Intrinsic value of NCS Multistage Holdings, Inc. - NCSM

Previous Close

$4.60

  Intrinsic Value

$1.16

stock screener

  Rating & Target

str. sell

-75%

Previous close

$4.60

 
Intrinsic value

$1.16

 
Up/down potential

-75%

 
Rating

str. sell

We calculate the intrinsic value of NCSM 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 0.2

 

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
  232
  237
  243
  250
  257
  266
  275
  285
  295
  306
  319
  331
  345
  360
  375
  392
  409
  428
  447
  468
  489
  512
  536
  562
  588
  617
  646
  677
  710
  745
Variable operating expenses, $m
  219
  224
  230
  236
  243
  250
  259
  268
  277
  288
  292
  303
  316
  329
  344
  359
  375
  391
  409
  428
  448
  469
  491
  514
  539
  564
  591
  620
  650
  682
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
  219
  224
  230
  236
  243
  250
  259
  268
  277
  288
  292
  303
  316
  329
  344
  359
  375
  391
  409
  428
  448
  469
  491
  514
  539
  564
  591
  620
  650
  682
Operating income, $m
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  27
  28
  29
  30
  32
  33
  35
  36
  38
  40
  41
  43
  45
  48
  50
  52
  55
  57
  60
  63
EBITDA, $m
  30
  31
  31
  32
  33
  34
  35
  37
  38
  39
  41
  43
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  96
Interest expense (income), $m
  5
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
Earnings before tax, $m
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
  23
  24
  25
  26
  27
  28
  29
  30
  32
  33
  34
  36
  37
  39
  41
  42
  44
  46
  48
  51
Tax expense, $m
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  13
  13
  14
Net income, $m
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37

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
  232
  238
  244
  251
  258
  267
  276
  286
  296
  308
  320
  333
  347
  361
  377
  393
  411
  429
  449
  469
  491
  514
  538
  564
  591
  619
  649
  680
  713
  748
Adjusted assets (=assets-cash), $m
  232
  238
  244
  251
  258
  267
  276
  286
  296
  308
  320
  333
  347
  361
  377
  393
  411
  429
  449
  469
  491
  514
  538
  564
  591
  619
  649
  680
  713
  748
Revenue / Adjusted assets
  1.000
  0.996
  0.996
  0.996
  0.996
  0.996
  0.996
  0.997
  0.997
  0.994
  0.997
  0.994
  0.994
  0.997
  0.995
  0.997
  0.995
  0.998
  0.996
  0.998
  0.996
  0.996
  0.996
  0.996
  0.995
  0.997
  0.995
  0.996
  0.996
  0.996
Average production assets, $m
  129
  132
  135
  139
  143
  148
  153
  158
  164
  170
  177
  184
  192
  200
  209
  218
  228
  238
  249
  260
  272
  285
  298
  312
  327
  343
  359
  377
  395
  414
Working capital, $m
  67
  69
  71
  73
  75
  77
  80
  83
  86
  89
  93
  96
  100
  105
  109
  114
  119
  124
  130
  136
  142
  149
  156
  163
  171
  179
  188
  197
  207
  217
Total debt, $m
  27
  28
  30
  32
  34
  37
  40
  42
  46
  49
  52
  56
  60
  65
  69
  74
  79
  84
  90
  96
  102
  109
  116
  124
  132
  140
  148
  158
  167
  177
Total liabilities, $m
  68
  69
  71
  73
  75
  78
  81
  83
  87
  90
  93
  97
  101
  105
  110
  115
  120
  125
  131
  137
  143
  150
  157
  165
  172
  181
  189
  199
  208
  218
Total equity, $m
  165
  168
  173
  178
  183
  189
  195
  202
  210
  218
  226
  236
  245
  256
  267
  278
  291
  304
  318
  332
  348
  364
  381
  399
  418
  438
  459
  481
  505
  529
Total liabilities and equity, $m
  233
  237
  244
  251
  258
  267
  276
  285
  297
  308
  319
  333
  346
  361
  377
  393
  411
  429
  449
  469
  491
  514
  538
  564
  590
  619
  648
  680
  713
  747
Debt-to-equity ratio
  0.160
  0.170
  0.180
  0.180
  0.190
  0.200
  0.200
  0.210
  0.220
  0.220
  0.230
  0.240
  0.250
  0.250
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.310
  0.310
  0.320
  0.320
  0.330
  0.330
  0.340
Adjusted equity ratio
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708
  0.708

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  17
  18
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  32
  34
  35
  37
Depreciation, amort., depletion, $m
  17
  18
  18
  18
  19
  19
  19
  20
  20
  21
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
Funds from operations, $m
  25
  26
  26
  27
  27
  28
  29
  30
  31
  32
  31
  32
  34
  35
  36
  38
  39
  41
  43
  45
  47
  49
  51
  53
  56
  58
  61
  64
  67
  70
Change in working capital, $m
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
Cash from operations, $m
  24
  24
  24
  25
  25
  26
  26
  27
  28
  29
  28
  29
  30
  31
  32
  33
  34
  36
  37
  39
  40
  42
  44
  46
  48
  50
  52
  55
  57
  60
Maintenance CAPEX, $m
  -10
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -31
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -18
  -19
Cash from investing activities, $m
  -13
  -13
  -13
  -15
  -15
  -16
  -17
  -17
  -19
  -19
  -21
  -21
  -23
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -36
  -38
  -40
  -42
  -43
  -46
  -48
  -50
Free cash flow, $m
  11
  11
  11
  10
  10
  10
  10
  10
  9
  9
  7
  7
  7
  7
  7
  7
  7
  7
  7
  8
  8
  8
  8
  8
  8
  8
  9
  9
  9
  9
Issuance/(repayment) of debt, $m
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
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  
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
Total cash flow (excl. dividends), $m
  12
  12
  12
  12
  12
  12
  12
  12
  13
  13
  11
  11
  11
  12
  12
  12
  12
  13
  13
  14
  14
  14
  15
  16
  16
  17
  17
  18
  19
  19
Retained Cash Flow (-), $m
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
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
  9
  9
  8
  7
  7
  6
  6
  5
  5
  5
  2
  2
  2
  1
  1
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -5
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
  9
  8
  7
  6
  5
  5
  4
  3
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  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
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

NCS Multistage Holdings, Inc. is a provider of engineered products and support services for oil and natural gas well completions and field development strategies. The Company’s products and services include Multistage Unlimited, casing-installed sliding sleeves, downhole frac isolation assembly, AirLock casing buoyancy system and liner hanger systems. The Company provides products and services primarily to exploration and production (E&P) companies for use in onshore wells, predominantly wells that have been drilled with horizontal laterals in unconventional oil and natural gas formations. The Company’s products and services are utilized in oil and natural gas basins throughout North America and in selected international markets, including Argentina, China and Russia.

FINANCIAL RATIOS  of  NCS Multistage Holdings, Inc. (NCSM)

Valuation Ratios
P/E Ratio -11.1
Price to Sales 2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 18.2
Price to Free Cash Flow 20
Growth Rates
Sales Growth Rate -14%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 18
Current Ratio 0.1
LT Debt to Equity 49.7%
Total Debt to Equity 50.3%
Interest Coverage -4
Management Effectiveness
Return On Assets -4.4%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital -6.7%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity -9.9%
Return On Equity - 3 Yr. Avg. 6.7%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 45.9%
Gross Margin - 3 Yr. Avg. 32.6%
EBITDA Margin 4.1%
EBITDA Margin - 3 Yr. Avg. 15.4%
Operating Margin -18.4%
Oper. Margin - 3 Yr. Avg. -7.9%
Pre-Tax Margin -27.6%
Pre-Tax Margin - 3 Yr. Avg. -5.7%
Net Profit Margin -18.4%
Net Profit Margin - 3 Yr. Avg. 2.1%
Effective Tax Rate 33.3%
Eff/ Tax Rate - 3 Yr. Avg. -33.3%
Payout Ratio 0%

NCSM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NCSM stock intrinsic value calculation we used $227 million for the last fiscal year's total revenue generated by NCS Multistage Holdings, Inc.. The default revenue input number comes from 0001 income statement of NCS Multistage Holdings, 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 NCSM 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 4.3%, whose default value for NCSM is calculated based on our internal credit rating of NCS Multistage Holdings, 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 NCS Multistage Holdings, 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 NCSM stock the variable cost ratio is equal to 94.7%.

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 NCSM 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 7.4% for NCS Multistage Holdings, Inc..

Corporate tax rate of 27% is the nominal tax rate for NCS Multistage Holdings, 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 NCSM 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 NCSM are equal to 55.6%.

Life of production assets of 12.6 years is the average useful life of capital assets used in NCS Multistage Holdings, 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 NCSM is equal to 29.1%. 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 - $161.301 million for NCS Multistage Holdings, 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 46.670 million for NCS Multistage Holdings, 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 NCS Multistage Holdings, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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