Intrinsic value of Hallador Energy Company - HNRG

Previous Close

$5.90

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$5.90

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
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, %
  29.50
  27.05
  24.85
  22.86
  21.07
  19.47
  18.02
  16.72
  15.55
  14.49
  13.54
  12.69
  11.92
  11.23
  10.60
  10.04
  9.54
  9.09
  8.68
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
Revenue, $m
  381
  484
  604
  742
  898
  1,073
  1,267
  1,478
  1,708
  1,956
  2,221
  2,502
  2,801
  3,115
  3,445
  3,791
  4,153
  4,530
  4,924
  5,333
  5,758
  6,200
  6,660
  7,138
  7,634
  8,150
  8,687
  9,245
  9,825
  10,430
Variable operating expenses, $m
  332
  411
  503
  609
  728
  862
  1,010
  1,172
  1,347
  1,536
  1,698
  1,913
  2,141
  2,381
  2,634
  2,899
  3,175
  3,464
  3,764
  4,077
  4,402
  4,740
  5,092
  5,457
  5,836
  6,231
  6,641
  7,068
  7,512
  7,974
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
  332
  411
  503
  609
  728
  862
  1,010
  1,172
  1,347
  1,536
  1,698
  1,913
  2,141
  2,381
  2,634
  2,899
  3,175
  3,464
  3,764
  4,077
  4,402
  4,740
  5,092
  5,457
  5,836
  6,231
  6,641
  7,068
  7,512
  7,974
Operating income, $m
  48
  73
  101
  133
  170
  211
  257
  307
  361
  419
  523
  589
  659
  734
  811
  893
  978
  1,067
  1,159
  1,256
  1,356
  1,460
  1,568
  1,681
  1,798
  1,919
  2,045
  2,177
  2,314
  2,456
EBITDA, $m
  147
  186
  233
  286
  346
  413
  488
  570
  658
  753
  856
  964
  1,079
  1,200
  1,327
  1,461
  1,600
  1,745
  1,897
  2,055
  2,218
  2,389
  2,566
  2,750
  2,941
  3,140
  3,347
  3,562
  3,785
  4,018
Interest expense (income), $m
  13
  16
  22
  30
  39
  50
  62
  75
  90
  106
  124
  142
  163
  184
  207
  231
  256
  283
  310
  339
  369
  400
  433
  467
  502
  538
  576
  615
  656
  699
  743
Earnings before tax, $m
  33
  50
  71
  94
  120
  150
  182
  217
  255
  296
  380
  427
  475
  527
  580
  637
  695
  757
  820
  887
  956
  1,027
  1,102
  1,179
  1,260
  1,343
  1,430
  1,521
  1,615
  1,713
Tax expense, $m
  9
  14
  19
  25
  33
  40
  49
  59
  69
  80
  103
  115
  128
  142
  157
  172
  188
  204
  221
  239
  258
  277
  297
  318
  340
  363
  386
  411
  436
  462
Net income, $m
  24
  37
  52
  69
  88
  109
  133
  158
  186
  216
  278
  311
  347
  384
  424
  465
  508
  552
  599
  647
  698
  750
  804
  861
  919
  981
  1,044
  1,110
  1,179
  1,250

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
  668
  849
  1,059
  1,302
  1,576
  1,883
  2,222
  2,594
  2,997
  3,431
  3,896
  4,390
  4,913
  5,465
  6,044
  6,652
  7,286
  7,948
  8,638
  9,356
  10,102
  10,878
  11,684
  12,522
  13,393
  14,298
  15,240
  16,219
  17,238
  18,298
Adjusted assets (=assets-cash), $m
  668
  849
  1,059
  1,302
  1,576
  1,883
  2,222
  2,594
  2,997
  3,431
  3,896
  4,390
  4,913
  5,465
  6,044
  6,652
  7,286
  7,948
  8,638
  9,356
  10,102
  10,878
  11,684
  12,522
  13,393
  14,298
  15,240
  16,219
  17,238
  18,298
Revenue / Adjusted assets
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
Average production assets, $m
  542
  688
  859
  1,056
  1,278
  1,527
  1,802
  2,104
  2,431
  2,783
  3,160
  3,561
  3,985
  4,433
  4,903
  5,395
  5,910
  6,447
  7,006
  7,588
  8,194
  8,823
  9,477
  10,157
  10,863
  11,598
  12,361
  13,155
  13,982
  14,842
Working capital, $m
  47
  59
  74
  91
  110
  132
  156
  182
  210
  241
  273
  308
  344
  383
  424
  466
  511
  557
  606
  656
  708
  763
  819
  878
  939
  1,002
  1,068
  1,137
  1,209
  1,283
Total debt, $m
  258
  350
  457
  579
  718
  873
  1,045
  1,233
  1,437
  1,657
  1,892
  2,142
  2,407
  2,686
  2,979
  3,286
  3,607
  3,942
  4,291
  4,654
  5,032
  5,425
  5,833
  6,257
  6,697
  7,155
  7,632
  8,127
  8,643
  9,179
Total liabilities, $m
  338
  429
  536
  659
  797
  953
  1,124
  1,312
  1,516
  1,736
  1,971
  2,221
  2,486
  2,765
  3,058
  3,366
  3,687
  4,022
  4,371
  4,734
  5,112
  5,504
  5,912
  6,336
  6,777
  7,235
  7,711
  8,207
  8,722
  9,259
Total equity, $m
  330
  419
  523
  643
  779
  930
  1,098
  1,281
  1,480
  1,695
  1,924
  2,169
  2,427
  2,700
  2,986
  3,286
  3,599
  3,926
  4,267
  4,622
  4,990
  5,374
  5,772
  6,186
  6,616
  7,063
  7,528
  8,012
  8,515
  9,039
Total liabilities and equity, $m
  668
  848
  1,059
  1,302
  1,576
  1,883
  2,222
  2,593
  2,996
  3,431
  3,895
  4,390
  4,913
  5,465
  6,044
  6,652
  7,286
  7,948
  8,638
  9,356
  10,102
  10,878
  11,684
  12,522
  13,393
  14,298
  15,239
  16,219
  17,237
  18,298
Debt-to-equity ratio
  0.780
  0.830
  0.870
  0.900
  0.920
  0.940
  0.950
  0.960
  0.970
  0.980
  0.980
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
  1.000
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.010
  1.020
Adjusted equity ratio
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494
  0.494

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  24
  37
  52
  69
  88
  109
  133
  158
  186
  216
  278
  311
  347
  384
  424
  465
  508
  552
  599
  647
  698
  750
  804
  861
  919
  981
  1,044
  1,110
  1,179
  1,250
Depreciation, amort., depletion, $m
  98
  114
  132
  152
  176
  202
  231
  263
  297
  334
  333
  375
  419
  467
  516
  568
  622
  679
  737
  799
  863
  929
  998
  1,069
  1,144
  1,221
  1,301
  1,385
  1,472
  1,562
Funds from operations, $m
  122
  151
  183
  221
  264
  311
  364
  421
  483
  550
  610
  686
  766
  851
  940
  1,033
  1,130
  1,231
  1,336
  1,446
  1,560
  1,679
  1,802
  1,930
  2,063
  2,201
  2,345
  2,495
  2,650
  2,813
Change in working capital, $m
  11
  13
  15
  17
  19
  22
  24
  26
  28
  30
  33
  35
  37
  39
  41
  43
  44
  46
  48
  50
  52
  54
  57
  59
  61
  63
  66
  69
  71
  74
Cash from operations, $m
  112
  138
  169
  204
  245
  290
  340
  395
  455
  520
  578
  652
  730
  812
  899
  990
  1,085
  1,185
  1,288
  1,396
  1,508
  1,624
  1,745
  1,871
  2,002
  2,138
  2,279
  2,426
  2,579
  2,738
Maintenance CAPEX, $m
  -44
  -57
  -72
  -90
  -111
  -135
  -161
  -190
  -221
  -256
  -293
  -333
  -375
  -419
  -467
  -516
  -568
  -622
  -679
  -737
  -799
  -863
  -929
  -998
  -1,069
  -1,144
  -1,221
  -1,301
  -1,385
  -1,472
New CAPEX, $m
  -123
  -147
  -171
  -196
  -223
  -249
  -275
  -301
  -327
  -352
  -377
  -401
  -424
  -447
  -470
  -492
  -515
  -537
  -559
  -582
  -605
  -629
  -654
  -680
  -706
  -734
  -763
  -794
  -826
  -860
Cash from investing activities, $m
  -167
  -204
  -243
  -286
  -334
  -384
  -436
  -491
  -548
  -608
  -670
  -734
  -799
  -866
  -937
  -1,008
  -1,083
  -1,159
  -1,238
  -1,319
  -1,404
  -1,492
  -1,583
  -1,678
  -1,775
  -1,878
  -1,984
  -2,095
  -2,211
  -2,332
Free cash flow, $m
  -56
  -66
  -75
  -83
  -89
  -94
  -96
  -96
  -94
  -88
  -92
  -82
  -69
  -55
  -38
  -18
  3
  25
  50
  76
  104
  132
  163
  194
  226
  260
  295
  331
  368
  406
Issuance/(repayment) of debt, $m
  77
  91
  107
  123
  139
  155
  172
  188
  204
  220
  235
  250
  265
  279
  293
  307
  321
  335
  349
  363
  378
  393
  408
  424
  441
  458
  476
  495
  516
  537
Issuance/(repurchase) of shares, $m
  51
  52
  52
  51
  48
  42
  35
  25
  13
  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  
  128
  143
  159
  174
  187
  197
  207
  213
  217
  220
  235
  250
  265
  279
  293
  307
  321
  335
  349
  363
  378
  393
  408
  424
  441
  458
  476
  495
  516
  537
Total cash flow (excl. dividends), $m
  73
  78
  84
  91
  97
  104
  111
  117
  124
  131
  143
  168
  195
  224
  256
  289
  324
  360
  399
  439
  481
  525
  571
  618
  667
  718
  771
  826
  883
  943
Retained Cash Flow (-), $m
  -75
  -89
  -104
  -120
  -136
  -152
  -168
  -184
  -199
  -215
  -230
  -244
  -258
  -273
  -286
  -300
  -313
  -327
  -341
  -355
  -369
  -383
  -398
  -414
  -430
  -447
  -465
  -484
  -503
  -524
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
  -11
  -20
  -29
  -38
  -48
  -57
  -66
  -76
  -83
  -87
  -76
  -63
  -48
  -31
  -11
  10
  33
  58
  85
  113
  142
  172
  204
  237
  271
  306
  343
  380
  419
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  -2
  -10
  -16
  -22
  -27
  -31
  -34
  -35
  -36
  -35
  -32
  -24
  -17
  -11
  -6
  -2
  1
  4
  5
  5
  6
  5
  5
  4
  3
  3
  2
  1
  1
  1
Current shareholders' claim on cash, %
  77.7
  63.3
  53.7
  47.2
  42.7
  39.6
  37.6
  36.4
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9
  35.9

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 Company (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 $294 million for the last fiscal year's total revenue generated by Hallador Energy Company. The default revenue input number comes from 0001 income statement of Hallador Energy Company. 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 29.5% 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 5.8%, whose default value for HNRG is calculated based on our internal credit rating of Hallador Energy Company, 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 Company.
    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 90.5%.

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 8.6% for Hallador Energy Company.

Corporate tax rate of 27% is the nominal tax rate for Hallador Energy Company. 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 142.3%.

Life of production assets of 9.5 years is the average useful life of capital assets used in Hallador Energy Company 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 12.3%. 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 - $254.874 million for Hallador Energy Company - 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 30.244 million for Hallador Energy Company 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 Company at the current share price and the inputted number of shares is $0.2 billion.

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