Intrinsic value of Overseas Shipholding Group Cl A - OSG

Previous Close

$2.17

  Intrinsic Value

$0.81

stock screener

  Rating & Target

str. sell

-63%

Previous close

$2.17

 
Intrinsic value

$0.81

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of OSG 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, %
  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
  398
  407
  418
  430
  443
  457
  472
  489
  507
  527
  548
  570
  594
  619
  646
  674
  704
  735
  769
  804
  842
  881
  922
  966
  1,012
  1,060
  1,111
  1,165
  1,221
  1,281
Variable operating expenses, $m
  420
  430
  441
  453
  467
  482
  498
  516
  535
  555
  573
  596
  621
  647
  675
  705
  736
  769
  804
  841
  880
  921
  964
  1,010
  1,058
  1,109
  1,162
  1,218
  1,277
  1,339
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
  420
  430
  441
  453
  467
  482
  498
  516
  535
  555
  573
  596
  621
  647
  675
  705
  736
  769
  804
  841
  880
  921
  964
  1,010
  1,058
  1,109
  1,162
  1,218
  1,277
  1,339
Operating income, $m
  -22
  -23
  -23
  -24
  -24
  -25
  -26
  -26
  -27
  -28
  -25
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -48
  -51
  -53
  -56
  -58
EBITDA, $m
  40
  41
  42
  43
  45
  46
  48
  49
  51
  53
  55
  58
  60
  62
  65
  68
  71
  74
  78
  81
  85
  89
  93
  97
  102
  107
  112
  118
  123
  129
Interest expense (income), $m
  0
  35
  36
  37
  38
  39
  41
  42
  44
  46
  48
  51
  53
  56
  58
  61
  64
  68
  71
  75
  79
  83
  87
  92
  97
  102
  107
  113
  119
  125
  132
Earnings before tax, $m
  -57
  -58
  -60
  -62
  -63
  -66
  -68
  -71
  -73
  -76
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
  -134
  -141
  -148
  -155
  -163
  -172
  -181
  -190
Tax expense, $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
Net income, $m
  -57
  -58
  -60
  -62
  -63
  -66
  -68
  -71
  -73
  -76
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
  -134
  -141
  -148
  -155
  -163
  -172
  -181
  -190

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
  818
  837
  858
  882
  909
  938
  970
  1,005
  1,042
  1,082
  1,125
  1,170
  1,219
  1,271
  1,326
  1,384
  1,445
  1,510
  1,579
  1,651
  1,728
  1,809
  1,894
  1,983
  2,078
  2,177
  2,282
  2,392
  2,508
  2,630
Adjusted assets (=assets-cash), $m
  818
  837
  858
  882
  909
  938
  970
  1,005
  1,042
  1,082
  1,125
  1,170
  1,219
  1,271
  1,326
  1,384
  1,445
  1,510
  1,579
  1,651
  1,728
  1,809
  1,894
  1,983
  2,078
  2,177
  2,282
  2,392
  2,508
  2,630
Revenue / Adjusted assets
  0.487
  0.486
  0.487
  0.488
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
  0.487
Average production assets, $m
  723
  739
  758
  780
  803
  829
  858
  888
  921
  956
  994
  1,035
  1,078
  1,123
  1,172
  1,223
  1,277
  1,335
  1,396
  1,460
  1,527
  1,599
  1,674
  1,753
  1,837
  1,925
  2,017
  2,114
  2,217
  2,324
Working capital, $m
  7
  7
  8
  8
  8
  8
  9
  9
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
Total debt, $m
  462
  476
  492
  509
  529
  551
  574
  600
  627
  657
  689
  722
  758
  796
  837
  880
  925
  973
  1,024
  1,077
  1,134
  1,193
  1,256
  1,322
  1,392
  1,465
  1,543
  1,624
  1,709
  1,799
Total liabilities, $m
  603
  617
  633
  651
  671
  692
  716
  742
  769
  799
  830
  864
  900
  938
  978
  1,021
  1,067
  1,115
  1,165
  1,219
  1,275
  1,335
  1,398
  1,464
  1,533
  1,607
  1,684
  1,765
  1,851
  1,941
Total equity, $m
  214
  219
  225
  231
  238
  246
  254
  263
  273
  284
  295
  307
  319
  333
  347
  363
  379
  396
  414
  433
  453
  474
  496
  520
  544
  570
  598
  627
  657
  689
Total liabilities and equity, $m
  817
  836
  858
  882
  909
  938
  970
  1,005
  1,042
  1,083
  1,125
  1,171
  1,219
  1,271
  1,325
  1,384
  1,446
  1,511
  1,579
  1,652
  1,728
  1,809
  1,894
  1,984
  2,077
  2,177
  2,282
  2,392
  2,508
  2,630
Debt-to-equity ratio
  2.160
  2.170
  2.190
  2.200
  2.220
  2.240
  2.260
  2.280
  2.300
  2.320
  2.340
  2.360
  2.370
  2.390
  2.410
  2.430
  2.440
  2.460
  2.470
  2.490
  2.500
  2.520
  2.530
  2.540
  2.560
  2.570
  2.580
  2.590
  2.600
  2.610
Adjusted equity ratio
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262
  0.262

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -57
  -58
  -60
  -62
  -63
  -66
  -68
  -71
  -73
  -76
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -115
  -121
  -127
  -134
  -141
  -148
  -155
  -163
  -172
  -181
  -190
Depreciation, amort., depletion, $m
  62
  64
  65
  67
  69
  71
  73
  76
  78
  81
  80
  83
  87
  91
  94
  99
  103
  108
  113
  118
  123
  129
  135
  141
  148
  155
  163
  171
  179
  187
Funds from operations, $m
  6
  6
  6
  5
  5
  5
  5
  5
  5
  5
  5
  4
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  0
  0
  -1
  -1
  -2
  -2
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
Cash from operations, $m
  5
  5
  5
  5
  5
  5
  5
  5
  5
  4
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  1
  1
  0
  0
  -1
  -1
  -2
  -2
  -3
  -3
Maintenance CAPEX, $m
  -57
  -58
  -60
  -61
  -63
  -65
  -67
  -69
  -72
  -74
  -77
  -80
  -83
  -87
  -91
  -94
  -99
  -103
  -108
  -113
  -118
  -123
  -129
  -135
  -141
  -148
  -155
  -163
  -171
  -179
New CAPEX, $m
  -15
  -17
  -19
  -21
  -24
  -26
  -28
  -31
  -33
  -35
  -38
  -40
  -43
  -46
  -48
  -51
  -54
  -57
  -61
  -64
  -68
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -108
Cash from investing activities, $m
  -72
  -75
  -79
  -82
  -87
  -91
  -95
  -100
  -105
  -109
  -115
  -120
  -126
  -133
  -139
  -145
  -153
  -160
  -169
  -177
  -186
  -194
  -204
  -214
  -224
  -236
  -247
  -260
  -273
  -287
Free cash flow, $m
  -67
  -70
  -73
  -77
  -81
  -86
  -90
  -95
  -100
  -105
  -111
  -116
  -123
  -129
  -136
  -143
  -150
  -158
  -166
  -175
  -184
  -194
  -204
  -214
  -225
  -237
  -249
  -262
  -276
  -290
Issuance/(repayment) of debt, $m
  13
  14
  16
  18
  20
  22
  24
  26
  28
  30
  32
  34
  36
  38
  40
  43
  45
  48
  51
  54
  56
  60
  63
  66
  70
  73
  77
  81
  85
  90
Issuance/(repurchase) of shares, $m
  61
  63
  65
  68
  70
  73
  76
  80
  83
  87
  87
  91
  95
  100
  105
  110
  116
  122
  128
  134
  141
  149
  156
  164
  173
  181
  191
  201
  211
  222
Cash from financing (excl. dividends), $m  
  74
  77
  81
  86
  90
  95
  100
  106
  111
  117
  119
  125
  131
  138
  145
  153
  161
  170
  179
  188
  197
  209
  219
  230
  243
  254
  268
  282
  296
  312
Total cash flow (excl. dividends), $m
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
  18
  19
  20
  21
  22
Retained Cash Flow (-), $m
  -61
  -63
  -65
  -68
  -70
  -73
  -76
  -80
  -83
  -87
  -87
  -91
  -95
  -100
  -105
  -110
  -116
  -122
  -128
  -134
  -141
  -149
  -156
  -164
  -173
  -181
  -191
  -201
  -211
  -222
Prev. year cash balance distribution, $m
  104
  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
  50
  -56
  -57
  -59
  -62
  -64
  -67
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -95
  -100
  -105
  -110
  -116
  -121
  -128
  -134
  -141
  -148
  -156
  -164
  -172
  -181
  -190
  -200
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  47
  -48
  -46
  -44
  -41
  -38
  -36
  -33
  -30
  -27
  -24
  -21
  -19
  -16
  -14
  -11
  -9
  -8
  -6
  -5
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  70.5
  49.6
  34.8
  24.3
  16.9
  11.8
  8.1
  5.6
  3.9
  2.7
  1.9
  1.3
  0.9
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Overseas Shipholding Group, Inc. primarily engages in the ocean transportation of crude oil and petroleum products. As of December 31, 2015, the company owned or operated a fleet of 79 vessels aggregating 7.4 million deadweight tons and 864,800 cubic meters, which included 55 vessels operated in the international flag market and 24 operated in the United States (U.S.) flag market. Its customers comprise independent and state-owned oil companies, oil traders, refinery operators, and the U.S. and international government entities. Overseas Shipholding Group, Inc. was founded in 1948 and is headquartered in Tampa, Florida.

FINANCIAL RATIOS  of  Overseas Shipholding Group Cl A (OSG)

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%

OSG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OSG stock intrinsic value calculation we used $390.426 million for the last fiscal year's total revenue generated by Overseas Shipholding Group Cl A. The default revenue input number comes from 0001 income statement of Overseas Shipholding Group Cl A. 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 OSG 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 7%, whose default value for OSG is calculated based on our internal credit rating of Overseas Shipholding Group Cl A, 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 Overseas Shipholding Group Cl A.
    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 OSG stock the variable cost ratio is equal to 105.6%.

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 OSG 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 7.7% for Overseas Shipholding Group Cl A.

Corporate tax rate of 27% is the nominal tax rate for Overseas Shipholding Group Cl A. 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 OSG 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 OSG are equal to 181.5%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Overseas Shipholding Group Cl A 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 OSG is equal to 1.8%. 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 - $313.238 million for Overseas Shipholding Group Cl A - 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 84.563 million for Overseas Shipholding Group Cl A 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 Overseas Shipholding Group Cl A at the current share price and the inputted number of shares is $0.2 billion.

COMPANY NEWS

▶ Overseas Shipholding Group Announces CFO Appointment   [Dec-04-17 04:55PM  Business Wire]
▶ Great Lakes Announces Changes to Board of Directors   [Nov-30-17 08:00AM  GlobeNewswire]
▶ Overseas Shipholding reports 4Q loss   [Mar-07-17 07:20AM  Associated Press]
▶ Tampa's newest public company gets a new CEO   [Dec-21-16 08:10AM  at bizjournals.com]
▶ Tampa's newest public company gets a new CEO   [08:10AM  American City Business Journals]
▶ [$$] Moody's Downgrades Overseas Shipholding Ahead of Spinoff   [Nov-29-16 06:51PM  at The Wall Street Journal]

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