Intrinsic value of Infrastructure and Energy Alternatives, - IEA

Previous Close

$3.91

  Intrinsic Value

$162.38

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  Rating & Target

str. buy

+999%

Previous close

$3.91

 
Intrinsic value

$162.38

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of IEA 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 0.1

 

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
  1,246
  1,926
  2,880
  4,179
  5,895
  8,105
  10,879
  14,285
  18,381
  23,217
  28,830
  35,247
  42,485
  50,548
  59,436
  69,138
  79,641
  90,928
  102,981
  115,781
  129,312
  143,560
  158,514
  174,166
  190,515
  207,564
  225,318
  243,790
  262,997
  282,960
Variable operating expenses, $m
  1,146
  1,761
  2,625
  3,801
  5,355
  7,356
  9,867
  12,951
  16,660
  21,038
  26,103
  31,913
  38,466
  45,767
  53,814
  62,598
  72,108
  82,327
  93,240
  104,829
  117,080
  129,980
  143,519
  157,691
  172,494
  187,930
  204,004
  220,729
  238,119
  256,194
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
  1,146
  1,761
  2,625
  3,801
  5,355
  7,356
  9,867
  12,951
  16,660
  21,038
  26,103
  31,913
  38,466
  45,767
  53,814
  62,598
  72,108
  82,327
  93,240
  104,829
  117,080
  129,980
  143,519
  157,691
  172,494
  187,930
  204,004
  220,729
  238,119
  256,194
Operating income, $m
  100
  165
  255
  378
  540
  749
  1,011
  1,334
  1,721
  2,179
  2,727
  3,334
  4,019
  4,782
  5,622
  6,540
  7,534
  8,601
  9,741
  10,952
  12,232
  13,580
  14,994
  16,475
  18,021
  19,634
  21,313
  23,061
  24,878
  26,766
EBITDA, $m
  140
  217
  325
  471
  664
  913
  1,226
  1,610
  2,072
  2,617
  3,249
  3,972
  4,788
  5,697
  6,699
  7,792
  8,976
  10,248
  11,606
  13,049
  14,574
  16,180
  17,865
  19,629
  21,472
  23,393
  25,394
  27,476
  29,641
  31,891
Interest expense (income), $m
  0
  21
  29
  56
  94
  146
  215
  303
  413
  549
  712
  905
  1,129
  1,385
  1,673
  1,995
  2,349
  2,736
  3,155
  3,605
  4,085
  4,596
  5,135
  5,703
  6,299
  6,923
  7,575
  8,255
  8,963
  9,699
  10,465
Earnings before tax, $m
  79
  135
  198
  283
  394
  534
  709
  920
  1,172
  1,466
  1,822
  2,205
  2,634
  3,108
  3,627
  4,191
  4,798
  5,446
  6,137
  6,867
  7,636
  8,445
  9,291
  10,176
  11,098
  12,059
  13,059
  14,098
  15,179
  16,301
Tax expense, $m
  21
  37
  54
  76
  106
  144
  191
  248
  316
  396
  492
  595
  711
  839
  979
  1,132
  1,295
  1,471
  1,657
  1,854
  2,062
  2,280
  2,509
  2,747
  2,996
  3,256
  3,526
  3,806
  4,098
  4,401
Net income, $m
  58
  99
  145
  207
  288
  390
  517
  672
  856
  1,070
  1,330
  1,610
  1,923
  2,269
  2,648
  3,059
  3,502
  3,976
  4,480
  5,013
  5,575
  6,165
  6,783
  7,428
  8,102
  8,803
  9,533
  10,292
  11,080
  11,900

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
  1,022
  1,580
  2,362
  3,428
  4,836
  6,649
  8,924
  11,718
  15,079
  19,046
  23,650
  28,915
  34,852
  41,467
  48,758
  56,717
  65,333
  74,593
  84,480
  94,981
  106,081
  117,769
  130,036
  142,876
  156,288
  170,274
  184,838
  199,992
  215,748
  232,124
Adjusted assets (=assets-cash), $m
  1,022
  1,580
  2,362
  3,428
  4,836
  6,649
  8,924
  11,718
  15,079
  19,046
  23,650
  28,915
  34,852
  41,467
  48,758
  56,717
  65,333
  74,593
  84,480
  94,981
  106,081
  117,769
  130,036
  142,876
  156,288
  170,274
  184,838
  199,992
  215,748
  232,124
Revenue / Adjusted assets
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
  1.219
Average production assets, $m
  203
  314
  469
  681
  961
  1,321
  1,773
  2,328
  2,996
  3,784
  4,699
  5,745
  6,925
  8,239
  9,688
  11,270
  12,982
  14,821
  16,786
  18,872
  21,078
  23,400
  25,838
  28,389
  31,054
  33,833
  36,727
  39,738
  42,868
  46,122
Working capital, $m
  -46
  -71
  -107
  -155
  -218
  -300
  -403
  -529
  -680
  -859
  -1,067
  -1,304
  -1,572
  -1,870
  -2,199
  -2,558
  -2,947
  -3,364
  -3,810
  -4,284
  -4,785
  -5,312
  -5,865
  -6,444
  -7,049
  -7,680
  -8,337
  -9,020
  -9,731
  -10,470
Total debt, $m
  542
  1,043
  1,748
  2,706
  3,974
  5,605
  7,653
  10,168
  13,192
  16,762
  20,907
  25,645
  30,988
  36,942
  43,503
  50,667
  58,421
  66,755
  75,653
  85,104
  95,094
  105,613
  116,654
  128,210
  140,281
  152,868
  165,976
  179,614
  193,794
  208,533
Total liabilities, $m
  920
  1,422
  2,126
  3,085
  4,353
  5,984
  8,032
  10,547
  13,571
  17,141
  21,285
  26,023
  31,367
  37,320
  43,882
  51,045
  58,800
  67,133
  76,032
  85,483
  95,473
  105,992
  117,032
  128,589
  140,659
  153,246
  166,354
  179,992
  194,173
  208,912
Total equity, $m
  102
  158
  236
  343
  484
  665
  892
  1,172
  1,508
  1,905
  2,365
  2,891
  3,485
  4,147
  4,876
  5,672
  6,533
  7,459
  8,448
  9,498
  10,608
  11,777
  13,004
  14,288
  15,629
  17,027
  18,484
  19,999
  21,575
  23,212
Total liabilities and equity, $m
  1,022
  1,580
  2,362
  3,428
  4,837
  6,649
  8,924
  11,719
  15,079
  19,046
  23,650
  28,914
  34,852
  41,467
  48,758
  56,717
  65,333
  74,592
  84,480
  94,981
  106,081
  117,769
  130,036
  142,877
  156,288
  170,273
  184,838
  199,991
  215,748
  232,124
Debt-to-equity ratio
  5.300
  6.600
  7.400
  7.900
  8.220
  8.430
  8.580
  8.680
  8.750
  8.800
  8.840
  8.870
  8.890
  8.910
  8.920
  8.930
  8.940
  8.950
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  99
  145
  207
  288
  390
  517
  672
  856
  1,070
  1,330
  1,610
  1,923
  2,269
  2,648
  3,059
  3,502
  3,976
  4,480
  5,013
  5,575
  6,165
  6,783
  7,428
  8,102
  8,803
  9,533
  10,292
  11,080
  11,900
Depreciation, amort., depletion, $m
  40
  52
  70
  93
  124
  164
  215
  276
  350
  438
  522
  638
  769
  915
  1,076
  1,252
  1,442
  1,647
  1,865
  2,097
  2,342
  2,600
  2,871
  3,154
  3,450
  3,759
  4,081
  4,415
  4,763
  5,125
Funds from operations, $m
  98
  151
  215
  300
  412
  555
  732
  948
  1,206
  1,508
  1,852
  2,248
  2,692
  3,184
  3,724
  4,311
  4,945
  5,623
  6,345
  7,110
  7,917
  8,765
  9,653
  10,583
  11,552
  12,562
  13,614
  14,707
  15,843
  17,025
Change in working capital, $m
  -17
  -25
  -35
  -48
  -64
  -82
  -103
  -126
  -152
  -179
  -208
  -237
  -268
  -298
  -329
  -359
  -389
  -418
  -446
  -474
  -501
  -527
  -553
  -579
  -605
  -631
  -657
  -683
  -711
  -739
Cash from operations, $m
  115
  176
  250
  348
  475
  636
  835
  1,074
  1,358
  1,687
  2,060
  2,486
  2,960
  3,483
  4,053
  4,670
  5,333
  6,040
  6,791
  7,583
  8,417
  9,292
  10,207
  11,162
  12,157
  13,193
  14,270
  15,390
  16,554
  17,763
Maintenance CAPEX, $m
  -14
  -23
  -35
  -52
  -76
  -107
  -147
  -197
  -259
  -333
  -420
  -522
  -638
  -769
  -915
  -1,076
  -1,252
  -1,442
  -1,647
  -1,865
  -2,097
  -2,342
  -2,600
  -2,871
  -3,154
  -3,450
  -3,759
  -4,081
  -4,415
  -4,763
New CAPEX, $m
  -76
  -111
  -156
  -212
  -280
  -360
  -452
  -555
  -668
  -788
  -915
  -1,046
  -1,180
  -1,314
  -1,449
  -1,581
  -1,712
  -1,840
  -1,965
  -2,086
  -2,206
  -2,322
  -2,437
  -2,551
  -2,665
  -2,779
  -2,894
  -3,011
  -3,131
  -3,254
Cash from investing activities, $m
  -90
  -134
  -191
  -264
  -356
  -467
  -599
  -752
  -927
  -1,121
  -1,335
  -1,568
  -1,818
  -2,083
  -2,364
  -2,657
  -2,964
  -3,282
  -3,612
  -3,951
  -4,303
  -4,664
  -5,037
  -5,422
  -5,819
  -6,229
  -6,653
  -7,092
  -7,546
  -8,017
Free cash flow, $m
  25
  43
  60
  84
  120
  169
  236
  322
  431
  566
  724
  917
  1,142
  1,399
  1,689
  2,013
  2,369
  2,758
  3,179
  3,632
  4,115
  4,627
  5,169
  5,739
  6,338
  6,964
  7,617
  8,299
  9,008
  9,746
Issuance/(repayment) of debt, $m
  150
  502
  704
  959
  1,268
  1,631
  2,048
  2,515
  3,024
  3,570
  4,144
  4,738
  5,344
  5,953
  6,562
  7,163
  7,755
  8,333
  8,899
  9,451
  9,990
  10,519
  11,040
  11,556
  12,071
  12,587
  13,108
  13,638
  14,181
  14,739
Issuance/(repurchase) of shares, $m
  176
  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  
  326
  502
  704
  959
  1,268
  1,631
  2,048
  2,515
  3,024
  3,570
  4,144
  4,738
  5,344
  5,953
  6,562
  7,163
  7,755
  8,333
  8,899
  9,451
  9,990
  10,519
  11,040
  11,556
  12,071
  12,587
  13,108
  13,638
  14,181
  14,739
Total cash flow (excl. dividends), $m
  351
  545
  764
  1,043
  1,387
  1,801
  2,284
  2,837
  3,456
  4,136
  4,869
  5,655
  6,485
  7,352
  8,251
  9,176
  10,124
  11,092
  12,078
  13,082
  14,105
  15,147
  16,210
  17,296
  18,409
  19,551
  20,725
  21,937
  23,189
  24,485
Retained Cash Flow (-), $m
  -233
  -56
  -78
  -107
  -141
  -181
  -228
  -279
  -336
  -397
  -460
  -526
  -594
  -661
  -729
  -796
  -862
  -926
  -989
  -1,050
  -1,110
  -1,169
  -1,227
  -1,284
  -1,341
  -1,399
  -1,456
  -1,515
  -1,576
  -1,638
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
  117
  489
  686
  937
  1,247
  1,619
  2,056
  2,557
  3,120
  3,740
  4,408
  5,129
  5,892
  6,691
  7,522
  8,380
  9,262
  10,166
  11,089
  12,032
  12,995
  13,978
  14,983
  16,012
  17,067
  18,152
  19,269
  20,421
  21,613
  22,847
Discount rate, %
  13.70
  14.39
  15.10
  15.86
  16.65
  17.49
  18.36
  19.28
  20.24
  21.25
  22.32
  23.43
  24.60
  25.83
  27.13
  28.48
  29.91
  31.40
  32.97
  34.62
  36.35
  38.17
  40.08
  42.08
  44.18
  46.39
  48.71
  51.15
  53.71
  56.39
PV of cash for distribution, $m
  103
  374
  450
  520
  577
  616
  632
  624
  594
  544
  481
  410
  338
  268
  206
  152
  108
  75
  49
  31
  19
  11
  6
  3
  2
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

FINANCIAL RATIOS  of  Infrastructure and Energy Alternatives, (IEA)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

IEA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IEA stock intrinsic value calculation we used $779 million for the last fiscal year's total revenue generated by Infrastructure and Energy Alternatives, . The default revenue input number comes from 0001 income statement of Infrastructure and Energy Alternatives, . 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 IEA 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 13.7%, whose default value for IEA is calculated based on our internal credit rating of Infrastructure and Energy Alternatives, , 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 Infrastructure and Energy Alternatives, .
    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 IEA stock the variable cost ratio is equal to 92.8%.

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 IEA 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 Infrastructure and Energy Alternatives, .

Corporate tax rate of 27% is the nominal tax rate for Infrastructure and Energy Alternatives, . 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 IEA 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 IEA are equal to 16.3%.

Life of production assets of 9 years is the average useful life of capital assets used in Infrastructure and Energy Alternatives, 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 IEA is equal to -3.7%. 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 - $-131.178 million for Infrastructure and Energy Alternatives, - 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 22.156 million for Infrastructure and Energy Alternatives, 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 Infrastructure and Energy Alternatives, at the current share price and the inputted number of shares is $0.1 billion.

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