Intrinsic value of Liberty Oilfield Services Inc. - LBRT

Previous Close

$15.04

  Intrinsic Value

$30.50

stock screener

  Rating & Target

str. buy

+103%

Previous close

$15.04

 
Intrinsic value

$30.50

 
Up/down potential

+103%

 
Rating

str. buy

We calculate the intrinsic value of LBRT 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 1.7

 

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, %
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.15
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
Revenue, $m
  2,271
  2,393
  2,521
  2,654
  2,794
  2,940
  3,093
  3,254
  3,422
  3,598
  3,783
  3,977
  4,181
  4,394
  4,618
  4,852
  5,098
  5,357
  5,628
  5,912
  6,211
  6,524
  6,853
  7,198
  7,560
  7,940
  8,339
  8,758
  9,198
  9,659
Variable operating expenses, $m
  1,844
  1,943
  2,047
  2,155
  2,268
  2,387
  2,512
  2,642
  2,779
  2,922
  3,072
  3,229
  3,395
  3,568
  3,749
  3,940
  4,140
  4,350
  4,570
  4,801
  5,043
  5,297
  5,564
  5,845
  6,139
  6,447
  6,771
  7,112
  7,469
  7,843
Fixed operating expenses, $m
  104
  107
  109
  111
  114
  116
  119
  121
  124
  127
  130
  132
  135
  138
  141
  144
  148
  151
  154
  158
  161
  165
  168
  172
  176
  180
  184
  188
  192
  196
Total operating expenses, $m
  1,948
  2,050
  2,156
  2,266
  2,382
  2,503
  2,631
  2,763
  2,903
  3,049
  3,202
  3,361
  3,530
  3,706
  3,890
  4,084
  4,288
  4,501
  4,724
  4,959
  5,204
  5,462
  5,732
  6,017
  6,315
  6,627
  6,955
  7,300
  7,661
  8,039
Operating income, $m
  323
  343
  365
  388
  411
  436
  463
  490
  519
  550
  582
  615
  651
  688
  727
  768
  811
  856
  904
  954
  1,007
  1,062
  1,120
  1,181
  1,246
  1,313
  1,384
  1,459
  1,537
  1,620
EBITDA, $m
  441
  468
  496
  526
  557
  589
  624
  659
  697
  737
  778
  822
  868
  916
  967
  1,020
  1,076
  1,135
  1,196
  1,261
  1,329
  1,401
  1,476
  1,556
  1,639
  1,726
  1,818
  1,914
  2,016
  2,122
Interest expense (income), $m
  0
  12
  16
  21
  25
  30
  35
  40
  46
  51
  57
  64
  70
  77
  85
  92
  100
  109
  117
  127
  136
  147
  157
  169
  180
  193
  206
  219
  234
  249
  264
Earnings before tax, $m
  311
  327
  344
  363
  382
  402
  423
  445
  468
  492
  518
  545
  573
  603
  634
  667
  702
  739
  777
  817
  860
  905
  951
  1,001
  1,053
  1,107
  1,165
  1,225
  1,289
  1,356
Tax expense, $m
  84
  88
  93
  98
  103
  108
  114
  120
  126
  133
  140
  147
  155
  163
  171
  180
  190
  199
  210
  221
  232
  244
  257
  270
  284
  299
  315
  331
  348
  366
Net income, $m
  227
  239
  251
  265
  279
  293
  308
  325
  342
  359
  378
  398
  418
  440
  463
  487
  513
  539
  567
  597
  628
  660
  695
  731
  769
  808
  850
  894
  941
  990

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
  1,177
  1,240
  1,306
  1,375
  1,447
  1,523
  1,603
  1,686
  1,773
  1,864
  1,960
  2,061
  2,166
  2,277
  2,392
  2,514
  2,642
  2,776
  2,916
  3,063
  3,218
  3,380
  3,551
  3,729
  3,917
  4,114
  4,321
  4,538
  4,766
  5,005
Adjusted assets (=assets-cash), $m
  1,177
  1,240
  1,306
  1,375
  1,447
  1,523
  1,603
  1,686
  1,773
  1,864
  1,960
  2,061
  2,166
  2,277
  2,392
  2,514
  2,642
  2,776
  2,916
  3,063
  3,218
  3,380
  3,551
  3,729
  3,917
  4,114
  4,321
  4,538
  4,766
  5,005
Revenue / Adjusted assets
  1.929
  1.930
  1.930
  1.930
  1.931
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.931
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
  1.930
Average production assets, $m
  591
  622
  655
  690
  726
  764
  804
  846
  890
  936
  984
  1,034
  1,087
  1,142
  1,201
  1,262
  1,326
  1,393
  1,463
  1,537
  1,615
  1,696
  1,782
  1,871
  1,966
  2,064
  2,168
  2,277
  2,391
  2,511
Working capital, $m
  145
  153
  161
  170
  179
  188
  198
  208
  219
  230
  242
  255
  268
  281
  296
  311
  326
  343
  360
  378
  397
  418
  439
  461
  484
  508
  534
  561
  589
  618
Total debt, $m
  143
  182
  222
  265
  309
  355
  404
  455
  508
  564
  623
  684
  749
  816
  887
  962
  1,040
  1,122
  1,208
  1,298
  1,392
  1,492
  1,596
  1,705
  1,820
  1,941
  2,067
  2,200
  2,340
  2,486
Total liabilities, $m
  720
  759
  799
  842
  886
  932
  981
  1,032
  1,085
  1,141
  1,200
  1,261
  1,326
  1,393
  1,464
  1,539
  1,617
  1,699
  1,785
  1,875
  1,969
  2,069
  2,173
  2,282
  2,397
  2,518
  2,644
  2,777
  2,917
  3,063
Total equity, $m
  457
  481
  507
  534
  562
  591
  622
  654
  688
  723
  761
  800
  840
  883
  928
  975
  1,025
  1,077
  1,131
  1,189
  1,249
  1,312
  1,378
  1,447
  1,520
  1,596
  1,676
  1,761
  1,849
  1,942
Total liabilities and equity, $m
  1,177
  1,240
  1,306
  1,376
  1,448
  1,523
  1,603
  1,686
  1,773
  1,864
  1,961
  2,061
  2,166
  2,276
  2,392
  2,514
  2,642
  2,776
  2,916
  3,064
  3,218
  3,381
  3,551
  3,729
  3,917
  4,114
  4,320
  4,538
  4,766
  5,005
Debt-to-equity ratio
  0.310
  0.380
  0.440
  0.500
  0.550
  0.600
  0.650
  0.700
  0.740
  0.780
  0.820
  0.860
  0.890
  0.920
  0.960
  0.990
  1.010
  1.040
  1.070
  1.090
  1.120
  1.140
  1.160
  1.180
  1.200
  1.220
  1.230
  1.250
  1.270
  1.280
Adjusted equity ratio
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388
  0.388

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  227
  239
  251
  265
  279
  293
  308
  325
  342
  359
  378
  398
  418
  440
  463
  487
  513
  539
  567
  597
  628
  660
  695
  731
  769
  808
  850
  894
  941
  990
Depreciation, amort., depletion, $m
  118
  124
  131
  138
  145
  153
  161
  169
  178
  187
  197
  207
  217
  228
  240
  252
  265
  279
  293
  307
  323
  339
  356
  374
  393
  413
  434
  455
  478
  502
Funds from operations, $m
  345
  363
  382
  403
  424
  446
  469
  494
  519
  546
  575
  605
  636
  669
  703
  740
  778
  818
  860
  904
  951
  1,000
  1,051
  1,105
  1,162
  1,221
  1,284
  1,350
  1,419
  1,492
Change in working capital, $m
  7
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
Cash from operations, $m
  338
  355
  374
  394
  415
  437
  460
  484
  509
  535
  563
  592
  623
  655
  689
  725
  762
  801
  843
  886
  932
  979
  1,030
  1,083
  1,138
  1,197
  1,258
  1,323
  1,391
  1,462
Maintenance CAPEX, $m
  -112
  -118
  -124
  -131
  -138
  -145
  -153
  -161
  -169
  -178
  -187
  -197
  -207
  -217
  -228
  -240
  -252
  -265
  -279
  -293
  -307
  -323
  -339
  -356
  -374
  -393
  -413
  -434
  -455
  -478
New CAPEX, $m
  -30
  -32
  -33
  -35
  -36
  -38
  -40
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -61
  -64
  -67
  -70
  -74
  -78
  -81
  -85
  -90
  -94
  -99
  -104
  -109
  -114
  -120
Cash from investing activities, $m
  -142
  -150
  -157
  -166
  -174
  -183
  -193
  -203
  -213
  -224
  -235
  -247
  -260
  -272
  -286
  -301
  -316
  -332
  -349
  -367
  -385
  -404
  -424
  -446
  -468
  -492
  -517
  -543
  -569
  -598
Free cash flow, $m
  196
  206
  217
  228
  241
  253
  267
  281
  296
  311
  328
  345
  363
  382
  402
  423
  446
  469
  494
  519
  547
  575
  605
  637
  670
  705
  742
  781
  821
  864
Issuance/(repayment) of debt, $m
  37
  39
  40
  42
  44
  46
  49
  51
  53
  56
  59
  61
  64
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  109
  115
  121
  127
  133
  139
  146
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  37
  39
  40
  42
  44
  46
  49
  51
  53
  56
  59
  61
  64
  68
  71
  74
  78
  82
  86
  90
  95
  99
  104
  109
  115
  121
  127
  133
  139
  146
Total cash flow (excl. dividends), $m
  232
  244
  257
  271
  285
  300
  315
  332
  349
  367
  386
  407
  428
  450
  473
  498
  524
  551
  579
  610
  641
  674
  709
  746
  785
  826
  868
  913
  961
  1,010
Retained Cash Flow (-), $m
  -24
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
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
  209
  220
  232
  244
  257
  270
  285
  300
  315
  332
  349
  368
  387
  407
  428
  451
  474
  499
  525
  552
  581
  611
  643
  677
  712
  749
  788
  829
  872
  918
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
  200
  201
  202
  201
  199
  196
  192
  187
  181
  174
  166
  157
  147
  137
  126
  115
  103
  92
  81
  70
  60
  51
  42
  34
  28
  22
  17
  13
  10
  7
Current shareholders' claim on cash, %
  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
  100.0

FINANCIAL RATIOS  of  Liberty Oilfield Services Inc. (LBRT)

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%

LBRT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LBRT stock intrinsic value calculation we used $2155 million for the last fiscal year's total revenue generated by Liberty Oilfield Services Inc.. The default revenue input number comes from 0001 income statement of Liberty Oilfield Services 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 LBRT stock valuation model: a) initial revenue growth rate of 5.4% 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 4.3%, whose default value for LBRT is calculated based on our internal credit rating of Liberty Oilfield Services 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 Liberty Oilfield Services 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 LBRT stock the variable cost ratio is equal to 81.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $102 million in the base year in the intrinsic value calculation for LBRT 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 11.3% for Liberty Oilfield Services Inc..

Corporate tax rate of 27% is the nominal tax rate for Liberty Oilfield Services 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 LBRT 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 LBRT are equal to 26%.

Life of production assets of 4.5 years is the average useful life of capital assets used in Liberty Oilfield Services 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 LBRT is equal to 6.4%. 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 - $433.069 million for Liberty Oilfield Services 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 112.251 million for Liberty Oilfield Services 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 Liberty Oilfield Services Inc. at the current share price and the inputted number of shares is $1.7 billion.

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