Intrinsic value of Marten Transport, Ltd. - MRTN

Previous Close

$19.38

  Intrinsic Value

$2.64

stock screener

  Rating & Target

str. sell

-86%

Previous close

$19.38

 
Intrinsic value

$2.64

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of MRTN 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 1.1

 

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, %
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
Revenue, $m
  879
  976
  1,077
  1,182
  1,292
  1,407
  1,527
  1,652
  1,781
  1,916
  2,056
  2,201
  2,352
  2,509
  2,673
  2,843
  3,020
  3,204
  3,396
  3,596
  3,804
  4,022
  4,249
  4,487
  4,735
  4,994
  5,265
  5,548
  5,845
  6,155
Variable operating expenses, $m
  743
  824
  910
  999
  1,092
  1,189
  1,290
  1,396
  1,505
  1,619
  1,737
  1,860
  1,988
  2,120
  2,258
  2,402
  2,552
  2,707
  2,869
  3,038
  3,215
  3,399
  3,591
  3,791
  4,001
  4,220
  4,449
  4,688
  4,939
  5,201
Fixed operating expenses, $m
  53
  54
  56
  57
  58
  59
  61
  62
  63
  65
  66
  68
  69
  71
  72
  74
  75
  77
  79
  80
  82
  84
  86
  88
  90
  92
  94
  96
  98
  100
Total operating expenses, $m
  796
  878
  966
  1,056
  1,150
  1,248
  1,351
  1,458
  1,568
  1,684
  1,803
  1,928
  2,057
  2,191
  2,330
  2,476
  2,627
  2,784
  2,948
  3,118
  3,297
  3,483
  3,677
  3,879
  4,091
  4,312
  4,543
  4,784
  5,037
  5,301
Operating income, $m
  83
  97
  111
  127
  142
  159
  176
  194
  213
  232
  253
  274
  296
  318
  342
  367
  393
  420
  448
  477
  508
  539
  573
  608
  644
  682
  722
  764
  808
  854
EBITDA, $m
  183
  207
  233
  260
  289
  318
  349
  381
  415
  449
  485
  523
  562
  603
  645
  689
  735
  782
  832
  884
  938
  995
  1,054
  1,116
  1,180
  1,248
  1,319
  1,393
  1,470
  1,551
Interest expense (income), $m
  0
  0
  1
  2
  4
  5
  6
  8
  9
  11
  12
  14
  15
  17
  19
  21
  23
  25
  27
  29
  32
  34
  37
  39
  42
  45
  48
  51
  55
  58
  62
Earnings before tax, $m
  83
  96
  109
  123
  138
  153
  169
  185
  202
  220
  239
  258
  278
  299
  321
  344
  368
  392
  418
  445
  473
  503
  533
  566
  599
  634
  671
  710
  750
  792
Tax expense, $m
  22
  26
  29
  33
  37
  41
  46
  50
  55
  59
  64
  70
  75
  81
  87
  93
  99
  106
  113
  120
  128
  136
  144
  153
  162
  171
  181
  192
  203
  214
Net income, $m
  61
  70
  80
  90
  100
  112
  123
  135
  148
  161
  174
  188
  203
  219
  234
  251
  268
  286
  305
  325
  346
  367
  389
  413
  437
  463
  490
  518
  548
  579

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
  842
  934
  1,030
  1,131
  1,237
  1,347
  1,461
  1,581
  1,705
  1,833
  1,967
  2,106
  2,251
  2,401
  2,558
  2,720
  2,890
  3,066
  3,249
  3,441
  3,641
  3,849
  4,066
  4,293
  4,531
  4,779
  5,038
  5,309
  5,593
  5,890
Adjusted assets (=assets-cash), $m
  842
  934
  1,030
  1,131
  1,237
  1,347
  1,461
  1,581
  1,705
  1,833
  1,967
  2,106
  2,251
  2,401
  2,558
  2,720
  2,890
  3,066
  3,249
  3,441
  3,641
  3,849
  4,066
  4,293
  4,531
  4,779
  5,038
  5,309
  5,593
  5,890
Revenue / Adjusted assets
  1.044
  1.045
  1.046
  1.045
  1.044
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
  1.045
Average production assets, $m
  647
  718
  792
  870
  951
  1,036
  1,124
  1,216
  1,311
  1,410
  1,513
  1,620
  1,731
  1,847
  1,967
  2,092
  2,222
  2,358
  2,499
  2,646
  2,800
  2,960
  3,127
  3,302
  3,485
  3,675
  3,875
  4,083
  4,302
  4,530
Working capital, $m
  39
  43
  47
  52
  57
  62
  67
  73
  78
  84
  90
  97
  103
  110
  118
  125
  133
  141
  149
  158
  167
  177
  187
  197
  208
  220
  232
  244
  257
  271
Total debt, $m
  21
  42
  65
  89
  114
  140
  167
  195
  224
  255
  286
  319
  353
  389
  426
  464
  504
  546
  589
  634
  681
  730
  782
  835
  891
  950
  1,011
  1,075
  1,142
  1,212
Total liabilities, $m
  199
  220
  243
  267
  292
  318
  345
  373
  402
  433
  464
  497
  531
  567
  604
  642
  682
  724
  767
  812
  859
  908
  960
  1,013
  1,069
  1,128
  1,189
  1,253
  1,320
  1,390
Total equity, $m
  643
  713
  787
  864
  945
  1,029
  1,117
  1,208
  1,302
  1,401
  1,503
  1,609
  1,720
  1,835
  1,954
  2,078
  2,208
  2,342
  2,483
  2,629
  2,781
  2,941
  3,107
  3,280
  3,461
  3,651
  3,849
  4,056
  4,273
  4,500
Total liabilities and equity, $m
  842
  933
  1,030
  1,131
  1,237
  1,347
  1,462
  1,581
  1,704
  1,834
  1,967
  2,106
  2,251
  2,402
  2,558
  2,720
  2,890
  3,066
  3,250
  3,441
  3,640
  3,849
  4,067
  4,293
  4,530
  4,779
  5,038
  5,309
  5,593
  5,890
Debt-to-equity ratio
  0.030
  0.060
  0.080
  0.100
  0.120
  0.140
  0.150
  0.160
  0.170
  0.180
  0.190
  0.200
  0.210
  0.210
  0.220
  0.220
  0.230
  0.230
  0.240
  0.240
  0.240
  0.250
  0.250
  0.250
  0.260
  0.260
  0.260
  0.270
  0.270
  0.270
Adjusted equity ratio
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764
  0.764

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  61
  70
  80
  90
  100
  112
  123
  135
  148
  161
  174
  188
  203
  219
  234
  251
  268
  286
  305
  325
  346
  367
  389
  413
  437
  463
  490
  518
  548
  579
Depreciation, amort., depletion, $m
  100
  110
  122
  134
  146
  159
  173
  187
  202
  217
  233
  249
  266
  284
  303
  322
  342
  363
  384
  407
  431
  455
  481
  508
  536
  565
  596
  628
  662
  697
Funds from operations, $m
  160
  180
  202
  224
  247
  271
  296
  322
  349
  378
  407
  438
  470
  503
  537
  573
  610
  649
  690
  732
  776
  822
  871
  921
  973
  1,029
  1,086
  1,146
  1,209
  1,275
Change in working capital, $m
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
Cash from operations, $m
  156
  176
  197
  219
  242
  266
  291
  317
  344
  372
  401
  431
  463
  496
  530
  565
  603
  641
  681
  723
  767
  813
  861
  910
  963
  1,017
  1,074
  1,134
  1,196
  1,262
Maintenance CAPEX, $m
  -89
  -100
  -110
  -122
  -134
  -146
  -159
  -173
  -187
  -202
  -217
  -233
  -249
  -266
  -284
  -303
  -322
  -342
  -363
  -384
  -407
  -431
  -455
  -481
  -508
  -536
  -565
  -596
  -628
  -662
New CAPEX, $m
  -67
  -71
  -74
  -78
  -81
  -85
  -88
  -92
  -95
  -99
  -103
  -107
  -111
  -116
  -120
  -125
  -130
  -136
  -141
  -147
  -154
  -160
  -167
  -175
  -182
  -191
  -199
  -209
  -218
  -228
Cash from investing activities, $m
  -156
  -171
  -184
  -200
  -215
  -231
  -247
  -265
  -282
  -301
  -320
  -340
  -360
  -382
  -404
  -428
  -452
  -478
  -504
  -531
  -561
  -591
  -622
  -656
  -690
  -727
  -764
  -805
  -846
  -890
Free cash flow, $m
  0
  6
  12
  19
  27
  35
  43
  52
  61
  71
  81
  92
  102
  114
  126
  138
  150
  164
  177
  192
  206
  222
  238
  255
  272
  290
  309
  329
  350
  372
Issuance/(repayment) of debt, $m
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  27
  22
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  35
  37
  38
  40
  42
  43
  45
  47
  49
  51
  54
  56
  59
  61
  64
  67
  70
Total cash flow (excl. dividends), $m
  27
  28
  35
  43
  52
  61
  70
  80
  91
  101
  113
  124
  137
  149
  162
  176
  190
  205
  221
  237
  254
  271
  289
  308
  328
  349
  370
  393
  417
  442
Retained Cash Flow (-), $m
  -67
  -70
  -74
  -77
  -81
  -84
  -88
  -91
  -95
  -98
  -102
  -106
  -110
  -115
  -119
  -124
  -129
  -135
  -140
  -146
  -153
  -159
  -166
  -174
  -181
  -189
  -198
  -207
  -217
  -227
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
  -40
  -42
  -39
  -34
  -29
  -23
  -17
  -11
  -4
  3
  10
  18
  26
  34
  43
  52
  61
  71
  80
  91
  101
  112
  123
  135
  147
  159
  172
  186
  200
  215
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
  -39
  -39
  -34
  -28
  -22
  -17
  -12
  -7
  -2
  2
  5
  8
  10
  12
  13
  13
  13
  13
  12
  12
  10
  9
  8
  7
  6
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4

Marten Transport, Ltd. is a temperature-sensitive truckload carrier. The Company focuses on transporting and distributing food and other consumer-packaged goods that require a temperature-controlled or insulated environment. The Company operates through four segments: Truckload, Dedicated, Intermodal and Brokerage. It operates throughout the United States and in parts of Canada and Mexico. The Company's medium-to-long-haul traffic lanes are between the Midwest and the West Coast, Southwest, Southeast, and the East Coast, as well as from California to the Pacific Northwest. It provides regional truckload carrier services in the Southeast, West Coast, Midwest, South Central and Northeast regions. It also offers loading and unloading activities, equipment detention and other ancillary services. The Company's Truckload segment provides a combination of regional short-haul and medium-to-long-haul full-load transportation services.

FINANCIAL RATIOS  of  Marten Transport, Ltd. (MRTN)

Valuation Ratios
P/E Ratio 31.9
Price to Sales 1.6
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 7.9
Price to Free Cash Flow -37.6
Growth Rates
Sales Growth Rate 0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.8%
Cap. Spend. - 3 Yr. Gr. Rate 6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 1.8%
Total Debt to Equity 1.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.1%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 7.4%
Ret/ On T. Cap. - 3 Yr. Avg. 7.8%
Return On Equity 7.8%
Return On Equity - 3 Yr. Avg. 8.3%
Asset Turnover 1
Profitability Ratios
Gross Margin 36.1%
Gross Margin - 3 Yr. Avg. 34.3%
EBITDA Margin 20.7%
EBITDA Margin - 3 Yr. Avg. 19.7%
Operating Margin 8.6%
Oper. Margin - 3 Yr. Avg. 8.5%
Pre-Tax Margin 8.5%
Pre-Tax Margin - 3 Yr. Avg. 8.5%
Net Profit Margin 4.9%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 42.1%
Eff/ Tax Rate - 3 Yr. Avg. 41.8%
Payout Ratio 9.1%

MRTN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MRTN stock intrinsic value calculation we used $788 million for the last fiscal year's total revenue generated by Marten Transport, Ltd.. The default revenue input number comes from 0001 income statement of Marten Transport, Ltd.. 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 MRTN stock valuation model: a) initial revenue growth rate of 11.6% 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 MRTN is calculated based on our internal credit rating of Marten Transport, Ltd., 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 Marten Transport, Ltd..
    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 MRTN stock the variable cost ratio is equal to 84.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $52 million in the base year in the intrinsic value calculation for MRTN 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 Marten Transport, Ltd..

Corporate tax rate of 27% is the nominal tax rate for Marten Transport, Ltd.. 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 MRTN 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 MRTN are equal to 73.6%.

Life of production assets of 6.5 years is the average useful life of capital assets used in Marten Transport, Ltd. 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 MRTN is equal to 4.4%. 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 - $575.954 million for Marten Transport, Ltd. - 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 54.470 million for Marten Transport, Ltd. 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 Marten Transport, Ltd. at the current share price and the inputted number of shares is $1.1 billion.

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