Solutions Group, Inc.. The default revenue input number comes from 0001 income statement of Helix Energy Solutions Group, 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 HLX 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 4.3%, whose default value for HLX is calculated based on our internal credit rating of Helix Energy Solutions Group, 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 Helix Energy Solutions Group, 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 HLX stock the variable cost ratio is equal to 66.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $199 million in the base year in the intrinsic value calculation for HLX 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 Helix Energy Solutions Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for Helix Energy Solutions Group, 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 HLX 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 HLX are equal to 245.5%.

Life of production assets of 16.4 years is the average useful life of capital assets used in Helix Energy Solutions Group, 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 HLX is equal to 3.7%. 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 - $1617.779 million for Helix Energy Solutions Group, 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 148.649 million for Helix Energy Solutions Group, 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 Helix Energy Solutions Group, Inc. at the current share price and the inputted number of shares is $1.2 billion.

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