Intrinsic value of Macquarie Infrastructure Corporation - MIC

Previous Close

$39.75

  Intrinsic Value

$28.18

stock screener

  Rating & Target

sell

-29%

Previous close

$39.75

 
Intrinsic value

$28.18

 
Up/down potential

-29%

 
Rating

sell

We calculate the intrinsic value of MIC 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 3.4

 

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, %
  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
  1,797
  1,839
  1,886
  1,939
  1,998
  2,062
  2,132
  2,208
  2,290
  2,378
  2,472
  2,573
  2,679
  2,793
  2,913
  3,041
  3,176
  3,319
  3,470
  3,630
  3,798
  3,975
  4,162
  4,359
  4,567
  4,785
  5,015
  5,257
  5,512
  5,780
Variable operating expenses, $m
  1,490
  1,517
  1,549
  1,585
  1,624
  1,667
  1,715
  1,766
  1,821
  1,880
  1,660
  1,727
  1,799
  1,875
  1,956
  2,041
  2,132
  2,228
  2,329
  2,436
  2,549
  2,669
  2,794
  2,926
  3,066
  3,212
  3,367
  3,529
  3,700
  3,880
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
  1,490
  1,517
  1,549
  1,585
  1,624
  1,667
  1,715
  1,766
  1,821
  1,880
  1,660
  1,727
  1,799
  1,875
  1,956
  2,041
  2,132
  2,228
  2,329
  2,436
  2,549
  2,669
  2,794
  2,926
  3,066
  3,212
  3,367
  3,529
  3,700
  3,880
Operating income, $m
  308
  321
  337
  354
  373
  395
  418
  443
  470
  499
  813
  846
  881
  918
  958
  1,000
  1,044
  1,091
  1,141
  1,193
  1,248
  1,307
  1,368
  1,433
  1,501
  1,573
  1,649
  1,728
  1,812
  1,900
EBITDA, $m
  795
  813
  834
  858
  884
  912
  943
  977
  1,013
  1,052
  1,093
  1,138
  1,185
  1,235
  1,289
  1,345
  1,405
  1,468
  1,535
  1,605
  1,680
  1,758
  1,841
  1,928
  2,020
  2,117
  2,218
  2,325
  2,438
  2,556
Interest expense (income), $m
  109
  163
  168
  173
  180
  187
  195
  203
  213
  223
  234
  245
  258
  271
  285
  300
  316
  333
  351
  371
  391
  412
  434
  458
  483
  509
  537
  566
  596
  628
  662
Earnings before tax, $m
  145
  153
  163
  174
  187
  200
  215
  230
  247
  265
  567
  588
  610
  633
  657
  683
  711
  740
  770
  803
  837
  873
  910
  950
  992
  1,037
  1,083
  1,132
  1,183
  1,238
Tax expense, $m
  39
  41
  44
  47
  50
  54
  58
  62
  67
  72
  153
  159
  165
  171
  177
  184
  192
  200
  208
  217
  226
  236
  246
  257
  268
  280
  292
  306
  320
  334
Net income, $m
  106
  112
  119
  127
  136
  146
  157
  168
  180
  193
  414
  429
  445
  462
  480
  499
  519
  540
  562
  586
  611
  637
  665
  694
  724
  757
  791
  826
  864
  903

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
  7,457
  7,629
  7,825
  8,045
  8,289
  8,557
  8,848
  9,164
  9,503
  9,868
  10,258
  10,675
  11,118
  11,589
  12,089
  12,619
  13,179
  13,772
  14,399
  15,061
  15,759
  16,495
  17,271
  18,089
  18,950
  19,856
  20,811
  21,815
  22,872
  23,983
Adjusted assets (=assets-cash), $m
  7,457
  7,629
  7,825
  8,045
  8,289
  8,557
  8,848
  9,164
  9,503
  9,868
  10,258
  10,675
  11,118
  11,589
  12,089
  12,619
  13,179
  13,772
  14,399
  15,061
  15,759
  16,495
  17,271
  18,089
  18,950
  19,856
  20,811
  21,815
  22,872
  23,983
Revenue / Adjusted assets
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
  0.241
Average production assets, $m
  4,694
  4,802
  4,926
  5,064
  5,218
  5,386
  5,570
  5,768
  5,982
  6,212
  6,457
  6,720
  6,999
  7,295
  7,610
  7,943
  8,296
  8,670
  9,064
  9,481
  9,920
  10,383
  10,872
  11,387
  11,929
  12,499
  13,100
  13,732
  14,397
  15,097
Working capital, $m
  327
  335
  343
  353
  364
  375
  388
  402
  417
  433
  450
  468
  488
  508
  530
  553
  578
  604
  632
  661
  691
  724
  758
  793
  831
  871
  913
  957
  1,003
  1,052
Total debt, $m
  3,110
  3,212
  3,328
  3,459
  3,604
  3,763
  3,936
  4,123
  4,325
  4,542
  4,774
  5,021
  5,284
  5,564
  5,861
  6,176
  6,509
  6,861
  7,233
  7,626
  8,041
  8,478
  8,939
  9,425
  9,936
  10,475
  11,042
  11,638
  12,266
  12,926
Total liabilities, $m
  4,430
  4,532
  4,648
  4,779
  4,924
  5,083
  5,256
  5,443
  5,645
  5,862
  6,093
  6,341
  6,604
  6,884
  7,181
  7,495
  7,829
  8,181
  8,553
  8,946
  9,361
  9,798
  10,259
  10,745
  11,256
  11,795
  12,362
  12,958
  13,586
  14,246
Total equity, $m
  3,028
  3,097
  3,177
  3,266
  3,365
  3,474
  3,592
  3,720
  3,858
  4,006
  4,165
  4,334
  4,514
  4,705
  4,908
  5,123
  5,351
  5,592
  5,846
  6,115
  6,398
  6,697
  7,012
  7,344
  7,694
  8,062
  8,449
  8,857
  9,286
  9,737
Total liabilities and equity, $m
  7,458
  7,629
  7,825
  8,045
  8,289
  8,557
  8,848
  9,163
  9,503
  9,868
  10,258
  10,675
  11,118
  11,589
  12,089
  12,618
  13,180
  13,773
  14,399
  15,061
  15,759
  16,495
  17,271
  18,089
  18,950
  19,857
  20,811
  21,815
  22,872
  23,983
Debt-to-equity ratio
  1.030
  1.040
  1.050
  1.060
  1.070
  1.080
  1.100
  1.110
  1.120
  1.130
  1.150
  1.160
  1.170
  1.180
  1.190
  1.210
  1.220
  1.230
  1.240
  1.250
  1.260
  1.270
  1.270
  1.280
  1.290
  1.300
  1.310
  1.310
  1.320
  1.330
Adjusted equity ratio
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  106
  112
  119
  127
  136
  146
  157
  168
  180
  193
  414
  429
  445
  462
  480
  499
  519
  540
  562
  586
  611
  637
  665
  694
  724
  757
  791
  826
  864
  903
Depreciation, amort., depletion, $m
  487
  492
  497
  503
  510
  517
  525
  534
  543
  553
  281
  292
  304
  317
  331
  345
  361
  377
  394
  412
  431
  451
  473
  495
  519
  543
  570
  597
  626
  656
Funds from operations, $m
  593
  604
  617
  631
  646
  663
  682
  702
  724
  747
  695
  721
  749
  779
  811
  844
  879
  917
  956
  998
  1,042
  1,088
  1,137
  1,189
  1,243
  1,300
  1,360
  1,423
  1,490
  1,560
Change in working capital, $m
  6
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  21
  22
  23
  25
  26
  27
  29
  31
  32
  34
  36
  38
  40
  42
  44
  46
  49
Cash from operations, $m
  587
  596
  608
  621
  636
  652
  669
  688
  709
  731
  678
  703
  730
  758
  789
  821
  855
  891
  929
  969
  1,011
  1,056
  1,103
  1,153
  1,205
  1,260
  1,318
  1,379
  1,444
  1,511
Maintenance CAPEX, $m
  -200
  -204
  -209
  -214
  -220
  -227
  -234
  -242
  -251
  -260
  -270
  -281
  -292
  -304
  -317
  -331
  -345
  -361
  -377
  -394
  -412
  -431
  -451
  -473
  -495
  -519
  -543
  -570
  -597
  -626
New CAPEX, $m
  -92
  -108
  -123
  -139
  -154
  -168
  -183
  -199
  -214
  -230
  -246
  -262
  -279
  -297
  -315
  -333
  -353
  -373
  -394
  -416
  -439
  -463
  -488
  -515
  -542
  -571
  -601
  -632
  -665
  -700
Cash from investing activities, $m
  -292
  -312
  -332
  -353
  -374
  -395
  -417
  -441
  -465
  -490
  -516
  -543
  -571
  -601
  -632
  -664
  -698
  -734
  -771
  -810
  -851
  -894
  -939
  -988
  -1,037
  -1,090
  -1,144
  -1,202
  -1,262
  -1,326
Free cash flow, $m
  294
  284
  276
  268
  262
  256
  252
  247
  244
  241
  162
  160
  159
  158
  157
  157
  156
  157
  157
  158
  160
  161
  163
  166
  168
  171
  174
  178
  181
  186
Issuance/(repayment) of debt, $m
  96
  102
  116
  131
  145
  159
  173
  187
  202
  217
  232
  247
  263
  280
  297
  315
  333
  352
  372
  393
  415
  437
  461
  486
  512
  539
  567
  597
  628
  660
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  
  96
  102
  116
  131
  145
  159
  173
  187
  202
  217
  232
  247
  263
  280
  297
  315
  333
  352
  372
  393
  415
  437
  461
  486
  512
  539
  567
  597
  628
  660
Total cash flow (excl. dividends), $m
  390
  386
  392
  399
  407
  415
  425
  435
  446
  458
  394
  408
  422
  437
  454
  471
  490
  509
  530
  551
  574
  599
  624
  651
  680
  710
  741
  774
  809
  846
Retained Cash Flow (-), $m
  -63
  -70
  -80
  -89
  -99
  -109
  -118
  -128
  -138
  -148
  -158
  -169
  -180
  -191
  -203
  -215
  -228
  -241
  -254
  -269
  -283
  -299
  -315
  -332
  -350
  -368
  -387
  -408
  -429
  -451
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
  327
  317
  313
  310
  308
  307
  306
  307
  308
  310
  236
  238
  242
  246
  251
  256
  262
  268
  275
  283
  291
  300
  309
  319
  330
  341
  354
  366
  380
  395
Discount rate, %
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
  306
  276
  252
  229
  207
  186
  166
  148
  130
  114
  74
  64
  54
  45
  38
  31
  25
  20
  15
  12
  9
  7
  5
  3
  2
  2
  1
  1
  0
  0
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

Macquarie Infrastructure Corporation owns and operates a group of businesses that provide services, such as bulk liquid terminalling and handling services. The Company operates through four segments: International-Matex Tank Terminals (IMTT), Atlantic Aviation, Contracted Power (CP) and MIC Hawaii. Its group of businesses also provides services, such as aircraft fueling, CP generation and utility gas services. Its group of businesses provides services to businesses, government agencies and individuals in the United States. IMTT segment provides bulk liquid terminal services in the United States. As of December 31, 2016, Atlantic Aviation operated Fixed based operations (FBOs) at 69 airports in the United States. The businesses in its CP segment sell electricity to off-takers, pursuant to multi-year contracts. MIC Hawaii segment consists of Hawaii Gas and several smaller businesses. Hawaii Gas consists of a gas utility and a liquefied petroleum gas (LPG) distribution business.

FINANCIAL RATIOS  of  Macquarie Infrastructure Corporation (MIC)

Valuation Ratios
P/E Ratio 20.9
Price to Sales 2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 5.8
Price to Free Cash Flow 13.3
Growth Rates
Sales Growth Rate 0.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 62.4%
Cap. Spend. - 3 Yr. Gr. Rate 23.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 102.9%
Total Debt to Equity 104.3%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.1%
Ret/ On Assets - 3 Yr. Avg. 9%
Return On Total Capital 2.6%
Ret/ On T. Cap. - 3 Yr. Avg. 9.8%
Return On Equity 5.2%
Return On Equity - 3 Yr. Avg. 18.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 60.4%
Gross Margin - 3 Yr. Avg. 53.8%
EBITDA Margin 37.9%
EBITDA Margin - 3 Yr. Avg. 48%
Operating Margin 19.4%
Oper. Margin - 3 Yr. Avg. 31.6%
Pre-Tax Margin 13.7%
Pre-Tax Margin - 3 Yr. Avg. 26%
Net Profit Margin 9.4%
Net Profit Margin - 3 Yr. Avg. 26.6%
Effective Tax Rate 31.4%
Eff/ Tax Rate - 3 Yr. Avg. 21.8%
Payout Ratio 253.8%

MIC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MIC stock intrinsic value calculation we used $1762 million for the last fiscal year's total revenue generated by Macquarie Infrastructure Corporation. The default revenue input number comes from 0001 income statement of Macquarie Infrastructure Corporation. 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 MIC 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 6.8%, whose default value for MIC is calculated based on our internal credit rating of Macquarie Infrastructure Corporation, 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 Macquarie Infrastructure Corporation.
    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 MIC stock the variable cost ratio is equal to 83.2%.

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 MIC 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 5.4% for Macquarie Infrastructure Corporation.

Corporate tax rate of 27% is the nominal tax rate for Macquarie Infrastructure Corporation. 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 MIC 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 MIC are equal to 261.2%.

Life of production assets of 23 years is the average useful life of capital assets used in Macquarie Infrastructure Corporation 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 MIC is equal to 18.2%. 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 - $2964.602 million for Macquarie Infrastructure Corporation - 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 85.939 million for Macquarie Infrastructure Corporation 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 Macquarie Infrastructure Corporation at the current share price and the inputted number of shares is $3.4 billion.

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