Intrinsic value of Layne Christensen - LAYN

Previous Close

$16.14

  Intrinsic Value

$0.92

stock screener

  Rating & Target

str. sell

-94%

Previous close

$16.14

 
Intrinsic value

$0.92

 
Up/down potential

-94%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LAYN 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Layne Christensen (LAYN) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -11.86
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
  5.00
Revenue, $m
  602
  632
  664
  697
  732
  768
  807
  847
  889
  934
  981
  1,030
  1,081
  1,135
  1,192
  1,252
  1,314
  1,380
  1,449
  1,521
  1,597
  1,677
  1,761
  1,849
  1,942
  2,039
  2,141
  2,248
  2,360
  2,478
  2,602
Variable operating expenses, $m
 
  600
  630
  662
  695
  730
  766
  804
  845
  887
  931
  977
  1,025
  1,077
  1,131
  1,187
  1,246
  1,309
  1,374
  1,443
  1,515
  1,591
  1,670
  1,754
  1,842
  1,934
  2,030
  2,132
  2,238
  2,350
  2,468
Fixed operating expenses, $m
 
  76
  78
  80
  82
  84
  86
  88
  90
  92
  95
  97
  100
  102
  105
  107
  110
  113
  115
  118
  121
  124
  127
  131
  134
  137
  141
  144
  148
  151
  155
Total operating expenses, $m
  644
  676
  708
  742
  777
  814
  852
  892
  935
  979
  1,026
  1,074
  1,125
  1,179
  1,236
  1,294
  1,356
  1,422
  1,489
  1,561
  1,636
  1,715
  1,797
  1,885
  1,976
  2,071
  2,171
  2,276
  2,386
  2,501
  2,623
Operating income, $m
  -42
  -44
  -44
  -45
  -45
  -45
  -45
  -45
  -45
  -45
  -45
  -44
  -44
  -44
  -43
  -43
  -42
  -42
  -41
  -40
  -39
  -38
  -37
  -35
  -34
  -32
  -30
  -28
  -26
  -24
  -21
EBITDA, $m
  -15
  -21
  -20
  -19
  -18
  -17
  -16
  -14
  -13
  -11
  -9
  -7
  -5
  -3
  -1
  2
  5
  8
  11
  14
  18
  22
  26
  30
  35
  40
  46
  52
  58
  64
  71
Interest expense (income), $m
  12
  12
  12
  13
  14
  16
  17
  19
  20
  22
  24
  26
  28
  30
  32
  35
  37
  40
  42
  45
  48
  51
  55
  58
  62
  66
  70
  74
  78
  83
  88
Earnings before tax, $m
  -51
  -56
  -56
  -58
  -59
  -61
  -62
  -64
  -66
  -67
  -69
  -70
  -72
  -74
  -76
  -77
  -79
  -81
  -83
  -85
  -87
  -89
  -91
  -93
  -96
  -98
  -100
  -102
  -104
  -107
  -109
Tax expense, $m
  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
  0
  0
  0
Net income, $m
  -52
  -56
  -56
  -58
  -59
  -61
  -62
  -64
  -66
  -67
  -69
  -70
  -72
  -74
  -76
  -77
  -79
  -81
  -83
  -85
  -87
  -89
  -91
  -93
  -96
  -98
  -100
  -102
  -104
  -107
  -109

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  69
  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
  436
  385
  405
  425
  446
  468
  492
  517
  542
  569
  598
  628
  659
  692
  727
  763
  801
  841
  883
  928
  974
  1,023
  1,074
  1,127
  1,184
  1,243
  1,305
  1,370
  1,439
  1,511
  1,586
Adjusted assets (=assets-cash), $m
  367
  385
  405
  425
  446
  468
  492
  517
  542
  569
  598
  628
  659
  692
  727
  763
  801
  841
  883
  928
  974
  1,023
  1,074
  1,127
  1,184
  1,243
  1,305
  1,370
  1,439
  1,511
  1,586
Revenue / Adjusted assets
  1.640
  1.642
  1.640
  1.640
  1.641
  1.641
  1.640
  1.638
  1.640
  1.641
  1.640
  1.640
  1.640
  1.640
  1.640
  1.641
  1.640
  1.641
  1.641
  1.639
  1.640
  1.639
  1.640
  1.641
  1.640
  1.640
  1.641
  1.641
  1.640
  1.640
  1.641
Average production assets, $m
  107
  113
  118
  124
  130
  137
  144
  151
  158
  166
  175
  183
  192
  202
  212
  223
  234
  246
  258
  271
  284
  299
  313
  329
  346
  363
  381
  400
  420
  441
  463
Working capital, $m
  105
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
  72
  75
  79
  83
  87
  91
  96
  101
  106
  111
  116
  122
  128
  135
  142
  149
  156
Total debt, $m
  162
  155
  172
  190
  210
  230
  251
  273
  296
  321
  346
  373
  401
  431
  462
  495
  529
  565
  603
  643
  685
  728
  774
  823
  873
  927
  983
  1,041
  1,103
  1,168
  1,236
Total liabilities, $m
  354
  347
  364
  382
  402
  422
  443
  465
  488
  513
  538
  565
  593
  623
  654
  687
  721
  757
  795
  835
  877
  920
  966
  1,015
  1,065
  1,119
  1,175
  1,233
  1,295
  1,360
  1,428
Total equity, $m
  82
  39
  40
  42
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
  97
  102
  107
  113
  118
  124
  131
  137
  144
  151
  159
Total liabilities and equity, $m
  436
  386
  404
  424
  447
  469
  492
  517
  542
  570
  598
  628
  659
  692
  727
  763
  801
  841
  883
  928
  974
  1,022
  1,073
  1,128
  1,183
  1,243
  1,306
  1,370
  1,439
  1,511
  1,587
Debt-to-equity ratio
  1.976
  4.020
  4.260
  4.480
  4.700
  4.900
  5.100
  5.280
  5.460
  5.630
  5.790
  5.940
  6.090
  6.230
  6.360
  6.480
  6.600
  6.720
  6.830
  6.930
  7.030
  7.120
  7.210
  7.300
  7.380
  7.460
  7.530
  7.600
  7.670
  7.730
  7.790
Adjusted equity ratio
  0.035
  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
  -52
  -56
  -56
  -58
  -59
  -61
  -62
  -64
  -66
  -67
  -69
  -70
  -72
  -74
  -76
  -77
  -79
  -81
  -83
  -85
  -87
  -89
  -91
  -93
  -96
  -98
  -100
  -102
  -104
  -107
  -109
Depreciation, amort., depletion, $m
  27
  23
  25
  26
  27
  28
  30
  31
  33
  34
  36
  37
  38
  40
  42
  45
  47
  49
  52
  54
  57
  60
  63
  66
  69
  73
  76
  80
  84
  88
  93
Funds from operations, $m
  36
  -33
  -32
  -32
  -32
  -33
  -33
  -33
  -33
  -33
  -33
  -33
  -33
  -33
  -33
  -33
  -33
  -32
  -32
  -31
  -30
  -30
  -29
  -28
  -26
  -25
  -24
  -22
  -20
  -18
  -16
Change in working capital, $m
  23
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
Cash from operations, $m
  13
  -35
  -33
  -34
  -34
  -35
  -35
  -35
  -36
  -36
  -36
  -36
  -36
  -36
  -36
  -36
  -36
  -36
  -36
  -35
  -35
  -34
  -34
  -33
  -32
  -31
  -30
  -29
  -27
  -25
  -24
Maintenance CAPEX, $m
  0
  -21
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
New CAPEX, $m
  -22
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
Cash from investing activities, $m
  -8
  -27
  -29
  -30
  -31
  -33
  -34
  -36
  -38
  -40
  -41
  -44
  -46
  -48
  -50
  -53
  -56
  -59
  -61
  -65
  -68
  -71
  -75
  -79
  -82
  -86
  -91
  -95
  -100
  -105
  -110
Free cash flow, $m
  5
  -62
  -62
  -63
  -65
  -67
  -69
  -71
  -73
  -76
  -78
  -80
  -82
  -85
  -87
  -89
  -92
  -95
  -97
  -100
  -103
  -105
  -108
  -111
  -114
  -117
  -121
  -124
  -127
  -130
  -134
Issuance/(repayment) of debt, $m
  0
  -7
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  59
  62
  65
  68
Issuance/(repurchase) of shares, $m
  0
  82
  58
  60
  61
  63
  65
  67
  68
  70
  72
  73
  75
  77
  79
  81
  83
  85
  87
  90
  92
  94
  96
  99
  101
  104
  106
  109
  111
  114
  116
Cash from financing (excl. dividends), $m  
  0
  75
  75
  78
  80
  83
  86
  89
  91
  94
  98
  100
  103
  107
  110
  114
  117
  121
  125
  130
  134
  138
  142
  147
  152
  157
  162
  168
  173
  179
  184
Total cash flow (excl. dividends), $m
  3
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  27
  28
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  50
Retained Cash Flow (-), $m
  47
  -82
  -58
  -60
  -61
  -63
  -65
  -67
  -68
  -70
  -72
  -73
  -75
  -77
  -79
  -81
  -83
  -85
  -87
  -90
  -92
  -94
  -96
  -99
  -101
  -104
  -106
  -109
  -111
  -114
  -116
Prev. year cash balance distribution, $m
 
  69
  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
 
  0
  -44
  -45
  -46
  -47
  -48
  -49
  -50
  -51
  -52
  -53
  -54
  -55
  -56
  -57
  -58
  -58
  -59
  -60
  -61
  -62
  -62
  -63
  -64
  -64
  -65
  -65
  -65
  -66
  -66
Discount rate, %
 
  8.70
  9.14
  9.59
  10.07
  10.57
  11.10
  11.66
  12.24
  12.85
  13.50
  14.17
  14.88
  15.62
  16.41
  17.23
  18.09
  18.99
  19.94
  20.94
  21.98
  23.08
  24.24
  25.45
  26.72
  28.06
  29.46
  30.93
  32.48
  34.11
  35.81
PV of cash for distribution, $m
 
  0
  -37
  -34
  -31
  -29
  -26
  -23
  -20
  -17
  -15
  -12
  -10
  -8
  -7
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  38.4
  27.7
  20.2
  14.7
  10.8
  8.0
  6.0
  4.5
  3.4
  2.5
  1.9
  1.5
  1.1
  0.9
  0.7
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0

Layne Christensen Company (Layne) is a water management, construction and drilling company. The Company provides drilling solutions for water management, mineral services and specialty drilling needs. The Company operates through three segments: Water Resources, Inliner and Mineral Services. Its Water Resources segment provides its customers with solutions for various aspects of water supply system development and technology throughout the United States. Its Inliner segment is a service rehabilitation company offering a range of solutions for wastewater, storm water and process sewer pipeline networks. Its Mineral Services conducts ground drilling activities, including core drilling, reverse circulation, dual tube, hammer and rotary air-blast methods.

FINANCIAL RATIOS  of  Layne Christensen (LAYN)

Valuation Ratios
P/E Ratio -6.1
Price to Sales 0.5
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 24.6
Price to Free Cash Flow -35.5
Growth Rates
Sales Growth Rate -11.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.4%
Cap. Spend. - 3 Yr. Gr. Rate -8.3%
Financial Strength
Quick Ratio NaN
Current Ratio 0.7
LT Debt to Equity 197.6%
Total Debt to Equity 197.6%
Interest Coverage -3
Management Effectiveness
Return On Assets -8.6%
Ret/ On Assets - 3 Yr. Avg. -10.9%
Return On Total Capital -19.5%
Ret/ On T. Cap. - 3 Yr. Avg. -21.9%
Return On Equity -49.3%
Return On Equity - 3 Yr. Avg. -41.7%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 16.6%
Gross Margin - 3 Yr. Avg. 16.1%
EBITDA Margin -2%
EBITDA Margin - 3 Yr. Avg. -1.4%
Operating Margin -7%
Oper. Margin - 3 Yr. Avg. -6.6%
Pre-Tax Margin -8.5%
Pre-Tax Margin - 3 Yr. Avg. -8.6%
Net Profit Margin -8.6%
Net Profit Margin - 3 Yr. Avg. -10.2%
Effective Tax Rate -2%
Eff/ Tax Rate - 3 Yr. Avg. 2.6%
Payout Ratio 0%

LAYN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LAYN stock intrinsic value calculation we used $602 million for the last fiscal year's total revenue generated by Layne Christensen. The default revenue input number comes from 2017 income statement of Layne Christensen. 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 LAYN stock valuation model: a) initial revenue growth rate of 5% 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 8.7%, whose default value for LAYN is calculated based on our internal credit rating of Layne Christensen, 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 Layne Christensen.
    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 LAYN stock the variable cost ratio is equal to 95%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $74 million in the base year in the intrinsic value calculation for LAYN 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 7.5% for Layne Christensen.

Corporate tax rate of 27% is the nominal tax rate for Layne Christensen. 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 LAYN 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 LAYN are equal to 17.8%.

Life of production assets of 4.3 years is the average useful life of capital assets used in Layne Christensen 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 LAYN is equal to 6%. 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 - $82 million for Layne Christensen - 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 19.93 million for Layne Christensen 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 Layne Christensen at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Is It Too Late To Buy Layne Christensen Company (NASDAQ:LAYN)?   [Feb-14-18 04:49PM  Simply Wall St.]
▶ Layne Christensen reports 3Q loss   [Dec-05-17 04:30PM  Associated Press]
▶ Why Layne Christensen Company (LAYN) Could Be A Buy   [Oct-12-17 09:55AM  Simply Wall St.]
▶ Layne Christensen reports 2Q loss   [Sep-11-17 07:54PM  Associated Press]
▶ 5 Breakout Stocks Offering Phenomenal Returns   [Jul-07-17 08:41AM  Zacks]
▶ Layne Christensen reports 1Q loss   [Jun-08-17 04:40PM  Associated Press]
▶ ETFs with exposure to Layne Christensen Co. : May 2, 2017   [May-02-17 04:16PM  Capital Cube]
▶ New Strong Sell Stocks for April 18th   [Apr-18-17 10:30AM  Zacks]
▶ Layne Christensen reports 4Q loss   [Apr-10-17 04:54PM  Associated Press]
Financial statements of LAYN
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