Intrinsic value of Pure Cycle - PCYO

Previous Close

$10.37

  Intrinsic Value

$0.71

stock screener

  Rating & Target

str. sell

-93%

Previous close

$10.37

 
Intrinsic value

$0.71

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of PCYO 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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  2
  3
  5
  7
  9
  13
  17
  23
  29
  37
  45
  56
  67
  80
  94
  109
  126
  143
  162
  182
  204
  226
  250
  275
  300
  327
  355
  384
  415
  446
Variable operating expenses, $m
  2
  3
  5
  7
  9
  13
  17
  23
  29
  37
  45
  56
  67
  80
  94
  109
  126
  143
  162
  182
  204
  226
  250
  275
  300
  327
  355
  384
  415
  446
Fixed operating expenses, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
Total operating expenses, $m
  4
  5
  7
  9
  11
  15
  19
  25
  31
  39
  48
  59
  70
  83
  97
  112
  129
  146
  165
  185
  207
  229
  253
  278
  303
  331
  359
  388
  419
  450
Operating income, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
EBITDA, $m
  0
  2
  4
  6
  9
  14
  19
  26
  34
  43
  54
  66
  80
  96
  114
  132
  153
  175
  198
  223
  250
  278
  307
  337
  369
  403
  437
  473
  511
  550
Interest expense (income), $m
  0
  0
  0
  0
  0
  1
  1
  1
  2
  3
  4
  4
  6
  7
  8
  10
  12
  14
  16
  18
  20
  23
  25
  28
  31
  34
  37
  41
  44
  48
  52
Earnings before tax, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -13
  -14
  -16
  -19
  -21
  -23
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -52
  -56
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
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -13
  -14
  -16
  -19
  -21
  -23
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -52
  -56

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
  89
  138
  206
  299
  422
  581
  779
  1,023
  1,317
  1,663
  2,065
  2,525
  3,044
  3,621
  4,258
  4,953
  5,706
  6,514
  7,378
  8,295
  9,264
  10,285
  11,356
  12,477
  13,649
  14,870
  16,142
  17,465
  18,841
  20,272
Adjusted assets (=assets-cash), $m
  89
  138
  206
  299
  422
  581
  779
  1,023
  1,317
  1,663
  2,065
  2,525
  3,044
  3,621
  4,258
  4,953
  5,706
  6,514
  7,378
  8,295
  9,264
  10,285
  11,356
  12,477
  13,649
  14,870
  16,142
  17,465
  18,841
  20,272
Revenue / Adjusted assets
  0.022
  0.022
  0.024
  0.023
  0.021
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
  0.022
Average production assets, $m
  73
  113
  169
  245
  346
  476
  639
  839
  1,079
  1,363
  1,692
  2,069
  2,494
  2,967
  3,489
  4,059
  4,675
  5,338
  6,045
  6,797
  7,591
  8,427
  9,305
  10,224
  11,184
  12,185
  13,227
  14,311
  15,439
  16,611
Working capital, $m
  1
  1
  2
  2
  3
  4
  6
  8
  10
  12
  15
  19
  23
  27
  32
  37
  42
  48
  55
  61
  69
  76
  84
  93
  101
  110
  120
  129
  140
  150
Total debt, $m
  2
  5
  8
  13
  19
  27
  37
  50
  65
  83
  103
  127
  153
  182
  215
  250
  289
  330
  374
  421
  470
  522
  577
  634
  694
  756
  821
  888
  959
  1,032
Total liabilities, $m
  5
  7
  11
  15
  22
  30
  40
  52
  67
  85
  105
  129
  155
  185
  217
  253
  291
  332
  376
  423
  472
  525
  579
  636
  696
  758
  823
  891
  961
  1,034
Total equity, $m
  85
  131
  196
  284
  401
  551
  740
  971
  1,250
  1,578
  1,960
  2,396
  2,888
  3,437
  4,041
  4,701
  5,415
  6,182
  7,001
  7,872
  8,792
  9,760
  10,777
  11,841
  12,953
  14,112
  15,319
  16,575
  17,880
  19,238
Total liabilities and equity, $m
  90
  138
  207
  299
  423
  581
  780
  1,023
  1,317
  1,663
  2,065
  2,525
  3,043
  3,622
  4,258
  4,954
  5,706
  6,514
  7,377
  8,295
  9,264
  10,285
  11,356
  12,477
  13,649
  14,870
  16,142
  17,466
  18,841
  20,272
Debt-to-equity ratio
  0.030
  0.040
  0.040
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
Adjusted equity ratio
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949
  0.949

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -5
  -6
  -7
  -8
  -9
  -11
  -13
  -14
  -16
  -19
  -21
  -23
  -26
  -29
  -32
  -35
  -38
  -41
  -44
  -48
  -52
  -56
Depreciation, amort., depletion, $m
  2
  4
  6
  8
  12
  16
  21
  28
  36
  45
  56
  69
  83
  99
  116
  135
  156
  178
  202
  227
  253
  281
  310
  341
  373
  406
  441
  477
  515
  554
Funds from operations, $m
  0
  2
  3
  6
  9
  13
  17
  24
  31
  39
  49
  61
  74
  88
  104
  121
  139
  159
  181
  203
  227
  252
  279
  306
  335
  365
  396
  429
  463
  498
Change in working capital, $m
  0
  0
  1
  1
  1
  1
  1
  2
  2
  3
  3
  3
  4
  4
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
Cash from operations, $m
  0
  1
  3
  5
  8
  11
  16
  22
  29
  37
  46
  57
  70
  84
  99
  116
  134
  153
  174
  196
  220
  245
  271
  298
  326
  356
  387
  419
  453
  487
Maintenance CAPEX, $m
  -1
  -2
  -4
  -6
  -8
  -12
  -16
  -21
  -28
  -36
  -45
  -56
  -69
  -83
  -99
  -116
  -135
  -156
  -178
  -202
  -227
  -253
  -281
  -310
  -341
  -373
  -406
  -441
  -477
  -515
New CAPEX, $m
  -36
  -40
  -56
  -76
  -101
  -130
  -163
  -200
  -240
  -284
  -330
  -377
  -425
  -473
  -522
  -570
  -617
  -663
  -708
  -751
  -794
  -836
  -878
  -919
  -960
  -1,001
  -1,042
  -1,084
  -1,128
  -1,172
Cash from investing activities, $m
  -37
  -42
  -60
  -82
  -109
  -142
  -179
  -221
  -268
  -320
  -375
  -433
  -494
  -556
  -621
  -686
  -752
  -819
  -886
  -953
  -1,021
  -1,089
  -1,159
  -1,229
  -1,301
  -1,374
  -1,448
  -1,525
  -1,605
  -1,687
Free cash flow, $m
  -37
  -41
  -57
  -77
  -101
  -130
  -163
  -199
  -240
  -283
  -329
  -376
  -424
  -473
  -522
  -570
  -618
  -665
  -711
  -756
  -801
  -845
  -888
  -931
  -974
  -1,017
  -1,061
  -1,106
  -1,152
  -1,199
Issuance/(repayment) of debt, $m
  2
  2
  3
  5
  6
  8
  10
  12
  15
  18
  21
  23
  26
  29
  32
  35
  38
  41
  44
  47
  49
  52
  55
  57
  60
  62
  65
  67
  70
  73
Issuance/(repurchase) of shares, $m
  44
  48
  67
  91
  120
  154
  192
  236
  284
  335
  389
  444
  502
  559
  617
  674
  730
  786
  840
  894
  946
  997
  1,048
  1,099
  1,149
  1,200
  1,251
  1,304
  1,358
  1,413
Cash from financing (excl. dividends), $m  
  46
  50
  70
  96
  126
  162
  202
  248
  299
  353
  410
  467
  528
  588
  649
  709
  768
  827
  884
  941
  995
  1,049
  1,103
  1,156
  1,209
  1,262
  1,316
  1,371
  1,428
  1,486
Total cash flow (excl. dividends), $m
  9
  10
  14
  19
  25
  32
  40
  49
  59
  69
  81
  92
  104
  116
  128
  139
  151
  162
  173
  184
  194
  205
  215
  225
  235
  245
  255
  265
  276
  287
Retained Cash Flow (-), $m
  -44
  -48
  -67
  -91
  -120
  -154
  -192
  -236
  -284
  -335
  -389
  -444
  -502
  -559
  -617
  -674
  -730
  -786
  -840
  -894
  -946
  -997
  -1,048
  -1,099
  -1,149
  -1,200
  -1,251
  -1,304
  -1,358
  -1,413
Prev. year cash balance distribution, $m
  25
  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
  -39
  -54
  -72
  -95
  -122
  -153
  -187
  -225
  -265
  -308
  -352
  -398
  -443
  -489
  -535
  -580
  -624
  -667
  -710
  -751
  -793
  -833
  -874
  -914
  -955
  -996
  -1,039
  -1,082
  -1,126
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
  -9
  -35
  -47
  -60
  -74
  -88
  -103
  -117
  -129
  -139
  -146
  -150
  -151
  -149
  -144
  -136
  -126
  -115
  -103
  -90
  -78
  -66
  -55
  -45
  -36
  -28
  -21
  -16
  -12
  -8
Current shareholders' claim on cash, %
  77.9
  67.3
  59.0
  52.4
  47.0
  42.5
  38.8
  35.7
  33.0
  30.8
  28.8
  27.1
  25.7
  24.4
  23.2
  22.2
  21.3
  20.5
  19.8
  19.1
  18.5
  17.9
  17.4
  16.9
  16.5
  16.1
  15.7
  15.4
  15.0
  14.7

Pure Cycle Corporation is an integrated water company that provides wholesale water and wastewater services. The Company provides its services to wholesale customers, which include industrial customers and local governmental entities that provide water and wastewater services to their end-use customers located in the Denver, Colorado metropolitan area. The Company is engaged in selling water service to customers, using water rights owned or controlled by the Company and developing infrastructure to divert, treat and distribute that water and collect, treat and reuse wastewater. The Company owns a portfolio of water rights located in the Denver, Colorado metropolitan area, Southeastern Colorado in the Arkansas River, and the Western Slope of Colorado in the Colorado River. The Company's Denver area assets include Rangeview Water, the Lowry Range Property, Sky Ranch and Arapahoe County Fairgrounds.

FINANCIAL RATIOS  of  Pure Cycle (PCYO)

Valuation Ratios
P/E Ratio -123.1
Price to Sales 246.3
Price to Book 3.6
Price to Tangible Book
Price to Cash Flow -246.3
Price to Free Cash Flow -27.4
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 300%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -2.8%
Ret/ On Assets - 3 Yr. Avg. -9.9%
Return On Total Capital -2.9%
Ret/ On T. Cap. - 3 Yr. Avg. -10.7%
Return On Equity -2.9%
Return On Equity - 3 Yr. Avg. -11%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -100%
EBITDA Margin - 3 Yr. Avg. -66.7%
Operating Margin -200%
Oper. Margin - 3 Yr. Avg. -133.3%
Pre-Tax Margin -200%
Pre-Tax Margin - 3 Yr. Avg. -100%
Net Profit Margin -200%
Net Profit Margin - 3 Yr. Avg. -833.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PCYO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PCYO stock intrinsic value calculation we used $1.227787 million for the last fiscal year's total revenue generated by Pure Cycle. The default revenue input number comes from 0001 income statement of Pure Cycle. 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 PCYO stock valuation model: a) initial revenue growth rate of 60% 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 PCYO is calculated based on our internal credit rating of Pure Cycle, 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 Pure Cycle.
    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 PCYO stock the variable cost ratio is equal to 100%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2 million in the base year in the intrinsic value calculation for PCYO 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 Pure Cycle.

Corporate tax rate of 27% is the nominal tax rate for Pure Cycle. 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 PCYO 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 PCYO are equal to 3724.6%.

Life of production assets of 50.7 years is the average useful life of capital assets used in Pure Cycle 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 PCYO is equal to 33.7%. 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 - $67.506099 million for Pure Cycle - 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 23.764 million for Pure Cycle 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 Pure Cycle at the current share price and the inputted number of shares is $0.2 billion.

RELATED COMPANIES Price Int.Val. Rating
CWT California Wat 43.87 13.21  str.sell
AWR American State 64.61 15.69  str.sell
SJW SJW Group 63.56 23.28  str.sell
GWRS Global Water R 10.50 1.11  str.sell
AWK American Water 91.14 39.12  str.sell
WTR Aqua America 33.04 4.88  str.sell
MSEX Middlesex Wate 49.24 13.76  str.sell
ARTNA Artesian Resou 36.68 13.38  str.sell

COMPANY NEWS

▶ ETFs with exposure to Pure Cycle Corp. : October 9, 2017   [Oct-09-17 11:53AM  Capital Cube]
▶ ETFs with exposure to Pure Cycle Corp. : August 1, 2017   [Aug-01-17 05:06PM  Capital Cube]
▶ ETFs with exposure to Pure Cycle Corp. : July 12, 2017   [Jul-12-17 02:53PM  Capital Cube]
▶ ETFs with exposure to Pure Cycle Corp. : April 28, 2017   [Apr-28-17 04:10PM  Capital Cube]
▶ ETFs with exposure to Pure Cycle Corp. : April 17, 2017   [Apr-17-17 01:03PM  Capital Cube]
▶ Pure Cycle reports 2Q loss   [05:50AM  Associated Press]
▶ ETFs with exposure to Pure Cycle Corp. : January 9, 2017   [Jan-09-17 01:56PM  Capital Cube]
▶ Pure Cycle reports 1Q loss   [Jan-04-17 05:58PM  Associated Press]
▶ Hedge Funds Are Buying Pure Cycle Corporation (PCYO)   [Dec-16-16 07:55AM  Insider Monkey]
▶ Hedge Funds Are Betting On Pure Cycle Corporation (PCYO)   [Dec-02  12:01PM  at Insider Monkey]
▶ NYSSAs 19th Annual Water Utilities Industry Conference   [Nov-30  01:31PM  Business Wire]
▶ NYSSAs 19th Annual Water Utilities Industry Conference   [Nov-25  01:03PM  Business Wire]
▶ Is DryShips Inc. (DRYS) Going To Sink These Hedge Funds?   [Nov-21  03:52PM  at Insider Monkey]
▶ 10-Q for Pure Cycle Corp.   [Jul-10  08:09PM  at Company Spotlight]

CONTACT US       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.