Intrinsic value of Industrial Services of America - IDSA

Previous Close

$1.69

  Intrinsic Value

$1.30

stock screener

  Rating & Target

sell

-23%

Previous close

$1.69

 
Intrinsic value

$1.30

 
Up/down potential

-23%

 
Rating

sell

We calculate the intrinsic value of IDSA 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, %
  22.40
  20.66
  19.09
  17.68
  16.42
  15.27
  14.25
  13.32
  12.49
  11.74
  11.07
  10.46
  9.91
  9.42
  8.98
  8.58
  8.22
  7.90
  7.61
  7.35
  7.12
  6.90
  6.71
  6.54
  6.39
  6.25
  6.12
  6.01
  5.91
  5.82
Revenue, $m
  67
  81
  97
  114
  132
  153
  174
  198
  222
  248
  276
  305
  335
  366
  399
  434
  469
  506
  545
  585
  627
  670
  715
  762
  810
  861
  914
  968
  1,026
  1,085
Variable operating expenses, $m
  57
  69
  83
  97
  113
  130
  149
  169
  190
  212
  236
  260
  286
  313
  341
  371
  401
  433
  466
  500
  536
  573
  611
  651
  693
  736
  781
  828
  877
  928
Fixed operating expenses, $m
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
Total operating expenses, $m
  66
  78
  93
  107
  123
  140
  159
  180
  201
  223
  247
  272
  298
  325
  353
  384
  414
  446
  480
  514
  550
  588
  626
  666
  709
  752
  797
  845
  894
  945
Operating income, $m
  1
  2
  4
  7
  9
  12
  15
  18
  21
  25
  29
  32
  37
  41
  45
  50
  55
  60
  65
  71
  77
  83
  89
  95
  102
  109
  116
  124
  132
  140
EBITDA, $m
  3
  6
  8
  11
  14
  18
  22
  26
  30
  35
  40
  45
  50
  56
  61
  68
  74
  80
  87
  94
  102
  110
  118
  126
  135
  144
  153
  163
  173
  184
Interest expense (income), $m
  0
  1
  1
  2
  2
  2
  3
  3
  4
  4
  5
  6
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
Earnings before tax, $m
  0
  1
  3
  5
  7
  9
  11
  14
  17
  20
  23
  26
  30
  33
  37
  41
  45
  49
  54
  58
  63
  68
  73
  78
  84
  90
  96
  102
  109
  116
Tax expense, $m
  0
  0
  1
  1
  2
  2
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  24
  26
  28
  29
  31
Net income, $m
  0
  1
  2
  3
  5
  7
  8
  10
  12
  14
  17
  19
  22
  24
  27
  30
  33
  36
  39
  42
  46
  50
  53
  57
  61
  66
  70
  75
  80
  85

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
  27
  32
  38
  45
  53
  61
  69
  79
  88
  99
  110
  121
  133
  146
  159
  172
  187
  201
  217
  233
  249
  266
  284
  303
  322
  342
  363
  385
  408
  432
Adjusted assets (=assets-cash), $m
  27
  32
  38
  45
  53
  61
  69
  79
  88
  99
  110
  121
  133
  146
  159
  172
  187
  201
  217
  233
  249
  266
  284
  303
  322
  342
  363
  385
  408
  432
Revenue / Adjusted assets
  2.481
  2.531
  2.553
  2.533
  2.491
  2.508
  2.522
  2.506
  2.523
  2.505
  2.509
  2.521
  2.519
  2.507
  2.509
  2.523
  2.508
  2.517
  2.512
  2.511
  2.518
  2.519
  2.518
  2.515
  2.516
  2.518
  2.518
  2.514
  2.515
  2.512
Average production assets, $m
  15
  18
  21
  25
  29
  34
  39
  44
  49
  55
  61
  67
  74
  81
  88
  96
  104
  112
  120
  129
  138
  148
  158
  168
  179
  190
  202
  214
  227
  240
Working capital, $m
  8
  10
  12
  14
  17
  19
  22
  25
  28
  31
  34
  38
  42
  46
  50
  54
  59
  63
  68
  73
  78
  84
  89
  95
  101
  108
  114
  121
  128
  136
Total debt, $m
  10
  13
  16
  19
  23
  27
  31
  35
  40
  45
  50
  56
  62
  68
  74
  81
  88
  95
  102
  110
  118
  126
  135
  144
  154
  163
  173
  184
  195
  207
Total liabilities, $m
  13
  16
  19
  22
  26
  29
  34
  38
  43
  48
  53
  59
  65
  71
  77
  84
  90
  98
  105
  113
  121
  129
  138
  147
  156
  166
  176
  187
  198
  209
Total equity, $m
  14
  17
  20
  23
  27
  31
  36
  40
  46
  51
  56
  62
  69
  75
  82
  89
  96
  104
  112
  120
  128
  137
  146
  156
  166
  176
  187
  198
  210
  222
Total liabilities and equity, $m
  27
  33
  39
  45
  53
  60
  70
  78
  89
  99
  109
  121
  134
  146
  159
  173
  186
  202
  217
  233
  249
  266
  284
  303
  322
  342
  363
  385
  408
  431
Debt-to-equity ratio
  0.740
  0.780
  0.800
  0.820
  0.840
  0.850
  0.870
  0.870
  0.880
  0.890
  0.890
  0.900
  0.900
  0.910
  0.910
  0.910
  0.910
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.930
  0.930
  0.930
  0.930
  0.930
  0.930
Adjusted equity ratio
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515
  0.515

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  0
  1
  2
  3
  5
  7
  8
  10
  12
  14
  17
  19
  22
  24
  27
  30
  33
  36
  39
  42
  46
  50
  53
  57
  61
  66
  70
  75
  80
  85
Depreciation, amort., depletion, $m
  3
  3
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  15
  16
  17
  19
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  39
  41
  44
Funds from operations, $m
  2
  4
  6
  8
  10
  13
  15
  18
  21
  24
  28
  31
  35
  39
  43
  47
  52
  56
  61
  66
  71
  77
  82
  88
  94
  100
  107
  114
  121
  128
Change in working capital, $m
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
Cash from operations, $m
  1
  2
  4
  6
  8
  10
  13
  15
  18
  21
  24
  28
  31
  35
  39
  43
  47
  52
  56
  61
  66
  71
  76
  82
  88
  94
  100
  107
  114
  121
Maintenance CAPEX, $m
  -2
  -3
  -3
  -4
  -5
  -5
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -41
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
Cash from investing activities, $m
  -5
  -6
  -6
  -8
  -9
  -9
  -11
  -12
  -13
  -15
  -16
  -17
  -19
  -20
  -22
  -24
  -25
  -27
  -29
  -31
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -54
Free cash flow, $m
  -4
  -3
  -3
  -2
  -1
  0
  2
  3
  5
  7
  8
  10
  12
  15
  17
  19
  22
  25
  27
  30
  33
  36
  40
  43
  47
  50
  54
  58
  62
  66
Issuance/(repayment) of debt, $m
  2
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
Issuance/(repurchase) of shares, $m
  3
  2
  1
  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  
  5
  5
  4
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
Total cash flow (excl. dividends), $m
  1
  1
  1
  2
  3
  4
  6
  8
  10
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  38
  41
  45
  48
  52
  56
  60
  64
  69
  73
  78
Retained Cash Flow (-), $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
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
  -2
  -2
  -2
  -1
  0
  1
  3
  4
  6
  8
  10
  12
  14
  17
  19
  22
  24
  27
  30
  33
  36
  39
  42
  46
  50
  53
  57
  61
  66
Discount rate, %
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
  -2
  -1
  -1
  -1
  -1
  0
  1
  1
  2
  2
  2
  2
  2
  2
  2
  1
  1
  1
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  82.4
  73.4
  69.5
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3
  69.3

Industrial Services of America, Inc. buys, processes and markets ferrous and non-ferrous metals, and other recyclable commodities. The Company operates through Recycling Segment. The Company's Recycling Segment collects, purchases, processes, and sells ferrous and non-ferrous scrap metal to steel mini-mills, integrated steel makers, foundries and refineries. It buys, dismantles and sells used auto parts. It purchases ferrous and non-ferrous scrap metal from industrial and commercial generators of steel, iron, aluminum, copper, stainless steel and other metals, and from scrap dealers and retail customers who deliver these materials to its facilities. It processes scrap metal through sorting, cutting and baling. Its non-ferrous scrap recycling operations consist of collecting, sorting and processing various grades of copper, aluminum, stainless steel and brass. Its used automobile yard purchases automobiles so that retail customers can locate and remove used parts for purchase.

FINANCIAL RATIOS  of  Industrial Services of America (IDSA)

Valuation Ratios
P/E Ratio -4.5
Price to Sales 0.4
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow -4.5
Price to Free Cash Flow -4.5
Growth Rates
Sales Growth Rate -19.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 25%
Total Debt to Equity 50%
Interest Coverage 0
Management Effectiveness
Return On Assets -15%
Ret/ On Assets - 3 Yr. Avg. -11%
Return On Total Capital -18.2%
Ret/ On T. Cap. - 3 Yr. Avg. -15.6%
Return On Equity -22.2%
Return On Equity - 3 Yr. Avg. -24.9%
Asset Turnover 1.9
Profitability Ratios
Gross Margin 2.7%
Gross Margin - 3 Yr. Avg. -1.3%
EBITDA Margin -2.7%
EBITDA Margin - 3 Yr. Avg. -6.8%
Operating Margin -5.4%
Oper. Margin - 3 Yr. Avg. -10.7%
Pre-Tax Margin -8.1%
Pre-Tax Margin - 3 Yr. Avg. -12%
Net Profit Margin -8.1%
Net Profit Margin - 3 Yr. Avg. -6.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IDSA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IDSA stock intrinsic value calculation we used $54.935 million for the last fiscal year's total revenue generated by Industrial Services of America. The default revenue input number comes from 0001 income statement of Industrial Services of America. 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 IDSA stock valuation model: a) initial revenue growth rate of 22.4% 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 8.3%, whose default value for IDSA is calculated based on our internal credit rating of Industrial Services of America, 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 Industrial Services of America.
    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 IDSA stock the variable cost ratio is equal to 85.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9 million in the base year in the intrinsic value calculation for IDSA 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 12.4% for Industrial Services of America.

Corporate tax rate of 27% is the nominal tax rate for Industrial Services of America. 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 IDSA 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 IDSA are equal to 22.1%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Industrial Services of America 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 IDSA is equal to 12.5%. 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 - $11.258 million for Industrial Services of America - 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 8.108 million for Industrial Services of America 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 Industrial Services of America at the current share price and the inputted number of shares is $0.0 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Vince Tyra involved in leadership shakeup at Louisville public company   [Mar-27-18 07:06AM  American City Business Journals]
▶ 10-Q for Industrial Services of America, Inc.   [Aug-16  08:12PM  at Company Spotlight]
▶ 10-K/A for Industrial Services of America, Inc.   [Jun-19  08:09PM  at Company Spotlight]
▶ INVESTKentucky Announces Executive Presentation Schedule   [May-26  09:53AM  GlobeNewswire]
▶ 10-Q for Industrial Services of America, Inc.   [May-17  08:11PM  at Company Spotlight]
▶ 10-K for Industrial Services of America, Inc.   [Apr-22  08:10PM  at Company Spotlight]
▶ 10-Q for Industrial Services of America, Inc.   [Nov-13  07:08PM  Company Spotlight]

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