Intrinsic value of International Seaways - INSW

Previous Close

$17.40

  Intrinsic Value

$9.30

stock screener

  Rating & Target

sell

-47%

Previous close

$17.40

 
Intrinsic value

$9.30

 
Up/down potential

-47%

 
Rating

sell

We calculate the intrinsic value of INSW 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 0.5

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  296
  303
  310
  319
  329
  340
  351
  364
  377
  392
  407
  424
  441
  460
  480
  501
  523
  546
  571
  598
  625
  655
  685
  718
  752
  788
  826
  866
  908
  952
Variable operating expenses, $m
  58
  60
  61
  63
  65
  67
  69
  72
  74
  77
  80
  83
  87
  91
  94
  99
  103
  108
  113
  118
  123
  129
  135
  141
  148
  155
  163
  171
  179
  187
Fixed operating expenses, $m
  328
  335
  343
  350
  358
  366
  374
  382
  390
  399
  408
  417
  426
  435
  445
  455
  465
  475
  485
  496
  507
  518
  530
  541
  553
  565
  578
  590
  603
  617
Total operating expenses, $m
  386
  395
  404
  413
  423
  433
  443
  454
  464
  476
  488
  500
  513
  526
  539
  554
  568
  583
  598
  614
  630
  647
  665
  682
  701
  720
  741
  761
  782
  804
Operating income, $m
  -90
  -92
  -93
  -94
  -94
  -93
  -92
  -90
  -88
  -85
  -81
  -77
  -72
  -66
  -60
  -53
  -45
  -36
  -27
  -16
  -5
  7
  21
  35
  51
  67
  85
  105
  125
  148
EBITDA, $m
  -10
  -10
  -9
  -7
  -4
  -1
  4
  9
  15
  22
  30
  38
  48
  59
  71
  83
  97
  112
  129
  146
  165
  185
  207
  230
  255
  282
  310
  340
  372
  406
Interest expense (income), $m
  33
  45
  46
  47
  48
  49
  51
  53
  54
  56
  58
  61
  63
  66
  68
  71
  74
  78
  81
  85
  89
  93
  97
  101
  106
  111
  117
  122
  128
  134
  141
Earnings before tax, $m
  -135
  -138
  -140
  -142
  -143
  -144
  -144
  -144
  -144
  -143
  -142
  -140
  -137
  -134
  -131
  -127
  -122
  -117
  -111
  -105
  -97
  -89
  -81
  -71
  -61
  -49
  -37
  -23
  -9
  7
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
  2
Net income, $m
  -135
  -138
  -140
  -142
  -143
  -144
  -144
  -144
  -144
  -143
  -142
  -140
  -137
  -134
  -131
  -127
  -122
  -117
  -111
  -105
  -97
  -89
  -81
  -71
  -61
  -49
  -37
  -23
  -9
  5

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
  1,653
  1,691
  1,735
  1,783
  1,837
  1,897
  1,961
  2,031
  2,107
  2,187
  2,274
  2,366
  2,464
  2,569
  2,680
  2,797
  2,921
  3,053
  3,192
  3,339
  3,493
  3,656
  3,828
  4,010
  4,201
  4,402
  4,613
  4,836
  5,070
  5,316
Adjusted assets (=assets-cash), $m
  1,653
  1,691
  1,735
  1,783
  1,837
  1,897
  1,961
  2,031
  2,107
  2,187
  2,274
  2,366
  2,464
  2,569
  2,680
  2,797
  2,921
  3,053
  3,192
  3,339
  3,493
  3,656
  3,828
  4,010
  4,201
  4,402
  4,613
  4,836
  5,070
  5,316
Revenue / Adjusted assets
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
  0.179
Average production assets, $m
  1,158
  1,185
  1,216
  1,250
  1,288
  1,329
  1,374
  1,423
  1,476
  1,533
  1,594
  1,658
  1,727
  1,800
  1,878
  1,960
  2,047
  2,139
  2,237
  2,340
  2,448
  2,562
  2,683
  2,810
  2,944
  3,085
  3,233
  3,389
  3,553
  3,726
Working capital, $m
  39
  40
  41
  42
  43
  44
  46
  48
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  75
  78
  82
  86
  90
  94
  98
  103
  108
  113
  119
  125
Total debt, $m
  565
  578
  593
  610
  628
  649
  671
  695
  721
  748
  778
  810
  843
  879
  917
  958
  1,000
  1,045
  1,093
  1,143
  1,196
  1,252
  1,311
  1,374
  1,439
  1,508
  1,580
  1,657
  1,737
  1,822
Total liabilities, $m
  567
  580
  595
  612
  630
  651
  673
  697
  723
  750
  780
  812
  845
  881
  919
  959
  1,002
  1,047
  1,095
  1,145
  1,198
  1,254
  1,313
  1,375
  1,441
  1,510
  1,582
  1,659
  1,739
  1,823
Total equity, $m
  1,086
  1,111
  1,140
  1,172
  1,207
  1,246
  1,289
  1,335
  1,384
  1,437
  1,494
  1,555
  1,619
  1,688
  1,761
  1,838
  1,919
  2,006
  2,097
  2,193
  2,295
  2,402
  2,515
  2,634
  2,760
  2,892
  3,031
  3,177
  3,331
  3,493
Total liabilities and equity, $m
  1,653
  1,691
  1,735
  1,784
  1,837
  1,897
  1,962
  2,032
  2,107
  2,187
  2,274
  2,367
  2,464
  2,569
  2,680
  2,797
  2,921
  3,053
  3,192
  3,338
  3,493
  3,656
  3,828
  4,009
  4,201
  4,402
  4,613
  4,836
  5,070
  5,316
Debt-to-equity ratio
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
Adjusted equity ratio
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -135
  -138
  -140
  -142
  -143
  -144
  -144
  -144
  -144
  -143
  -142
  -140
  -137
  -134
  -131
  -127
  -122
  -117
  -111
  -105
  -97
  -89
  -81
  -71
  -61
  -49
  -37
  -23
  -9
  5
Depreciation, amort., depletion, $m
  80
  82
  84
  87
  89
  92
  95
  99
  103
  106
  111
  115
  120
  125
  130
  136
  142
  149
  155
  162
  170
  178
  186
  195
  204
  214
  225
  235
  247
  259
Funds from operations, $m
  -55
  -56
  -56
  -55
  -54
  -52
  -49
  -46
  -41
  -37
  -31
  -25
  -17
  -9
  -1
  9
  20
  31
  44
  58
  73
  88
  106
  124
  144
  165
  188
  212
  238
  264
Change in working capital, $m
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
Cash from operations, $m
  -56
  -57
  -57
  -56
  -55
  -53
  -51
  -47
  -43
  -38
  -33
  -27
  -20
  -12
  -3
  6
  17
  28
  41
  54
  69
  85
  102
  120
  139
  160
  183
  207
  232
  258
Maintenance CAPEX, $m
  -79
  -80
  -82
  -84
  -87
  -89
  -92
  -95
  -99
  -103
  -106
  -111
  -115
  -120
  -125
  -130
  -136
  -142
  -149
  -155
  -162
  -170
  -178
  -186
  -195
  -204
  -214
  -225
  -235
  -247
New CAPEX, $m
  -23
  -27
  -30
  -34
  -38
  -42
  -45
  -49
  -53
  -57
  -61
  -65
  -69
  -73
  -78
  -82
  -87
  -92
  -97
  -103
  -108
  -114
  -121
  -127
  -134
  -141
  -148
  -156
  -164
  -173
Cash from investing activities, $m
  -102
  -107
  -112
  -118
  -125
  -131
  -137
  -144
  -152
  -160
  -167
  -176
  -184
  -193
  -203
  -212
  -223
  -234
  -246
  -258
  -270
  -284
  -299
  -313
  -329
  -345
  -362
  -381
  -399
  -420
Free cash flow, $m
  -157
  -164
  -170
  -175
  -180
  -184
  -188
  -192
  -195
  -198
  -200
  -202
  -204
  -205
  -206
  -206
  -206
  -206
  -205
  -204
  -202
  -200
  -197
  -193
  -189
  -185
  -180
  -174
  -167
  -161
Issuance/(repayment) of debt, $m
  12
  13
  15
  17
  19
  20
  22
  24
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  50
  53
  56
  59
  62
  65
  69
  73
  76
  80
  84
Issuance/(repurchase) of shares, $m
  159
  163
  169
  174
  179
  183
  187
  190
  193
  196
  198
  200
  202
  203
  204
  204
  204
  203
  203
  201
  199
  197
  194
  190
  186
  181
  176
  170
  163
  157
Cash from financing (excl. dividends), $m  
  171
  176
  184
  191
  198
  203
  209
  214
  219
  224
  228
  232
  236
  239
  242
  244
  247
  248
  251
  251
  252
  253
  253
  252
  251
  250
  249
  246
  243
  241
Total cash flow (excl. dividends), $m
  14
  12
  14
  16
  18
  19
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  50
  53
  56
  59
  62
  65
  69
  72
  76
  80
Retained Cash Flow (-), $m
  -159
  -163
  -169
  -174
  -179
  -183
  -187
  -190
  -193
  -196
  -198
  -200
  -202
  -203
  -204
  -204
  -204
  -203
  -203
  -201
  -199
  -197
  -194
  -190
  -186
  -181
  -176
  -170
  -163
  -162
Prev. year cash balance distribution, $m
  23
  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
  -122
  -151
  -155
  -158
  -161
  -164
  -166
  -168
  -169
  -170
  -170
  -170
  -170
  -169
  -168
  -166
  -164
  -161
  -157
  -153
  -149
  -144
  -138
  -131
  -124
  -116
  -107
  -97
  -87
  -82
Discount rate, %
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
  -113
  -129
  -121
  -113
  -104
  -94
  -84
  -74
  -65
  -56
  -47
  -39
  -32
  -26
  -20
  -16
  -12
  -9
  -6
  -5
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  82.4
  67.8
  55.7
  45.8
  37.6
  30.9
  25.4
  21.0
  17.4
  14.5
  12.1
  10.1
  8.6
  7.3
  6.2
  5.3
  4.6
  4.0
  3.5
  3.1
  2.7
  2.4
  2.2
  2.0
  1.8
  1.6
  1.5
  1.4
  1.3
  1.2

International Seaways, Inc. and its subsidiaries own and operate a fleet of oceangoing vessels. The Company's oceangoing vessels engage in the transportation of crude oil and petroleum products in the International Flag trades. The Company's segments are International Crude Tankers and International Product Carriers. Its 55-vessel fleet consists of Ultra Large Crude Carrier (ULCC), Very Large Crude Carrier (VLCC), Aframax and Panamax crude tankers, as well as long range 1 (LR1), LR2 and medium range (MR) product carriers. Its International Crude Tankers segment is made up of a ULCC and a fleet of VLCCs, Aframaxes, and Panamaxes. Its International Product Carriers segment consists of a fleet of MRs, LR1s and an LR2 engaged in the transportation of crude and refined petroleum products. Through joint venture partnerships (the JVs), it has ownership interests in approximately four liquefied natural gas carriers and approximately two floating storage and offloading service vessels.

FINANCIAL RATIOS  of  International Seaways (INSW)

Valuation Ratios
P/E Ratio -28.2
Price to Sales 1.3
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow 4.5
Growth Rates
Sales Growth Rate -20.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 200%
Cap. Spend. - 3 Yr. Gr. Rate -38.8%
Financial Strength
Quick Ratio 15
Current Ratio 0
LT Debt to Equity 36.8%
Total Debt to Equity 37.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. 0.8%
Return On Total Capital -1%
Ret/ On T. Cap. - 3 Yr. Avg. -1.4%
Return On Equity -1.4%
Return On Equity - 3 Yr. Avg. -2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 51.8%
Gross Margin - 3 Yr. Avg. 46.8%
EBITDA Margin 23.9%
EBITDA Margin - 3 Yr. Avg. 27.3%
Operating Margin 1.3%
Oper. Margin - 3 Yr. Avg. 5.4%
Pre-Tax Margin -4.5%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin -4.5%
Net Profit Margin - 3 Yr. Avg. 2.4%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -0.3%
Payout Ratio 0%

INSW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INSW stock intrinsic value calculation we used $290.101 million for the last fiscal year's total revenue generated by International Seaways. The default revenue input number comes from 0001 income statement of International Seaways. 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 INSW stock valuation model: a) initial revenue growth rate of 2% 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 7.6%, whose default value for INSW is calculated based on our internal credit rating of International Seaways, 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 International Seaways.
    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 INSW stock the variable cost ratio is equal to 19.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $321 million in the base year in the intrinsic value calculation for INSW 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 8.1% for International Seaways.

Corporate tax rate of 27% is the nominal tax rate for International Seaways. 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 INSW 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 INSW are equal to 391.5%.

Life of production assets of 14.4 years is the average useful life of capital assets used in International Seaways 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 INSW is equal to 13.1%. 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 - $1085.654 million for International Seaways - 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 29.178 million for International Seaways 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 International Seaways at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
INSW International 17.40 9.30  str.sell
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TNK Teekay Tankers 1.13 0.92  hold
NAT Nordic America 2.91 1.25  sell
STNG Scorpio Tanker 1.80 1.28  sell
NNA Navios Maritim 6.18 2.12  str.buy
LPG Dorian LPG 7.58 4.35  sell
ASC Ardmore Shippi 6.21 2.96  str.sell

COMPANY NEWS

▶ Cobas Asset Management Comments on International Seaways   [Nov-09-18 04:36PM  GuruFocus.com]
▶ International Seaways, Inc. to Host Earnings Call   [May-04-18 07:30AM  ACCESSWIRE]
▶ International Seaways, Inc. to Host Earnings Call   [Mar-08-18 08:00AM  ACCESSWIRE]
▶ New Strong Sell Stocks for December 7th   [Dec-07-17 09:01AM  Zacks]
▶ New Strong Sell Stocks for November 24th   [Nov-24-17 08:29AM  Zacks]
▶ International Seaways Reports Third Quarter 2017 Results   [Nov-09-17 06:58AM  Business Wire]
▶ International Seaways Reports Second Quarter 2017 Results   [Aug-09-17 06:58AM  Business Wire]
▶ International Seaways Reports First Quarter 2017 Results   [May-10-17 06:58AM  Business Wire]
▶ Tampa's newest public company gets a new CEO   [Dec-21-16 08:10AM  at bizjournals.com]

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