Intrinsic value of Hallador Energy - HNRG

Previous Close

$5.96

  Intrinsic Value

$1.75

stock screener

  Rating & Target

str. sell

-71%

Previous close

$5.96

 
Intrinsic value

$1.75

 
Up/down potential

-71%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Hallador Energy (HNRG) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -17.35
  12.10
  11.39
  10.75
  10.18
  9.66
  9.19
  8.77
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.80
  6.62
  6.46
  6.32
  6.18
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
Revenue, $m
  281
  315
  351
  389
  428
  469
  513
  558
  604
  653
  704
  756
  811
  868
  927
  988
  1,052
  1,119
  1,188
  1,260
  1,335
  1,413
  1,495
  1,580
  1,669
  1,762
  1,859
  1,960
  2,067
  2,178
  2,294
Variable operating expenses, $m
 
  214
  239
  264
  291
  319
  349
  379
  411
  444
  479
  514
  552
  590
  630
  672
  715
  761
  808
  857
  908
  961
  1,017
  1,074
  1,135
  1,198
  1,264
  1,333
  1,405
  1,481
  1,560
Fixed operating expenses, $m
 
  70
  71
  73
  75
  77
  79
  81
  83
  85
  87
  89
  91
  94
  96
  98
  101
  103
  106
  109
  111
  114
  117
  120
  123
  126
  129
  132
  136
  139
  143
Total operating expenses, $m
  257
  284
  310
  337
  366
  396
  428
  460
  494
  529
  566
  603
  643
  684
  726
  770
  816
  864
  914
  966
  1,019
  1,075
  1,134
  1,194
  1,258
  1,324
  1,393
  1,465
  1,541
  1,620
  1,703
Operating income, $m
  24
  31
  41
  51
  62
  73
  85
  98
  111
  124
  138
  153
  168
  184
  201
  218
  236
  254
  274
  294
  316
  338
  361
  386
  411
  438
  466
  495
  526
  558
  591
EBITDA, $m
  60
  72
  86
  101
  117
  134
  151
  169
  188
  208
  229
  250
  272
  296
  320
  345
  371
  398
  427
  456
  487
  520
  554
  589
  626
  664
  705
  747
  791
  838
  886
Interest expense (income), $m
  13
  12
  14
  16
  18
  20
  22
  25
  27
  30
  33
  36
  39
  42
  45
  48
  52
  55
  59
  63
  67
  71
  76
  80
  85
  90
  96
  101
  107
  113
  119
Earnings before tax, $m
  8
  19
  27
  36
  44
  53
  63
  73
  83
  94
  105
  117
  130
  142
  156
  170
  184
  199
  215
  231
  249
  267
  286
  305
  326
  348
  370
  394
  419
  445
  472
Tax expense, $m
  -5
  5
  7
  10
  12
  14
  17
  20
  22
  25
  28
  32
  35
  38
  42
  46
  50
  54
  58
  62
  67
  72
  77
  82
  88
  94
  100
  106
  113
  120
  128
Net income, $m
  13
  14
  20
  26
  32
  39
  46
  53
  61
  69
  77
  86
  95
  104
  114
  124
  134
  145
  157
  169
  182
  195
  208
  223
  238
  254
  270
  288
  306
  325
  345

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  19
  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
  531
  574
  639
  708
  780
  855
  934
  1,016
  1,101
  1,190
  1,282
  1,378
  1,477
  1,581
  1,688
  1,800
  1,917
  2,038
  2,164
  2,295
  2,432
  2,574
  2,723
  2,878
  3,040
  3,209
  3,386
  3,571
  3,764
  3,966
  4,178
Adjusted assets (=assets-cash), $m
  512
  574
  639
  708
  780
  855
  934
  1,016
  1,101
  1,190
  1,282
  1,378
  1,477
  1,581
  1,688
  1,800
  1,917
  2,038
  2,164
  2,295
  2,432
  2,574
  2,723
  2,878
  3,040
  3,209
  3,386
  3,571
  3,764
  3,966
  4,178
Revenue / Adjusted assets
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
  0.549
Average production assets, $m
  434
  486
  541
  600
  661
  724
  791
  860
  933
  1,008
  1,086
  1,167
  1,251
  1,339
  1,430
  1,525
  1,624
  1,726
  1,833
  1,944
  2,060
  2,181
  2,307
  2,438
  2,575
  2,719
  2,868
  3,025
  3,189
  3,360
  3,539
Working capital, $m
  34
  49
  55
  61
  67
  74
  80
  88
  95
  103
  110
  119
  127
  136
  146
  155
  165
  176
  186
  198
  210
  222
  235
  248
  262
  277
  292
  308
  324
  342
  360
Total debt, $m
  234
  250
  288
  328
  369
  413
  458
  505
  554
  605
  658
  714
  771
  831
  893
  957
  1,024
  1,094
  1,166
  1,242
  1,321
  1,403
  1,488
  1,578
  1,671
  1,769
  1,870
  1,977
  2,088
  2,205
  2,327
Total liabilities, $m
  314
  330
  368
  408
  449
  493
  538
  585
  634
  685
  738
  794
  851
  911
  973
  1,037
  1,104
  1,174
  1,246
  1,322
  1,401
  1,483
  1,568
  1,658
  1,751
  1,849
  1,950
  2,057
  2,168
  2,285
  2,407
Total equity, $m
  217
  243
  271
  300
  331
  363
  396
  431
  467
  504
  544
  584
  626
  670
  716
  763
  813
  864
  917
  973
  1,031
  1,091
  1,155
  1,220
  1,289
  1,361
  1,436
  1,514
  1,596
  1,682
  1,771
Total liabilities and equity, $m
  531
  573
  639
  708
  780
  856
  934
  1,016
  1,101
  1,189
  1,282
  1,378
  1,477
  1,581
  1,689
  1,800
  1,917
  2,038
  2,163
  2,295
  2,432
  2,574
  2,723
  2,878
  3,040
  3,210
  3,386
  3,571
  3,764
  3,967
  4,178
Debt-to-equity ratio
  1.078
  1.030
  1.060
  1.090
  1.120
  1.140
  1.160
  1.170
  1.190
  1.200
  1.210
  1.220
  1.230
  1.240
  1.250
  1.250
  1.260
  1.270
  1.270
  1.280
  1.280
  1.290
  1.290
  1.290
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.310
Adjusted equity ratio
  0.387
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  13
  14
  20
  26
  32
  39
  46
  53
  61
  69
  77
  86
  95
  104
  114
  124
  134
  145
  157
  169
  182
  195
  208
  223
  238
  254
  270
  288
  306
  325
  345
Depreciation, amort., depletion, $m
  36
  41
  45
  50
  55
  60
  66
  72
  78
  84
  90
  97
  104
  112
  119
  127
  135
  144
  153
  162
  172
  182
  192
  203
  215
  227
  239
  252
  266
  280
  295
Funds from operations, $m
  49
  55
  65
  76
  87
  99
  112
  125
  139
  153
  167
  183
  199
  216
  233
  251
  270
  289
  310
  331
  353
  376
  401
  426
  453
  480
  509
  540
  571
  605
  640
Change in working capital, $m
  -12
  5
  6
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
Cash from operations, $m
  61
  49
  59
  70
  81
  93
  105
  118
  131
  145
  160
  175
  190
  207
  224
  241
  260
  279
  299
  320
  341
  364
  388
  413
  439
  466
  494
  524
  555
  587
  621
Maintenance CAPEX, $m
  0
  -36
  -41
  -45
  -50
  -55
  -60
  -66
  -72
  -78
  -84
  -90
  -97
  -104
  -112
  -119
  -127
  -135
  -144
  -153
  -162
  -172
  -182
  -192
  -203
  -215
  -227
  -239
  -252
  -266
  -280
New CAPEX, $m
  -42
  -53
  -55
  -58
  -61
  -64
  -67
  -69
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -111
  -116
  -121
  -126
  -131
  -137
  -143
  -150
  -157
  -164
  -171
  -179
Cash from investing activities, $m
  -49
  -89
  -96
  -103
  -111
  -119
  -127
  -135
  -144
  -153
  -162
  -171
  -181
  -192
  -203
  -214
  -226
  -238
  -251
  -264
  -278
  -293
  -308
  -323
  -340
  -358
  -377
  -396
  -416
  -437
  -459
Free cash flow, $m
  12
  -39
  -36
  -33
  -30
  -26
  -22
  -17
  -13
  -8
  -3
  3
  9
  15
  21
  27
  34
  41
  48
  56
  64
  72
  80
  89
  98
  108
  118
  128
  139
  150
  162
Issuance/(repayment) of debt, $m
  -11
  35
  38
  40
  41
  43
  45
  47
  49
  51
  53
  55
  57
  60
  62
  64
  67
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
Issuance/(repurchase) of shares, $m
  0
  12
  8
  3
  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  
  -13
  47
  46
  43
  41
  43
  45
  47
  49
  51
  53
  55
  57
  60
  62
  64
  67
  70
  73
  76
  79
  82
  86
  89
  93
  97
  102
  106
  111
  116
  122
Total cash flow (excl. dividends), $m
  -1
  8
  9
  9
  12
  17
  23
  30
  36
  43
  51
  58
  66
  74
  83
  92
  101
  111
  121
  131
  142
  154
  166
  178
  191
  205
  220
  235
  250
  267
  284
Retained Cash Flow (-), $m
  -10
  -26
  -28
  -29
  -31
  -32
  -33
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -47
  -49
  -51
  -53
  -56
  -58
  -60
  -63
  -66
  -69
  -72
  -75
  -78
  -82
  -86
  -90
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
 
  -18
  -19
  -20
  -19
  -15
  -10
  -5
  0
  6
  11
  17
  24
  30
  37
  44
  52
  59
  67
  76
  84
  93
  103
  113
  123
  133
  145
  156
  168
  181
  194
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  -17
  -16
  -16
  -14
  -10
  -6
  -3
  0
  2
  4
  6
  6
  7
  7
  7
  6
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  93.9
  90.5
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3
  89.3

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 13.5
Price to Sales 0.6
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 2.9
Price to Free Cash Flow 9.2
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 $281 million for the last fiscal year's total revenue generated by Hallador Energy. The default revenue input number comes from 2016 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 12.1% 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 6.8%, 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 68%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $68 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 5.4% 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 154.3%.

Life of production assets of 12 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 15.7%. 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 - $217 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 31.034 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.

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COMPANY NEWS

▶ 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]
Financial statements of HNRG
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