Intrinsic value of MYR Group, Inc. - MYRG

Previous Close

$33.67

  Intrinsic Value

$232.98

stock screener

  Rating & Target

str. buy

+592%

Previous close

$33.67

 
Intrinsic value

$232.98

 
Up/down potential

+592%

 
Rating

str. buy

We calculate the intrinsic value of MYRG 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 0.6

 

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, %
  19.50
  18.05
  16.75
  15.57
  14.51
  13.56
  12.71
  11.94
  11.24
  10.62
  10.06
  9.55
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
Revenue, $m
  1,830
  2,160
  2,521
  2,914
  3,337
  3,790
  4,271
  4,781
  5,318
  5,883
  6,474
  7,093
  7,738
  8,410
  9,109
  9,837
  10,593
  11,379
  12,195
  13,044
  13,926
  14,843
  15,798
  16,791
  17,824
  18,901
  20,023
  21,193
  22,414
  23,687
Variable operating expenses, $m
  1,533
  1,808
  2,110
  2,437
  2,789
  3,166
  3,567
  3,992
  4,440
  4,910
  5,394
  5,909
  6,447
  7,007
  7,589
  8,195
  8,825
  9,480
  10,160
  10,867
  11,602
  12,366
  13,161
  13,989
  14,850
  15,747
  16,682
  17,656
  18,673
  19,734
Fixed operating expenses, $m
  205
  210
  215
  219
  224
  229
  234
  239
  244
  250
  255
  261
  267
  273
  279
  285
  291
  297
  304
  311
  317
  324
  332
  339
  346
  354
  362
  370
  378
  386
Total operating expenses, $m
  1,738
  2,018
  2,325
  2,656
  3,013
  3,395
  3,801
  4,231
  4,684
  5,160
  5,649
  6,170
  6,714
  7,280
  7,868
  8,480
  9,116
  9,777
  10,464
  11,178
  11,919
  12,690
  13,493
  14,328
  15,196
  16,101
  17,044
  18,026
  19,051
  20,120
Operating income, $m
  91
  141
  197
  258
  324
  394
  470
  550
  634
  723
  825
  923
  1,025
  1,131
  1,242
  1,357
  1,477
  1,602
  1,731
  1,866
  2,007
  2,153
  2,305
  2,463
  2,628
  2,800
  2,980
  3,167
  3,363
  3,567
EBITDA, $m
  140
  198
  262
  331
  406
  486
  572
  663
  760
  861
  967
  1,078
  1,194
  1,315
  1,441
  1,573
  1,709
  1,851
  1,999
  2,152
  2,312
  2,478
  2,651
  2,831
  3,019
  3,215
  3,419
  3,632
  3,854
  4,086
Interest expense (income), $m
  1
  5
  9
  14
  20
  26
  32
  39
  46
  54
  62
  70
  79
  89
  98
  108
  119
  130
  141
  153
  165
  178
  191
  205
  219
  234
  250
  266
  283
  300
  319
Earnings before tax, $m
  86
  132
  183
  238
  298
  362
  431
  503
  580
  661
  755
  843
  936
  1,033
  1,133
  1,238
  1,347
  1,460
  1,578
  1,701
  1,829
  1,961
  2,100
  2,244
  2,394
  2,550
  2,714
  2,884
  3,062
  3,248
Tax expense, $m
  23
  36
  49
  64
  80
  98
  116
  136
  157
  178
  204
  228
  253
  279
  306
  334
  364
  394
  426
  459
  494
  530
  567
  606
  646
  689
  733
  779
  827
  877
Net income, $m
  63
  96
  133
  174
  218
  264
  314
  367
  424
  482
  551
  616
  683
  754
  827
  904
  983
  1,066
  1,152
  1,242
  1,335
  1,432
  1,533
  1,638
  1,748
  1,862
  1,981
  2,105
  2,235
  2,371

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
  895
  1,056
  1,233
  1,425
  1,632
  1,853
  2,089
  2,338
  2,601
  2,877
  3,166
  3,468
  3,784
  4,112
  4,454
  4,810
  5,180
  5,564
  5,964
  6,379
  6,810
  7,258
  7,725
  8,211
  8,716
  9,243
  9,791
  10,363
  10,960
  11,583
Adjusted assets (=assets-cash), $m
  895
  1,056
  1,233
  1,425
  1,632
  1,853
  2,089
  2,338
  2,601
  2,877
  3,166
  3,468
  3,784
  4,112
  4,454
  4,810
  5,180
  5,564
  5,964
  6,379
  6,810
  7,258
  7,725
  8,211
  8,716
  9,243
  9,791
  10,363
  10,960
  11,583
Revenue / Adjusted assets
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
  2.045
Average production assets, $m
  229
  270
  315
  364
  417
  474
  534
  598
  665
  735
  809
  887
  967
  1,051
  1,139
  1,230
  1,324
  1,422
  1,524
  1,631
  1,741
  1,855
  1,975
  2,099
  2,228
  2,363
  2,503
  2,649
  2,802
  2,961
Working capital, $m
  227
  268
  313
  361
  414
  470
  530
  593
  659
  729
  803
  880
  959
  1,043
  1,130
  1,220
  1,314
  1,411
  1,512
  1,617
  1,727
  1,841
  1,959
  2,082
  2,210
  2,344
  2,483
  2,628
  2,779
  2,937
Total debt, $m
  176
  268
  368
  477
  595
  721
  855
  997
  1,146
  1,304
  1,468
  1,640
  1,820
  2,007
  2,201
  2,404
  2,614
  2,833
  3,060
  3,296
  3,541
  3,797
  4,062
  4,338
  4,626
  4,926
  5,238
  5,563
  5,903
  6,257
Total liabilities, $m
  509
  601
  702
  811
  928
  1,054
  1,188
  1,330
  1,480
  1,637
  1,801
  1,973
  2,153
  2,340
  2,535
  2,737
  2,947
  3,166
  3,393
  3,629
  3,875
  4,130
  4,396
  4,672
  4,959
  5,259
  5,571
  5,897
  6,236
  6,591
Total equity, $m
  386
  455
  531
  614
  703
  799
  900
  1,008
  1,121
  1,240
  1,365
  1,495
  1,631
  1,772
  1,920
  2,073
  2,233
  2,398
  2,570
  2,749
  2,935
  3,128
  3,329
  3,539
  3,757
  3,984
  4,220
  4,467
  4,724
  4,992
Total liabilities and equity, $m
  895
  1,056
  1,233
  1,425
  1,631
  1,853
  2,088
  2,338
  2,601
  2,877
  3,166
  3,468
  3,784
  4,112
  4,455
  4,810
  5,180
  5,564
  5,963
  6,378
  6,810
  7,258
  7,725
  8,211
  8,716
  9,243
  9,791
  10,364
  10,960
  11,583
Debt-to-equity ratio
  0.460
  0.590
  0.690
  0.780
  0.850
  0.900
  0.950
  0.990
  1.020
  1.050
  1.080
  1.100
  1.120
  1.130
  1.150
  1.160
  1.170
  1.180
  1.190
  1.200
  1.210
  1.210
  1.220
  1.230
  1.230
  1.240
  1.240
  1.250
  1.250
  1.250
Adjusted equity ratio
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431
  0.431

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  63
  96
  133
  174
  218
  264
  314
  367
  424
  482
  551
  616
  683
  754
  827
  904
  983
  1,066
  1,152
  1,242
  1,335
  1,432
  1,533
  1,638
  1,748
  1,862
  1,981
  2,105
  2,235
  2,371
Depreciation, amort., depletion, $m
  49
  56
  64
  73
  82
  92
  103
  114
  126
  138
  142
  156
  170
  184
  200
  216
  232
  250
  267
  286
  305
  326
  346
  368
  391
  414
  439
  465
  492
  519
Funds from operations, $m
  112
  153
  198
  247
  300
  357
  417
  481
  549
  621
  693
  771
  853
  938
  1,027
  1,119
  1,216
  1,316
  1,420
  1,528
  1,640
  1,757
  1,879
  2,006
  2,138
  2,276
  2,420
  2,570
  2,727
  2,891
Change in working capital, $m
  37
  41
  45
  49
  52
  56
  60
  63
  67
  70
  73
  77
  80
  83
  87
  90
  94
  97
  101
  105
  109
  114
  118
  123
  128
  134
  139
  145
  151
  158
Cash from operations, $m
  75
  112
  153
  198
  247
  300
  357
  418
  483
  550
  620
  695
  773
  855
  940
  1,029
  1,122
  1,218
  1,318
  1,423
  1,531
  1,644
  1,761
  1,883
  2,010
  2,143
  2,281
  2,425
  2,576
  2,733
Maintenance CAPEX, $m
  -34
  -40
  -47
  -55
  -64
  -73
  -83
  -94
  -105
  -117
  -129
  -142
  -156
  -170
  -184
  -200
  -216
  -232
  -250
  -267
  -286
  -305
  -326
  -346
  -368
  -391
  -414
  -439
  -465
  -492
New CAPEX, $m
  -37
  -41
  -45
  -49
  -53
  -57
  -60
  -64
  -67
  -71
  -74
  -77
  -81
  -84
  -87
  -91
  -95
  -98
  -102
  -106
  -110
  -115
  -119
  -124
  -129
  -135
  -140
  -146
  -153
  -159
Cash from investing activities, $m
  -71
  -81
  -92
  -104
  -117
  -130
  -143
  -158
  -172
  -188
  -203
  -219
  -237
  -254
  -271
  -291
  -311
  -330
  -352
  -373
  -396
  -420
  -445
  -470
  -497
  -526
  -554
  -585
  -618
  -651
Free cash flow, $m
  4
  30
  60
  94
  130
  171
  214
  261
  310
  363
  417
  475
  537
  601
  668
  739
  812
  888
  967
  1,049
  1,135
  1,224
  1,316
  1,412
  1,513
  1,617
  1,726
  1,840
  1,958
  2,082
Issuance/(repayment) of debt, $m
  83
  92
  101
  109
  118
  126
  134
  142
  150
  157
  165
  172
  179
  187
  195
  202
  210
  219
  227
  236
  245
  255
  265
  276
  288
  300
  312
  326
  340
  354
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  
  83
  92
  101
  109
  118
  126
  134
  142
  150
  157
  165
  172
  179
  187
  195
  202
  210
  219
  227
  236
  245
  255
  265
  276
  288
  300
  312
  326
  340
  354
Total cash flow (excl. dividends), $m
  88
  122
  161
  203
  248
  297
  348
  403
  460
  520
  581
  647
  716
  788
  863
  941
  1,022
  1,106
  1,194
  1,285
  1,380
  1,479
  1,582
  1,689
  1,800
  1,917
  2,038
  2,165
  2,298
  2,436
Retained Cash Flow (-), $m
  -63
  -70
  -76
  -83
  -89
  -95
  -101
  -107
  -113
  -119
  -125
  -130
  -136
  -142
  -147
  -153
  -159
  -166
  -172
  -179
  -186
  -193
  -201
  -209
  -218
  -227
  -236
  -247
  -257
  -268
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
  25
  53
  85
  120
  159
  201
  247
  295
  347
  401
  457
  517
  580
  647
  716
  788
  863
  941
  1,022
  1,106
  1,194
  1,285
  1,381
  1,479
  1,583
  1,690
  1,802
  1,919
  2,041
  2,168
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
  24
  48
  74
  99
  123
  146
  167
  184
  199
  210
  217
  221
  221
  217
  210
  200
  188
  173
  157
  141
  124
  107
  90
  75
  62
  49
  39
  30
  22
  16
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

MYR Group Inc. is a holding company. The Company, through its subsidiaries, provides specialty electrical construction services. The Company performs construction services in two segments: Transmission and Distribution (T&D), and Commercial and Industrial (C&I). The Company provides C&I electrical contracting services to general contractors, commercial and industrial facility owners, local governments and developers in the western and northeastern United States and western Canada. The Company's T&D segment serves the T&D sector of the electric utility industry. The Company provides a range of services on electric transmission and distribution networks and substation facilities, such as design, engineering, procurement, construction and upgrade. The Company's C&I segment provides services, such as the design, installation, maintenance and repair of commercial and industrial wiring, installation of traffic networks and the installation of bridge, roadway and tunnel lighting.

FINANCIAL RATIOS  of  MYR Group, Inc. (MYRG)

Valuation Ratios
P/E Ratio 26.2
Price to Sales 0.5
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 10.2
Price to Free Cash Flow 19
Growth Rates
Sales Growth Rate 7.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -46.8%
Cap. Spend. - 3 Yr. Gr. Rate -10.3%
Financial Strength
Quick Ratio 24
Current Ratio 0
LT Debt to Equity 24%
Total Debt to Equity 24.3%
Interest Coverage 39
Management Effectiveness
Return On Assets 3.9%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 6.4%
Ret/ On T. Cap. - 3 Yr. Avg. 8.9%
Return On Equity 7.1%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 2.1
Profitability Ratios
Gross Margin 11.8%
Gross Margin - 3 Yr. Avg. 12.4%
EBITDA Margin 6.8%
EBITDA Margin - 3 Yr. Avg. 8.1%
Operating Margin 3.3%
Oper. Margin - 3 Yr. Avg. 4.6%
Pre-Tax Margin 3.3%
Pre-Tax Margin - 3 Yr. Avg. 4.5%
Net Profit Margin 1.8%
Net Profit Margin - 3 Yr. Avg. 2.8%
Effective Tax Rate 44.7%
Eff/ Tax Rate - 3 Yr. Avg. 39.9%
Payout Ratio 0%

MYRG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MYRG stock intrinsic value calculation we used $1531 million for the last fiscal year's total revenue generated by MYR Group, Inc.. The default revenue input number comes from 0001 income statement of MYR Group, 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 MYRG stock valuation model: a) initial revenue growth rate of 19.5% 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 MYRG is calculated based on our internal credit rating of MYR Group, 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 MYR Group, 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 MYRG stock the variable cost ratio is equal to 83.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $201 million in the base year in the intrinsic value calculation for MYRG 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 MYR Group, Inc..

Corporate tax rate of 27% is the nominal tax rate for MYR Group, 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 MYRG 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 MYRG are equal to 12.5%.

Life of production assets of 5.7 years is the average useful life of capital assets used in MYR Group, 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 MYRG is equal to 12.4%. 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 - $322.984 million for MYR Group, 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 16.600 million for MYR Group, 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 MYR Group, Inc. at the current share price and the inputted number of shares is $0.6 billion.

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