Intrinsic value of Nine Energy Service, Inc. - NINE

Previous Close

$5.38

  Intrinsic Value

$5.60

stock screener

  Rating & Target

hold

+4%

Previous close

$5.38

 
Intrinsic value

$5.60

 
Up/down potential

+4%

 
Rating

hold

We calculate the intrinsic value of NINE 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, %
  48.70
  44.33
  40.40
  36.86
  33.67
  30.80
  28.22
  25.90
  23.81
  21.93
  20.24
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
Revenue, $m
  1,230
  1,775
  2,492
  3,410
  4,559
  5,963
  7,646
  9,626
  11,918
  14,532
  17,473
  20,743
  24,340
  28,261
  32,499
  37,048
  41,901
  47,050
  52,488
  58,211
  64,214
  70,496
  77,054
  83,891
  91,010
  98,416
  106,115
  114,118
  122,434
  131,075
Variable operating expenses, $m
  1,078
  1,530
  2,124
  2,885
  3,837
  5,000
  6,395
  8,036
  9,935
  12,101
  14,479
  17,189
  20,170
  23,419
  26,931
  30,701
  34,722
  38,988
  43,495
  48,237
  53,212
  58,417
  63,852
  69,517
  75,416
  81,553
  87,933
  94,565
  101,455
  108,617
Fixed operating expenses, $m
  115
  118
  121
  123
  126
  129
  132
  134
  137
  140
  144
  147
  150
  153
  157
  160
  164
  167
  171
  175
  178
  182
  186
  191
  195
  199
  203
  208
  212
  217
Total operating expenses, $m
  1,193
  1,648
  2,245
  3,008
  3,963
  5,129
  6,527
  8,170
  10,072
  12,241
  14,623
  17,336
  20,320
  23,572
  27,088
  30,861
  34,886
  39,155
  43,666
  48,412
  53,390
  58,599
  64,038
  69,708
  75,611
  81,752
  88,136
  94,773
  101,667
  108,834
Operating income, $m
  36
  127
  247
  402
  596
  834
  1,119
  1,456
  1,846
  2,291
  2,850
  3,407
  4,021
  4,689
  5,412
  6,188
  7,016
  7,894
  8,823
  9,799
  10,824
  11,896
  13,016
  14,184
  15,399
  16,664
  17,979
  19,345
  20,766
  22,242
EBITDA, $m
  161
  281
  440
  644
  900
  1,213
  1,589
  2,032
  2,545
  3,130
  3,788
  4,521
  5,327
  6,206
  7,157
  8,177
  9,265
  10,420
  11,640
  12,924
  14,271
  15,681
  17,153
  18,687
  20,285
  21,947
  23,675
  25,472
  27,338
  29,278
Interest expense (income), $m
  0
  29
  47
  71
  102
  143
  194
  256
  331
  418
  520
  635
  766
  910
  1,070
  1,243
  1,431
  1,632
  1,847
  2,075
  2,316
  2,569
  2,835
  3,113
  3,403
  3,706
  4,021
  4,349
  4,689
  5,044
  5,412
Earnings before tax, $m
  8
  81
  177
  300
  453
  640
  863
  1,125
  1,428
  1,771
  2,215
  2,642
  3,110
  3,620
  4,169
  4,757
  5,384
  6,048
  6,748
  7,484
  8,255
  9,062
  9,904
  10,781
  11,694
  12,643
  13,630
  14,656
  15,722
  16,830
Tax expense, $m
  2
  22
  48
  81
  122
  173
  233
  304
  385
  478
  598
  713
  840
  977
  1,126
  1,284
  1,454
  1,633
  1,822
  2,021
  2,229
  2,447
  2,674
  2,911
  3,157
  3,414
  3,680
  3,957
  4,245
  4,544
Net income, $m
  6
  59
  129
  219
  331
  467
  630
  822
  1,042
  1,293
  1,617
  1,929
  2,271
  2,642
  3,043
  3,473
  3,930
  4,415
  4,926
  5,463
  6,026
  6,615
  7,230
  7,870
  8,536
  9,229
  9,950
  10,699
  11,477
  12,286

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
  1,696
  2,448
  3,437
  4,704
  6,288
  8,225
  10,546
  13,278
  16,439
  20,044
  24,101
  28,611
  33,573
  38,981
  44,827
  51,101
  57,794
  64,896
  72,398
  80,291
  88,572
  97,235
  106,282
  115,712
  125,531
  135,746
  146,366
  157,404
  168,874
  180,793
Adjusted assets (=assets-cash), $m
  1,696
  2,448
  3,437
  4,704
  6,288
  8,225
  10,546
  13,278
  16,439
  20,044
  24,101
  28,611
  33,573
  38,981
  44,827
  51,101
  57,794
  64,896
  72,398
  80,291
  88,572
  97,235
  106,282
  115,712
  125,531
  135,746
  146,366
  157,404
  168,874
  180,793
Revenue / Adjusted assets
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
  0.725
Average production assets, $m
  627
  905
  1,271
  1,739
  2,325
  3,041
  3,899
  4,909
  6,078
  7,411
  8,911
  10,579
  12,414
  14,413
  16,575
  18,895
  21,370
  23,995
  26,769
  29,688
  32,749
  35,953
  39,298
  42,785
  46,415
  50,192
  54,119
  58,200
  62,441
  66,848
Working capital, $m
  230
  332
  466
  638
  852
  1,115
  1,430
  1,800
  2,229
  2,718
  3,267
  3,879
  4,552
  5,285
  6,077
  6,928
  7,835
  8,798
  9,815
  10,885
  12,008
  13,183
  14,409
  15,688
  17,019
  18,404
  19,844
  21,340
  22,895
  24,511
Total debt, $m
  694
  1,054
  1,528
  2,135
  2,893
  3,821
  4,933
  6,242
  7,756
  9,483
  11,426
  13,586
  15,963
  18,553
  21,354
  24,359
  27,565
  30,967
  34,560
  38,341
  42,307
  46,457
  50,791
  55,308
  60,011
  64,904
  69,991
  75,278
  80,772
  86,482
Total liabilities, $m
  812
  1,173
  1,646
  2,253
  3,012
  3,940
  5,052
  6,360
  7,874
  9,601
  11,544
  13,705
  16,081
  18,672
  21,472
  24,478
  27,684
  31,085
  34,678
  38,460
  42,426
  46,576
  50,909
  55,426
  60,129
  65,022
  70,109
  75,396
  80,891
  86,600
Total equity, $m
  884
  1,275
  1,791
  2,451
  3,276
  4,285
  5,495
  6,918
  8,565
  10,443
  12,557
  14,906
  17,491
  20,309
  23,355
  26,624
  30,111
  33,811
  37,719
  41,832
  46,146
  50,660
  55,373
  60,286
  65,402
  70,724
  76,257
  82,007
  87,983
  94,193
Total liabilities and equity, $m
  1,696
  2,448
  3,437
  4,704
  6,288
  8,225
  10,547
  13,278
  16,439
  20,044
  24,101
  28,611
  33,572
  38,981
  44,827
  51,102
  57,795
  64,896
  72,397
  80,292
  88,572
  97,236
  106,282
  115,712
  125,531
  135,746
  146,366
  157,403
  168,874
  180,793
Debt-to-equity ratio
  0.790
  0.830
  0.850
  0.870
  0.880
  0.890
  0.900
  0.900
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
  0.920
Adjusted equity ratio
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521
  0.521

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6
  59
  129
  219
  331
  467
  630
  822
  1,042
  1,293
  1,617
  1,929
  2,271
  2,642
  3,043
  3,473
  3,930
  4,415
  4,926
  5,463
  6,026
  6,615
  7,230
  7,870
  8,536
  9,229
  9,950
  10,699
  11,477
  12,286
Depreciation, amort., depletion, $m
  125
  154
  193
  242
  304
  379
  469
  576
  699
  839
  938
  1,114
  1,307
  1,517
  1,745
  1,989
  2,249
  2,526
  2,818
  3,125
  3,447
  3,785
  4,137
  4,504
  4,886
  5,283
  5,697
  6,126
  6,573
  7,037
Funds from operations, $m
  131
  213
  322
  461
  634
  846
  1,100
  1,397
  1,741
  2,132
  2,555
  3,042
  3,577
  4,159
  4,788
  5,462
  6,180
  6,941
  7,744
  8,588
  9,474
  10,400
  11,366
  12,374
  13,422
  14,513
  15,647
  16,825
  18,050
  19,323
Change in working capital, $m
  75
  102
  134
  172
  215
  263
  315
  370
  429
  489
  550
  611
  673
  733
  793
  851
  907
  963
  1,017
  1,070
  1,123
  1,175
  1,226
  1,279
  1,331
  1,385
  1,440
  1,496
  1,555
  1,616
Cash from operations, $m
  55
  111
  188
  289
  420
  584
  785
  1,027
  1,312
  1,643
  2,005
  2,431
  2,905
  3,426
  3,995
  4,611
  5,272
  5,978
  6,727
  7,518
  8,351
  9,225
  10,140
  11,095
  12,091
  13,128
  14,207
  15,329
  16,495
  17,707
Maintenance CAPEX, $m
  -44
  -66
  -95
  -134
  -183
  -245
  -320
  -410
  -517
  -640
  -780
  -938
  -1,114
  -1,307
  -1,517
  -1,745
  -1,989
  -2,249
  -2,526
  -2,818
  -3,125
  -3,447
  -3,785
  -4,137
  -4,504
  -4,886
  -5,283
  -5,697
  -6,126
  -6,573
New CAPEX, $m
  -205
  -278
  -366
  -468
  -586
  -716
  -858
  -1,010
  -1,169
  -1,333
  -1,500
  -1,668
  -1,835
  -2,000
  -2,162
  -2,320
  -2,475
  -2,626
  -2,774
  -2,919
  -3,062
  -3,203
  -3,345
  -3,487
  -3,631
  -3,777
  -3,927
  -4,081
  -4,241
  -4,407
Cash from investing activities, $m
  -249
  -344
  -461
  -602
  -769
  -961
  -1,178
  -1,420
  -1,686
  -1,973
  -2,280
  -2,606
  -2,949
  -3,307
  -3,679
  -4,065
  -4,464
  -4,875
  -5,300
  -5,737
  -6,187
  -6,650
  -7,130
  -7,624
  -8,135
  -8,663
  -9,210
  -9,778
  -10,367
  -10,980
Free cash flow, $m
  -194
  -233
  -273
  -313
  -349
  -377
  -393
  -394
  -374
  -330
  -275
  -175
  -44
  120
  317
  546
  808
  1,102
  1,427
  1,782
  2,164
  2,574
  3,010
  3,471
  3,957
  4,465
  4,997
  5,551
  6,127
  6,726
Issuance/(repayment) of debt, $m
  266
  360
  474
  607
  759
  928
  1,112
  1,308
  1,514
  1,727
  1,943
  2,160
  2,377
  2,590
  2,800
  3,006
  3,206
  3,402
  3,593
  3,781
  3,966
  4,150
  4,333
  4,517
  4,703
  4,893
  5,087
  5,287
  5,494
  5,710
Issuance/(repurchase) of shares, $m
  283
  333
  386
  441
  494
  542
  579
  602
  605
  586
  496
  421
  315
  175
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  549
  693
  860
  1,048
  1,253
  1,470
  1,691
  1,910
  2,119
  2,313
  2,439
  2,581
  2,692
  2,765
  2,803
  3,006
  3,206
  3,402
  3,593
  3,781
  3,966
  4,150
  4,333
  4,517
  4,703
  4,893
  5,087
  5,287
  5,494
  5,710
Total cash flow (excl. dividends), $m
  355
  460
  587
  735
  904
  1,093
  1,298
  1,517
  1,746
  1,983
  2,165
  2,407
  2,648
  2,886
  3,119
  3,552
  4,014
  4,504
  5,020
  5,563
  6,131
  6,724
  7,344
  7,989
  8,660
  9,358
  10,084
  10,838
  11,622
  12,436
Retained Cash Flow (-), $m
  -289
  -392
  -515
  -660
  -825
  -1,009
  -1,209
  -1,423
  -1,647
  -1,878
  -2,113
  -2,350
  -2,585
  -2,818
  -3,046
  -3,269
  -3,487
  -3,700
  -3,908
  -4,113
  -4,314
  -4,514
  -4,713
  -4,913
  -5,116
  -5,322
  -5,533
  -5,751
  -5,976
  -6,210
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
  66
  68
  71
  75
  79
  83
  88
  93
  99
  104
  51
  57
  62
  68
  74
  283
  527
  804
  1,112
  1,450
  1,817
  2,211
  2,630
  3,075
  3,544
  4,036
  4,551
  5,087
  5,646
  6,226
Discount rate, %
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
  63
  60
  59
  57
  55
  53
  50
  48
  45
  42
  18
  17
  16
  14
  13
  41
  61
  74
  79
  79
  74
  66
  57
  47
  37
  28
  21
  15
  10
  7
Current shareholders' claim on cash, %
  59.5
  38.7
  27.0
  20.0
  15.5
  12.5
  10.5
  9.1
  8.1
  7.4
  6.9
  6.6
  6.4
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3
  6.3

FINANCIAL RATIOS  of  Nine Energy Service, Inc. (NINE)

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%

NINE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NINE stock intrinsic value calculation we used $827 million for the last fiscal year's total revenue generated by Nine Energy Service, Inc.. The default revenue input number comes from 0001 income statement of Nine Energy Service, 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 NINE stock valuation model: a) initial revenue growth rate of 48.7% 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 6.2%, whose default value for NINE is calculated based on our internal credit rating of Nine Energy Service, 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 Nine Energy Service, 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 NINE stock the variable cost ratio is equal to 90%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $113 million in the base year in the intrinsic value calculation for NINE 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 6.7% for Nine Energy Service, Inc..

Corporate tax rate of 27% is the nominal tax rate for Nine Energy Service, 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 NINE 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 NINE are equal to 51%.

Life of production assets of 9.5 years is the average useful life of capital assets used in Nine Energy Service, 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 NINE is equal to 18.7%. 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 - $594.823 million for Nine Energy Service, 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 30.144 million for Nine Energy Service, 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 Nine Energy Service, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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