Intrinsic value of NACCO Industries, Inc. - NC

Previous Close

$38.40

  Intrinsic Value

$7.50

stock screener

  Rating & Target

str. sell

-80%

Previous close

$38.40

 
Intrinsic value

$7.50

 
Up/down potential

-80%

 
Rating

str. sell

We calculate the intrinsic value of NC 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 0.3

 

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, %
  47.70
  43.43
  39.59
  36.13
  33.02
  30.21
  27.69
  25.42
  23.38
  21.54
  19.89
  18.40
  17.06
  15.85
  14.77
  13.79
  12.91
  12.12
  11.41
  10.77
  10.19
  9.67
  9.20
  8.78
  8.41
  8.07
  7.76
  7.48
  7.23
  7.01
Revenue, $m
  199
  286
  399
  543
  723
  941
  1,202
  1,507
  1,860
  2,261
  2,710
  3,209
  3,756
  4,352
  4,995
  5,683
  6,417
  7,195
  8,016
  8,879
  9,784
  10,730
  11,718
  12,747
  13,819
  14,934
  16,092
  17,296
  18,548
  19,848
Variable operating expenses, $m
  128
  182
  252
  342
  453
  589
  751
  941
  1,160
  1,409
  1,685
  1,995
  2,335
  2,705
  3,105
  3,533
  3,989
  4,473
  4,983
  5,520
  6,082
  6,670
  7,284
  7,924
  8,590
  9,283
  10,003
  10,752
  11,530
  12,338
Fixed operating expenses, $m
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  5
  5
  5
  5
  6
  6
  6
Total operating expenses, $m
  131
  185
  255
  345
  456
  592
  754
  945
  1,164
  1,413
  1,689
  1,999
  2,339
  2,709
  3,109
  3,537
  3,993
  4,477
  4,988
  5,525
  6,087
  6,675
  7,289
  7,929
  8,595
  9,288
  10,008
  10,758
  11,536
  12,344
Operating income, $m
  68
  101
  144
  198
  266
  349
  447
  563
  696
  848
  1,022
  1,210
  1,417
  1,643
  1,886
  2,146
  2,424
  2,718
  3,028
  3,355
  3,697
  4,055
  4,429
  4,818
  5,224
  5,645
  6,083
  6,539
  7,012
  7,504
EBITDA, $m
  91
  132
  186
  254
  339
  442
  565
  710
  876
  1,066
  1,279
  1,515
  1,773
  2,055
  2,359
  2,685
  3,032
  3,400
  3,789
  4,197
  4,625
  5,073
  5,540
  6,027
  6,534
  7,061
  7,609
  8,179
  8,771
  9,386
Interest expense (income), $m
  6
  1
  4
  9
  14
  22
  31
  43
  56
  72
  91
  112
  135
  161
  190
  221
  254
  290
  329
  369
  412
  457
  504
  554
  605
  659
  715
  773
  834
  896
  962
Earnings before tax, $m
  68
  97
  135
  184
  244
  317
  404
  506
  624
  757
  910
  1,075
  1,256
  1,453
  1,665
  1,892
  2,133
  2,389
  2,659
  2,943
  3,240
  3,551
  3,875
  4,213
  4,565
  4,930
  5,310
  5,705
  6,116
  6,542
Tax expense, $m
  18
  26
  37
  50
  66
  86
  109
  137
  168
  204
  246
  290
  339
  392
  450
  511
  576
  645
  718
  795
  875
  959
  1,046
  1,137
  1,232
  1,331
  1,434
  1,540
  1,651
  1,766
Net income, $m
  49
  71
  99
  134
  178
  232
  295
  370
  455
  553
  664
  785
  917
  1,061
  1,215
  1,381
  1,557
  1,744
  1,941
  2,148
  2,365
  2,592
  2,829
  3,075
  3,332
  3,599
  3,877
  4,165
  4,465
  4,776

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
  486
  698
  974
  1,325
  1,763
  2,296
  2,931
  3,677
  4,536
  5,514
  6,610
  7,827
  9,162
  10,614
  12,182
  13,862
  15,652
  17,549
  19,551
  21,656
  23,864
  26,172
  28,581
  31,091
  33,705
  36,423
  39,249
  42,187
  45,239
  48,410
Adjusted assets (=assets-cash), $m
  486
  698
  974
  1,325
  1,763
  2,296
  2,931
  3,677
  4,536
  5,514
  6,610
  7,827
  9,162
  10,614
  12,182
  13,862
  15,652
  17,549
  19,551
  21,656
  23,864
  26,172
  28,581
  31,091
  33,705
  36,423
  39,249
  42,187
  45,239
  48,410
Revenue / Adjusted assets
  0.409
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
Average production assets, $m
  212
  304
  424
  577
  768
  1,000
  1,276
  1,601
  1,975
  2,401
  2,878
  3,408
  3,989
  4,622
  5,304
  6,036
  6,815
  7,641
  8,513
  9,430
  10,391
  11,396
  12,445
  13,538
  14,676
  15,859
  17,090
  18,369
  19,698
  21,079
Working capital, $m
  61
  88
  122
  166
  221
  288
  368
  461
  569
  692
  829
  982
  1,149
  1,332
  1,528
  1,739
  1,964
  2,202
  2,453
  2,717
  2,994
  3,283
  3,586
  3,901
  4,229
  4,570
  4,924
  5,293
  5,676
  6,074
Total debt, $m
  69
  147
  249
  378
  540
  737
  971
  1,246
  1,563
  1,924
  2,329
  2,777
  3,270
  3,806
  4,384
  5,004
  5,665
  6,365
  7,104
  7,881
  8,695
  9,547
  10,436
  11,362
  12,327
  13,330
  14,372
  15,456
  16,582
  17,753
Total liabilities, $m
  179
  257
  359
  489
  651
  847
  1,082
  1,357
  1,674
  2,035
  2,439
  2,888
  3,381
  3,917
  4,495
  5,115
  5,776
  6,476
  7,214
  7,991
  8,806
  9,657
  10,546
  11,473
  12,437
  13,440
  14,483
  15,567
  16,693
  17,863
Total equity, $m
  307
  440
  614
  836
  1,112
  1,449
  1,850
  2,320
  2,862
  3,479
  4,171
  4,939
  5,781
  6,698
  7,687
  8,747
  9,876
  11,073
  12,337
  13,665
  15,058
  16,514
  18,034
  19,619
  21,268
  22,983
  24,766
  26,620
  28,546
  30,547
Total liabilities and equity, $m
  486
  697
  973
  1,325
  1,763
  2,296
  2,932
  3,677
  4,536
  5,514
  6,610
  7,827
  9,162
  10,615
  12,182
  13,862
  15,652
  17,549
  19,551
  21,656
  23,864
  26,171
  28,580
  31,092
  33,705
  36,423
  39,249
  42,187
  45,239
  48,410
Debt-to-equity ratio
  0.220
  0.330
  0.400
  0.450
  0.490
  0.510
  0.520
  0.540
  0.550
  0.550
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
Adjusted equity ratio
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  49
  71
  99
  134
  178
  232
  295
  370
  455
  553
  664
  785
  917
  1,061
  1,215
  1,381
  1,557
  1,744
  1,941
  2,148
  2,365
  2,592
  2,829
  3,075
  3,332
  3,599
  3,877
  4,165
  4,465
  4,776
Depreciation, amort., depletion, $m
  23
  31
  42
  56
  73
  93
  118
  147
  180
  218
  257
  304
  356
  413
  474
  539
  608
  682
  760
  842
  928
  1,017
  1,111
  1,209
  1,310
  1,416
  1,526
  1,640
  1,759
  1,882
Funds from operations, $m
  72
  102
  141
  190
  251
  325
  413
  517
  636
  771
  921
  1,089
  1,273
  1,473
  1,689
  1,920
  2,166
  2,427
  2,701
  2,990
  3,293
  3,610
  3,940
  4,284
  4,642
  5,015
  5,402
  5,805
  6,223
  6,658
Change in working capital, $m
  20
  26
  35
  44
  55
  67
  80
  94
  108
  123
  138
  153
  168
  182
  197
  211
  225
  238
  251
  264
  277
  290
  302
  315
  328
  341
  355
  368
  383
  398
Cash from operations, $m
  53
  76
  106
  146
  196
  258
  334
  423
  528
  648
  784
  937
  1,106
  1,291
  1,492
  1,709
  1,941
  2,188
  2,450
  2,726
  3,016
  3,320
  3,638
  3,969
  4,315
  4,674
  5,048
  5,437
  5,840
  6,260
Maintenance CAPEX, $m
  -13
  -19
  -27
  -38
  -52
  -69
  -89
  -114
  -143
  -176
  -214
  -257
  -304
  -356
  -413
  -474
  -539
  -608
  -682
  -760
  -842
  -928
  -1,017
  -1,111
  -1,209
  -1,310
  -1,416
  -1,526
  -1,640
  -1,759
New CAPEX, $m
  -68
  -92
  -120
  -153
  -191
  -232
  -277
  -325
  -374
  -426
  -477
  -530
  -581
  -632
  -683
  -732
  -779
  -826
  -872
  -917
  -961
  -1,005
  -1,049
  -1,093
  -1,138
  -1,184
  -1,231
  -1,279
  -1,329
  -1,381
Cash from investing activities, $m
  -81
  -111
  -147
  -191
  -243
  -301
  -366
  -439
  -517
  -602
  -691
  -787
  -885
  -988
  -1,096
  -1,206
  -1,318
  -1,434
  -1,554
  -1,677
  -1,803
  -1,933
  -2,066
  -2,204
  -2,347
  -2,494
  -2,647
  -2,805
  -2,969
  -3,140
Free cash flow, $m
  -29
  -35
  -41
  -45
  -46
  -42
  -33
  -15
  11
  46
  92
  150
  220
  302
  397
  504
  623
  754
  896
  1,049
  1,213
  1,387
  1,571
  1,765
  1,968
  2,180
  2,401
  2,632
  2,871
  3,120
Issuance/(repayment) of debt, $m
  58
  78
  102
  130
  161
  197
  235
  275
  317
  361
  405
  449
  493
  536
  578
  620
  660
  700
  739
  777
  814
  852
  889
  926
  964
  1,003
  1,043
  1,084
  1,126
  1,170
Issuance/(repurchase) of shares, $m
  50
  62
  76
  88
  98
  104
  106
  101
  87
  64
  28
  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  
  108
  140
  178
  218
  259
  301
  341
  376
  404
  425
  433
  449
  493
  536
  578
  620
  660
  700
  739
  777
  814
  852
  889
  926
  964
  1,003
  1,043
  1,084
  1,126
  1,170
Total cash flow (excl. dividends), $m
  79
  105
  136
  172
  213
  259
  308
  360
  415
  471
  524
  599
  713
  838
  976
  1,124
  1,284
  1,454
  1,635
  1,826
  2,028
  2,239
  2,460
  2,691
  2,932
  3,183
  3,444
  3,716
  3,998
  4,291
Retained Cash Flow (-), $m
  -99
  -133
  -174
  -222
  -276
  -336
  -401
  -470
  -542
  -617
  -692
  -767
  -843
  -917
  -989
  -1,060
  -1,129
  -1,197
  -1,263
  -1,328
  -1,393
  -1,456
  -1,520
  -1,584
  -1,649
  -1,715
  -1,783
  -1,853
  -1,926
  -2,001
Prev. year cash balance distribution, $m
  43
  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
  23
  -28
  -38
  -50
  -63
  -77
  -93
  -110
  -127
  -145
  -168
  -169
  -130
  -78
  -14
  64
  154
  257
  372
  498
  635
  783
  940
  1,107
  1,283
  1,468
  1,661
  1,862
  2,072
  2,289
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
  22
  -26
  -33
  -41
  -49
  -56
  -63
  -69
  -73
  -76
  -80
  -72
  -49
  -26
  -4
  16
  34
  47
  57
  63
  66
  65
  62
  56
  50
  43
  36
  29
  23
  17
Current shareholders' claim on cash, %
  81.7
  68.6
  59.1
  52.2
  47.0
  43.2
  40.5
  38.5
  37.2
  36.4
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2
  36.2

NACCO Industries, Inc. is a holding company. The Company's principal business includes mining. The Company operates through the NACoal segment. The Company's subsidiary includes The North American Coal Corporation (NACoal). The Company's NACoal segment mines coal for use in power generation and provides mining services for other natural resources companies. Coal is surface mined from NACoal's mines in North Dakota, Texas, Mississippi, Louisiana and the Navajo Nation in New Mexico. NACoal's operating coal mining subsidiaries include Bisti Fuels Company, LLC (Bisti), Caddo Creek Resources Company, LLC (Caddo Creek), Camino Real Fuels, LLC (Camino Real), The Coteau Properties Company (Coteau), Coyote Creek Mining Company, LLC (Coyote Creek), Demery Resources Company, LLC (Demery), The Falkirk Mining Company (Falkirk), Liberty Fuels Company, LLC (Liberty), Mississippi Lignite Mining Company (MLMC) and The Sabine Mining Company (Sabine).

FINANCIAL RATIOS  of  NACCO Industries, Inc. (NC)

Valuation Ratios
P/E Ratio 8.7
Price to Sales 0.3
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 2.8
Price to Free Cash Flow 3.3
Growth Rates
Sales Growth Rate -6.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 45.5%
Cap. Spend. - 3 Yr. Gr. Rate -22.4%
Financial Strength
Quick Ratio 35
Current Ratio 1.1
LT Debt to Equity 42.7%
Total Debt to Equity 43.6%
Interest Coverage 7
Management Effectiveness
Return On Assets 5.3%
Ret/ On Assets - 3 Yr. Avg. 1.6%
Return On Total Capital 8.7%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity 14.3%
Return On Equity - 3 Yr. Avg. 3.3%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 24.1%
Gross Margin - 3 Yr. Avg. 21.4%
EBITDA Margin 6.9%
EBITDA Margin - 3 Yr. Avg. 2.8%
Operating Margin 4.8%
Oper. Margin - 3 Yr. Avg. 0.3%
Pre-Tax Margin 4%
Pre-Tax Margin - 3 Yr. Avg. -0.6%
Net Profit Margin 3.5%
Net Profit Margin - 3 Yr. Avg. 0.6%
Effective Tax Rate 11.8%
Eff/ Tax Rate - 3 Yr. Avg. 24.8%
Payout Ratio 23.3%

NC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NC stock intrinsic value calculation we used $135 million for the last fiscal year's total revenue generated by NACCO Industries, Inc.. The default revenue input number comes from 0001 income statement of NACCO Industries, 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 NC stock valuation model: a) initial revenue growth rate of 47.7% 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 NC is calculated based on our internal credit rating of NACCO Industries, 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 NACCO Industries, 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 NC stock the variable cost ratio is equal to 65.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3 million in the base year in the intrinsic value calculation for NC 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 5.8% for NACCO Industries, Inc..

Corporate tax rate of 27% is the nominal tax rate for NACCO Industries, 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 NC 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 NC are equal to 106.2%.

Life of production assets of 11.2 years is the average useful life of capital assets used in NACCO Industries, 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 NC is equal to 30.6%. 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 - $250.704 million for NACCO Industries, 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 6.986 million for NACCO Industries, 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 NACCO Industries, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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