Intrinsic value of Hydrogenics Corporation - HYGS

Previous Close

$8.07

  Intrinsic Value

$0.26

stock screener

  Rating & Target

str. sell

-97%

Previous close

$8.07

 
Intrinsic value

$0.26

 
Up/down potential

-97%

 
Rating

str. sell

We calculate the intrinsic value of HYGS 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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  77
  119
  177
  257
  363
  499
  670
  880
  1,133
  1,431
  1,776
  2,172
  2,618
  3,115
  3,662
  4,260
  4,907
  5,603
  6,345
  7,134
  7,968
  8,846
  9,767
  10,732
  11,739
  12,790
  13,884
  15,022
  16,205
  17,435
Variable operating expenses, $m
  78
  121
  180
  261
  368
  506
  679
  892
  1,147
  1,449
  1,799
  2,199
  2,651
  3,154
  3,709
  4,314
  4,969
  5,674
  6,426
  7,225
  8,069
  8,958
  9,891
  10,868
  11,888
  12,952
  14,059
  15,212
  16,410
  17,656
Fixed operating expenses, $m
  7
  7
  7
  8
  8
  8
  8
  8
  9
  9
  9
  9
  9
  9
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  13
Total operating expenses, $m
  85
  128
  187
  269
  376
  514
  687
  900
  1,156
  1,458
  1,808
  2,208
  2,660
  3,163
  3,719
  4,324
  4,979
  5,684
  6,437
  7,236
  8,080
  8,969
  9,903
  10,880
  11,900
  12,964
  14,072
  15,225
  16,423
  17,669
Operating income, $m
  -9
  -9
  -10
  -11
  -13
  -15
  -17
  -20
  -23
  -27
  -31
  -37
  -42
  -49
  -56
  -64
  -72
  -81
  -91
  -101
  -112
  -123
  -135
  -148
  -161
  -174
  -188
  -203
  -218
  -234
EBITDA, $m
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -17
  -18
  -20
  -22
  -24
  -25
  -28
  -30
  -32
  -34
  -37
  -40
  -42
  -45
  -48
  -51
  -54
Interest expense (income), $m
  1
  2
  12
  27
  47
  75
  112
  159
  218
  291
  379
  482
  602
  740
  894
  1,067
  1,257
  1,464
  1,689
  1,930
  2,188
  2,462
  2,751
  3,056
  3,376
  3,710
  4,060
  4,425
  4,804
  5,199
  5,610
Earnings before tax, $m
  -11
  -22
  -37
  -59
  -88
  -127
  -176
  -238
  -315
  -406
  -514
  -639
  -782
  -943
  -1,123
  -1,321
  -1,537
  -1,770
  -2,021
  -2,289
  -2,574
  -2,874
  -3,191
  -3,523
  -3,871
  -4,234
  -4,613
  -5,007
  -5,418
  -5,844
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
  -11
  -22
  -37
  -59
  -88
  -127
  -176
  -238
  -315
  -406
  -514
  -639
  -782
  -943
  -1,123
  -1,321
  -1,537
  -1,770
  -2,021
  -2,289
  -2,574
  -2,874
  -3,191
  -3,523
  -3,871
  -4,234
  -4,613
  -5,007
  -5,418
  -5,844

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
  104
  161
  240
  348
  492
  676
  907
  1,191
  1,533
  1,936
  2,404
  2,939
  3,542
  4,215
  4,956
  5,765
  6,640
  7,582
  8,587
  9,654
  10,782
  11,970
  13,217
  14,522
  15,885
  17,307
  18,787
  20,327
  21,929
  23,593
Adjusted assets (=assets-cash), $m
  104
  161
  240
  348
  492
  676
  907
  1,191
  1,533
  1,936
  2,404
  2,939
  3,542
  4,215
  4,956
  5,765
  6,640
  7,582
  8,587
  9,654
  10,782
  11,970
  13,217
  14,522
  15,885
  17,307
  18,787
  20,327
  21,929
  23,593
Revenue / Adjusted assets
  0.740
  0.739
  0.738
  0.739
  0.738
  0.738
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
  0.739
Average production assets, $m
  10
  15
  23
  33
  47
  65
  87
  114
  147
  186
  231
  282
  340
  405
  476
  554
  638
  728
  825
  927
  1,036
  1,150
  1,270
  1,395
  1,526
  1,663
  1,805
  1,953
  2,107
  2,267
Working capital, $m
  11
  17
  25
  36
  51
  70
  95
  124
  160
  202
  250
  306
  369
  439
  516
  601
  692
  790
  895
  1,006
  1,123
  1,247
  1,377
  1,513
  1,655
  1,803
  1,958
  2,118
  2,285
  2,458
Total debt, $m
  31
  67
  118
  187
  278
  396
  543
  725
  942
  1,200
  1,498
  1,840
  2,225
  2,654
  3,126
  3,643
  4,201
  4,802
  5,443
  6,124
  6,844
  7,602
  8,397
  9,230
  10,099
  11,006
  11,951
  12,933
  13,955
  15,017
Total liabilities, $m
  66
  102
  153
  222
  314
  431
  579
  760
  978
  1,235
  1,534
  1,875
  2,260
  2,689
  3,162
  3,678
  4,237
  4,837
  5,478
  6,159
  6,879
  7,637
  8,432
  9,265
  10,135
  11,042
  11,986
  12,969
  13,990
  15,052
Total equity, $m
  38
  58
  87
  126
  178
  245
  328
  431
  555
  701
  870
  1,064
  1,282
  1,526
  1,794
  2,087
  2,404
  2,745
  3,108
  3,495
  3,903
  4,333
  4,784
  5,257
  5,750
  6,265
  6,801
  7,358
  7,938
  8,541
Total liabilities and equity, $m
  104
  160
  240
  348
  492
  676
  907
  1,191
  1,533
  1,936
  2,404
  2,939
  3,542
  4,215
  4,956
  5,765
  6,641
  7,582
  8,586
  9,654
  10,782
  11,970
  13,216
  14,522
  15,885
  17,307
  18,787
  20,327
  21,928
  23,593
Debt-to-equity ratio
  0.820
  1.160
  1.360
  1.480
  1.560
  1.620
  1.650
  1.680
  1.700
  1.710
  1.720
  1.730
  1.730
  1.740
  1.740
  1.750
  1.750
  1.750
  1.750
  1.750
  1.750
  1.750
  1.760
  1.760
  1.760
  1.760
  1.760
  1.760
  1.760
  1.760
Adjusted equity ratio
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362
  0.362

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -11
  -22
  -37
  -59
  -88
  -127
  -176
  -238
  -315
  -406
  -514
  -639
  -782
  -943
  -1,123
  -1,321
  -1,537
  -1,770
  -2,021
  -2,289
  -2,574
  -2,874
  -3,191
  -3,523
  -3,871
  -4,234
  -4,613
  -5,007
  -5,418
  -5,844
Depreciation, amort., depletion, $m
  1
  2
  2
  3
  4
  6
  7
  9
  12
  15
  18
  22
  27
  32
  38
  44
  51
  58
  65
  74
  82
  91
  101
  111
  121
  132
  143
  155
  167
  180
Funds from operations, $m
  -10
  -20
  -35
  -56
  -84
  -121
  -169
  -229
  -302
  -391
  -495
  -617
  -755
  -911
  -1,085
  -1,277
  -1,486
  -1,712
  -1,956
  -2,216
  -2,492
  -2,783
  -3,090
  -3,413
  -3,750
  -4,102
  -4,470
  -4,852
  -5,250
  -5,664
Change in working capital, $m
  4
  6
  8
  11
  15
  19
  24
  30
  36
  42
  49
  56
  63
  70
  77
  84
  91
  98
  105
  111
  118
  124
  130
  136
  142
  148
  154
  160
  167
  173
Cash from operations, $m
  -14
  -26
  -43
  -67
  -99
  -140
  -193
  -258
  -338
  -433
  -544
  -672
  -818
  -981
  -1,162
  -1,361
  -1,577
  -1,811
  -2,061
  -2,327
  -2,609
  -2,907
  -3,220
  -3,549
  -3,892
  -4,250
  -4,624
  -5,013
  -5,417
  -5,838
Maintenance CAPEX, $m
  0
  -1
  -1
  -2
  -3
  -4
  -5
  -7
  -9
  -12
  -15
  -18
  -22
  -27
  -32
  -38
  -44
  -51
  -58
  -65
  -74
  -82
  -91
  -101
  -111
  -121
  -132
  -143
  -155
  -167
New CAPEX, $m
  -4
  -5
  -8
  -10
  -14
  -18
  -22
  -27
  -33
  -39
  -45
  -51
  -58
  -65
  -71
  -78
  -84
  -90
  -97
  -103
  -108
  -114
  -120
  -125
  -131
  -137
  -142
  -148
  -154
  -160
Cash from investing activities, $m
  -4
  -6
  -9
  -12
  -17
  -22
  -27
  -34
  -42
  -51
  -60
  -69
  -80
  -92
  -103
  -116
  -128
  -141
  -155
  -168
  -182
  -196
  -211
  -226
  -242
  -258
  -274
  -291
  -309
  -327
Free cash flow, $m
  -18
  -32
  -52
  -79
  -115
  -162
  -220
  -293
  -380
  -483
  -604
  -742
  -898
  -1,073
  -1,266
  -1,477
  -1,705
  -1,952
  -2,215
  -2,495
  -2,791
  -3,103
  -3,431
  -3,775
  -4,134
  -4,508
  -4,898
  -5,304
  -5,726
  -6,165
Issuance/(repayment) of debt, $m
  25
  36
  51
  69
  91
  118
  148
  181
  218
  257
  299
  341
  385
  429
  473
  516
  559
  600
  641
  681
  720
  758
  795
  833
  870
  907
  944
  983
  1,022
  1,062
Issuance/(repurchase) of shares, $m
  25
  42
  66
  98
  140
  193
  260
  341
  438
  552
  683
  833
  1,000
  1,187
  1,391
  1,614
  1,854
  2,111
  2,385
  2,676
  2,982
  3,305
  3,642
  3,996
  4,365
  4,749
  5,149
  5,565
  5,997
  6,447
Cash from financing (excl. dividends), $m  
  50
  78
  117
  167
  231
  311
  408
  522
  656
  809
  982
  1,174
  1,385
  1,616
  1,864
  2,130
  2,413
  2,711
  3,026
  3,357
  3,702
  4,063
  4,437
  4,829
  5,235
  5,656
  6,093
  6,548
  7,019
  7,509
Total cash flow (excl. dividends), $m
  32
  46
  65
  88
  116
  149
  187
  230
  276
  326
  378
  432
  487
  543
  598
  653
  707
  760
  811
  862
  911
  959
  1,007
  1,054
  1,101
  1,148
  1,195
  1,243
  1,293
  1,344
Retained Cash Flow (-), $m
  -25
  -42
  -66
  -98
  -140
  -193
  -260
  -341
  -438
  -552
  -683
  -833
  -1,000
  -1,187
  -1,391
  -1,614
  -1,854
  -2,111
  -2,385
  -2,676
  -2,982
  -3,305
  -3,642
  -3,996
  -4,365
  -4,749
  -5,149
  -5,565
  -5,997
  -6,447
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
  7
  4
  -1
  -10
  -24
  -44
  -73
  -111
  -162
  -226
  -305
  -401
  -513
  -644
  -793
  -960
  -1,147
  -1,351
  -1,574
  -1,814
  -2,071
  -2,345
  -2,636
  -2,942
  -3,264
  -3,601
  -3,954
  -4,321
  -4,704
  -5,103
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
  7
  4
  -1
  -8
  -18
  -32
  -49
  -70
  -93
  -119
  -145
  -171
  -195
  -216
  -233
  -244
  -249
  -249
  -242
  -230
  -214
  -195
  -173
  -150
  -127
  -105
  -85
  -67
  -51
  -38
Current shareholders' claim on cash, %
  85.9
  73.3
  62.5
  53.3
  45.5
  39.0
  33.6
  28.9
  25.0
  21.7
  18.9
  16.5
  14.4
  12.6
  11.1
  9.7
  8.6
  7.5
  6.7
  5.9
  5.2
  4.6
  4.1
  3.6
  3.2
  2.8
  2.5
  2.2
  2.0
  1.8

Hydrogenics Corp is a Canada-based firm, which designs and manufactures hydrogen generation products based on water electrolysis technology, and fuel cell products based on proton exchange membrane (PEM) technology. The Company's segments are Onsite Generation and Power Systems. The OnSite Generation segment is based in Oevel, Belgium and develops products for industrial gas, hydrogen fueling and renewable energy storage markets. The Power business segment is based in Mississauga, Canada, with a satellite facility in Gladbeck, Germany. The Company's products include HySTAT hydrogen generation equipment and HyPM fuel cell products. It has facilities in Mississauga, Ontario, Canada; Oevel-Westerlo, Belgium, and Gladbeck, Germany. It also has sales and service offices in Eastern Europe and North America. The Company has operations in Belgium, Canada and Germany with satellite offices in the United States and branch offices in Russia and Indonesia. Its products are sold around the world.

FINANCIAL RATIOS  of  Hydrogenics Corporation (HYGS)

Valuation Ratios
P/E Ratio -10.1
Price to Sales 3.5
Price to Book 10.1
Price to Tangible Book
Price to Cash Flow -7.8
Price to Free Cash Flow -6.3
Growth Rates
Sales Growth Rate -19.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 50%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 90%
Total Debt to Equity 140%
Interest Coverage -9
Management Effectiveness
Return On Assets -16.7%
Ret/ On Assets - 3 Yr. Avg. -16.2%
Return On Total Capital -36.4%
Ret/ On T. Cap. - 3 Yr. Avg. -39.9%
Return On Equity -66.7%
Return On Equity - 3 Yr. Avg. -59%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 20.7%
Gross Margin - 3 Yr. Avg. 20.4%
EBITDA Margin -27.6%
EBITDA Margin - 3 Yr. Avg. -21.4%
Operating Margin -27.6%
Oper. Margin - 3 Yr. Avg. -18.8%
Pre-Tax Margin -34.5%
Pre-Tax Margin - 3 Yr. Avg. -25.3%
Net Profit Margin -34.5%
Net Profit Margin - 3 Yr. Avg. -25.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

HYGS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HYGS stock intrinsic value calculation we used $48 million for the last fiscal year's total revenue generated by Hydrogenics Corporation. The default revenue input number comes from 0001 income statement of Hydrogenics Corporation. 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 HYGS stock valuation model: a) initial revenue growth rate of 60% 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 HYGS is calculated based on our internal credit rating of Hydrogenics Corporation, 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 Hydrogenics Corporation.
    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 HYGS stock the variable cost ratio is equal to 102.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7 million in the base year in the intrinsic value calculation for HYGS 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 40.2% for Hydrogenics Corporation.

Corporate tax rate of 27% is the nominal tax rate for Hydrogenics Corporation. 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 HYGS 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 HYGS are equal to 13%.

Life of production assets of 12.6 years is the average useful life of capital assets used in Hydrogenics Corporation 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 HYGS is equal to 14.1%. 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 - $23.496 million for Hydrogenics Corporation - 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 18.985 million for Hydrogenics Corporation 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 Hydrogenics Corporation at the current share price and the inputted number of shares is $0.2 billion.

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