Intrinsic value of IDACORP, Inc. - IDA

Previous Close

$103.67

  Intrinsic Value

$15.32

stock screener

  Rating & Target

str. sell

-85%

Previous close

$103.67

 
Intrinsic value

$15.32

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of IDA 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 5.2

 

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, %
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  1,400
  1,433
  1,471
  1,514
  1,561
  1,612
  1,668
  1,728
  1,793
  1,862
  1,936
  2,016
  2,100
  2,189
  2,284
  2,385
  2,491
  2,604
  2,723
  2,848
  2,981
  3,120
  3,267
  3,422
  3,586
  3,757
  3,938
  4,128
  4,329
  4,539
Variable operating expenses, $m
  1,067
  1,092
  1,121
  1,153
  1,189
  1,228
  1,271
  1,317
  1,366
  1,419
  1,476
  1,536
  1,600
  1,668
  1,741
  1,817
  1,898
  1,984
  2,075
  2,170
  2,271
  2,378
  2,490
  2,608
  2,732
  2,863
  3,001
  3,146
  3,298
  3,459
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
  1,067
  1,092
  1,121
  1,153
  1,189
  1,228
  1,271
  1,317
  1,366
  1,419
  1,476
  1,536
  1,600
  1,668
  1,741
  1,817
  1,898
  1,984
  2,075
  2,170
  2,271
  2,378
  2,490
  2,608
  2,732
  2,863
  3,001
  3,146
  3,298
  3,459
Operating income, $m
  333
  341
  350
  360
  371
  384
  397
  411
  427
  443
  461
  480
  500
  521
  544
  568
  593
  620
  648
  678
  709
  743
  778
  815
  853
  894
  937
  983
  1,030
  1,080
EBITDA, $m
  506
  518
  531
  547
  564
  582
  602
  624
  647
  673
  699
  728
  758
  791
  825
  861
  900
  940
  983
  1,029
  1,076
  1,127
  1,180
  1,236
  1,295
  1,357
  1,422
  1,491
  1,563
  1,639
Interest expense (income), $m
  78
  99
  104
  109
  115
  122
  129
  137
  146
  156
  166
  177
  189
  201
  215
  229
  244
  260
  277
  294
  313
  333
  354
  376
  399
  424
  450
  477
  506
  536
  567
Earnings before tax, $m
  234
  237
  241
  245
  249
  254
  259
  265
  271
  277
  284
  291
  298
  306
  315
  324
  333
  343
  354
  365
  376
  389
  401
  415
  429
  444
  460
  477
  495
  513
Tax expense, $m
  63
  64
  65
  66
  67
  69
  70
  72
  73
  75
  77
  79
  81
  83
  85
  87
  90
  93
  95
  98
  102
  105
  108
  112
  116
  120
  124
  129
  134
  139
Net income, $m
  171
  173
  176
  179
  182
  186
  189
  193
  198
  202
  207
  212
  218
  224
  230
  236
  243
  250
  258
  266
  275
  284
  293
  303
  313
  324
  336
  348
  361
  374

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
  6,511
  6,666
  6,843
  7,040
  7,259
  7,497
  7,756
  8,037
  8,338
  8,661
  9,007
  9,375
  9,767
  10,184
  10,625
  11,093
  11,588
  12,112
  12,664
  13,248
  13,864
  14,513
  15,197
  15,918
  16,677
  17,476
  18,317
  19,202
  20,133
  21,112
Adjusted assets (=assets-cash), $m
  6,511
  6,666
  6,843
  7,040
  7,259
  7,497
  7,756
  8,037
  8,338
  8,661
  9,007
  9,375
  9,767
  10,184
  10,625
  11,093
  11,588
  12,112
  12,664
  13,248
  13,864
  14,513
  15,197
  15,918
  16,677
  17,476
  18,317
  19,202
  20,133
  21,112
Revenue / Adjusted assets
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
Average production assets, $m
  4,430
  4,536
  4,656
  4,791
  4,939
  5,102
  5,278
  5,469
  5,674
  5,894
  6,129
  6,380
  6,646
  6,930
  7,230
  7,549
  7,885
  8,242
  8,618
  9,015
  9,434
  9,876
  10,341
  10,832
  11,348
  11,892
  12,464
  13,067
  13,700
  14,366
Working capital, $m
  73
  75
  77
  79
  81
  84
  87
  90
  93
  97
  101
  105
  109
  114
  119
  124
  130
  135
  142
  148
  155
  162
  170
  178
  186
  195
  205
  215
  225
  236
Total debt, $m
  1,924
  2,022
  2,133
  2,258
  2,395
  2,546
  2,709
  2,886
  3,075
  3,279
  3,497
  3,729
  3,976
  4,238
  4,516
  4,811
  5,123
  5,453
  5,801
  6,169
  6,557
  6,965
  7,397
  7,851
  8,329
  8,832
  9,362
  9,920
  10,506
  11,123
Total liabilities, $m
  4,102
  4,200
  4,311
  4,435
  4,573
  4,723
  4,887
  5,063
  5,253
  5,457
  5,674
  5,906
  6,153
  6,416
  6,694
  6,989
  7,301
  7,630
  7,979
  8,346
  8,734
  9,143
  9,574
  10,028
  10,506
  11,010
  11,540
  12,097
  12,684
  13,301
Total equity, $m
  2,409
  2,467
  2,532
  2,605
  2,686
  2,774
  2,870
  2,974
  3,085
  3,205
  3,333
  3,469
  3,614
  3,768
  3,931
  4,104
  4,288
  4,481
  4,686
  4,902
  5,130
  5,370
  5,623
  5,890
  6,170
  6,466
  6,777
  7,105
  7,449
  7,812
Total liabilities and equity, $m
  6,511
  6,667
  6,843
  7,040
  7,259
  7,497
  7,757
  8,037
  8,338
  8,662
  9,007
  9,375
  9,767
  10,184
  10,625
  11,093
  11,589
  12,111
  12,665
  13,248
  13,864
  14,513
  15,197
  15,918
  16,676
  17,476
  18,317
  19,202
  20,133
  21,113
Debt-to-equity ratio
  0.800
  0.820
  0.840
  0.870
  0.890
  0.920
  0.940
  0.970
  1.000
  1.020
  1.050
  1.070
  1.100
  1.120
  1.150
  1.170
  1.190
  1.220
  1.240
  1.260
  1.280
  1.300
  1.320
  1.330
  1.350
  1.370
  1.380
  1.400
  1.410
  1.420
Adjusted equity ratio
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  171
  173
  176
  179
  182
  186
  189
  193
  198
  202
  207
  212
  218
  224
  230
  236
  243
  250
  258
  266
  275
  284
  293
  303
  313
  324
  336
  348
  361
  374
Depreciation, amort., depletion, $m
  172
  177
  181
  186
  192
  199
  205
  213
  221
  229
  238
  248
  259
  270
  281
  294
  307
  321
  335
  351
  367
  384
  402
  421
  442
  463
  485
  508
  533
  559
Funds from operations, $m
  343
  350
  357
  365
  374
  384
  395
  406
  418
  432
  446
  461
  476
  493
  511
  530
  550
  571
  593
  617
  642
  668
  695
  724
  755
  787
  821
  857
  894
  933
Change in working capital, $m
  1
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
Cash from operations, $m
  342
  348
  355
  363
  372
  381
  392
  403
  415
  428
  442
  456
  472
  489
  506
  525
  545
  565
  587
  610
  635
  661
  688
  716
  747
  778
  812
  847
  884
  923
Maintenance CAPEX, $m
  -169
  -172
  -177
  -181
  -186
  -192
  -199
  -205
  -213
  -221
  -229
  -238
  -248
  -259
  -270
  -281
  -294
  -307
  -321
  -335
  -351
  -367
  -384
  -402
  -421
  -442
  -463
  -485
  -508
  -533
New CAPEX, $m
  -91
  -106
  -120
  -134
  -148
  -162
  -176
  -191
  -205
  -220
  -235
  -251
  -267
  -283
  -301
  -318
  -337
  -356
  -376
  -397
  -419
  -442
  -466
  -490
  -517
  -544
  -572
  -602
  -633
  -666
Cash from investing activities, $m
  -260
  -278
  -297
  -315
  -334
  -354
  -375
  -396
  -418
  -441
  -464
  -489
  -515
  -542
  -571
  -599
  -631
  -663
  -697
  -732
  -770
  -809
  -850
  -892
  -938
  -986
  -1,035
  -1,087
  -1,141
  -1,199
Free cash flow, $m
  82
  70
  58
  48
  37
  27
  17
  7
  -3
  -13
  -23
  -33
  -43
  -53
  -64
  -75
  -86
  -98
  -110
  -122
  -135
  -148
  -162
  -176
  -191
  -207
  -223
  -240
  -258
  -277
Issuance/(repayment) of debt, $m
  89
  98
  111
  124
  137
  150
  163
  177
  190
  204
  218
  232
  247
  262
  278
  295
  312
  330
  348
  368
  388
  409
  431
  454
  478
  503
  530
  558
  587
  617
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  
  89
  98
  111
  124
  137
  150
  163
  177
  190
  204
  218
  232
  247
  262
  278
  295
  312
  330
  348
  368
  388
  409
  431
  454
  478
  503
  530
  558
  587
  617
Total cash flow (excl. dividends), $m
  172
  168
  170
  172
  174
  177
  180
  184
  187
  191
  195
  199
  204
  209
  214
  220
  226
  232
  239
  246
  253
  261
  269
  278
  287
  296
  306
  317
  328
  340
Retained Cash Flow (-), $m
  -47
  -58
  -65
  -73
  -81
  -88
  -96
  -104
  -112
  -120
  -128
  -136
  -145
  -154
  -163
  -173
  -183
  -194
  -205
  -216
  -228
  -240
  -253
  -267
  -281
  -296
  -311
  -327
  -344
  -362
Prev. year cash balance distribution, $m
  9
  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
  133
  110
  104
  99
  94
  89
  84
  80
  76
  71
  67
  63
  59
  55
  51
  47
  43
  38
  34
  30
  25
  21
  16
  11
  6
  1
  -5
  -10
  -16
  -22
Discount rate, %
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
  126
  98
  86
  76
  66
  58
  49
  42
  36
  30
  24
  20
  16
  13
  10
  7
  5
  4
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

IDACORP, Inc. is a holding company. The Company's principal operating subsidiary is Idaho Power Company (Idaho Power). The Company's segment is utility operations. The utility operations segment's primary source of revenue is the regulated operations of Idaho Power. Idaho Power is an electric utility engaged in the generation, transmission, distribution, sale and purchase of electric energy and capacity. Idaho Power is the parent of Idaho Energy Resources Co. (IERCo), a joint venturer in Bridger Coal Company, which mines and supplies coal to the Jim Bridger generating plant owned in part by Idaho Power. Its subsidiaries also include IDACORP Financial Services, Inc., an investor in affordable housing and other real estate investments, and Ida-West Energy Company, an operator of small hydroelectric generation projects. As of December 31, 2016, Idaho Power provided electric utility service to approximately 535,000 general business customers in southern Idaho and eastern Oregon.

FINANCIAL RATIOS  of  IDACORP, Inc. (IDA)

Valuation Ratios
P/E Ratio 26.4
Price to Sales 4.1
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow 102.5
Growth Rates
Sales Growth Rate -0.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1%
Cap. Spend. - 3 Yr. Gr. Rate 3.8%
Financial Strength
Quick Ratio 3
Current Ratio 0.6
LT Debt to Equity 81%
Total Debt to Equity 82%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 5.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.3%
Return On Equity 9.4%
Return On Equity - 3 Yr. Avg. 9.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 36.5%
EBITDA Margin - 3 Yr. Avg. 35.3%
Operating Margin 21.6%
Oper. Margin - 3 Yr. Avg. 21.2%
Pre-Tax Margin 18.6%
Pre-Tax Margin - 3 Yr. Avg. 18%
Net Profit Margin 15.7%
Net Profit Margin - 3 Yr. Avg. 15.4%
Effective Tax Rate 15.7%
Eff/ Tax Rate - 3 Yr. Avg. 14.3%
Payout Ratio 53%

IDA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IDA stock intrinsic value calculation we used $1371 million for the last fiscal year's total revenue generated by IDACORP, Inc.. The default revenue input number comes from 0001 income statement of IDACORP, 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 IDA stock valuation model: a) initial revenue growth rate of 2.1% 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 5.9%, whose default value for IDA is calculated based on our internal credit rating of IDACORP, 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 IDACORP, 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 IDA stock the variable cost ratio is equal to 76.2%.

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 IDA 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 IDACORP, Inc..

Corporate tax rate of 27% is the nominal tax rate for IDACORP, 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 IDA 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 IDA are equal to 316.5%.

Life of production assets of 25.7 years is the average useful life of capital assets used in IDACORP, 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 IDA is equal to 5.2%. 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 - $2370.36 million for IDACORP, 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 50.432 million for IDACORP, 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 IDACORP, Inc. at the current share price and the inputted number of shares is $5.2 billion.

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