Intrinsic value of National Energy Services Reunited Corp. - NESR

Previous Close

$7.64

  Intrinsic Value

$4.21

stock screener

  Rating & Target

sell

-45%

Previous close

$7.64

 
Intrinsic value

$4.21

 
Up/down potential

-45%

 
Rating

sell

We calculate the intrinsic value of NESR 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 0.7

 

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
  276
  283
  290
  298
  307
  317
  328
  340
  352
  366
  380
  396
  412
  430
  448
  468
  489
  510
  534
  558
  584
  611
  640
  670
  702
  736
  771
  809
  848
  889
Variable operating expenses, $m
  148
  150
  154
  158
  162
  167
  172
  177
  183
  189
  178
  185
  193
  201
  210
  219
  229
  239
  250
  261
  273
  286
  299
  314
  329
  344
  361
  378
  397
  416
Fixed operating expenses, $m
  90
  92
  94
  96
  98
  100
  102
  105
  107
  109
  112
  114
  117
  119
  122
  125
  127
  130
  133
  136
  139
  142
  145
  148
  152
  155
  158
  162
  165
  169
Total operating expenses, $m
  238
  242
  248
  254
  260
  267
  274
  282
  290
  298
  290
  299
  310
  320
  332
  344
  356
  369
  383
  397
  412
  428
  444
  462
  481
  499
  519
  540
  562
  585
Operating income, $m
  39
  40
  42
  44
  47
  50
  54
  58
  62
  67
  91
  96
  103
  109
  116
  124
  133
  141
  151
  161
  172
  183
  196
  208
  222
  237
  252
  268
  286
  304
EBITDA, $m
  88
  91
  93
  96
  100
  104
  109
  114
  120
  127
  134
  141
  149
  158
  167
  177
  188
  199
  211
  224
  238
  252
  268
  284
  302
  320
  339
  360
  382
  405
Interest expense (income), $m
  0
  13
  14
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  32
  34
  36
  38
  40
  42
  45
  47
  50
  52
  55
Earnings before tax, $m
  26
  27
  28
  30
  32
  34
  37
  40
  44
  48
  70
  75
  80
  86
  92
  98
  105
  112
  120
  129
  138
  147
  157
  168
  180
  192
  205
  219
  233
  249
Tax expense, $m
  7
  7
  8
  8
  9
  9
  10
  11
  12
  13
  19
  20
  22
  23
  25
  26
  28
  30
  32
  35
  37
  40
  43
  45
  49
  52
  55
  59
  63
  67
Net income, $m
  19
  19
  20
  22
  23
  25
  27
  29
  32
  35
  51
  55
  58
  63
  67
  72
  77
  82
  88
  94
  100
  107
  115
  123
  131
  140
  150
  160
  170
  182

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
  633
  647
  664
  682
  703
  726
  750
  777
  806
  837
  870
  905
  943
  983
  1,025
  1,070
  1,118
  1,168
  1,221
  1,277
  1,337
  1,399
  1,465
  1,534
  1,607
  1,684
  1,765
  1,850
  1,940
  2,034
Adjusted assets (=assets-cash), $m
  633
  647
  664
  682
  703
  726
  750
  777
  806
  837
  870
  905
  943
  983
  1,025
  1,070
  1,118
  1,168
  1,221
  1,277
  1,337
  1,399
  1,465
  1,534
  1,607
  1,684
  1,765
  1,850
  1,940
  2,034
Revenue / Adjusted assets
  0.436
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.438
  0.437
  0.437
  0.437
  0.438
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
  0.437
Average production assets, $m
  181
  186
  190
  196
  202
  208
  215
  223
  231
  240
  249
  260
  270
  282
  294
  307
  320
  335
  350
  366
  383
  401
  420
  440
  461
  483
  506
  530
  556
  583
Working capital, $m
  82
  84
  86
  89
  92
  95
  98
  101
  105
  109
  113
  118
  123
  128
  134
  139
  146
  152
  159
  166
  174
  182
  191
  200
  209
  219
  230
  241
  253
  265
Total debt, $m
  160
  166
  172
  179
  186
  195
  204
  214
  224
  236
  248
  261
  275
  289
  305
  321
  339
  358
  377
  398
  420
  442
  467
  492
  519
  547
  577
  609
  642
  676
Total liabilities, $m
  233
  238
  244
  251
  259
  267
  276
  286
  297
  308
  320
  333
  347
  362
  377
  394
  411
  430
  449
  470
  492
  515
  539
  565
  591
  620
  650
  681
  714
  749
Total equity, $m
  400
  409
  419
  431
  444
  459
  474
  491
  509
  529
  550
  572
  596
  621
  648
  676
  707
  738
  772
  807
  845
  884
  926
  970
  1,016
  1,064
  1,116
  1,169
  1,226
  1,286
Total liabilities and equity, $m
  633
  647
  663
  682
  703
  726
  750
  777
  806
  837
  870
  905
  943
  983
  1,025
  1,070
  1,118
  1,168
  1,221
  1,277
  1,337
  1,399
  1,465
  1,535
  1,607
  1,684
  1,766
  1,850
  1,940
  2,035
Debt-to-equity ratio
  0.400
  0.410
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.440
  0.450
  0.450
  0.460
  0.460
  0.470
  0.470
  0.480
  0.480
  0.480
  0.490
  0.490
  0.500
  0.500
  0.500
  0.510
  0.510
  0.510
  0.520
  0.520
  0.520
  0.530
Adjusted equity ratio
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632
  0.632

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19
  19
  20
  22
  23
  25
  27
  29
  32
  35
  51
  55
  58
  63
  67
  72
  77
  82
  88
  94
  100
  107
  115
  123
  131
  140
  150
  160
  170
  182
Depreciation, amort., depletion, $m
  49
  50
  51
  52
  53
  54
  55
  57
  58
  60
  43
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  96
  101
Funds from operations, $m
  68
  70
  71
  74
  76
  79
  82
  86
  90
  94
  94
  99
  105
  111
  118
  124
  132
  140
  148
  157
  167
  177
  187
  199
  211
  223
  237
  251
  266
  282
Change in working capital, $m
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
Cash from operations, $m
  67
  68
  69
  71
  73
  76
  79
  83
  86
  90
  90
  95
  100
  106
  112
  119
  126
  133
  141
  150
  159
  169
  179
  190
  201
  213
  226
  240
  255
  270
Maintenance CAPEX, $m
  -31
  -31
  -32
  -33
  -34
  -35
  -36
  -37
  -38
  -40
  -41
  -43
  -45
  -47
  -49
  -51
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
New CAPEX, $m
  -4
  -4
  -5
  -5
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
Cash from investing activities, $m
  -35
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -46
  -49
  -50
  -53
  -56
  -58
  -61
  -64
  -67
  -69
  -73
  -76
  -80
  -84
  -88
  -92
  -97
  -101
  -106
  -111
  -117
  -123
Free cash flow, $m
  32
  32
  32
  33
  34
  35
  36
  38
  40
  42
  39
  42
  45
  48
  51
  55
  59
  64
  68
  73
  79
  85
  91
  97
  104
  112
  120
  128
  137
  147
Issuance/(repayment) of debt, $m
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
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  
  5
  5
  6
  7
  8
  8
  9
  10
  11
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
Total cash flow (excl. dividends), $m
  37
  38
  39
  40
  41
  43
  45
  48
  50
  53
  51
  55
  58
  63
  67
  72
  77
  82
  88
  94
  101
  108
  115
  123
  131
  140
  150
  160
  170
  182
Retained Cash Flow (-), $m
  -8
  -9
  -11
  -12
  -13
  -14
  -16
  -17
  -18
  -20
  -21
  -22
  -24
  -25
  -27
  -28
  -30
  -32
  -34
  -35
  -37
  -39
  -42
  -44
  -46
  -49
  -51
  -54
  -57
  -60
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
  28
  28
  28
  28
  28
  29
  30
  31
  32
  34
  30
  32
  35
  37
  40
  43
  47
  50
  54
  58
  63
  68
  73
  79
  85
  92
  99
  106
  114
  122
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
  27
  26
  24
  23
  22
  21
  20
  19
  18
  18
  14
  14
  13
  13
  12
  11
  10
  9
  8
  7
  7
  6
  5
  4
  3
  3
  2
  2
  1
  1
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

National Energy Services Reunited Corp. is a blank check company. The Company formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation, purchasing all of the assets of, entering into contractual arrangements, or engaging in any other similar business combination. The Company intends to focus its search on target businesses that operate in the energy services industry, with an emphasis on oil and gas services globally. The Company will either seek shareholder approval of its initial business combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable and working capital released to us), or provide its shareholders with the opportunity to sell their shares to us by means of a tender offer.

FINANCIAL RATIOS  of  National Energy Services Reunited Corp. (NESR)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

NESR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NESR stock intrinsic value calculation we used $271 million for the last fiscal year's total revenue generated by National Energy Services Reunited Corp.. The default revenue input number comes from 0001 income statement of National Energy Services Reunited Corp.. 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 NESR 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 NESR is calculated based on our internal credit rating of National Energy Services Reunited Corp., 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 National Energy Services Reunited Corp..
    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 NESR stock the variable cost ratio is equal to 53.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $88 million in the base year in the intrinsic value calculation for NESR 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 8.6% for National Energy Services Reunited Corp..

Corporate tax rate of 27% is the nominal tax rate for National Energy Services Reunited Corp.. 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 NESR 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 NESR are equal to 65.6%.

Life of production assets of 5.8 years is the average useful life of capital assets used in National Energy Services Reunited Corp. 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 NESR is equal to 29.8%. 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 - $391.389 million for National Energy Services Reunited Corp. - 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 86.897 million for National Energy Services Reunited Corp. 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 National Energy Services Reunited Corp. at the current share price and the inputted number of shares is $0.7 billion.

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