Intrinsic value of Hallador Energy - HNRG

Previous Close

$5.89

  Intrinsic Value

$2.07

stock screener

  Rating & Target

str. sell

-65%

Previous close

$5.89

 
Intrinsic value

$2.07

 
Up/down potential

-65%

 
Rating

str. sell

We calculate the intrinsic value of HNRG 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 0.2

 

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
  277
  283
  291
  299
  308
  318
  329
  340
  353
  367
  381
  397
  413
  431
  449
  469
  490
  512
  535
  560
  585
  613
  642
  672
  704
  738
  773
  810
  850
  891
Variable operating expenses, $m
  254
  259
  266
  273
  282
  291
  301
  312
  323
  335
  349
  363
  378
  394
  411
  429
  448
  468
  489
  512
  536
  561
  587
  615
  644
  675
  707
  742
  778
  815
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
  254
  259
  266
  273
  282
  291
  301
  312
  323
  335
  349
  363
  378
  394
  411
  429
  448
  468
  489
  512
  536
  561
  587
  615
  644
  675
  707
  742
  778
  815
Operating income, $m
  24
  24
  25
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  43
  45
  48
  50
  52
  55
  57
  60
  63
  66
  69
  72
  76
EBITDA, $m
  63
  64
  66
  68
  70
  72
  75
  77
  80
  83
  87
  90
  94
  98
  102
  106
  111
  116
  121
  127
  133
  139
  146
  153
  160
  168
  176
  184
  193
  202
Interest expense (income), $m
  13
  11
  12
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  44
Earnings before tax, $m
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  16
  16
  17
  17
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
Tax expense, $m
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
Net income, $m
  9
  9
  9
  9
  10
  10
  10
  11
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23

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
  528
  540
  554
  569
  587
  606
  626
  648
  673
  698
  726
  755
  787
  820
  856
  893
  933
  975
  1,019
  1,066
  1,115
  1,167
  1,222
  1,280
  1,341
  1,405
  1,473
  1,544
  1,619
  1,697
Adjusted assets (=assets-cash), $m
  528
  540
  554
  569
  587
  606
  626
  648
  673
  698
  726
  755
  787
  820
  856
  893
  933
  975
  1,019
  1,066
  1,115
  1,167
  1,222
  1,280
  1,341
  1,405
  1,473
  1,544
  1,619
  1,697
Revenue / Adjusted assets
  0.525
  0.524
  0.525
  0.525
  0.525
  0.525
  0.526
  0.525
  0.525
  0.526
  0.525
  0.526
  0.525
  0.526
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
  0.525
Average production assets, $m
  429
  439
  450
  463
  477
  492
  509
  527
  547
  568
  590
  614
  640
  667
  696
  726
  758
  793
  829
  867
  907
  949
  994
  1,041
  1,091
  1,143
  1,198
  1,255
  1,316
  1,380
Working capital, $m
  31
  32
  33
  34
  35
  36
  37
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  73
  76
  80
  83
  87
  92
  96
  101
Total debt, $m
  204
  210
  217
  226
  235
  244
  255
  267
  279
  293
  307
  322
  338
  356
  374
  394
  414
  436
  459
  483
  509
  536
  564
  594
  626
  659
  694
  731
  770
  811
Total liabilities, $m
  274
  280
  287
  295
  304
  314
  325
  337
  349
  362
  377
  392
  408
  426
  444
  463
  484
  506
  529
  553
  579
  606
  634
  664
  696
  729
  764
  801
  840
  881
Total equity, $m
  254
  260
  266
  274
  282
  291
  301
  312
  323
  336
  349
  363
  378
  394
  411
  430
  449
  469
  490
  513
  536
  561
  588
  616
  645
  676
  708
  743
  779
  816
Total liabilities and equity, $m
  528
  540
  553
  569
  586
  605
  626
  649
  672
  698
  726
  755
  786
  820
  855
  893
  933
  975
  1,019
  1,066
  1,115
  1,167
  1,222
  1,280
  1,341
  1,405
  1,472
  1,544
  1,619
  1,697
Debt-to-equity ratio
  0.800
  0.810
  0.820
  0.820
  0.830
  0.840
  0.850
  0.850
  0.860
  0.870
  0.880
  0.890
  0.890
  0.900
  0.910
  0.920
  0.920
  0.930
  0.940
  0.940
  0.950
  0.950
  0.960
  0.970
  0.970
  0.980
  0.980
  0.980
  0.990
  0.990
Adjusted equity ratio
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481
  0.481

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9
  9
  9
  9
  10
  10
  10
  11
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
Depreciation, amort., depletion, $m
  39
  40
  41
  42
  44
  45
  47
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  76
  80
  83
  87
  91
  96
  100
  105
  110
  115
  121
  127
Funds from operations, $m
  48
  49
  51
  52
  53
  55
  57
  59
  61
  63
  66
  68
  71
  74
  77
  80
  84
  87
  91
  95
  99
  104
  109
  114
  119
  125
  130
  137
  143
  150
Change in working capital, $m
  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
  4
  5
Cash from operations, $m
  48
  49
  50
  51
  52
  54
  56
  58
  60
  62
  64
  66
  69
  72
  75
  78
  81
  85
  88
  92
  96
  101
  105
  110
  115
  121
  126
  132
  139
  145
Maintenance CAPEX, $m
  -39
  -39
  -40
  -41
  -42
  -44
  -45
  -47
  -48
  -50
  -52
  -54
  -56
  -59
  -61
  -64
  -67
  -70
  -73
  -76
  -80
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
New CAPEX, $m
  -8
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -20
  -21
  -22
  -24
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
Cash from investing activities, $m
  -47
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -68
  -71
  -74
  -78
  -82
  -86
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -125
  -132
  -138
  -146
  -152
  -160
  -168
  -176
  -185
Free cash flow, $m
  1
  -1
  -2
  -3
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -12
  -13
  -14
  -15
  -16
  -18
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -40
Issuance/(repayment) of debt, $m
  5
  6
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  29
  30
  32
  33
  35
  37
  39
  41
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  2
  2
  3
  3
  4
  5
  5
  6
  6
  7
  8
  8
  9
  10
  10
  11
  12
  13
  14
  15
Cash from financing (excl. dividends), $m  
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  19
  20
  22
  24
  26
  28
  29
  31
  34
  35
  38
  40
  42
  44
  47
  50
  53
  56
Total cash flow (excl. dividends), $m
  6
  6
  5
  5
  5
  5
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
Retained Cash Flow (-), $m
  -5
  -6
  -7
  -7
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
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
  2
  0
  -1
  -2
  -3
  -4
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
Discount rate, %
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
  2
  0
  -1
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  -1
  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
  99.9
  99.6
  99.0
  98.3
  97.4
  96.3
  95.1
  93.8
  92.4
  90.9
  89.3
  87.6
  85.9
  84.2
  82.4
  80.6
  78.8
  77.0
  75.2
  73.4
  71.6
  69.8
  68.0

Hallador Energy Company is an oil and gas exploration company focused on developing coal reserves in the Illinois Basin. The Company, through its subsidiary, Sunrise Coal, LLC, is engaged in coal mining in the state of Indiana serving the electric power generation industry. Its projects include Carlisle Mine, Ace in the Hole Mine, Oaktown 1 Mine, Oaktown 2 Mine and Bulldog Mine. It develops over 10 million tons of coal annually and has customers in the mid-west and southeastern United States. It has over 40.6 million tons of the Indiana coal V seam. It also has over 69.3 million controlled tons in both Knox County, Indiana and Lawrence County, Illinois. Its Carlisle underground coal mine is located near the town of Carlisle, Indiana in Sullivan County. The Ace mine is located approximately 40 miles northeast of the Carlisle Mine. Its Bulldog Mine controls over 35.8 million tons of coal reserves.

FINANCIAL RATIOS  of  Hallador Energy (HNRG)

Valuation Ratios
P/E Ratio 13.3
Price to Sales 0.6
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 2.8
Price to Free Cash Flow 9.1
Growth Rates
Sales Growth Rate -17.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 35.5%
Cap. Spend. - 3 Yr. Gr. Rate 4.3%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 94.5%
Total Debt to Equity 107.8%
Interest Coverage 2
Management Effectiveness
Return On Assets 6.4%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3.3%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 7.2%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 31%
Gross Margin - 3 Yr. Avg. 29.7%
EBITDA Margin 20.3%
EBITDA Margin - 3 Yr. Avg. 21.4%
Operating Margin 8.5%
Oper. Margin - 3 Yr. Avg. 9.8%
Pre-Tax Margin 2.8%
Pre-Tax Margin - 3 Yr. Avg. 5.2%
Net Profit Margin 4.6%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate -62.5%
Eff/ Tax Rate - 3 Yr. Avg. -8.3%
Payout Ratio 38.5%

HNRG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HNRG stock intrinsic value calculation we used $271.633 million for the last fiscal year's total revenue generated by Hallador Energy. The default revenue input number comes from 0001 income statement of Hallador Energy. 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 HNRG 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 5.9%, whose default value for HNRG is calculated based on our internal credit rating of Hallador Energy, 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 Hallador Energy.
    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 HNRG stock the variable cost ratio is equal to 91.5%.

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 HNRG 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 5.7% for Hallador Energy.

Corporate tax rate of 27% is the nominal tax rate for Hallador Energy. 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 HNRG 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 HNRG are equal to 154.9%.

Life of production assets of 10.9 years is the average useful life of capital assets used in Hallador Energy 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 HNRG is equal to 11.3%. 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 - $249.323 million for Hallador Energy - 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 30.177 million for Hallador Energy 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 Hallador Energy at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ Hallador Energy: 3Q Earnings Snapshot   [Nov-05-18 06:49PM  Associated Press]
▶ Denver coal mining business branches into the booming world of fracking   [Sep-26-18 02:13PM  American City Business Journals]
▶ Hallador Energy Co to Host Earnings Call   [Aug-07-18 12:00PM  ACCESSWIRE]
▶ Hallador Energy: 2Q Earnings Snapshot   [Aug-06-18 07:01PM  Associated Press]
▶ Best Undervalued Energy Stocks in June   [Jun-12-18 09:02AM  Simply Wall St.]
▶ Hallador Energy: 1Q Earnings Snapshot   [May-07-18 05:51PM  Associated Press]
▶ Discounted Energy Stocks To Buy This May   [May-01-18 09:02AM  Simply Wall St.]
▶ Best Undervalued Energy Stocks To Buy Now   [Mar-27-18 09:02AM  Simply Wall St.]
▶ Hallador Energy posts 4Q profit   [09:19AM  Associated Press]
▶ Hallador Energy Co to Host Earnings Call   [Nov-07-17 09:30AM  ACCESSWIRE]
▶ Hallador Energy posts 3Q profit   [05:03AM  Associated Press]
▶ Sunrise Coal, LLC Announces Two Executive Promotions   [Nov-03-17 05:41PM  PR Newswire]
▶ 6 Cheap High-Yield Stocks   [Oct-06-17 04:10PM  GuruFocus.com]
▶ Hallador Energy posts 2Q profit   [Aug-10-17 01:10AM  Associated Press]
▶ Hallador Energy posts 1Q profit   [05:02AM  Associated Press]
▶ Hallador Energy Company Declares Quarterly Dividend   [Apr-17-17 05:23PM  PR Newswire]
▶ Hallador Energy Company Declares Quarterly Dividend   [Jan-13-17 09:13PM  PR Newswire]
▶ How Hallador Energy Co (HNRG) Stacks Up Against Its Peers   [Dec-14-16 07:32AM  Insider Monkey]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.