Intrinsic value of Navigator Holdings Ltd. - NVGS

Previous Close

$9.32

  Intrinsic Value

$4.33

stock screener

  Rating & Target

str. sell

-54%

Previous close

$9.32

 
Intrinsic value

$4.33

 
Up/down potential

-54%

 
Rating

str. sell

We calculate the intrinsic value of NVGS 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 0.5

 

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
  305
  312
  320
  329
  339
  350
  362
  375
  389
  404
  420
  437
  455
  474
  494
  516
  539
  563
  589
  616
  644
  675
  706
  740
  775
  812
  851
  892
  935
  981
Variable operating expenses, $m
  224
  230
  236
  242
  249
  258
  266
  276
  286
  297
  309
  321
  335
  349
  364
  380
  397
  415
  433
  453
  474
  496
  520
  544
  570
  598
  626
  657
  688
  722
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
  224
  230
  236
  242
  249
  258
  266
  276
  286
  297
  309
  321
  335
  349
  364
  380
  397
  415
  433
  453
  474
  496
  520
  544
  570
  598
  626
  657
  688
  722
Operating income, $m
  81
  82
  84
  87
  89
  92
  96
  99
  103
  107
  111
  115
  120
  125
  131
  136
  142
  149
  155
  163
  170
  178
  186
  195
  205
  214
  225
  236
  247
  259
EBITDA, $m
  156
  159
  163
  168
  173
  179
  185
  191
  198
  206
  214
  223
  232
  242
  252
  263
  275
  287
  300
  314
  329
  344
  360
  377
  395
  414
  434
  455
  477
  500
Interest expense (income), $m
  30
  47
  48
  49
  50
  51
  53
  55
  56
  58
  61
  63
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  100
  105
  110
  115
  120
  126
  132
  139
  145
Earnings before tax, $m
  34
  35
  36
  37
  38
  40
  41
  43
  44
  46
  48
  50
  52
  54
  57
  59
  62
  65
  68
  71
  74
  78
  82
  86
  90
  94
  99
  103
  108
  114
Tax expense, $m
  9
  9
  10
  10
  10
  11
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
  27
  28
  29
  31
Net income, $m
  25
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  62
  65
  69
  72
  75
  79
  83

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
  1,860
  1,902
  1,951
  2,006
  2,067
  2,134
  2,206
  2,285
  2,370
  2,461
  2,558
  2,662
  2,772
  2,890
  3,015
  3,147
  3,287
  3,434
  3,591
  3,756
  3,930
  4,113
  4,307
  4,511
  4,725
  4,952
  5,190
  5,440
  5,703
  5,981
Adjusted assets (=assets-cash), $m
  1,860
  1,902
  1,951
  2,006
  2,067
  2,134
  2,206
  2,285
  2,370
  2,461
  2,558
  2,662
  2,772
  2,890
  3,015
  3,147
  3,287
  3,434
  3,591
  3,756
  3,930
  4,113
  4,307
  4,511
  4,725
  4,952
  5,190
  5,440
  5,703
  5,981
Revenue / Adjusted assets
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
Average production assets, $m
  1,720
  1,760
  1,805
  1,856
  1,912
  1,974
  2,041
  2,114
  2,192
  2,276
  2,366
  2,462
  2,564
  2,673
  2,788
  2,911
  3,040
  3,177
  3,321
  3,474
  3,635
  3,805
  3,984
  4,172
  4,371
  4,580
  4,800
  5,032
  5,275
  5,532
Working capital, $m
  22
  22
  23
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  37
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  70
Total debt, $m
  880
  900
  923
  949
  978
  1,009
  1,044
  1,081
  1,121
  1,163
  1,209
  1,258
  1,310
  1,366
  1,424
  1,486
  1,552
  1,622
  1,696
  1,773
  1,855
  1,942
  2,033
  2,129
  2,230
  2,337
  2,449
  2,567
  2,691
  2,821
Total liabilities, $m
  876
  896
  919
  945
  974
  1,005
  1,039
  1,076
  1,116
  1,159
  1,205
  1,254
  1,306
  1,361
  1,420
  1,482
  1,548
  1,618
  1,691
  1,769
  1,851
  1,937
  2,029
  2,125
  2,226
  2,332
  2,444
  2,562
  2,686
  2,817
Total equity, $m
  984
  1,006
  1,032
  1,061
  1,093
  1,129
  1,167
  1,209
  1,254
  1,302
  1,353
  1,408
  1,467
  1,529
  1,595
  1,665
  1,739
  1,817
  1,899
  1,987
  2,079
  2,176
  2,278
  2,386
  2,500
  2,619
  2,745
  2,878
  3,017
  3,164
Total liabilities and equity, $m
  1,860
  1,902
  1,951
  2,006
  2,067
  2,134
  2,206
  2,285
  2,370
  2,461
  2,558
  2,662
  2,773
  2,890
  3,015
  3,147
  3,287
  3,435
  3,590
  3,756
  3,930
  4,113
  4,307
  4,511
  4,726
  4,951
  5,189
  5,440
  5,703
  5,981
Debt-to-equity ratio
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
  0.890
Adjusted equity ratio
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529
  0.529

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
  40
  41
  43
  45
  47
  50
  52
  54
  57
  60
  62
  65
  69
  72
  75
  79
  83
Depreciation, amort., depletion, $m
  75
  77
  79
  81
  83
  86
  89
  92
  96
  99
  103
  108
  112
  117
  122
  127
  133
  139
  145
  152
  159
  166
  174
  182
  191
  200
  210
  220
  230
  242
Funds from operations, $m
  100
  102
  105
  108
  111
  115
  119
  123
  128
  133
  138
  144
  150
  156
  163
  170
  178
  186
  195
  204
  213
  223
  234
  245
  256
  269
  282
  295
  309
  325
Change in working capital, $m
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
Cash from operations, $m
  99
  102
  104
  107
  111
  114
  118
  122
  127
  132
  137
  143
  149
  155
  162
  169
  176
  184
  193
  202
  211
  221
  231
  242
  254
  266
  279
  292
  306
  321
Maintenance CAPEX, $m
  -74
  -75
  -77
  -79
  -81
  -83
  -86
  -89
  -92
  -96
  -99
  -103
  -108
  -112
  -117
  -122
  -127
  -133
  -139
  -145
  -152
  -159
  -166
  -174
  -182
  -191
  -200
  -210
  -220
  -230
New CAPEX, $m
  -34
  -40
  -45
  -51
  -56
  -62
  -67
  -73
  -78
  -84
  -90
  -96
  -102
  -109
  -115
  -122
  -129
  -137
  -145
  -153
  -161
  -170
  -179
  -189
  -199
  -209
  -220
  -232
  -244
  -256
Cash from investing activities, $m
  -108
  -115
  -122
  -130
  -137
  -145
  -153
  -162
  -170
  -180
  -189
  -199
  -210
  -221
  -232
  -244
  -256
  -270
  -284
  -298
  -313
  -329
  -345
  -363
  -381
  -400
  -420
  -442
  -464
  -486
Free cash flow, $m
  -8
  -13
  -18
  -22
  -27
  -31
  -35
  -39
  -44
  -48
  -52
  -57
  -61
  -66
  -70
  -75
  -80
  -85
  -90
  -96
  -102
  -108
  -114
  -120
  -127
  -134
  -141
  -149
  -157
  -165
Issuance/(repayment) of debt, $m
  18
  20
  23
  26
  29
  31
  34
  37
  40
  43
  46
  49
  52
  55
  59
  62
  66
  70
  74
  78
  82
  86
  91
  96
  101
  106
  112
  118
  124
  131
Issuance/(repurchase) of shares, $m
  0
  0
  0
  2
  4
  6
  8
  11
  13
  15
  16
  18
  20
  22
  24
  27
  29
  31
  33
  35
  38
  40
  43
  45
  48
  51
  54
  57
  60
  64
Cash from financing (excl. dividends), $m  
  18
  20
  23
  28
  33
  37
  42
  48
  53
  58
  62
  67
  72
  77
  83
  89
  95
  101
  107
  113
  120
  126
  134
  141
  149
  157
  166
  175
  184
  195
Total cash flow (excl. dividends), $m
  11
  7
  5
  6
  6
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  27
  29
Retained Cash Flow (-), $m
  -21
  -23
  -26
  -29
  -32
  -35
  -38
  -42
  -45
  -48
  -51
  -55
  -58
  -62
  -66
  -70
  -74
  -78
  -83
  -87
  -92
  -97
  -102
  -108
  -114
  -120
  -126
  -132
  -139
  -147
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
  -10
  -15
  -20
  -23
  -26
  -28
  -31
  -33
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -59
  -63
  -66
  -70
  -74
  -78
  -82
  -87
  -91
  -96
  -101
  -106
  -112
  -118
Discount rate, %
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
  -9
  -13
  -16
  -16
  -16
  -16
  -15
  -14
  -13
  -12
  -11
  -9
  -8
  -7
  -6
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  99.7
  99.2
  98.3
  97.3
  96.0
  94.6
  93.1
  91.4
  89.7
  87.9
  86.0
  84.1
  82.1
  80.1
  78.2
  76.2
  74.2
  72.2
  70.3
  68.4
  66.5
  64.6
  62.8
  61.0
  59.2
  57.5
  55.8

Navigator Holdings Ltd. is an owner and operator of a fleet of handysize liquefied gas carriers. The Company provides international and regional seaborne transportation services of liquefied petroleum gas (LPG), petrochemical gases and ammonia. As of December 31, 2016, it had 33 semi- or fully-refrigerated handysize liquefied gas carriers. Its handysize liquefied gas carriers are liquefied gas carriers with capabilities between 15,000 and 24,999 cubic meter (cbm). Its handysize liquefied gas carriers can accommodate medium- and long-haul routes. In addition, it had four midsize 37,300 cbm ethylene-capable semi-refrigerated liquefied gas carriers as of December 31, 2016. Its midsize ethylene-capable semi-refrigerated gas carriers enable long-haul transportation of ethane/ethylene. As of December 31, 2016, it also had one 38,000 cbm fully refrigerated gas carrier. The Company carries LPG for international energy companies, state-owned utilities and commodities traders.

FINANCIAL RATIOS  of  Navigator Holdings Ltd. (NVGS)

Valuation Ratios
P/E Ratio 11.5
Price to Sales 1.8
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 5.9
Price to Free Cash Flow -3.4
Growth Rates
Sales Growth Rate -6.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0.4%
Cap. Spend. - 3 Yr. Gr. Rate -12.4%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 67.1%
Total Debt to Equity 77.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.5%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 4.8%
Return On Equity - 3 Yr. Avg. 9.3%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 52.7%
Gross Margin - 3 Yr. Avg. 57.3%
EBITDA Margin 46.9%
EBITDA Margin - 3 Yr. Avg. 51.8%
Operating Margin 26.5%
Oper. Margin - 3 Yr. Avg. 35.2%
Pre-Tax Margin 15.6%
Pre-Tax Margin - 3 Yr. Avg. 25.4%
Net Profit Margin 15.3%
Net Profit Margin - 3 Yr. Avg. 25.1%
Effective Tax Rate 2.2%
Eff/ Tax Rate - 3 Yr. Avg. 1.4%
Payout Ratio 0%

NVGS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVGS stock intrinsic value calculation we used $299 million for the last fiscal year's total revenue generated by Navigator Holdings Ltd.. The default revenue input number comes from 0001 income statement of Navigator Holdings 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 NVGS 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 8.1%, whose default value for NVGS is calculated based on our internal credit rating of Navigator Holdings 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 Navigator Holdings 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 NVGS stock the variable cost ratio is equal to 73.6%.

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 NVGS 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 Navigator Holdings Ltd..

Corporate tax rate of 27% is the nominal tax rate for Navigator Holdings 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 NVGS 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 NVGS are equal to 564%.

Life of production assets of 22.9 years is the average useful life of capital assets used in Navigator Holdings 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 NVGS is equal to 7.1%. 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 - $963.213 million for Navigator Holdings 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 55.656 million for Navigator Holdings 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 Navigator Holdings Ltd. at the current share price and the inputted number of shares is $0.5 billion.

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