Intrinsic value of Matrix Service Company - MTRX

Previous Close

$19.71

  Intrinsic Value

$56.52

stock screener

  Rating & Target

str. buy

+187%

Previous close

$19.71

 
Intrinsic value

$56.52

 
Up/down potential

+187%

 
Rating

str. buy

We calculate the intrinsic value of MTRX 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 0.5

 

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, %
  20.40
  18.86
  17.47
  16.23
  15.10
  14.09
  13.18
  12.37
  11.63
  10.97
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.69
  6.52
  6.36
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
Revenue, $m
  1,315
  1,563
  1,836
  2,134
  2,456
  2,802
  3,172
  3,564
  3,978
  4,414
  4,872
  5,351
  5,852
  6,373
  6,916
  7,481
  8,069
  8,680
  9,314
  9,974
  10,659
  11,372
  12,113
  12,884
  13,686
  14,522
  15,393
  16,300
  17,246
  18,234
Variable operating expenses, $m
  1,127
  1,337
  1,569
  1,821
  2,095
  2,388
  2,702
  3,034
  3,386
  3,756
  4,132
  4,538
  4,963
  5,405
  5,866
  6,345
  6,843
  7,361
  7,900
  8,459
  9,040
  9,644
  10,273
  10,927
  11,607
  12,316
  13,054
  13,824
  14,627
  15,464
Fixed operating expenses, $m
  173
  177
  180
  184
  188
  193
  197
  201
  206
  210
  215
  219
  224
  229
  234
  239
  245
  250
  256
  261
  267
  273
  279
  285
  291
  298
  304
  311
  318
  325
Total operating expenses, $m
  1,300
  1,514
  1,749
  2,005
  2,283
  2,581
  2,899
  3,235
  3,592
  3,966
  4,347
  4,757
  5,187
  5,634
  6,100
  6,584
  7,088
  7,611
  8,156
  8,720
  9,307
  9,917
  10,552
  11,212
  11,898
  12,614
  13,358
  14,135
  14,945
  15,789
Operating income, $m
  15
  49
  87
  128
  173
  221
  273
  328
  387
  449
  525
  593
  665
  739
  816
  897
  981
  1,068
  1,159
  1,254
  1,352
  1,455
  1,561
  1,672
  1,788
  1,908
  2,034
  2,165
  2,302
  2,445
EBITDA, $m
  44
  81
  122
  167
  216
  269
  325
  386
  450
  517
  588
  662
  739
  820
  905
  993
  1,084
  1,179
  1,278
  1,381
  1,488
  1,600
  1,716
  1,837
  1,963
  2,094
  2,231
  2,373
  2,522
  2,678
Interest expense (income), $m
  2
  0
  6
  12
  19
  27
  35
  44
  53
  63
  73
  85
  96
  108
  121
  134
  148
  162
  177
  193
  209
  226
  243
  261
  280
  300
  320
  342
  364
  387
  411
Earnings before tax, $m
  15
  43
  75
  109
  146
  186
  230
  275
  324
  375
  441
  497
  556
  618
  682
  749
  819
  891
  966
  1,045
  1,126
  1,211
  1,300
  1,392
  1,488
  1,588
  1,692
  1,801
  1,915
  2,034
Tax expense, $m
  4
  12
  20
  29
  39
  50
  62
  74
  87
  101
  119
  134
  150
  167
  184
  202
  221
  241
  261
  282
  304
  327
  351
  376
  402
  429
  457
  486
  517
  549
Net income, $m
  11
  32
  54
  79
  107
  136
  168
  201
  236
  274
  322
  363
  406
  451
  498
  547
  598
  650
  705
  763
  822
  884
  949
  1,016
  1,086
  1,159
  1,235
  1,315
  1,398
  1,485

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
  672
  799
  938
  1,090
  1,255
  1,432
  1,621
  1,821
  2,033
  2,256
  2,490
  2,734
  2,990
  3,257
  3,534
  3,823
  4,123
  4,435
  4,760
  5,096
  5,447
  5,811
  6,190
  6,583
  6,994
  7,421
  7,865
  8,329
  8,813
  9,317
Adjusted assets (=assets-cash), $m
  672
  799
  938
  1,090
  1,255
  1,432
  1,621
  1,821
  2,033
  2,256
  2,490
  2,734
  2,990
  3,257
  3,534
  3,823
  4,123
  4,435
  4,760
  5,096
  5,447
  5,811
  6,190
  6,583
  6,994
  7,421
  7,865
  8,329
  8,813
  9,317
Revenue / Adjusted assets
  1.957
  1.956
  1.957
  1.958
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
  1.957
Average production assets, $m
  170
  202
  237
  275
  317
  361
  409
  460
  513
  569
  629
  690
  755
  822
  892
  965
  1,041
  1,120
  1,202
  1,287
  1,375
  1,467
  1,563
  1,662
  1,766
  1,873
  1,986
  2,103
  2,225
  2,352
Working capital, $m
  66
  78
  92
  107
  123
  140
  159
  178
  199
  221
  244
  268
  293
  319
  346
  374
  403
  434
  466
  499
  533
  569
  606
  644
  684
  726
  770
  815
  862
  912
Total debt, $m
  49
  103
  163
  229
  299
  375
  456
  542
  633
  729
  829
  934
  1,044
  1,158
  1,277
  1,401
  1,530
  1,664
  1,803
  1,947
  2,097
  2,254
  2,416
  2,585
  2,761
  2,944
  3,135
  3,334
  3,541
  3,758
Total liabilities, $m
  288
  343
  402
  468
  538
  614
  695
  781
  872
  968
  1,068
  1,173
  1,283
  1,397
  1,516
  1,640
  1,769
  1,903
  2,042
  2,186
  2,337
  2,493
  2,655
  2,824
  3,000
  3,183
  3,374
  3,573
  3,781
  3,997
Total equity, $m
  384
  456
  536
  623
  717
  818
  925
  1,040
  1,161
  1,288
  1,422
  1,561
  1,707
  1,860
  2,018
  2,183
  2,354
  2,533
  2,718
  2,910
  3,110
  3,318
  3,534
  3,759
  3,993
  4,237
  4,491
  4,756
  5,032
  5,320
Total liabilities and equity, $m
  672
  799
  938
  1,091
  1,255
  1,432
  1,620
  1,821
  2,033
  2,256
  2,490
  2,734
  2,990
  3,257
  3,534
  3,823
  4,123
  4,436
  4,760
  5,096
  5,447
  5,811
  6,189
  6,583
  6,993
  7,420
  7,865
  8,329
  8,813
  9,317
Debt-to-equity ratio
  0.130
  0.230
  0.300
  0.370
  0.420
  0.460
  0.490
  0.520
  0.550
  0.570
  0.580
  0.600
  0.610
  0.620
  0.630
  0.640
  0.650
  0.660
  0.660
  0.670
  0.670
  0.680
  0.680
  0.690
  0.690
  0.690
  0.700
  0.700
  0.700
  0.710
Adjusted equity ratio
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571
  0.571

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  32
  54
  79
  107
  136
  168
  201
  236
  274
  322
  363
  406
  451
  498
  547
  598
  650
  705
  763
  822
  884
  949
  1,016
  1,086
  1,159
  1,235
  1,315
  1,398
  1,485
Depreciation, amort., depletion, $m
  29
  32
  35
  39
  43
  48
  52
  57
  63
  68
  62
  68
  75
  81
  88
  96
  103
  111
  119
  127
  136
  145
  155
  165
  175
  185
  197
  208
  220
  233
Funds from operations, $m
  40
  63
  90
  119
  150
  184
  220
  258
  299
  342
  384
  431
  481
  532
  586
  642
  701
  761
  824
  890
  958
  1,029
  1,103
  1,181
  1,261
  1,345
  1,432
  1,523
  1,618
  1,718
Change in working capital, $m
  11
  12
  14
  15
  16
  17
  18
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  45
  47
  49
Cash from operations, $m
  29
  51
  76
  104
  134
  166
  201
  239
  278
  320
  361
  407
  456
  506
  559
  614
  671
  731
  793
  857
  924
  994
  1,066
  1,142
  1,221
  1,303
  1,389
  1,478
  1,571
  1,668
Maintenance CAPEX, $m
  -14
  -17
  -20
  -23
  -27
  -31
  -36
  -41
  -46
  -51
  -56
  -62
  -68
  -75
  -81
  -88
  -96
  -103
  -111
  -119
  -127
  -136
  -145
  -155
  -165
  -175
  -185
  -197
  -208
  -220
New CAPEX, $m
  -28
  -32
  -35
  -38
  -42
  -45
  -48
  -51
  -53
  -56
  -59
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -82
  -85
  -88
  -92
  -96
  -99
  -104
  -108
  -112
  -117
  -122
  -127
Cash from investing activities, $m
  -42
  -49
  -55
  -61
  -69
  -76
  -84
  -92
  -99
  -107
  -115
  -124
  -133
  -142
  -151
  -161
  -172
  -182
  -193
  -204
  -215
  -228
  -241
  -254
  -269
  -283
  -297
  -314
  -330
  -347
Free cash flow, $m
  -14
  2
  21
  42
  65
  90
  118
  148
  179
  213
  246
  283
  323
  364
  408
  453
  500
  549
  600
  653
  708
  766
  826
  888
  953
  1,020
  1,091
  1,164
  1,241
  1,321
Issuance/(repayment) of debt, $m
  49
  54
  60
  65
  71
  76
  81
  86
  91
  96
  100
  105
  110
  114
  119
  124
  129
  134
  139
  145
  150
  156
  162
  169
  176
  183
  191
  199
  207
  216
Issuance/(repurchase) of shares, $m
  54
  41
  25
  7
  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  
  103
  95
  85
  72
  71
  76
  81
  86
  91
  96
  100
  105
  110
  114
  119
  124
  129
  134
  139
  145
  150
  156
  162
  169
  176
  183
  191
  199
  207
  216
Total cash flow (excl. dividends), $m
  89
  97
  106
  115
  136
  166
  199
  234
  270
  309
  346
  388
  433
  479
  527
  577
  629
  683
  739
  798
  859
  922
  988
  1,057
  1,129
  1,204
  1,282
  1,363
  1,448
  1,537
Retained Cash Flow (-), $m
  -65
  -72
  -80
  -87
  -94
  -101
  -108
  -114
  -121
  -127
  -134
  -140
  -146
  -152
  -158
  -165
  -171
  -178
  -185
  -192
  -200
  -208
  -216
  -225
  -234
  -244
  -254
  -265
  -276
  -288
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
  24
  25
  26
  28
  42
  65
  91
  119
  149
  182
  213
  249
  287
  326
  368
  412
  457
  505
  554
  605
  659
  714
  772
  832
  895
  960
  1,028
  1,098
  1,172
  1,249
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
  23
  23
  23
  23
  32
  47
  62
  75
  86
  95
  101
  106
  109
  110
  108
  105
  99
  93
  85
  77
  68
  59
  51
  42
  35
  28
  22
  17
  13
  9
Current shareholders' claim on cash, %
  90.8
  85.3
  82.5
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8
  81.8

Matrix Service Company provides engineering, fabrication, infrastructure, construction and maintenance services primarily to the oil, gas, power, petrochemical, industrial, mining and minerals markets. The Company's segments include Electrical Infrastructure, Oil Gas & Chemical, Storage Solutions and Industrial. The Electrical Infrastructure segment primarily includes construction and maintenance services to a range of power generation facilities, such as combined cycle plants, natural gas fired power stations and renewable energy installations. The Oil Gas & Chemical segment includes turnaround activities, plant maintenance services and construction in the downstream petroleum industry. The Storage Solutions segment includes new construction of crude and refined products aboveground storage tanks (ASTs), as well as planned and emergency maintenance services. The Industrial segment includes construction and maintenance work in the iron and steel and mining and minerals industries.

FINANCIAL RATIOS  of  Matrix Service Company (MTRX)

Valuation Ratios
P/E Ratio 0
Price to Sales 0.4
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow -27.6
Price to Free Cash Flow -16.9
Growth Rates
Sales Growth Rate -8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.3%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 14%
Total Debt to Equity 14%
Interest Coverage 2
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 2.7%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 5.1%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 6.8%
Gross Margin - 3 Yr. Avg. 7.6%
EBITDA Margin 2.2%
EBITDA Margin - 3 Yr. Avg. 3.1%
Operating Margin 0.4%
Oper. Margin - 3 Yr. Avg. 1.4%
Pre-Tax Margin 0.2%
Pre-Tax Margin - 3 Yr. Avg. 1.3%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 1.2%
Effective Tax Rate 100%
Eff/ Tax Rate - 3 Yr. Avg. 86.7%
Payout Ratio 0%

MTRX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTRX stock intrinsic value calculation we used $1092 million for the last fiscal year's total revenue generated by Matrix Service Company. The default revenue input number comes from 0001 income statement of Matrix Service Company. 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 MTRX stock valuation model: a) initial revenue growth rate of 20.4% 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 MTRX is calculated based on our internal credit rating of Matrix Service Company, 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 Matrix Service Company.
    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 MTRX stock the variable cost ratio is equal to 85.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $169 million in the base year in the intrinsic value calculation for MTRX 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 11.6% for Matrix Service Company.

Corporate tax rate of 27% is the nominal tax rate for Matrix Service Company. 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 MTRX 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 MTRX are equal to 12.9%.

Life of production assets of 10.1 years is the average useful life of capital assets used in Matrix Service Company 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 MTRX is equal to 5%. 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 - $318.843 million for Matrix Service Company - 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 26.784 million for Matrix Service Company 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 Matrix Service Company at the current share price and the inputted number of shares is $0.5 billion.

RELATED COMPANIES Price Int.Val. Rating
AEGN Aegion Corp 19.43 0.65  str.sell
EME EMCOR Group, I 79.56 264.45  str.buy
CVX Chevron Corpor 119.86 247.45  str.buy
ES Eversource Ene 69.96 31.15  str.sell
EIX Edison Interna 63.09 21.57  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.