Intrinsic value of Hornbeck Offshore Services - HOS

Previous Close

$1.01

  Intrinsic Value

$8.67

stock screener

  Rating & Target

str. buy

+759%

Previous close

$1.01

 
Intrinsic value

$8.67

 
Up/down potential

+759%

 
Rating

str. buy

We calculate the intrinsic value of HOS 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 0.0

 

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
  216
  221
  227
  233
  240
  248
  257
  266
  276
  286
  297
  310
  322
  336
  351
  366
  382
  399
  418
  437
  457
  478
  501
  525
  549
  576
  603
  633
  663
  695
Variable operating expenses, $m
  206
  211
  216
  222
  229
  236
  245
  253
  263
  273
  283
  295
  307
  320
  334
  349
  364
  381
  398
  416
  435
  456
  477
  500
  524
  549
  575
  603
  632
  663
Fixed operating expenses, $m
  102
  104
  107
  109
  111
  114
  116
  119
  122
  124
  127
  130
  133
  136
  139
  142
  145
  148
  151
  155
  158
  161
  165
  169
  172
  176
  180
  184
  188
  192
Total operating expenses, $m
  308
  315
  323
  331
  340
  350
  361
  372
  385
  397
  410
  425
  440
  456
  473
  491
  509
  529
  549
  571
  593
  617
  642
  669
  696
  725
  755
  787
  820
  855
Operating income, $m
  -92
  -94
  -96
  -98
  -100
  -102
  -104
  -107
  -109
  -111
  -113
  -115
  -118
  -120
  -122
  -124
  -127
  -129
  -132
  -134
  -136
  -139
  -141
  -144
  -146
  -149
  -152
  -154
  -157
  -159
EBITDA, $m
  19
  19
  20
  22
  23
  25
  27
  30
  33
  36
  39
  43
  48
  53
  58
  63
  69
  76
  83
  90
  98
  106
  115
  125
  135
  146
  158
  170
  183
  197
Interest expense (income), $m
  50
  67
  69
  71
  73
  75
  77
  80
  83
  86
  90
  94
  98
  102
  107
  111
  117
  122
  128
  134
  140
  147
  154
  162
  170
  178
  187
  196
  206
  216
  227
Earnings before tax, $m
  -159
  -163
  -167
  -171
  -175
  -180
  -185
  -190
  -195
  -201
  -207
  -213
  -220
  -226
  -234
  -241
  -249
  -257
  -265
  -274
  -284
  -293
  -303
  -314
  -325
  -336
  -348
  -360
  -373
  -387
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
  -159
  -163
  -167
  -171
  -175
  -180
  -185
  -190
  -195
  -201
  -207
  -213
  -220
  -226
  -234
  -241
  -249
  -257
  -265
  -274
  -284
  -293
  -303
  -314
  -325
  -336
  -348
  -360
  -373
  -387

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
  2,670
  2,731
  2,801
  2,880
  2,967
  3,063
  3,167
  3,280
  3,402
  3,533
  3,672
  3,821
  3,980
  4,149
  4,328
  4,517
  4,718
  4,930
  5,155
  5,391
  5,641
  5,905
  6,183
  6,475
  6,784
  7,108
  7,450
  7,809
  8,188
  8,585
Adjusted assets (=assets-cash), $m
  2,670
  2,731
  2,801
  2,880
  2,967
  3,063
  3,167
  3,280
  3,402
  3,533
  3,672
  3,821
  3,980
  4,149
  4,328
  4,517
  4,718
  4,930
  5,155
  5,391
  5,641
  5,905
  6,183
  6,475
  6,784
  7,108
  7,450
  7,809
  8,188
  8,585
Revenue / Adjusted assets
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
  0.081
Average production assets, $m
  2,517
  2,575
  2,641
  2,716
  2,798
  2,888
  2,987
  3,093
  3,208
  3,331
  3,463
  3,603
  3,753
  3,912
  4,081
  4,259
  4,449
  4,649
  4,860
  5,084
  5,319
  5,568
  5,830
  6,106
  6,396
  6,703
  7,025
  7,364
  7,720
  8,095
Working capital, $m
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  31
  32
Total debt, $m
  1,253
  1,285
  1,322
  1,363
  1,408
  1,458
  1,513
  1,572
  1,635
  1,704
  1,776
  1,854
  1,937
  2,025
  2,119
  2,218
  2,322
  2,433
  2,550
  2,674
  2,804
  2,942
  3,087
  3,240
  3,401
  3,570
  3,748
  3,936
  4,133
  4,341
Total liabilities, $m
  1,394
  1,426
  1,462
  1,503
  1,549
  1,599
  1,653
  1,712
  1,776
  1,844
  1,917
  1,995
  2,078
  2,166
  2,259
  2,358
  2,463
  2,574
  2,691
  2,814
  2,945
  3,082
  3,227
  3,380
  3,541
  3,711
  3,889
  4,077
  4,274
  4,482
Total equity, $m
  1,276
  1,305
  1,339
  1,377
  1,418
  1,464
  1,514
  1,568
  1,626
  1,689
  1,755
  1,827
  1,902
  1,983
  2,069
  2,159
  2,255
  2,357
  2,464
  2,577
  2,697
  2,823
  2,955
  3,095
  3,243
  3,398
  3,561
  3,733
  3,914
  4,104
Total liabilities and equity, $m
  2,670
  2,731
  2,801
  2,880
  2,967
  3,063
  3,167
  3,280
  3,402
  3,533
  3,672
  3,822
  3,980
  4,149
  4,328
  4,517
  4,718
  4,931
  5,155
  5,391
  5,642
  5,905
  6,182
  6,475
  6,784
  7,109
  7,450
  7,810
  8,188
  8,586
Debt-to-equity ratio
  0.980
  0.980
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
  1.010
  1.010
  1.010
  1.020
  1.020
  1.020
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.050
  1.050
  1.060
  1.060
Adjusted equity ratio
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -159
  -163
  -167
  -171
  -175
  -180
  -185
  -190
  -195
  -201
  -207
  -213
  -220
  -226
  -234
  -241
  -249
  -257
  -265
  -274
  -284
  -293
  -303
  -314
  -325
  -336
  -348
  -360
  -373
  -387
Depreciation, amort., depletion, $m
  111
  113
  116
  120
  123
  127
  132
  136
  141
  147
  153
  159
  165
  172
  180
  188
  196
  205
  214
  224
  234
  245
  257
  269
  282
  295
  309
  324
  340
  357
Funds from operations, $m
  -48
  -50
  -50
  -51
  -52
  -53
  -53
  -53
  -54
  -54
  -54
  -54
  -54
  -54
  -54
  -53
  -53
  -52
  -51
  -50
  -49
  -48
  -46
  -45
  -43
  -41
  -38
  -36
  -33
  -30
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  -48
  -50
  -51
  -51
  -52
  -53
  -53
  -54
  -54
  -55
  -55
  -55
  -55
  -55
  -54
  -54
  -54
  -53
  -52
  -51
  -50
  -49
  -47
  -46
  -44
  -42
  -40
  -37
  -35
  -32
Maintenance CAPEX, $m
  -109
  -111
  -113
  -116
  -120
  -123
  -127
  -132
  -136
  -141
  -147
  -153
  -159
  -165
  -172
  -180
  -188
  -196
  -205
  -214
  -224
  -234
  -245
  -257
  -269
  -282
  -295
  -309
  -324
  -340
New CAPEX, $m
  -49
  -58
  -66
  -74
  -82
  -90
  -98
  -106
  -115
  -123
  -132
  -141
  -150
  -159
  -169
  -179
  -189
  -200
  -212
  -223
  -236
  -249
  -262
  -276
  -291
  -306
  -322
  -339
  -357
  -375
Cash from investing activities, $m
  -158
  -169
  -179
  -190
  -202
  -213
  -225
  -238
  -251
  -264
  -279
  -294
  -309
  -324
  -341
  -359
  -377
  -396
  -417
  -437
  -460
  -483
  -507
  -533
  -560
  -588
  -617
  -648
  -681
  -715
Free cash flow, $m
  -206
  -219
  -230
  -242
  -254
  -266
  -279
  -292
  -305
  -319
  -333
  -348
  -363
  -379
  -395
  -413
  -430
  -449
  -468
  -489
  -510
  -532
  -555
  -579
  -604
  -630
  -657
  -686
  -716
  -747
Issuance/(repayment) of debt, $m
  33
  32
  37
  41
  46
  50
  54
  59
  64
  68
  73
  78
  83
  88
  93
  99
  105
  111
  117
  124
  130
  138
  145
  153
  161
  169
  178
  188
  197
  208
Issuance/(repurchase) of shares, $m
  191
  192
  200
  208
  217
  226
  234
  244
  253
  263
  274
  284
  295
  307
  319
  332
  345
  358
  373
  387
  403
  419
  436
  454
  472
  491
  511
  532
  554
  577
Cash from financing (excl. dividends), $m  
  224
  224
  237
  249
  263
  276
  288
  303
  317
  331
  347
  362
  378
  395
  412
  431
  450
  469
  490
  511
  533
  557
  581
  607
  633
  660
  689
  720
  751
  785
Total cash flow (excl. dividends), $m
  17
  6
  7
  7
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
Retained Cash Flow (-), $m
  -191
  -192
  -200
  -208
  -217
  -226
  -234
  -244
  -253
  -263
  -274
  -284
  -295
  -307
  -319
  -332
  -345
  -358
  -373
  -387
  -403
  -419
  -436
  -454
  -472
  -491
  -511
  -532
  -554
  -577
Prev. year cash balance distribution, $m
  64
  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
  -110
  -186
  -194
  -201
  -209
  -216
  -225
  -233
  -242
  -251
  -260
  -270
  -280
  -291
  -302
  -314
  -326
  -338
  -351
  -365
  -379
  -394
  -410
  -426
  -443
  -460
  -479
  -498
  -518
  -539
Discount rate, %
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
  -101
  -157
  -148
  -138
  -128
  -117
  -106
  -94
  -83
  -73
  -63
  -53
  -44
  -36
  -29
  -23
  -18
  -14
  -10
  -7
  -5
  -4
  -2
  -2
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  82.0
  67.5
  55.4
  45.3
  37.0
  30.1
  24.5
  19.9
  16.2
  13.2
  10.7
  8.7
  7.0
  5.7
  4.7
  3.8
  3.1
  2.5
  2.1
  1.7
  1.4
  1.1
  0.9
  0.8
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2

Hornbeck Offshore Services Inc. provides marine transportation, subsea installation and accommodation support services to exploration and production, oilfield service, offshore construction and the United States military customers. The Company focuses on providing marine solutions for the deepwater and ultradeepwater energy industry in domestic and select foreign locations. The Company, through its subsidiaries, operates offshore supply vessels (OSVs), multi-purpose support vessels (MPSVs), and a shore-base facility to provide logistics support and specialty services to the offshore oil and gas exploration and production industry, primarily in the United States, Gulf of Mexico, Latin America and selected international markets. Its OSVs and MPSVs support the deep-well, deepwater and ultra-deepwater activities of the offshore oil and gas industry. It provides vessel management services for other vessel owners, such as crewing, daily operational management and maintenance activities.

FINANCIAL RATIOS  of  Hornbeck Offshore Services (HOS)

Valuation Ratios
P/E Ratio -0.6
Price to Sales 0.2
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0.7
Price to Free Cash Flow -0.8
Growth Rates
Sales Growth Rate -52.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.6%
Cap. Spend. - 3 Yr. Gr. Rate -29%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 77.3%
Total Debt to Equity 77.3%
Interest Coverage -1
Management Effectiveness
Return On Assets -1.2%
Ret/ On Assets - 3 Yr. Avg. 2.1%
Return On Total Capital -2.6%
Ret/ On T. Cap. - 3 Yr. Avg. 1.3%
Return On Equity -4.5%
Return On Equity - 3 Yr. Avg. 2.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 41.5%
Gross Margin - 3 Yr. Avg. 49.6%
EBITDA Margin 24.1%
EBITDA Margin - 3 Yr. Avg. 42.7%
Operating Margin -29%
Oper. Margin - 3 Yr. Avg. 9.3%
Pre-Tax Margin -48.7%
Pre-Tax Margin - 3 Yr. Avg. -1.4%
Net Profit Margin -28.6%
Net Profit Margin - 3 Yr. Avg. -0.2%
Effective Tax Rate 41.3%
Eff/ Tax Rate - 3 Yr. Avg. 38.6%
Payout Ratio 0%

HOS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HOS stock intrinsic value calculation we used $212 million for the last fiscal year's total revenue generated by Hornbeck Offshore Services. The default revenue input number comes from 0001 income statement of Hornbeck Offshore Services. 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 HOS 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 8.5%, whose default value for HOS is calculated based on our internal credit rating of Hornbeck Offshore Services, 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 Hornbeck Offshore Services.
    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 HOS stock the variable cost ratio is equal to 95.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $100 million in the base year in the intrinsic value calculation for HOS 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 5.5% for Hornbeck Offshore Services.

Corporate tax rate of 27% is the nominal tax rate for Hornbeck Offshore Services. 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 HOS 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 HOS are equal to 1164.1%.

Life of production assets of 22.7 years is the average useful life of capital assets used in Hornbeck Offshore Services 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 HOS is equal to 4.6%. 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 - $1307.926 million for Hornbeck Offshore Services - 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 37.698 million for Hornbeck Offshore Services 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 Hornbeck Offshore Services at the current share price and the inputted number of shares is $0.0 billion.

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