Intrinsic value of Maiden Holdings - MHLD

Previous Close

$7.40

  Intrinsic Value

$25.08

stock screener

  Rating & Target

str. buy

+239%

Previous close

$7.40

 
Intrinsic value

$25.08

 
Up/down potential

+239%

 
Rating

str. buy

Our model is not good at valuating stocks of financial companies, such as MHLD.

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

We calculate the intrinsic value of MHLD 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

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
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.14
  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
  0
  2,787
  2,851
  2,924
  3,006
  3,097
  3,197
  3,306
  3,424
  3,551
  3,687
  3,833
  3,989
  4,154
  4,330
  4,517
  4,715
  4,925
  5,146
  5,381
  5,628
  5,889
  6,164
  6,454
  6,759
  7,081
  7,420
  7,776
  8,152
  8,546
  8,962
Variable operating expenses, $m
 
  2,628
  2,688
  2,757
  2,834
  2,920
  3,014
  3,117
  3,228
  3,347
  3,475
  3,607
  3,753
  3,909
  4,075
  4,250
  4,437
  4,634
  4,842
  5,063
  5,295
  5,541
  5,800
  6,072
  6,360
  6,663
  6,981
  7,317
  7,670
  8,041
  8,432
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
  2,663
  2,628
  2,688
  2,757
  2,834
  2,920
  3,014
  3,117
  3,228
  3,347
  3,475
  3,607
  3,753
  3,909
  4,075
  4,250
  4,437
  4,634
  4,842
  5,063
  5,295
  5,541
  5,800
  6,072
  6,360
  6,663
  6,981
  7,317
  7,670
  8,041
  8,432
Operating income, $m
  69
  159
  163
  167
  172
  177
  183
  190
  197
  204
  212
  226
  236
  245
  256
  267
  279
  291
  304
  318
  333
  348
  364
  381
  399
  418
  438
  459
  482
  505
  530
EBITDA, $m
  89
  169
  173
  177
  182
  188
  194
  201
  208
  216
  224
  233
  242
  252
  263
  274
  286
  299
  312
  327
  342
  357
  374
  392
  410
  430
  450
  472
  495
  519
  544
Interest expense (income), $m
  28
  28
  36
  45
  55
  67
  80
  95
  110
  127
  145
  165
  186
  208
  232
  257
  283
  312
  342
  374
  407
  442
  480
  519
  561
  604
  651
  699
  750
  804
  860
Earnings before tax, $m
  50
  131
  127
  122
  117
  110
  103
  95
  87
  77
  67
  62
  50
  38
  24
  10
  -5
  -21
  -38
  -56
  -75
  -95
  -116
  -138
  -161
  -186
  -212
  -240
  -268
  -299
  -331
Tax expense, $m
  2
  35
  34
  33
  31
  30
  28
  26
  23
  21
  18
  17
  14
  10
  7
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  49
  96
  93
  89
  85
  80
  75
  69
  63
  56
  49
  45
  37
  27
  18
  7
  -5
  -21
  -38
  -56
  -75
  -95
  -116
  -138
  -161
  -186
  -212
  -240
  -268
  -299
  -331

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
  0
Total assets, $m
  6,252
  6,377
  6,523
  6,691
  6,879
  7,088
  7,317
  7,566
  7,836
  8,126
  8,438
  8,772
  9,128
  9,507
  9,910
  10,337
  10,790
  11,270
  11,777
  12,312
  12,878
  13,475
  14,105
  14,768
  15,467
  16,204
  16,979
  17,795
  18,654
  19,557
  20,507
Adjusted assets (=assets-cash), $m
  6,252
  6,377
  6,523
  6,691
  6,879
  7,088
  7,317
  7,566
  7,836
  8,126
  8,438
  8,772
  9,128
  9,507
  9,910
  10,337
  10,790
  11,270
  11,777
  12,312
  12,878
  13,475
  14,105
  14,768
  15,467
  16,204
  16,979
  17,795
  18,654
  19,557
  20,507
Revenue / Adjusted assets
  0.000
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
Average production assets, $m
  22
  22
  23
  23
  24
  25
  26
  26
  27
  28
  29
  31
  32
  33
  35
  36
  38
  39
  41
  43
  45
  47
  49
  52
  54
  57
  59
  62
  65
  68
  72
Working capital, $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
  0
Total debt, $m
  351
  447
  561
  692
  840
  1,003
  1,182
  1,377
  1,587
  1,815
  2,059
  2,319
  2,598
  2,894
  3,209
  3,544
  3,898
  4,273
  4,669
  5,088
  5,531
  5,998
  6,490
  7,009
  7,555
  8,131
  8,738
  9,376
  10,047
  10,754
  11,497
Total liabilities, $m
  4,892
  4,987
  5,101
  5,232
  5,380
  5,543
  5,722
  5,917
  6,127
  6,355
  6,599
  6,859
  7,138
  7,434
  7,749
  8,084
  8,438
  8,813
  9,209
  9,628
  10,071
  10,538
  11,030
  11,549
  12,095
  12,671
  13,278
  13,916
  14,587
  15,294
  16,037
Total equity, $m
  1,361
  1,390
  1,422
  1,459
  1,500
  1,545
  1,595
  1,649
  1,708
  1,772
  1,839
  1,912
  1,990
  2,072
  2,160
  2,253
  2,352
  2,457
  2,567
  2,684
  2,807
  2,938
  3,075
  3,219
  3,372
  3,532
  3,701
  3,879
  4,067
  4,263
  4,471
Total liabilities and equity, $m
  6,253
  6,377
  6,523
  6,691
  6,880
  7,088
  7,317
  7,566
  7,835
  8,127
  8,438
  8,771
  9,128
  9,506
  9,909
  10,337
  10,790
  11,270
  11,776
  12,312
  12,878
  13,476
  14,105
  14,768
  15,467
  16,203
  16,979
  17,795
  18,654
  19,557
  20,508
Debt-to-equity ratio
  0.258
  0.320
  0.390
  0.470
  0.560
  0.650
  0.740
  0.830
  0.930
  1.020
  1.120
  1.210
  1.310
  1.400
  1.490
  1.570
  1.660
  1.740
  1.820
  1.900
  1.970
  2.040
  2.110
  2.180
  2.240
  2.300
  2.360
  2.420
  2.470
  2.520
  2.570
Adjusted equity ratio
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  49
  96
  93
  89
  85
  80
  75
  69
  63
  56
  49
  45
  37
  27
  18
  7
  -5
  -21
  -38
  -56
  -75
  -95
  -116
  -138
  -161
  -186
  -212
  -240
  -268
  -299
  -331
Depreciation, amort., depletion, $m
  20
  10
  10
  10
  11
  11
  11
  11
  11
  11
  12
  6
  6
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
Funds from operations, $m
  476
  106
  103
  100
  96
  91
  86
  80
  74
  68
  61
  51
  43
  34
  25
  15
  3
  -13
  -30
  -47
  -66
  -85
  -106
  -128
  -151
  -175
  -200
  -227
  -255
  -285
  -316
Change in working capital, $m
  6
  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 operations, $m
  470
  106
  103
  100
  96
  91
  86
  80
  74
  68
  61
  51
  43
  34
  25
  15
  3
  -13
  -30
  -47
  -66
  -85
  -106
  -128
  -151
  -175
  -200
  -227
  -255
  -285
  -316
Maintenance CAPEX, $m
  0
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -14
New CAPEX, $m
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
Cash from investing activities, $m
  -439
  -4
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -14
  -14
  -15
  -15
  -16
  -17
Free cash flow, $m
  31
  101
  98
  94
  90
  86
  80
  74
  68
  61
  54
  44
  36
  26
  17
  6
  -6
  -22
  -39
  -57
  -76
  -96
  -117
  -140
  -163
  -188
  -214
  -242
  -271
  -301
  -333
Issuance/(repayment) of debt, $m
  -1
  96
  115
  131
  147
  163
  179
  195
  211
  227
  244
  261
  278
  296
  315
  334
  354
  375
  397
  419
  442
  467
  492
  519
  547
  576
  606
  638
  672
  706
  743
Issuance/(repurchase) of shares, $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  7
  19
  28
  41
  55
  70
  86
  104
  125
  148
  172
  198
  225
  253
  283
  314
  347
  381
  417
  456
  496
  538
Cash from financing (excl. dividends), $m  
  0
  96
  115
  131
  147
  163
  179
  195
  211
  234
  263
  289
  319
  351
  385
  420
  458
  500
  545
  591
  640
  692
  745
  802
  861
  923
  987
  1,055
  1,128
  1,202
  1,281
Total cash flow (excl. dividends), $m
  33
  197
  213
  226
  237
  249
  259
  269
  279
  295
  317
  333
  355
  378
  402
  426
  452
  478
  506
  534
  564
  595
  628
  662
  697
  734
  773
  814
  856
  901
  948
Retained Cash Flow (-), $m
  -13
  -29
  -32
  -37
  -41
  -45
  -50
  -54
  -59
  -63
  -68
  -73
  -78
  -83
  -88
  -93
  -104
  -125
  -148
  -172
  -198
  -225
  -253
  -283
  -314
  -347
  -381
  -417
  -456
  -496
  -538
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
 
  167
  181
  189
  196
  203
  209
  215
  220
  232
  249
  260
  277
  295
  314
  333
  348
  353
  357
  362
  366
  371
  375
  379
  383
  388
  392
  396
  401
  405
  410
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
 
  161
  165
  164
  162
  157
  152
  145
  138
  133
  130
  123
  118
  112
  105
  98
  88
  77
  66
  56
  47
  38
  31
  25
  20
  15
  11
  9
  6
  4
  3
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  99.4
  97.9
  95.9
  93.0
  89.5
  85.3
  80.8
  75.8
  70.4
  64.8
  59.2
  53.5
  48.0
  42.8
  37.8
  33.2
  28.9
  25.1
  21.6
  18.5
  15.7
  13.3

Maiden Holdings, Ltd. (Maiden) is a holding company. The Company focuses on serving the needs of regional and specialty insurers in the United States, Europe and select other global markets by providing reinsurance solutions designed to support their capital needs. It operates through two segments: Diversified Reinsurance and AmTrust Reinsurance. The Diversified Reinsurance segment consists of a portfolio of property and casualty reinsurance business focusing on regional and specialty property, and casualty insurance companies located, primarily in the United States and Europe. AmTrust is a multinational specialty property and casualty insurance holding company with operations in the United States, Europe and Bermuda. The Company provides reinsurance through its subsidiaries, Maiden Reinsurance Ltd. and Maiden Reinsurance North America, Inc. Internationally, the Company provides insurance sales and distribution services through Maiden Global Holdings, Ltd. and its subsidiaries.

FINANCIAL RATIOS  of  Maiden Holdings (MHLD)

Valuation Ratios
P/E Ratio 13
Price to Sales 0.2
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 1.4
Price to Free Cash Flow 1.4
Growth Rates
Sales Growth Rate 6.1%
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 25.8%
Total Debt to Equity 25.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.3%
Ret/ On Assets - 3 Yr. Avg. 2.3%
Return On Total Capital 2.9%
Ret/ On T. Cap. - 3 Yr. Avg. 5.6%
Return On Equity 3.6%
Return On Equity - 3 Yr. Avg. 7.2%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 3.6%
EBITDA Margin - 3 Yr. Avg. 5.8%
Operating Margin 2.5%
Oper. Margin - 3 Yr. Avg. 5%
Pre-Tax Margin 1.8%
Pre-Tax Margin - 3 Yr. Avg. 3.7%
Net Profit Margin 1.8%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 4%
Eff/ Tax Rate - 3 Yr. Avg. 2.5%
Payout Ratio 157.1%

MHLD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MHLD stock intrinsic value calculation we used $2732 million for the last fiscal year's total revenue generated by Maiden Holdings. The default revenue input number comes from 2016 income statement of Maiden Holdings. 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 MHLD 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 4.3%, whose default value for MHLD is calculated based on our internal credit rating of Maiden Holdings, 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 Maiden Holdings.
    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 MHLD stock the variable cost ratio is equal to 94.3%.

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 MHLD 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% for Maiden Holdings.

Corporate tax rate of 27% is the nominal tax rate for Maiden Holdings. 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 MHLD 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 MHLD are equal to 0.8%.

Life of production assets of 4 years is the average useful life of capital assets used in Maiden Holdings 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 MHLD is equal to 0%. 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 - $1361 million for Maiden Holdings - 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 91.036 million for Maiden Holdings 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 Maiden Holdings at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ Maiden Holdings reports 3Q loss   [Nov-08-17 06:06PM  Associated Press]
▶ All You Need To Know About Maiden Holdings Ltds (MHLD) Risks   [Oct-02-17 01:12PM  Simply Wall St.]
▶ Should You Buy Maiden Holdings Ltd (MHLD) Now?   [Sep-12-17 12:37PM  Simply Wall St.]
▶ The Market In 5 Minutes   [Aug-10-17 09:28AM  Benzinga]
▶ Maiden Holdings reports 2Q loss   [Aug-08-17 10:50PM  Associated Press]
▶ ETFs with exposure to Maiden Holdings Ltd. : June 6, 2017   [Jun-06-17 11:45AM  Capital Cube]
▶ Maiden Holdings posts 1Q profit   [May-08-17 06:06PM  Associated Press]
▶ ETFs with exposure to Maiden Holdings Ltd. : May 5, 2017   [May-05-17 04:18PM  Capital Cube]
▶ Maiden Holdings Approved to File Annual Report on Form 10-K   [Mar-05-17 07:07PM  GlobeNewswire]
▶ Maiden Holdings reports 4Q loss   [Feb-27-17 07:13PM  Associated Press]
Financial statements of MHLD
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