Intrinsic value of NRG Yield Cl C - NYLD

Previous Close

$20.10

  Intrinsic Value

$4.50

stock screener

  Rating & Target

str. sell

-78%

Previous close

$20.10

 
Intrinsic value

$4.50

 
Up/down potential

-78%

 
Rating

str. sell

We calculate the intrinsic value of NYLD 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 1.4

 

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, %
  6.60
  6.44
  6.30
  6.17
  6.05
  5.94
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.18
  5.16
  5.14
  5.13
  5.11
  5.10
  5.09
  5.08
  5.08
Revenue, $m
  1,076
  1,145
  1,217
  1,292
  1,370
  1,452
  1,537
  1,625
  1,718
  1,814
  1,915
  2,020
  2,130
  2,246
  2,366
  2,492
  2,624
  2,762
  2,907
  3,059
  3,218
  3,384
  3,559
  3,742
  3,934
  4,135
  4,346
  4,567
  4,799
  5,043
Variable operating expenses, $m
  837
  883
  931
  981
  1,033
  1,087
  1,144
  1,202
  1,264
  1,328
  1,272
  1,342
  1,415
  1,492
  1,572
  1,656
  1,743
  1,835
  1,931
  2,032
  2,137
  2,248
  2,364
  2,486
  2,613
  2,747
  2,887
  3,034
  3,188
  3,350
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
  837
  883
  931
  981
  1,033
  1,087
  1,144
  1,202
  1,264
  1,328
  1,272
  1,342
  1,415
  1,492
  1,572
  1,656
  1,743
  1,835
  1,931
  2,032
  2,137
  2,248
  2,364
  2,486
  2,613
  2,747
  2,887
  3,034
  3,188
  3,350
Operating income, $m
  238
  262
  286
  311
  337
  365
  393
  423
  454
  486
  643
  678
  715
  754
  794
  837
  881
  927
  976
  1,027
  1,080
  1,136
  1,195
  1,256
  1,321
  1,388
  1,459
  1,533
  1,611
  1,693
EBITDA, $m
  684
  728
  774
  821
  871
  923
  977
  1,033
  1,092
  1,153
  1,217
  1,284
  1,354
  1,428
  1,504
  1,584
  1,668
  1,756
  1,848
  1,944
  2,045
  2,151
  2,262
  2,379
  2,501
  2,629
  2,763
  2,903
  3,051
  3,206
Interest expense (income), $m
  0
  327
  350
  374
  400
  426
  454
  483
  513
  544
  577
  611
  646
  684
  722
  763
  806
  850
  897
  946
  997
  1,050
  1,106
  1,165
  1,227
  1,291
  1,359
  1,430
  1,504
  1,583
  1,665
Earnings before tax, $m
  -88
  -89
  -89
  -89
  -89
  -90
  -90
  -90
  -90
  -90
  32
  32
  32
  31
  31
  31
  31
  31
  30
  30
  30
  30
  30
  29
  29
  29
  29
  29
  29
  28
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  9
  9
  9
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
  8
Net income, $m
  -88
  -89
  -89
  -89
  -89
  -90
  -90
  -90
  -90
  -90
  23
  23
  23
  23
  23
  23
  23
  22
  22
  22
  22
  22
  22
  22
  21
  21
  21
  21
  21
  21

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
  8,889
  9,462
  10,057
  10,678
  11,324
  11,997
  12,699
  13,431
  14,195
  14,992
  15,826
  16,696
  17,607
  18,559
  19,554
  20,597
  21,687
  22,830
  24,026
  25,279
  26,592
  27,969
  29,411
  30,923
  32,509
  34,172
  35,916
  37,745
  39,664
  41,677
Adjusted assets (=assets-cash), $m
  8,889
  9,462
  10,057
  10,678
  11,324
  11,997
  12,699
  13,431
  14,195
  14,992
  15,826
  16,696
  17,607
  18,559
  19,554
  20,597
  21,687
  22,830
  24,026
  25,279
  26,592
  27,969
  29,411
  30,923
  32,509
  34,172
  35,916
  37,745
  39,664
  41,677
Revenue / Adjusted assets
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
Average production assets, $m
  6,518
  6,938
  7,375
  7,829
  8,303
  8,797
  9,311
  9,848
  10,408
  10,993
  11,604
  12,243
  12,910
  13,608
  14,338
  15,103
  15,903
  16,740
  17,617
  18,536
  19,499
  20,508
  21,566
  22,675
  23,838
  25,057
  26,336
  27,677
  29,084
  30,560
Working capital, $m
  -32
  -34
  -37
  -39
  -41
  -44
  -46
  -49
  -52
  -54
  -57
  -61
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -97
  -102
  -107
  -112
  -118
  -124
  -130
  -137
  -144
  -151
Total debt, $m
  6,482
  6,935
  7,406
  7,897
  8,408
  8,940
  9,496
  10,075
  10,679
  11,310
  11,969
  12,658
  13,378
  14,131
  14,919
  15,743
  16,606
  17,509
  18,456
  19,447
  20,486
  21,574
  22,715
  23,911
  25,166
  26,481
  27,860
  29,307
  30,825
  32,417
Total liabilities, $m
  7,031
  7,484
  7,955
  8,446
  8,957
  9,489
  10,045
  10,624
  11,228
  11,859
  12,518
  13,207
  13,927
  14,680
  15,468
  16,292
  17,155
  18,058
  19,005
  19,996
  21,035
  22,123
  23,264
  24,460
  25,715
  27,030
  28,409
  29,856
  31,374
  32,966
Total equity, $m
  1,858
  1,977
  2,102
  2,232
  2,367
  2,507
  2,654
  2,807
  2,967
  3,133
  3,308
  3,490
  3,680
  3,879
  4,087
  4,305
  4,533
  4,771
  5,021
  5,283
  5,558
  5,845
  6,147
  6,463
  6,794
  7,142
  7,506
  7,889
  8,290
  8,710
Total liabilities and equity, $m
  8,889
  9,461
  10,057
  10,678
  11,324
  11,996
  12,699
  13,431
  14,195
  14,992
  15,826
  16,697
  17,607
  18,559
  19,555
  20,597
  21,688
  22,829
  24,026
  25,279
  26,593
  27,968
  29,411
  30,923
  32,509
  34,172
  35,915
  37,745
  39,664
  41,676
Debt-to-equity ratio
  3.490
  3.510
  3.520
  3.540
  3.550
  3.570
  3.580
  3.590
  3.600
  3.610
  3.620
  3.630
  3.640
  3.640
  3.650
  3.660
  3.660
  3.670
  3.680
  3.680
  3.690
  3.690
  3.700
  3.700
  3.700
  3.710
  3.710
  3.720
  3.720
  3.720
Adjusted equity ratio
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209
  0.209

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -88
  -89
  -89
  -89
  -89
  -90
  -90
  -90
  -90
  -90
  23
  23
  23
  23
  23
  23
  23
  22
  22
  22
  22
  22
  22
  22
  21
  21
  21
  21
  21
  21
Depreciation, amort., depletion, $m
  445
  466
  488
  510
  534
  558
  584
  610
  638
  667
  574
  606
  639
  674
  710
  748
  787
  829
  872
  918
  965
  1,015
  1,068
  1,123
  1,180
  1,240
  1,304
  1,370
  1,440
  1,513
Funds from operations, $m
  357
  378
  399
  421
  445
  469
  494
  520
  548
  577
  598
  629
  662
  697
  733
  770
  810
  851
  894
  940
  987
  1,037
  1,089
  1,144
  1,201
  1,262
  1,325
  1,391
  1,461
  1,534
Change in working capital, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
Cash from operations, $m
  359
  380
  401
  424
  447
  471
  497
  523
  551
  579
  601
  633
  666
  700
  736
  774
  814
  855
  899
  944
  992
  1,042
  1,095
  1,150
  1,207
  1,268
  1,331
  1,398
  1,468
  1,541
Maintenance CAPEX, $m
  -303
  -323
  -343
  -365
  -388
  -411
  -435
  -461
  -488
  -515
  -544
  -574
  -606
  -639
  -674
  -710
  -748
  -787
  -829
  -872
  -918
  -965
  -1,015
  -1,068
  -1,123
  -1,180
  -1,240
  -1,304
  -1,370
  -1,440
New CAPEX, $m
  -403
  -420
  -437
  -455
  -474
  -494
  -515
  -537
  -560
  -585
  -611
  -638
  -667
  -698
  -730
  -764
  -800
  -838
  -877
  -919
  -963
  -1,009
  -1,058
  -1,109
  -1,163
  -1,219
  -1,279
  -1,341
  -1,407
  -1,476
Cash from investing activities, $m
  -706
  -743
  -780
  -820
  -862
  -905
  -950
  -998
  -1,048
  -1,100
  -1,155
  -1,212
  -1,273
  -1,337
  -1,404
  -1,474
  -1,548
  -1,625
  -1,706
  -1,791
  -1,881
  -1,974
  -2,073
  -2,177
  -2,286
  -2,399
  -2,519
  -2,645
  -2,777
  -2,916
Free cash flow, $m
  -347
  -363
  -379
  -396
  -414
  -433
  -454
  -475
  -497
  -521
  -554
  -580
  -608
  -637
  -668
  -700
  -734
  -770
  -807
  -847
  -888
  -932
  -978
  -1,027
  -1,078
  -1,132
  -1,188
  -1,247
  -1,310
  -1,375
Issuance/(repayment) of debt, $m
  435
  453
  471
  491
  511
  532
  555
  579
  604
  631
  659
  689
  720
  753
  788
  824
  863
  904
  946
  991
  1,039
  1,089
  1,141
  1,196
  1,254
  1,315
  1,379
  1,447
  1,518
  1,592
Issuance/(repurchase) of shares, $m
  199
  208
  213
  219
  224
  230
  236
  243
  250
  257
  151
  159
  167
  176
  185
  195
  205
  216
  228
  240
  253
  266
  280
  295
  310
  326
  343
  361
  380
  400
Cash from financing (excl. dividends), $m  
  634
  661
  684
  710
  735
  762
  791
  822
  854
  888
  810
  848
  887
  929
  973
  1,019
  1,068
  1,120
  1,174
  1,231
  1,292
  1,355
  1,421
  1,491
  1,564
  1,641
  1,722
  1,808
  1,898
  1,992
Total cash flow (excl. dividends), $m
  288
  298
  305
  313
  321
  329
  338
  347
  357
  367
  256
  267
  279
  292
  305
  320
  335
  350
  367
  384
  403
  422
  442
  464
  486
  510
  535
  561
  588
  617
Retained Cash Flow (-), $m
  -199
  -208
  -213
  -219
  -224
  -230
  -236
  -243
  -250
  -257
  -174
  -182
  -190
  -199
  -208
  -218
  -228
  -239
  -250
  -262
  -274
  -288
  -301
  -316
  -331
  -348
  -364
  -382
  -401
  -421
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
  89
  90
  92
  94
  97
  99
  102
  104
  107
  110
  81
  85
  89
  93
  97
  102
  107
  112
  117
  122
  128
  134
  141
  148
  155
  162
  170
  179
  187
  197
Discount rate, %
  11.10
  11.66
  12.24
  12.85
  13.49
  14.17
  14.88
  15.62
  16.40
  17.22
  18.08
  18.98
  19.93
  20.93
  21.98
  23.08
  24.23
  25.44
  26.71
  28.05
  29.45
  30.92
  32.47
  34.09
  35.80
  37.59
  39.47
  41.44
  43.51
  45.69
PV of cash for distribution, $m
  80
  72
  65
  58
  51
  45
  38
  33
  27
  23
  13
  11
  8
  6
  5
  4
  3
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  87.5
  76.7
  67.5
  59.7
  53.0
  47.2
  42.2
  37.9
  34.1
  30.7
  29.0
  27.3
  25.8
  24.3
  22.9
  21.6
  20.4
  19.2
  18.2
  17.1
  16.2
  15.2
  14.4
  13.6
  12.8
  12.1
  11.4
  10.7
  10.1
  9.5

NRG Yield, Inc., through its subsidiaries, acquires, owns, and operates contracted renewable and conventional generation, and thermal infrastructure assets in the United States. As of December 31, 2015, it had contracted renewable and conventional generation portfolio of 4,435 net megawatt (MW). The company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,315 net MW thermal equivalents, and electric generation capacity of 124 net MW. Its thermal infrastructure assets provide steam, hot water and/or chilled water, and electricity to commercial businesses, universities, hospitals, and governmental units. The company was founded in 2012 and is headquartered in Princeton, New Jersey. NRG Yield, Inc. operates as a subsidiary of NRG Energy, Inc.

FINANCIAL RATIOS  of  NRG Yield Cl C (NYLD)

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%

NYLD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NYLD stock intrinsic value calculation we used $1009 million for the last fiscal year's total revenue generated by NRG Yield Cl C. The default revenue input number comes from 0001 income statement of NRG Yield Cl C. 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 NYLD stock valuation model: a) initial revenue growth rate of 6.6% 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 11.1%, whose default value for NYLD is calculated based on our internal credit rating of NRG Yield Cl C, 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 NRG Yield Cl C.
    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 NYLD stock the variable cost ratio is equal to 78.6%.

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 NYLD 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 NRG Yield Cl C.

Corporate tax rate of 27% is the nominal tax rate for NRG Yield Cl C. 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 NYLD 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 NYLD are equal to 606%.

Life of production assets of 20.2 years is the average useful life of capital assets used in NRG Yield Cl C 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 NYLD is equal to -3%. 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 - $1747 million for NRG Yield Cl C - 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 69.13 million for NRG Yield Cl C 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 NRG Yield Cl C at the current share price and the inputted number of shares is $1.4 billion.

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