Intrinsic value of MYR Group - MYRG

Previous Close

$30.45

  Intrinsic Value

$15.29

stock screener

  Rating & Target

sell

-50%

Previous close

$30.45

 
Intrinsic value

$15.29

 
Up/down potential

-50%

 
Rating

sell

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 0.5

 

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, %
  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
  1,431
  1,464
  1,502
  1,544
  1,591
  1,642
  1,698
  1,759
  1,824
  1,894
  1,969
  2,049
  2,134
  2,224
  2,320
  2,422
  2,530
  2,643
  2,764
  2,891
  3,025
  3,166
  3,315
  3,472
  3,637
  3,811
  3,994
  4,187
  4,390
  4,603
Variable operating expenses, $m
  1,383
  1,414
  1,450
  1,491
  1,536
  1,586
  1,639
  1,698
  1,760
  1,828
  1,894
  1,971
  2,053
  2,140
  2,232
  2,330
  2,433
  2,543
  2,658
  2,781
  2,909
  3,045
  3,189
  3,340
  3,499
  3,666
  3,842
  4,028
  4,223
  4,428
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
  1,383
  1,414
  1,450
  1,491
  1,536
  1,586
  1,639
  1,698
  1,760
  1,828
  1,894
  1,971
  2,053
  2,140
  2,232
  2,330
  2,433
  2,543
  2,658
  2,781
  2,909
  3,045
  3,189
  3,340
  3,499
  3,666
  3,842
  4,028
  4,223
  4,428
Operating income, $m
  49
  50
  51
  53
  55
  57
  59
  61
  64
  66
  75
  78
  81
  85
  88
  92
  96
  101
  105
  110
  115
  121
  126
  132
  139
  145
  152
  160
  167
  175
EBITDA, $m
  89
  91
  93
  96
  99
  102
  105
  109
  113
  117
  122
  127
  132
  138
  144
  150
  157
  164
  171
  179
  188
  196
  206
  215
  226
  236
  248
  260
  272
  285
Interest expense (income), $m
  1
  4
  5
  5
  6
  6
  7
  7
  8
  9
  10
  10
  11
  12
  13
  14
  16
  17
  18
  20
  21
  23
  24
  26
  28
  30
  32
  34
  36
  38
  41
Earnings before tax, $m
  44
  45
  46
  47
  49
  50
  52
  53
  55
  57
  65
  67
  69
  71
  74
  77
  80
  83
  86
  89
  93
  96
  100
  105
  109
  114
  118
  124
  129
  135
Tax expense, $m
  12
  12
  12
  13
  13
  14
  14
  14
  15
  15
  17
  18
  19
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
Net income, $m
  32
  33
  34
  35
  36
  37
  38
  39
  40
  41
  47
  49
  50
  52
  54
  56
  58
  60
  63
  65
  68
  70
  73
  76
  80
  83
  86
  90
  94
  98

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
  616
  630
  646
  664
  685
  707
  731
  757
  785
  815
  847
  882
  918
  957
  998
  1,042
  1,088
  1,137
  1,189
  1,244
  1,302
  1,362
  1,426
  1,494
  1,565
  1,640
  1,719
  1,802
  1,889
  1,981
Adjusted assets (=assets-cash), $m
  616
  630
  646
  664
  685
  707
  731
  757
  785
  815
  847
  882
  918
  957
  998
  1,042
  1,088
  1,137
  1,189
  1,244
  1,302
  1,362
  1,426
  1,494
  1,565
  1,640
  1,719
  1,802
  1,889
  1,981
Revenue / Adjusted assets
  2.323
  2.324
  2.325
  2.325
  2.323
  2.322
  2.323
  2.324
  2.324
  2.324
  2.325
  2.323
  2.325
  2.324
  2.325
  2.324
  2.325
  2.325
  2.325
  2.324
  2.323
  2.325
  2.325
  2.324
  2.324
  2.324
  2.323
  2.324
  2.324
  2.324
Average production assets, $m
  185
  189
  194
  199
  205
  212
  219
  227
  235
  244
  254
  264
  275
  287
  299
  312
  326
  341
  357
  373
  390
  408
  428
  448
  469
  492
  515
  540
  566
  594
Working capital, $m
  190
  195
  200
  205
  212
  218
  226
  234
  243
  252
  262
  273
  284
  296
  309
  322
  336
  352
  368
  384
  402
  421
  441
  462
  484
  507
  531
  557
  584
  612
Total debt, $m
  89
  97
  105
  115
  125
  137
  150
  163
  178
  194
  211
  229
  248
  268
  290
  313
  337
  363
  390
  419
  449
  481
  515
  550
  588
  627
  668
  712
  758
  806
Total liabilities, $m
  323
  331
  339
  349
  359
  371
  384
  397
  412
  428
  445
  463
  482
  502
  524
  547
  571
  597
  624
  653
  683
  715
  749
  784
  822
  861
  902
  946
  992
  1,040
Total equity, $m
  293
  299
  307
  316
  325
  336
  347
  359
  373
  387
  402
  419
  436
  455
  474
  495
  517
  540
  565
  591
  618
  647
  678
  710
  743
  779
  816
  856
  897
  941
Total liabilities and equity, $m
  616
  630
  646
  665
  684
  707
  731
  756
  785
  815
  847
  882
  918
  957
  998
  1,042
  1,088
  1,137
  1,189
  1,244
  1,301
  1,362
  1,427
  1,494
  1,565
  1,640
  1,718
  1,802
  1,889
  1,981
Debt-to-equity ratio
  0.310
  0.320
  0.340
  0.360
  0.390
  0.410
  0.430
  0.450
  0.480
  0.500
  0.520
  0.550
  0.570
  0.590
  0.610
  0.630
  0.650
  0.670
  0.690
  0.710
  0.730
  0.740
  0.760
  0.780
  0.790
  0.800
  0.820
  0.830
  0.840
  0.860
Adjusted equity ratio
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475
  0.475

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  32
  33
  34
  35
  36
  37
  38
  39
  40
  41
  47
  49
  50
  52
  54
  56
  58
  60
  63
  65
  68
  70
  73
  76
  80
  83
  86
  90
  94
  98
Depreciation, amort., depletion, $m
  40
  41
  42
  43
  44
  45
  46
  48
  49
  51
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
  110
Funds from operations, $m
  72
  74
  75
  77
  79
  82
  84
  87
  89
  93
  94
  98
  101
  105
  109
  114
  118
  123
  129
  134
  140
  146
  152
  159
  166
  174
  182
  190
  199
  208
Change in working capital, $m
  4
  4
  5
  6
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
Cash from operations, $m
  69
  69
  70
  72
  73
  75
  77
  79
  81
  83
  84
  87
  90
  93
  97
  100
  104
  108
  113
  117
  122
  127
  133
  138
  144
  151
  158
  165
  172
  180
Maintenance CAPEX, $m
  -33
  -34
  -35
  -36
  -37
  -38
  -39
  -41
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
New CAPEX, $m
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -28
Cash from investing activities, $m
  -37
  -38
  -40
  -41
  -43
  -45
  -46
  -49
  -50
  -53
  -55
  -57
  -60
  -63
  -65
  -68
  -72
  -75
  -79
  -82
  -86
  -90
  -95
  -99
  -104
  -109
  -115
  -120
  -126
  -133
Free cash flow, $m
  31
  31
  31
  30
  30
  30
  30
  30
  30
  31
  29
  30
  30
  31
  31
  32
  32
  33
  34
  35
  36
  37
  38
  39
  40
  41
  43
  44
  46
  47
Issuance/(repayment) of debt, $m
  7
  7
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  44
  46
  48
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  
  7
  7
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  44
  46
  48
Total cash flow (excl. dividends), $m
  38
  38
  39
  40
  41
  42
  43
  44
  45
  46
  46
  48
  49
  51
  53
  55
  57
  59
  61
  64
  66
  69
  71
  74
  78
  81
  84
  88
  92
  96
Retained Cash Flow (-), $m
  -6
  -7
  -8
  -9
  -10
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
  -44
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
  32
  32
  31
  31
  31
  31
  31
  31
  32
  32
  31
  31
  32
  33
  33
  34
  35
  36
  37
  38
  39
  40
  41
  42
  44
  45
  47
  48
  50
  52
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  30
  27
  25
  23
  21
  19
  17
  15
  13
  11
  9
  8
  7
  6
  5
  4
  3
  2
  2
  1
  1
  1
  1
  0
  0
  0
  0
  0
  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
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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 (MYRG)

Valuation Ratios
P/E Ratio 23.7
Price to Sales 0.4
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow 17.1
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 $1403.317 million for the last fiscal year's total revenue generated by MYR Group. The default revenue input number comes from 0001 income statement of MYR Group. 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 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 7%, whose default value for MYRG is calculated based on our internal credit rating of MYR Group, 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.
    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 96.6%.

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 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.

Corporate tax rate of 27% is the nominal tax rate for MYR Group. 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 12.9%.

Life of production assets of 5.4 years is the average useful life of capital assets used in MYR Group 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 13.3%. 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 - $287.039 million for MYR Group - 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 16.497 million for MYR Group 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 at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ MYR: 3Q Earnings Snapshot   [Oct-31-18 05:56PM  Associated Press]
▶ Is MYR Group Inc (NASDAQ:MYRG) Attractive At This PE Ratio?   [Aug-29-18 03:57PM  Simply Wall St.]
▶ MYR Group Inc. to Host Earnings Call   [Aug-02-18 08:00AM  ACCESSWIRE]
▶ MYR: 2Q Earnings Snapshot   [Aug-01-18 05:33PM  Associated Press]
▶ MYR Group Inc. Announces Appointment of New Board Member   [Jul-30-18 04:00PM  GlobeNewswire]
▶ MYR Group Acquires The Huen Electric Companies   [Jul-03-18 08:00AM  GlobeNewswire]
▶ MYR: 1Q Earnings Snapshot   [May-02-18 05:29PM  Associated Press]
▶ MYR Group Inc. to Host Earnings Call   [08:55AM  ACCESSWIRE]
▶ MYR tops 4Q profit forecasts   [Mar-07-18 04:59PM  Associated Press]
▶ ETFs with exposure to MYR Group, Inc. : November 27, 2017   [Nov-27-17 02:56PM  Capital Cube]
▶ ETFs with exposure to MYR Group, Inc. : November 8, 2017   [Nov-08-17 06:24PM  Capital Cube]
▶ New Strong Sell Stocks for November 3rd   [Nov-03-17 07:20AM  Zacks]
▶ MYR Group Inc. to Host Earnings Call   [Nov-02-17 08:35AM  ACCESSWIRE]
▶ MYR misses 3Q profit forecasts   [Nov-01-17 05:22PM  Associated Press]
▶ Investor Network: MYR Group Inc. to Host Earnings Call   [Aug-03-17 08:35AM  ACCESSWIRE]
▶ MYR misses 2Q profit forecasts   [Aug-02-17 10:49PM  Associated Press]
▶ ETFs with exposure to MYR Group, Inc. : June 19, 2017   [Jun-19-17 03:46PM  Capital Cube]
▶ Why MYR Group Inc.'s Shares Plunged 20% Today   [May-04-17 02:49PM  Motley Fool]
▶ MYR misses Street 1Q forecasts   [May-03-17 05:04PM  Associated Press]

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