Intrinsic value of Newpark Resources, Inc. - NR

Previous Close

$7.80

  Intrinsic Value

$1.39

stock screener

  Rating & Target

str. sell

-82%

Previous close

$7.80

 
Intrinsic value

$1.39

 
Up/down potential

-82%

 
Rating

str. sell

We calculate the intrinsic value of NR 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, %
  21.20
  19.58
  18.12
  16.81
  15.63
  14.57
  13.61
  12.75
  11.97
  11.28
  10.65
  10.08
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
Revenue, $m
  1,148
  1,372
  1,621
  1,894
  2,190
  2,509
  2,850
  3,213
  3,598
  4,004
  4,430
  4,877
  5,344
  5,831
  6,339
  6,867
  7,417
  7,988
  8,582
  9,199
  9,840
  10,506
  11,199
  11,920
  12,670
  13,451
  14,264
  15,111
  15,995
  16,917
Variable operating expenses, $m
  958
  1,144
  1,350
  1,576
  1,822
  2,086
  2,369
  2,670
  2,989
  3,325
  3,671
  4,042
  4,429
  4,832
  5,253
  5,691
  6,146
  6,620
  7,112
  7,623
  8,154
  8,707
  9,281
  9,878
  10,500
  11,147
  11,821
  12,523
  13,255
  14,019
Fixed operating expenses, $m
  94
  96
  98
  100
  103
  105
  107
  109
  112
  114
  117
  119
  122
  125
  128
  130
  133
  136
  139
  142
  145
  148
  152
  155
  159
  162
  166
  169
  173
  177
Total operating expenses, $m
  1,052
  1,240
  1,448
  1,676
  1,925
  2,191
  2,476
  2,779
  3,101
  3,439
  3,788
  4,161
  4,551
  4,957
  5,381
  5,821
  6,279
  6,756
  7,251
  7,765
  8,299
  8,855
  9,433
  10,033
  10,659
  11,309
  11,987
  12,692
  13,428
  14,196
Operating income, $m
  96
  132
  173
  217
  266
  318
  374
  434
  498
  565
  642
  716
  793
  874
  958
  1,046
  1,137
  1,232
  1,331
  1,433
  1,540
  1,651
  1,766
  1,887
  2,012
  2,142
  2,278
  2,419
  2,567
  2,721
EBITDA, $m
  153
  200
  251
  308
  369
  436
  507
  583
  663
  748
  838
  931
  1,029
  1,132
  1,238
  1,349
  1,465
  1,585
  1,710
  1,840
  1,975
  2,115
  2,261
  2,413
  2,571
  2,736
  2,908
  3,087
  3,273
  3,468
Interest expense (income), $m
  9
  15
  22
  29
  38
  47
  57
  67
  79
  91
  104
  118
  132
  147
  163
  179
  196
  214
  232
  252
  272
  292
  314
  336
  360
  384
  409
  435
  463
  491
  521
Earnings before tax, $m
  81
  110
  143
  180
  219
  261
  307
  355
  406
  461
  524
  584
  646
  711
  779
  850
  923
  1,000
  1,079
  1,162
  1,248
  1,337
  1,430
  1,527
  1,628
  1,733
  1,842
  1,956
  2,076
  2,200
Tax expense, $m
  22
  30
  39
  48
  59
  71
  83
  96
  110
  124
  142
  158
  174
  192
  210
  229
  249
  270
  291
  314
  337
  361
  386
  412
  439
  468
  497
  528
  560
  594
Net income, $m
  59
  81
  105
  131
  160
  191
  224
  259
  297
  336
  383
  426
  472
  519
  569
  620
  674
  730
  788
  848
  911
  976
  1,044
  1,115
  1,188
  1,265
  1,345
  1,428
  1,515
  1,606

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
  1,110
  1,327
  1,568
  1,831
  2,118
  2,426
  2,756
  3,108
  3,480
  3,872
  4,285
  4,717
  5,168
  5,640
  6,131
  6,642
  7,173
  7,725
  8,300
  8,896
  9,516
  10,161
  10,831
  11,528
  12,253
  13,008
  13,795
  14,615
  15,469
  16,361
Adjusted assets (=assets-cash), $m
  1,110
  1,327
  1,568
  1,831
  2,118
  2,426
  2,756
  3,108
  3,480
  3,872
  4,285
  4,717
  5,168
  5,640
  6,131
  6,642
  7,173
  7,725
  8,300
  8,896
  9,516
  10,161
  10,831
  11,528
  12,253
  13,008
  13,795
  14,615
  15,469
  16,361
Revenue / Adjusted assets
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
Average production assets, $m
  426
  509
  601
  703
  812
  931
  1,057
  1,192
  1,335
  1,485
  1,644
  1,809
  1,983
  2,163
  2,352
  2,548
  2,752
  2,964
  3,184
  3,413
  3,651
  3,898
  4,155
  4,422
  4,700
  4,990
  5,292
  5,606
  5,934
  6,276
Working capital, $m
  397
  475
  561
  655
  758
  868
  986
  1,112
  1,245
  1,385
  1,533
  1,687
  1,849
  2,018
  2,193
  2,376
  2,566
  2,764
  2,969
  3,183
  3,405
  3,635
  3,875
  4,124
  4,384
  4,654
  4,935
  5,229
  5,534
  5,853
Total debt, $m
  235
  317
  408
  508
  616
  733
  857
  990
  1,131
  1,279
  1,435
  1,598
  1,769
  1,947
  2,133
  2,326
  2,527
  2,736
  2,953
  3,178
  3,413
  3,656
  3,910
  4,173
  4,447
  4,733
  5,030
  5,340
  5,663
  6,000
Total liabilities, $m
  420
  502
  593
  692
  800
  917
  1,042
  1,175
  1,315
  1,464
  1,620
  1,783
  1,954
  2,132
  2,317
  2,510
  2,711
  2,920
  3,137
  3,363
  3,597
  3,841
  4,094
  4,358
  4,632
  4,917
  5,214
  5,524
  5,847
  6,184
Total equity, $m
  690
  826
  975
  1,139
  1,317
  1,509
  1,714
  1,933
  2,164
  2,409
  2,665
  2,934
  3,215
  3,508
  3,813
  4,131
  4,462
  4,805
  5,162
  5,533
  5,919
  6,320
  6,737
  7,170
  7,621
  8,091
  8,580
  9,090
  9,622
  10,176
Total liabilities and equity, $m
  1,110
  1,328
  1,568
  1,831
  2,117
  2,426
  2,756
  3,108
  3,479
  3,873
  4,285
  4,717
  5,169
  5,640
  6,130
  6,641
  7,173
  7,725
  8,299
  8,896
  9,516
  10,161
  10,831
  11,528
  12,253
  13,008
  13,794
  14,614
  15,469
  16,360
Debt-to-equity ratio
  0.340
  0.380
  0.420
  0.450
  0.470
  0.490
  0.500
  0.510
  0.520
  0.530
  0.540
  0.540
  0.550
  0.560
  0.560
  0.560
  0.570
  0.570
  0.570
  0.570
  0.580
  0.580
  0.580
  0.580
  0.580
  0.580
  0.590
  0.590
  0.590
  0.590
Adjusted equity ratio
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  59
  81
  105
  131
  160
  191
  224
  259
  297
  336
  383
  426
  472
  519
  569
  620
  674
  730
  788
  848
  911
  976
  1,044
  1,115
  1,188
  1,265
  1,345
  1,428
  1,515
  1,606
Depreciation, amort., depletion, $m
  58
  68
  79
  91
  104
  118
  133
  149
  166
  184
  196
  215
  236
  258
  280
  303
  328
  353
  379
  406
  435
  464
  495
  526
  560
  594
  630
  667
  706
  747
Funds from operations, $m
  117
  148
  183
  222
  263
  308
  357
  408
  462
  520
  578
  642
  708
  777
  849
  924
  1,002
  1,083
  1,167
  1,254
  1,345
  1,440
  1,539
  1,641
  1,748
  1,859
  1,975
  2,096
  2,222
  2,353
Change in working capital, $m
  69
  78
  86
  94
  102
  110
  118
  126
  133
  140
  148
  155
  162
  169
  176
  183
  190
  198
  205
  213
  222
  231
  240
  249
  260
  270
  281
  293
  306
  319
Cash from operations, $m
  47
  70
  97
  127
  161
  198
  239
  282
  329
  380
  431
  487
  546
  608
  673
  741
  811
  885
  961
  1,041
  1,124
  1,210
  1,299
  1,392
  1,488
  1,589
  1,693
  1,802
  1,916
  2,034
Maintenance CAPEX, $m
  -42
  -51
  -61
  -72
  -84
  -97
  -111
  -126
  -142
  -159
  -177
  -196
  -215
  -236
  -258
  -280
  -303
  -328
  -353
  -379
  -406
  -435
  -464
  -495
  -526
  -560
  -594
  -630
  -667
  -706
New CAPEX, $m
  -74
  -83
  -92
  -101
  -110
  -118
  -127
  -135
  -143
  -151
  -158
  -166
  -173
  -181
  -188
  -196
  -204
  -212
  -220
  -229
  -238
  -247
  -257
  -267
  -278
  -290
  -302
  -314
  -328
  -342
Cash from investing activities, $m
  -116
  -134
  -153
  -173
  -194
  -215
  -238
  -261
  -285
  -310
  -335
  -362
  -388
  -417
  -446
  -476
  -507
  -540
  -573
  -608
  -644
  -682
  -721
  -762
  -804
  -850
  -896
  -944
  -995
  -1,048
Free cash flow, $m
  -69
  -64
  -56
  -45
  -32
  -17
  1
  22
  45
  70
  96
  126
  158
  191
  227
  265
  304
  345
  388
  433
  479
  528
  578
  630
  684
  740
  798
  858
  921
  986
Issuance/(repayment) of debt, $m
  73
  82
  91
  100
  108
  117
  125
  133
  141
  148
  156
  163
  171
  178
  186
  193
  201
  209
  217
  226
  234
  244
  253
  263
  274
  285
  297
  310
  323
  337
Issuance/(repurchase) of shares, $m
  62
  55
  45
  33
  18
  1
  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  
  135
  137
  136
  133
  126
  118
  125
  133
  141
  148
  156
  163
  171
  178
  186
  193
  201
  209
  217
  226
  234
  244
  253
  263
  274
  285
  297
  310
  323
  337
Total cash flow (excl. dividends), $m
  66
  73
  80
  87
  94
  101
  126
  155
  185
  218
  252
  289
  328
  370
  413
  458
  505
  554
  605
  659
  714
  771
  831
  893
  958
  1,025
  1,095
  1,168
  1,244
  1,323
Retained Cash Flow (-), $m
  -121
  -135
  -150
  -164
  -178
  -192
  -205
  -219
  -231
  -244
  -256
  -269
  -281
  -293
  -305
  -318
  -331
  -344
  -357
  -371
  -386
  -401
  -417
  -434
  -451
  -470
  -489
  -510
  -532
  -555
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
  -55
  -62
  -70
  -77
  -84
  -91
  -79
  -64
  -46
  -26
  -5
  20
  47
  76
  107
  140
  175
  211
  248
  287
  328
  370
  414
  460
  507
  555
  606
  658
  712
  768
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
  -52
  -57
  -61
  -63
  -65
  -66
  -54
  -40
  -26
  -13
  -2
  9
  18
  26
  32
  36
  38
  39
  38
  37
  34
  31
  27
  23
  20
  16
  13
  10
  8
  6
Current shareholders' claim on cash, %
  91.9
  86.4
  82.8
  80.6
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5
  79.5

Newpark Resources, Inc. is a supplier providing products and services primarily to the oil and gas exploration and production (E&P) industry. The Company's segments include Fluids Systems, and Mats and Integrated Services. The Fluids Systems segment provides drilling fluids products and technical services to customers in the North America; Europe, the Middle East and Africa; Latin America, and Asia Pacific regions. The Mats and Integrated Services segment provides composite mat rentals, as well as location construction and related site services, to customers at well, production, transportation and refinery locations in the United States. It manufactures and sells composite mats to customers outside of the United States, and to domestic customers outside of the oil and gas exploration market. The Fluids Systems segment offers customized solutions for technical drilling projects involving subsurface conditions, such as horizontal, directional, geologically deep or deep water drilling.

FINANCIAL RATIOS  of  Newpark Resources, Inc. (NR)

Valuation Ratios
P/E Ratio -16.1
Price to Sales 1.4
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 60
Price to Free Cash Flow -24.5
Growth Rates
Sales Growth Rate -30.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -44.9%
Cap. Spend. - 3 Yr. Gr. Rate -11%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 14.6%
Total Debt to Equity 31.1%
Interest Coverage -6
Management Effectiveness
Return On Assets -4.3%
Ret/ On Assets - 3 Yr. Avg. -0.8%
Return On Total Capital -6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.7%
Return On Equity -8%
Return On Equity - 3 Yr. Avg. -2.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 7.2%
Gross Margin - 3 Yr. Avg. 13.4%
EBITDA Margin -3.8%
EBITDA Margin - 3 Yr. Avg. 0.9%
Operating Margin -11.7%
Oper. Margin - 3 Yr. Avg. -4.9%
Pre-Tax Margin -13.8%
Pre-Tax Margin - 3 Yr. Avg. -6.5%
Net Profit Margin -8.7%
Net Profit Margin - 3 Yr. Avg. -4.3%
Effective Tax Rate 36.9%
Eff/ Tax Rate - 3 Yr. Avg. 29.9%
Payout Ratio 0%

NR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NR stock intrinsic value calculation we used $947 million for the last fiscal year's total revenue generated by Newpark Resources, Inc.. The default revenue input number comes from 0001 income statement of Newpark Resources, 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 NR stock valuation model: a) initial revenue growth rate of 21.2% 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 NR is calculated based on our internal credit rating of Newpark Resources, 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 Newpark Resources, 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 NR stock the variable cost ratio is equal to 83.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $92 million in the base year in the intrinsic value calculation for NR 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 9.2% for Newpark Resources, Inc..

Corporate tax rate of 27% is the nominal tax rate for Newpark Resources, 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 NR 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 NR are equal to 37.1%.

Life of production assets of 8.4 years is the average useful life of capital assets used in Newpark Resources, 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 NR is equal to 34.6%. 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 - $569.681 million for Newpark Resources, 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 90.275 million for Newpark Resources, 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 Newpark Resources, Inc. at the current share price and the inputted number of shares is $0.7 billion.

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