Intrinsic value of Heartland Express, Inc. - HTLD

Previous Close

$19.69

  Intrinsic Value

$7.30

stock screener

  Rating & Target

str. sell

-63%

Previous close

$19.69

 
Intrinsic value

$7.30

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of HTLD 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 1.6

 

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
  623
  638
  654
  672
  693
  715
  739
  766
  794
  825
  857
  892
  929
  968
  1,010
  1,055
  1,101
  1,151
  1,203
  1,259
  1,317
  1,378
  1,443
  1,512
  1,584
  1,659
  1,739
  1,823
  1,911
  2,004
Variable operating expenses, $m
  584
  597
  611
  627
  645
  665
  686
  709
  734
  760
  748
  779
  811
  846
  882
  921
  962
  1,005
  1,051
  1,099
  1,150
  1,203
  1,260
  1,320
  1,383
  1,449
  1,518
  1,592
  1,669
  1,750
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
  584
  597
  611
  627
  645
  665
  686
  709
  734
  760
  748
  779
  811
  846
  882
  921
  962
  1,005
  1,051
  1,099
  1,150
  1,203
  1,260
  1,320
  1,383
  1,449
  1,518
  1,592
  1,669
  1,750
Operating income, $m
  39
  41
  43
  45
  48
  50
  54
  57
  61
  64
  109
  113
  118
  123
  128
  134
  140
  146
  153
  160
  167
  175
  183
  192
  201
  211
  221
  231
  243
  254
EBITDA, $m
  170
  174
  178
  183
  189
  195
  201
  209
  216
  225
  233
  243
  253
  264
  275
  287
  300
  313
  328
  343
  359
  375
  393
  412
  431
  452
  474
  496
  520
  546
Interest expense (income), $m
  0
  0
  0
  0
  1
  1
  1
  2
  2
  3
  3
  4
  4
  5
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  18
  19
  20
  22
Earnings before tax, $m
  39
  40
  42
  44
  47
  49
  52
  55
  58
  61
  105
  109
  113
  118
  122
  127
  132
  138
  144
  150
  156
  163
  170
  178
  186
  194
  203
  212
  222
  233
Tax expense, $m
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
  63
Net income, $m
  28
  30
  31
  32
  34
  36
  38
  40
  42
  45
  77
  80
  83
  86
  89
  93
  97
  101
  105
  109
  114
  119
  124
  130
  136
  142
  148
  155
  162
  170

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
  724
  740
  760
  781
  805
  831
  859
  889
  922
  958
  996
  1,036
  1,079
  1,125
  1,173
  1,225
  1,279
  1,337
  1,398
  1,462
  1,530
  1,601
  1,676
  1,756
  1,839
  1,927
  2,020
  2,117
  2,220
  2,328
Adjusted assets (=assets-cash), $m
  724
  740
  760
  781
  805
  831
  859
  889
  922
  958
  996
  1,036
  1,079
  1,125
  1,173
  1,225
  1,279
  1,337
  1,398
  1,462
  1,530
  1,601
  1,676
  1,756
  1,839
  1,927
  2,020
  2,117
  2,220
  2,328
Revenue / Adjusted assets
  0.860
  0.862
  0.861
  0.860
  0.861
  0.860
  0.860
  0.862
  0.861
  0.861
  0.860
  0.861
  0.861
  0.860
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
  0.861
Average production assets, $m
  507
  519
  532
  547
  564
  582
  602
  623
  646
  671
  698
  726
  756
  788
  822
  858
  897
  937
  980
  1,025
  1,072
  1,122
  1,175
  1,231
  1,289
  1,351
  1,416
  1,484
  1,556
  1,631
Working capital, $m
  6
  6
  7
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
Total debt, $m
  4
  8
  13
  19
  25
  32
  40
  48
  57
  66
  77
  87
  99
  111
  124
  138
  153
  168
  184
  202
  220
  239
  259
  280
  303
  326
  351
  377
  405
  434
Total liabilities, $m
  194
  198
  204
  209
  216
  223
  230
  238
  247
  257
  267
  278
  289
  301
  314
  328
  343
  358
  375
  392
  410
  429
  449
  471
  493
  517
  541
  567
  595
  624
Total equity, $m
  530
  542
  556
  572
  589
  608
  629
  651
  675
  701
  729
  758
  790
  823
  859
  897
  936
  979
  1,023
  1,070
  1,120
  1,172
  1,227
  1,285
  1,346
  1,411
  1,479
  1,550
  1,625
  1,704
Total liabilities and equity, $m
  724
  740
  760
  781
  805
  831
  859
  889
  922
  958
  996
  1,036
  1,079
  1,124
  1,173
  1,225
  1,279
  1,337
  1,398
  1,462
  1,530
  1,601
  1,676
  1,756
  1,839
  1,928
  2,020
  2,117
  2,220
  2,328
Debt-to-equity ratio
  0.010
  0.020
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.080
  0.090
  0.110
  0.120
  0.130
  0.140
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.200
  0.210
  0.220
  0.220
  0.230
  0.240
  0.240
  0.250
  0.250
Adjusted equity ratio
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  28
  30
  31
  32
  34
  36
  38
  40
  42
  45
  77
  80
  83
  86
  89
  93
  97
  101
  105
  109
  114
  119
  124
  130
  136
  142
  148
  155
  162
  170
Depreciation, amort., depletion, $m
  131
  133
  135
  138
  141
  144
  148
  152
  156
  160
  125
  130
  135
  141
  147
  153
  160
  167
  175
  183
  191
  200
  210
  220
  230
  241
  253
  265
  278
  291
Funds from operations, $m
  159
  162
  166
  170
  175
  180
  186
  192
  198
  205
  201
  209
  218
  227
  236
  246
  257
  268
  280
  292
  306
  319
  334
  350
  366
  383
  401
  420
  440
  461
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  159
  162
  166
  170
  175
  180
  185
  191
  198
  205
  201
  209
  217
  226
  236
  246
  256
  267
  279
  292
  305
  319
  334
  349
  365
  382
  400
  419
  439
  460
Maintenance CAPEX, $m
  -89
  -91
  -93
  -95
  -98
  -101
  -104
  -107
  -111
  -115
  -120
  -125
  -130
  -135
  -141
  -147
  -153
  -160
  -167
  -175
  -183
  -191
  -200
  -210
  -220
  -230
  -241
  -253
  -265
  -278
New CAPEX, $m
  -10
  -12
  -13
  -15
  -17
  -18
  -20
  -21
  -23
  -25
  -27
  -28
  -30
  -32
  -34
  -36
  -38
  -40
  -43
  -45
  -47
  -50
  -53
  -56
  -59
  -62
  -65
  -68
  -72
  -76
Cash from investing activities, $m
  -99
  -103
  -106
  -110
  -115
  -119
  -124
  -128
  -134
  -140
  -147
  -153
  -160
  -167
  -175
  -183
  -191
  -200
  -210
  -220
  -230
  -241
  -253
  -266
  -279
  -292
  -306
  -321
  -337
  -354
Free cash flow, $m
  60
  60
  60
  60
  60
  61
  62
  62
  63
  64
  55
  56
  58
  59
  61
  63
  65
  67
  69
  72
  75
  77
  80
  84
  87
  90
  94
  98
  102
  107
Issuance/(repayment) of debt, $m
  4
  4
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  4
  4
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  27
  29
Total cash flow (excl. dividends), $m
  64
  65
  65
  66
  67
  68
  69
  71
  72
  74
  65
  67
  69
  71
  74
  77
  79
  82
  86
  89
  93
  96
  101
  105
  109
  114
  119
  124
  130
  136
Retained Cash Flow (-), $m
  -11
  -12
  -14
  -16
  -17
  -19
  -21
  -22
  -24
  -26
  -28
  -30
  -31
  -33
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -58
  -61
  -64
  -68
  -71
  -75
  -79
Prev. year cash balance distribution, $m
  97
  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
  150
  52
  51
  50
  50
  49
  48
  48
  48
  48
  37
  37
  38
  38
  38
  39
  40
  40
  41
  42
  43
  44
  45
  47
  48
  50
  51
  53
  55
  57
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
  144
  48
  45
  41
  38
  36
  33
  30
  28
  25
  18
  16
  14
  13
  11
  10
  9
  7
  6
  5
  4
  4
  3
  2
  2
  1
  1
  1
  1
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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Heartland Express, Inc. is a holding company. The Company is a short-to-medium haul truckload carrier. The Company focuses primarily on short- to medium-haul, asset-based dry van truckload services in regional markets near its terminals. The Company's truckload services are primarily asset-based transportation services in the dry van truckload market, and it also offers truckload temperature-controlled transportation services and non-asset based brokerage services. All tractors are equipped with mobile communication systems. Its primary customers include retailers and manufacturers. It provides nationwide asset-based dry van truckload service for shippers from Washington to Florida and New England to California. The Company provides truckload services across the United States and parts of Canada. As of December 31, 2016, it had operated 20 terminal facilities throughout the contiguous United States in addition to its terminal and corporate headquarters in North Liberty, Iowa.

FINANCIAL RATIOS  of  Heartland Express, Inc. (HTLD)

Valuation Ratios
P/E Ratio 29.3
Price to Sales 2.7
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 23.4
Growth Rates
Sales Growth Rate -16.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -60.4%
Cap. Spend. - 3 Yr. Gr. Rate -8.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.2
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 7.6%
Ret/ On Assets - 3 Yr. Avg. 9.6%
Return On Total Capital 11.5%
Ret/ On T. Cap. - 3 Yr. Avg. 14.6%
Return On Equity 11.5%
Return On Equity - 3 Yr. Avg. 15.4%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 85%
Gross Margin - 3 Yr. Avg. 81%
EBITDA Margin 31.3%
EBITDA Margin - 3 Yr. Avg. 30.1%
Operating Margin 14%
Oper. Margin - 3 Yr. Avg. 15%
Pre-Tax Margin 14%
Pre-Tax Margin - 3 Yr. Avg. 15%
Net Profit Margin 9.1%
Net Profit Margin - 3 Yr. Avg. 9.6%
Effective Tax Rate 34.9%
Eff/ Tax Rate - 3 Yr. Avg. 36%
Payout Ratio 12.5%

HTLD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HTLD stock intrinsic value calculation we used $611 million for the last fiscal year's total revenue generated by Heartland Express, Inc.. The default revenue input number comes from 0001 income statement of Heartland Express, 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 HTLD 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 HTLD is calculated based on our internal credit rating of Heartland Express, 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 Heartland Express, 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 HTLD stock the variable cost ratio is equal to 93.9%.

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 HTLD 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 Heartland Express, Inc..

Corporate tax rate of 27% is the nominal tax rate for Heartland Express, 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 HTLD 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 HTLD are equal to 81.4%.

Life of production assets of 5.6 years is the average useful life of capital assets used in Heartland Express, 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 HTLD is equal to 1%. 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 - $615.972 million for Heartland Express, 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 81.836 million for Heartland Express, 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 Heartland Express, Inc. at the current share price and the inputted number of shares is $1.6 billion.

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