Intrinsic value of North American Construction Group Ltd. - NOA

Previous Close

$12.13

  Intrinsic Value

$23.39

stock screener

  Rating & Target

str. buy

+93%

Previous close

$12.13

 
Intrinsic value

$23.39

 
Up/down potential

+93%

 
Rating

str. buy

We calculate the intrinsic value of NOA 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, %
  32.20
  29.48
  27.03
  24.83
  22.85
  21.06
  19.46
  18.01
  16.71
  15.54
  14.48
  13.54
  12.68
  11.91
  11.22
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
Revenue, $m
  402
  520
  661
  825
  1,014
  1,227
  1,466
  1,730
  2,019
  2,333
  2,671
  3,032
  3,417
  3,824
  4,253
  4,703
  5,176
  5,669
  6,184
  6,721
  7,279
  7,859
  8,463
  9,090
  9,742
  10,419
  11,123
  11,855
  12,617
  13,409
Variable operating expenses, $m
  337
  437
  555
  692
  850
  1,030
  1,230
  1,451
  1,694
  1,957
  2,241
  2,544
  2,866
  3,208
  3,568
  3,946
  4,342
  4,757
  5,189
  5,639
  6,107
  6,594
  7,100
  7,627
  8,173
  8,742
  9,332
  9,947
  10,586
  11,250
Fixed operating expenses, $m
  28
  28
  29
  29
  30
  31
  31
  32
  33
  34
  34
  35
  36
  37
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
Total operating expenses, $m
  365
  465
  584
  721
  880
  1,061
  1,261
  1,483
  1,727
  1,991
  2,275
  2,579
  2,902
  3,245
  3,605
  3,984
  4,381
  4,797
  5,230
  5,681
  6,150
  6,638
  7,145
  7,673
  8,220
  8,790
  9,381
  9,997
  10,637
  11,302
Operating income, $m
  37
  56
  78
  103
  133
  167
  205
  246
  292
  342
  396
  453
  514
  579
  647
  719
  794
  873
  955
  1,040
  1,129
  1,222
  1,318
  1,418
  1,522
  1,630
  1,742
  1,859
  1,981
  2,107
EBITDA, $m
  95
  130
  172
  222
  278
  343
  415
  494
  581
  676
  778
  888
  1,004
  1,127
  1,257
  1,393
  1,536
  1,685
  1,841
  2,003
  2,172
  2,348
  2,531
  2,720
  2,918
  3,123
  3,336
  3,558
  3,788
  4,028
Interest expense (income), $m
  4
  15
  22
  31
  41
  52
  66
  81
  98
  117
  137
  159
  183
  209
  236
  265
  296
  328
  361
  397
  433
  471
  511
  552
  595
  640
  686
  734
  784
  836
  890
Earnings before tax, $m
  22
  33
  47
  63
  81
  101
  124
  149
  176
  205
  236
  270
  305
  342
  382
  423
  466
  511
  558
  607
  658
  711
  766
  823
  882
  944
  1,008
  1,075
  1,144
  1,217
Tax expense, $m
  6
  9
  13
  17
  22
  27
  33
  40
  47
  55
  64
  73
  82
  92
  103
  114
  126
  138
  151
  164
  178
  192
  207
  222
  238
  255
  272
  290
  309
  329
Net income, $m
  16
  24
  34
  46
  59
  74
  90
  108
  128
  150
  172
  197
  223
  250
  279
  309
  340
  373
  408
  443
  480
  519
  559
  601
  644
  689
  736
  785
  835
  888

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
  675
  875
  1,111
  1,387
  1,704
  2,062
  2,464
  2,907
  3,393
  3,920
  4,488
  5,096
  5,742
  6,426
  7,147
  7,905
  8,699
  9,528
  10,394
  11,295
  12,233
  13,209
  14,223
  15,277
  16,373
  17,511
  18,694
  19,925
  21,205
  22,537
Adjusted assets (=assets-cash), $m
  675
  875
  1,111
  1,387
  1,704
  2,062
  2,464
  2,907
  3,393
  3,920
  4,488
  5,096
  5,742
  6,426
  7,147
  7,905
  8,699
  9,528
  10,394
  11,295
  12,233
  13,209
  14,223
  15,277
  16,373
  17,511
  18,694
  19,925
  21,205
  22,537
Revenue / Adjusted assets
  0.596
  0.594
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
Average production assets, $m
  403
  522
  663
  828
  1,017
  1,231
  1,470
  1,735
  2,025
  2,340
  2,679
  3,041
  3,427
  3,835
  4,265
  4,718
  5,191
  5,686
  6,203
  6,741
  7,301
  7,883
  8,488
  9,117
  9,771
  10,450
  11,157
  11,891
  12,655
  13,450
Working capital, $m
  24
  31
  39
  49
  60
  72
  86
  102
  119
  138
  158
  179
  202
  226
  251
  278
  305
  334
  365
  397
  429
  464
  499
  536
  575
  615
  656
  699
  744
  791
Total debt, $m
  412
  568
  753
  969
  1,217
  1,498
  1,812
  2,160
  2,540
  2,953
  3,398
  3,873
  4,379
  4,915
  5,480
  6,073
  6,694
  7,344
  8,021
  8,727
  9,462
  10,226
  11,020
  11,846
  12,703
  13,595
  14,521
  15,484
  16,487
  17,530
Total liabilities, $m
  529
  685
  870
  1,086
  1,334
  1,615
  1,929
  2,277
  2,657
  3,070
  3,514
  3,990
  4,496
  5,032
  5,596
  6,190
  6,811
  7,461
  8,138
  8,844
  9,579
  10,343
  11,137
  11,962
  12,820
  13,711
  14,638
  15,601
  16,603
  17,646
Total equity, $m
  147
  190
  241
  301
  370
  448
  535
  631
  736
  851
  974
  1,106
  1,246
  1,394
  1,551
  1,715
  1,888
  2,068
  2,255
  2,451
  2,655
  2,866
  3,086
  3,315
  3,553
  3,800
  4,057
  4,324
  4,601
  4,890
Total liabilities and equity, $m
  676
  875
  1,111
  1,387
  1,704
  2,063
  2,464
  2,908
  3,393
  3,921
  4,488
  5,096
  5,742
  6,426
  7,147
  7,905
  8,699
  9,529
  10,393
  11,295
  12,234
  13,209
  14,223
  15,277
  16,373
  17,511
  18,695
  19,925
  21,204
  22,536
Debt-to-equity ratio
  2.810
  2.990
  3.120
  3.220
  3.290
  3.350
  3.390
  3.420
  3.450
  3.470
  3.490
  3.500
  3.510
  3.520
  3.530
  3.540
  3.550
  3.550
  3.560
  3.560
  3.560
  3.570
  3.570
  3.570
  3.580
  3.580
  3.580
  3.580
  3.580
  3.580
Adjusted equity ratio
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  16
  24
  34
  46
  59
  74
  90
  108
  128
  150
  172
  197
  223
  250
  279
  309
  340
  373
  408
  443
  480
  519
  559
  601
  644
  689
  736
  785
  835
  888
Depreciation, amort., depletion, $m
  58
  75
  95
  118
  145
  176
  210
  248
  289
  334
  383
  434
  490
  548
  609
  674
  742
  812
  886
  963
  1,043
  1,126
  1,213
  1,302
  1,396
  1,493
  1,594
  1,699
  1,808
  1,921
Funds from operations, $m
  74
  99
  129
  164
  204
  250
  300
  356
  417
  484
  555
  631
  712
  798
  888
  983
  1,082
  1,186
  1,294
  1,406
  1,523
  1,645
  1,772
  1,903
  2,040
  2,182
  2,330
  2,483
  2,643
  2,810
Change in working capital, $m
  6
  7
  8
  10
  11
  13
  14
  16
  17
  19
  20
  21
  23
  24
  25
  27
  28
  29
  30
  32
  33
  34
  36
  37
  38
  40
  42
  43
  45
  47
Cash from operations, $m
  68
  92
  121
  154
  193
  237
  286
  341
  400
  465
  535
  610
  690
  774
  863
  956
  1,054
  1,156
  1,263
  1,375
  1,490
  1,611
  1,736
  1,866
  2,001
  2,142
  2,288
  2,440
  2,598
  2,763
Maintenance CAPEX, $m
  -44
  -58
  -75
  -95
  -118
  -145
  -176
  -210
  -248
  -289
  -334
  -383
  -434
  -490
  -548
  -609
  -674
  -742
  -812
  -886
  -963
  -1,043
  -1,126
  -1,213
  -1,302
  -1,396
  -1,493
  -1,594
  -1,699
  -1,808
New CAPEX, $m
  -98
  -119
  -141
  -165
  -189
  -214
  -239
  -265
  -290
  -315
  -339
  -363
  -386
  -408
  -430
  -452
  -474
  -495
  -516
  -538
  -560
  -582
  -605
  -629
  -654
  -679
  -706
  -734
  -764
  -795
Cash from investing activities, $m
  -142
  -177
  -216
  -260
  -307
  -359
  -415
  -475
  -538
  -604
  -673
  -746
  -820
  -898
  -978
  -1,061
  -1,148
  -1,237
  -1,328
  -1,424
  -1,523
  -1,625
  -1,731
  -1,842
  -1,956
  -2,075
  -2,199
  -2,328
  -2,463
  -2,603
Free cash flow, $m
  -74
  -85
  -95
  -105
  -114
  -122
  -129
  -134
  -137
  -139
  -138
  -135
  -131
  -124
  -115
  -105
  -93
  -80
  -66
  -50
  -33
  -14
  5
  25
  45
  67
  89
  112
  136
  160
Issuance/(repayment) of debt, $m
  129
  156
  185
  216
  248
  281
  314
  347
  380
  413
  445
  476
  506
  536
  565
  593
  621
  650
  678
  706
  735
  764
  794
  825
  858
  891
  927
  963
  1,002
  1,043
Issuance/(repurchase) of shares, $m
  20
  19
  17
  14
  10
  4
  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  
  149
  175
  202
  230
  258
  285
  314
  347
  380
  413
  445
  476
  506
  536
  565
  593
  621
  650
  678
  706
  735
  764
  794
  825
  858
  891
  927
  963
  1,002
  1,043
Total cash flow (excl. dividends), $m
  75
  90
  107
  125
  144
  163
  185
  213
  243
  274
  307
  340
  375
  412
  449
  488
  528
  569
  612
  656
  702
  750
  799
  850
  903
  958
  1,016
  1,076
  1,138
  1,203
Retained Cash Flow (-), $m
  -36
  -43
  -51
  -60
  -69
  -78
  -87
  -96
  -105
  -114
  -123
  -132
  -140
  -148
  -156
  -164
  -172
  -180
  -188
  -196
  -204
  -212
  -220
  -229
  -238
  -247
  -257
  -267
  -278
  -289
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
  39
  47
  56
  65
  75
  85
  98
  117
  138
  160
  183
  209
  235
  263
  293
  324
  356
  389
  424
  461
  498
  538
  579
  621
  665
  711
  759
  809
  860
  914
Discount rate, %
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
  34.58
PV of cash for distribution, $m
  36
  40
  43
  45
  46
  46
  46
  48
  48
  47
  45
  42
  38
  34
  29
  25
  20
  16
  13
  10
  7
  5
  4
  3
  2
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  94.3
  90.4
  87.8
  86.1
  85.1
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8
  84.8

North American Energy Partners Inc. provides a range of mining and heavy construction services to customers in the resource development and industrial construction sectors within Western Canada. The Company's operating divisions include Heavy Construction and Mining; Industrial, and Tailings & Environmental Construction. Its Heavy Construction and Mining division is engaged in hard rock and oil sands mining, overburden removal, mine site development and mine reclamation. Its Industrial division offers services, which include site development, installation of underground utilities and piping, concrete foundations, facilities and infrastructure construction, and design/build services. The Tailings & Environmental Construction division performs a range of tailings, reclamation and environmental construction services, including oil sands tailings remediation; management of mine tailings; tailings dam and dyke construction, pipeline co-corridor construction, and tailings pipelines.

FINANCIAL RATIOS  of  North American Construction Group Ltd. (NOA)

Valuation Ratios
P/E Ratio 0
Price to Sales 2.2
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 11.8
Price to Free Cash Flow 38.2
Growth Rates
Sales Growth Rate -24%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20%
Cap. Spend. - 3 Yr. Gr. Rate -4.4%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 43.2%
Total Debt to Equity 63.6%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.5%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. -1%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. -1.7%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 15.2%
Gross Margin - 3 Yr. Avg. 12.5%
EBITDA Margin 22.2%
EBITDA Margin - 3 Yr. Avg. 16.5%
Operating Margin 1.9%
Oper. Margin - 3 Yr. Avg. 1.6%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -1.1%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -1.1%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

NOA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NOA stock intrinsic value calculation we used $304 million for the last fiscal year's total revenue generated by North American Construction Group Ltd.. The default revenue input number comes from 0001 income statement of North American Construction Group Ltd.. 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 NOA stock valuation model: a) initial revenue growth rate of 32.2% 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 8.4%, whose default value for NOA is calculated based on our internal credit rating of North American Construction Group Ltd., 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 North American Construction Group Ltd..
    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 NOA stock the variable cost ratio is equal to 83.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $27 million in the base year in the intrinsic value calculation for NOA 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 North American Construction Group Ltd..

Corporate tax rate of 27% is the nominal tax rate for North American Construction Group Ltd.. 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 NOA 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 NOA are equal to 100.3%.

Life of production assets of 7 years is the average useful life of capital assets used in North American Construction Group Ltd. 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 NOA is equal to 5.9%. 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 - $110.904444444 million for North American Construction Group Ltd. - 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 27.118 million for North American Construction Group Ltd. 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 North American Construction Group Ltd. at the current share price and the inputted number of shares is $0.3 billion.

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