Intrinsic value of IES Holdings, Inc. - IESC

Previous Close

$19.09

  Intrinsic Value

$53.90

stock screener

  Rating & Target

str. buy

+182%

Previous close

$19.09

 
Intrinsic value

$53.90

 
Up/down potential

+182%

 
Rating

str. buy

We calculate the intrinsic value of IESC 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 0.4

 

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, %
  23.00
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
  5.85
Revenue, $m
  1,079
  1,307
  1,563
  1,847
  2,157
  2,494
  2,858
  3,246
  3,660
  4,099
  4,561
  5,046
  5,555
  6,087
  6,642
  7,221
  7,822
  8,448
  9,099
  9,775
  10,478
  11,208
  11,967
  12,757
  13,578
  14,432
  15,321
  16,248
  17,213
  18,220
Variable operating expenses, $m
  983
  1,191
  1,424
  1,681
  1,964
  2,270
  2,600
  2,954
  3,330
  3,729
  4,146
  4,588
  5,051
  5,534
  6,039
  6,565
  7,112
  7,681
  8,272
  8,887
  9,526
  10,190
  10,880
  11,598
  12,344
  13,121
  13,929
  14,772
  15,649
  16,564
Fixed operating expenses, $m
  52
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
  81
  82
  84
  86
  88
  90
  92
  94
  96
  98
Total operating expenses, $m
  1,035
  1,244
  1,478
  1,737
  2,021
  2,328
  2,659
  3,015
  3,392
  3,792
  4,211
  4,654
  5,119
  5,603
  6,110
  6,637
  7,186
  7,756
  8,349
  8,966
  9,607
  10,272
  10,964
  11,684
  12,432
  13,211
  14,021
  14,866
  15,745
  16,662
Operating income, $m
  43
  63
  85
  110
  137
  166
  198
  232
  268
  306
  350
  392
  437
  484
  533
  584
  637
  692
  750
  809
  871
  936
  1,003
  1,073
  1,146
  1,221
  1,300
  1,382
  1,468
  1,557
EBITDA, $m
  53
  74
  97
  124
  153
  184
  218
  255
  293
  335
  378
  424
  472
  522
  574
  629
  686
  745
  807
  871
  937
  1,006
  1,078
  1,153
  1,231
  1,312
  1,396
  1,484
  1,576
  1,672
Interest expense (income), $m
  2
  2
  5
  9
  13
  17
  22
  27
  32
  38
  45
  52
  59
  66
  74
  82
  91
  100
  109
  119
  129
  139
  150
  161
  173
  185
  198
  211
  224
  239
  254
Earnings before tax, $m
  41
  58
  77
  97
  120
  144
  171
  199
  230
  262
  298
  334
  371
  410
  451
  493
  537
  583
  631
  681
  732
  786
  842
  900
  961
  1,024
  1,089
  1,158
  1,229
  1,304
Tax expense, $m
  11
  16
  21
  26
  32
  39
  46
  54
  62
  71
  80
  90
  100
  111
  122
  133
  145
  157
  170
  184
  198
  212
  227
  243
  259
  276
  294
  313
  332
  352
Net income, $m
  30
  42
  56
  71
  87
  105
  125
  145
  168
  191
  218
  244
  271
  299
  329
  360
  392
  426
  461
  497
  535
  574
  615
  657
  701
  747
  795
  845
  897
  952

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
  519
  629
  752
  889
  1,038
  1,200
  1,375
  1,562
  1,761
  1,972
  2,195
  2,429
  2,673
  2,929
  3,196
  3,475
  3,764
  4,066
  4,379
  4,704
  5,042
  5,394
  5,759
  6,139
  6,534
  6,945
  7,373
  7,819
  8,284
  8,768
Adjusted assets (=assets-cash), $m
  519
  629
  752
  889
  1,038
  1,200
  1,375
  1,562
  1,761
  1,972
  2,195
  2,429
  2,673
  2,929
  3,196
  3,475
  3,764
  4,066
  4,379
  4,704
  5,042
  5,394
  5,759
  6,139
  6,534
  6,945
  7,373
  7,819
  8,284
  8,768
Revenue / Adjusted assets
  2.079
  2.078
  2.078
  2.078
  2.078
  2.078
  2.079
  2.078
  2.078
  2.079
  2.078
  2.077
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
  2.078
Average production assets, $m
  80
  97
  116
  137
  160
  185
  211
  240
  271
  303
  337
  373
  411
  450
  492
  534
  579
  625
  673
  723
  775
  829
  886
  944
  1,005
  1,068
  1,134
  1,202
  1,274
  1,348
Working capital, $m
  88
  107
  128
  151
  177
  205
  234
  266
  300
  336
  374
  414
  456
  499
  545
  592
  641
  693
  746
  802
  859
  919
  981
  1,046
  1,113
  1,183
  1,256
  1,332
  1,411
  1,494
Total debt, $m
  77
  130
  190
  256
  328
  407
  492
  582
  679
  781
  889
  1,003
  1,121
  1,245
  1,375
  1,510
  1,650
  1,797
  1,948
  2,106
  2,270
  2,441
  2,618
  2,802
  2,994
  3,193
  3,401
  3,617
  3,842
  4,077
Total liabilities, $m
  252
  305
  365
  431
  503
  582
  667
  758
  854
  957
  1,064
  1,178
  1,297
  1,421
  1,550
  1,685
  1,826
  1,972
  2,124
  2,282
  2,446
  2,616
  2,793
  2,977
  3,169
  3,368
  3,576
  3,792
  4,018
  4,252
Total equity, $m
  267
  324
  387
  458
  535
  618
  708
  805
  907
  1,016
  1,130
  1,251
  1,377
  1,509
  1,646
  1,790
  1,939
  2,094
  2,255
  2,423
  2,597
  2,778
  2,966
  3,162
  3,365
  3,577
  3,797
  4,027
  4,266
  4,515
Total liabilities and equity, $m
  519
  629
  752
  889
  1,038
  1,200
  1,375
  1,563
  1,761
  1,973
  2,194
  2,429
  2,674
  2,930
  3,196
  3,475
  3,765
  4,066
  4,379
  4,705
  5,043
  5,394
  5,759
  6,139
  6,534
  6,945
  7,373
  7,819
  8,284
  8,767
Debt-to-equity ratio
  0.290
  0.400
  0.490
  0.560
  0.610
  0.660
  0.690
  0.720
  0.750
  0.770
  0.790
  0.800
  0.810
  0.830
  0.840
  0.840
  0.850
  0.860
  0.860
  0.870
  0.870
  0.880
  0.880
  0.890
  0.890
  0.890
  0.900
  0.900
  0.900
  0.900
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
  30
  42
  56
  71
  87
  105
  125
  145
  168
  191
  218
  244
  271
  299
  329
  360
  392
  426
  461
  497
  535
  574
  615
  657
  701
  747
  795
  845
  897
  952
Depreciation, amort., depletion, $m
  9
  11
  12
  14
  16
  18
  20
  23
  25
  28
  29
  32
  35
  38
  42
  45
  49
  53
  57
  61
  66
  70
  75
  80
  85
  91
  96
  102
  108
  114
Funds from operations, $m
  40
  53
  68
  85
  103
  124
  145
  168
  193
  219
  246
  275
  306
  337
  371
  405
  441
  479
  518
  558
  600
  644
  690
  737
  786
  838
  891
  947
  1,005
  1,066
Change in working capital, $m
  17
  19
  21
  23
  25
  28
  30
  32
  34
  36
  38
  40
  42
  44
  46
  47
  49
  51
  53
  55
  58
  60
  62
  65
  67
  70
  73
  76
  79
  83
Cash from operations, $m
  23
  34
  47
  62
  78
  96
  115
  136
  159
  183
  208
  235
  264
  294
  325
  358
  392
  427
  464
  503
  543
  584
  627
  672
  719
  768
  818
  871
  926
  983
Maintenance CAPEX, $m
  -5
  -7
  -8
  -10
  -12
  -14
  -16
  -18
  -20
  -23
  -26
  -29
  -32
  -35
  -38
  -42
  -45
  -49
  -53
  -57
  -61
  -66
  -70
  -75
  -80
  -85
  -91
  -96
  -102
  -108
New CAPEX, $m
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -31
  -32
  -34
  -36
  -38
  -39
  -41
  -43
  -45
  -46
  -48
  -50
  -52
  -54
  -56
  -58
  -61
  -63
  -66
  -69
  -71
  -74
Cash from investing activities, $m
  -20
  -24
  -27
  -31
  -35
  -39
  -43
  -47
  -51
  -55
  -60
  -65
  -70
  -74
  -79
  -85
  -90
  -95
  -101
  -107
  -113
  -120
  -126
  -133
  -141
  -148
  -157
  -165
  -173
  -182
Free cash flow, $m
  2
  11
  20
  31
  43
  57
  73
  90
  108
  128
  148
  171
  195
  220
  246
  273
  302
  332
  363
  396
  429
  465
  501
  539
  578
  619
  662
  707
  753
  801
Issuance/(repayment) of debt, $m
  47
  53
  60
  66
  72
  79
  85
  91
  97
  102
  108
  113
  119
  124
  130
  135
  140
  146
  152
  158
  164
  170
  177
  184
  192
  199
  208
  216
  225
  235
Issuance/(repurchase) of shares, $m
  20
  14
  8
  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  
  67
  67
  68
  66
  72
  79
  85
  91
  97
  102
  108
  113
  119
  124
  130
  135
  140
  146
  152
  158
  164
  170
  177
  184
  192
  199
  208
  216
  225
  235
Total cash flow (excl. dividends), $m
  69
  78
  87
  97
  116
  136
  158
  181
  205
  230
  256
  284
  313
  344
  375
  408
  443
  478
  515
  553
  593
  635
  678
  723
  770
  819
  870
  923
  978
  1,036
Retained Cash Flow (-), $m
  -50
  -57
  -63
  -70
  -77
  -84
  -90
  -96
  -103
  -109
  -115
  -120
  -126
  -132
  -138
  -143
  -149
  -155
  -161
  -168
  -174
  -181
  -188
  -196
  -203
  -212
  -220
  -230
  -239
  -249
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
  19
  22
  24
  27
  39
  53
  68
  84
  102
  122
  142
  164
  187
  212
  238
  265
  293
  323
  354
  386
  419
  454
  490
  528
  567
  607
  649
  693
  739
  786
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
  18
  20
  21
  22
  30
  38
  46
  53
  59
  64
  67
  70
  71
  71
  70
  67
  64
  59
  54
  49
  43
  38
  32
  27
  22
  18
  14
  11
  8
  6
Current shareholders' claim on cash, %
  95.3
  92.6
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5
  91.5

IES Holdings, Inc., formerly Integrated Electrical Services, Inc., is a holding company that owns and manages diverse operating subsidiaries across a range of infrastructure-related end markets. The Company operates through four segments: Communications, Residential, Commercial & Industrial, and Infrastructure Solutions. The Communications segment provides network infrastructure services for data centers and other mission critical environments. The Residential segment provides electrical installation services for single-family housing and multi-family apartment complexes and cable television installations for residential and light commercial applications. The Commercial & Industrial segment provides electrical and mechanical design, construction, and maintenance services to the commercial and industrial markets. The Company's Infrastructure Solutions segment provides electro-mechanical solutions for industrial operations to domestic and international customers.

FINANCIAL RATIOS  of  IES Holdings, Inc. (IESC)

Valuation Ratios
P/E Ratio 31.3
Price to Sales 0.5
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 18.5
Price to Free Cash Flow 24
Growth Rates
Sales Growth Rate 16.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 66.7%
Cap. Spend. - 3 Yr. Gr. Rate 20.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 12.2%
Total Debt to Equity 12.2%
Interest Coverage 11
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. 17.5%
Return On Total Capital 5%
Ret/ On T. Cap. - 3 Yr. Avg. 29.4%
Return On Equity 5.7%
Return On Equity - 3 Yr. Avg. 32.8%
Asset Turnover 2
Profitability Ratios
Gross Margin 17.4%
Gross Margin - 3 Yr. Avg. 17.7%
EBITDA Margin 3.8%
EBITDA Margin - 3 Yr. Avg. 4%
Operating Margin 2.6%
Oper. Margin - 3 Yr. Avg. 3.2%
Pre-Tax Margin 2.3%
Pre-Tax Margin - 3 Yr. Avg. 3%
Net Profit Margin 1.6%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 26.3%
Eff/ Tax Rate - 3 Yr. Avg. -124.1%
Payout Ratio 0%

IESC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IESC stock intrinsic value calculation we used $877 million for the last fiscal year's total revenue generated by IES Holdings, Inc.. The default revenue input number comes from 0001 income statement of IES Holdings, 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 IESC stock valuation model: a) initial revenue growth rate of 23% 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 IESC is calculated based on our internal credit rating of IES Holdings, 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 IES Holdings, 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 IESC stock the variable cost ratio is equal to 91.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $51 million in the base year in the intrinsic value calculation for IESC 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 6.6% for IES Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for IES Holdings, 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 IESC 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 IESC are equal to 7.4%.

Life of production assets of 11.8 years is the average useful life of capital assets used in IES Holdings, 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 IESC is equal to 8.2%. 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 - $217.175 million for IES Holdings, 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 21.139 million for IES Holdings, 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 IES Holdings, Inc. at the current share price and the inputted number of shares is $0.4 billion.

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