Intrinsic value of Pattern Energy Group Inc. - PEGI

Previous Close

$21.82

  Intrinsic Value

$1.96

stock screener

  Rating & Target

str. sell

-91%

Previous close

$21.82

 
Intrinsic value

$1.96

 
Up/down potential

-91%

 
Rating

str. sell

We calculate the intrinsic value of PEGI 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 2.1

 

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, %
  2.40
  2.66
  2.89
  3.10
  3.29
  3.46
  3.62
  3.76
  3.88
  3.99
  4.09
  4.18
  4.27
  4.34
  4.41
  4.46
  4.52
  4.57
  4.61
  4.65
  4.68
  4.72
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
  4.88
Revenue, $m
  495
  508
  522
  539
  556
  576
  597
  619
  643
  669
  696
  725
  756
  789
  824
  860
  899
  940
  984
  1,029
  1,078
  1,128
  1,182
  1,238
  1,298
  1,360
  1,426
  1,495
  1,568
  1,644
Variable operating expenses, $m
  482
  494
  507
  522
  538
  556
  575
  596
  618
  641
  639
  665
  694
  724
  756
  790
  825
  863
  903
  945
  989
  1,035
  1,085
  1,136
  1,191
  1,248
  1,308
  1,372
  1,439
  1,509
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
  482
  494
  507
  522
  538
  556
  575
  596
  618
  641
  639
  665
  694
  724
  756
  790
  825
  863
  903
  945
  989
  1,035
  1,085
  1,136
  1,191
  1,248
  1,308
  1,372
  1,439
  1,509
Operating income, $m
  13
  14
  15
  17
  18
  20
  21
  23
  25
  27
  57
  60
  62
  65
  68
  71
  74
  77
  81
  85
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
EBITDA, $m
  321
  330
  339
  350
  361
  374
  388
  402
  418
  434
  452
  471
  491
  512
  535
  559
  584
  611
  639
  669
  700
  733
  768
  804
  843
  884
  926
  971
  1,018
  1,068
Interest expense (income), $m
  70
  123
  129
  136
  143
  150
  159
  168
  178
  188
  200
  212
  225
  239
  254
  269
  286
  303
  322
  341
  362
  384
  407
  431
  456
  483
  512
  541
  573
  605
  640
Earnings before tax, $m
  -110
  -115
  -120
  -126
  -132
  -139
  -146
  -155
  -163
  -173
  -155
  -165
  -177
  -189
  -202
  -215
  -229
  -244
  -260
  -277
  -295
  -314
  -334
  -354
  -376
  -400
  -424
  -449
  -476
  -505
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
  -110
  -115
  -120
  -126
  -132
  -139
  -146
  -155
  -163
  -173
  -155
  -165
  -177
  -189
  -202
  -215
  -229
  -244
  -260
  -277
  -295
  -314
  -334
  -354
  -376
  -400
  -424
  -449
  -476
  -505

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
  5,435
  5,580
  5,741
  5,919
  6,114
  6,326
  6,555
  6,801
  7,065
  7,347
  7,648
  7,968
  8,308
  8,669
  9,050
  9,454
  9,882
  10,333
  10,809
  11,312
  11,842
  12,400
  12,988
  13,608
  14,260
  14,946
  15,668
  16,428
  17,227
  18,067
Adjusted assets (=assets-cash), $m
  5,435
  5,580
  5,741
  5,919
  6,114
  6,326
  6,555
  6,801
  7,065
  7,347
  7,648
  7,968
  8,308
  8,669
  9,050
  9,454
  9,882
  10,333
  10,809
  11,312
  11,842
  12,400
  12,988
  13,608
  14,260
  14,946
  15,668
  16,428
  17,227
  18,067
Revenue / Adjusted assets
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
  0.091
Average production assets, $m
  4,377
  4,494
  4,624
  4,767
  4,924
  5,095
  5,279
  5,477
  5,690
  5,917
  6,159
  6,417
  6,691
  6,981
  7,289
  7,614
  7,958
  8,322
  8,705
  9,110
  9,537
  9,986
  10,460
  10,959
  11,484
  12,037
  12,619
  13,230
  13,874
  14,551
Working capital, $m
  -154
  -158
  -162
  -168
  -173
  -179
  -186
  -192
  -200
  -208
  -216
  -226
  -235
  -245
  -256
  -268
  -280
  -292
  -306
  -320
  -335
  -351
  -368
  -385
  -404
  -423
  -443
  -465
  -488
  -511
Total debt, $m
  2,395
  2,511
  2,640
  2,783
  2,940
  3,110
  3,293
  3,491
  3,702
  3,929
  4,170
  4,426
  4,699
  4,988
  5,294
  5,618
  5,961
  6,323
  6,705
  7,108
  7,533
  7,981
  8,453
  8,949
  9,472
  10,023
  10,602
  11,211
  11,852
  12,526
Total liabilities, $m
  4,359
  4,475
  4,604
  4,747
  4,904
  5,074
  5,257
  5,455
  5,666
  5,893
  6,134
  6,390
  6,663
  6,952
  7,258
  7,582
  7,925
  8,287
  8,669
  9,072
  9,497
  9,945
  10,417
  10,913
  11,436
  11,987
  12,566
  13,175
  13,816
  14,490
Total equity, $m
  1,076
  1,105
  1,137
  1,172
  1,211
  1,253
  1,298
  1,347
  1,399
  1,455
  1,514
  1,578
  1,645
  1,716
  1,792
  1,872
  1,957
  2,046
  2,140
  2,240
  2,345
  2,455
  2,572
  2,694
  2,823
  2,959
  3,102
  3,253
  3,411
  3,577
Total liabilities and equity, $m
  5,435
  5,580
  5,741
  5,919
  6,115
  6,327
  6,555
  6,802
  7,065
  7,348
  7,648
  7,968
  8,308
  8,668
  9,050
  9,454
  9,882
  10,333
  10,809
  11,312
  11,842
  12,400
  12,989
  13,607
  14,259
  14,946
  15,668
  16,428
  17,227
  18,067
Debt-to-equity ratio
  2.230
  2.270
  2.320
  2.370
  2.430
  2.480
  2.540
  2.590
  2.650
  2.700
  2.750
  2.810
  2.860
  2.910
  2.950
  3.000
  3.050
  3.090
  3.130
  3.170
  3.210
  3.250
  3.290
  3.320
  3.350
  3.390
  3.420
  3.450
  3.470
  3.500
Adjusted equity ratio
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -110
  -115
  -120
  -126
  -132
  -139
  -146
  -155
  -163
  -173
  -155
  -165
  -177
  -189
  -202
  -215
  -229
  -244
  -260
  -277
  -295
  -314
  -334
  -354
  -376
  -400
  -424
  -449
  -476
  -505
Depreciation, amort., depletion, $m
  308
  316
  324
  333
  343
  354
  366
  379
  392
  407
  395
  411
  429
  448
  467
  488
  510
  533
  558
  584
  611
  640
  671
  702
  736
  772
  809
  848
  889
  933
Funds from operations, $m
  198
  201
  204
  207
  211
  215
  220
  224
  229
  234
  240
  246
  252
  259
  266
  273
  281
  289
  298
  307
  316
  326
  337
  348
  360
  372
  385
  399
  413
  428
Change in working capital, $m
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -16
  -17
  -18
  -18
  -19
  -20
  -22
  -23
  -24
Cash from operations, $m
  202
  205
  208
  212
  217
  221
  226
  231
  237
  242
  249
  255
  262
  269
  276
  284
  293
  302
  311
  321
  331
  342
  354
  366
  378
  392
  406
  420
  436
  452
Maintenance CAPEX, $m
  -274
  -281
  -288
  -296
  -306
  -316
  -327
  -338
  -351
  -365
  -379
  -395
  -411
  -429
  -448
  -467
  -488
  -510
  -533
  -558
  -584
  -611
  -640
  -671
  -702
  -736
  -772
  -809
  -848
  -889
New CAPEX, $m
  -102
  -116
  -130
  -144
  -157
  -171
  -184
  -198
  -213
  -227
  -242
  -258
  -274
  -290
  -308
  -325
  -344
  -363
  -384
  -405
  -427
  -450
  -474
  -499
  -525
  -553
  -582
  -612
  -644
  -677
Cash from investing activities, $m
  -376
  -397
  -418
  -440
  -463
  -487
  -511
  -536
  -564
  -592
  -621
  -653
  -685
  -719
  -756
  -792
  -832
  -873
  -917
  -963
  -1,011
  -1,061
  -1,114
  -1,170
  -1,227
  -1,289
  -1,354
  -1,421
  -1,492
  -1,566
Free cash flow, $m
  -175
  -192
  -210
  -228
  -246
  -265
  -285
  -305
  -327
  -350
  -373
  -398
  -423
  -450
  -479
  -508
  -539
  -572
  -606
  -642
  -679
  -719
  -760
  -804
  -849
  -897
  -948
  -1,001
  -1,056
  -1,114
Issuance/(repayment) of debt, $m
  112
  116
  130
  143
  156
  170
  184
  197
  212
  226
  241
  257
  273
  289
  306
  324
  343
  362
  382
  403
  425
  448
  472
  497
  523
  550
  579
  609
  641
  674
Issuance/(repurchase) of shares, $m
  139
  144
  152
  161
  171
  181
  192
  203
  216
  228
  214
  229
  244
  260
  277
  295
  314
  334
  355
  377
  400
  424
  450
  477
  506
  535
  567
  600
  635
  671
Cash from financing (excl. dividends), $m  
  251
  260
  282
  304
  327
  351
  376
  400
  428
  454
  455
  486
  517
  549
  583
  619
  657
  696
  737
  780
  825
  872
  922
  974
  1,029
  1,085
  1,146
  1,209
  1,276
  1,345
Total cash flow (excl. dividends), $m
  77
  67
  72
  77
  81
  86
  91
  95
  100
  105
  83
  88
  93
  99
  105
  111
  117
  124
  131
  138
  145
  153
  162
  170
  179
  188
  198
  209
  219
  231
Retained Cash Flow (-), $m
  -139
  -144
  -152
  -161
  -171
  -181
  -192
  -203
  -216
  -228
  -214
  -229
  -244
  -260
  -277
  -295
  -314
  -334
  -355
  -377
  -400
  -424
  -450
  -477
  -506
  -535
  -567
  -600
  -635
  -671
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
  -63
  -76
  -80
  -85
  -90
  -95
  -101
  -108
  -115
  -123
  -132
  -141
  -151
  -161
  -172
  -184
  -197
  -210
  -224
  -239
  -255
  -271
  -289
  -307
  -326
  -347
  -369
  -391
  -415
  -440
Discount rate, %
  9.70
  10.19
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.38
  29.79
  31.28
  32.85
  34.49
  36.21
  38.03
  39.93
PV of cash for distribution, $m
  -57
  -63
  -59
  -55
  -51
  -47
  -43
  -39
  -35
  -30
  -26
  -22
  -19
  -15
  -12
  -10
  -8
  -6
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  93.9
  88.1
  82.6
  77.2
  72.1
  67.2
  62.5
  58.0
  53.8
  49.8
  46.5
  43.3
  40.3
  37.4
  34.6
  32.0
  29.6
  27.3
  25.2
  23.2
  21.3
  19.6
  18.0
  16.5
  15.1
  13.8
  12.6
  11.6
  10.5
  9.6

Pattern Energy Group Inc. is an independent power company focused on owning and operating power projects. The Company holds interests in over 18 wind power projects located in the United States, Canada and Chile with total capacity of over 2,644 megawatts (MW). Each of its projects has contracted to sell its output pursuant to a power sale agreement. The Company sells its electricity and environmental attributes, including renewable energy credits (RECs), to local utilities under long-term and fixed-price power purchase agreements (PPAs). The Company's operating projects are Gulf Wind, Texas; Hatchet Ridge, California; St. Joseph, Manitoba; Spring Valley, Nevada; Santa Isabel, Puerto Rico; Ocotillo, California; South Kent, Ontario; El Arrayan, Chile; Panhandle 1, Texas; Panhandle 2, Texas; Grand, Ontario; Post Rock, Kansas; Lost Creek, Missouri; K2, Ontario; Logan's Gap, Texas, Amazon Wind Farm Fowler Ridge, Indiana, and Armow Wind power facility in Ontario, Canada.

FINANCIAL RATIOS  of  Pattern Energy Group Inc. (PEGI)

Valuation Ratios
P/E Ratio -112.2
Price to Sales 5.4
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 11.6
Price to Free Cash Flow 14.6
Growth Rates
Sales Growth Rate 7.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -91.3%
Cap. Spend. - 3 Yr. Gr. Rate -23.3%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 135.1%
Total Debt to Equity 158.3%
Interest Coverage 0
Management Effectiveness
Return On Assets 1.7%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital -0.7%
Ret/ On T. Cap. - 3 Yr. Avg. -1.2%
Return On Equity -1.9%
Return On Equity - 3 Yr. Avg. -4%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 14.4%
Gross Margin - 3 Yr. Avg. 22.5%
EBITDA Margin 56.5%
EBITDA Margin - 3 Yr. Avg. 49.7%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 9.8%
Pre-Tax Margin -12.4%
Pre-Tax Margin - 3 Yr. Avg. -13.9%
Net Profit Margin -4.8%
Net Profit Margin - 3 Yr. Avg. -8.8%
Effective Tax Rate -18.2%
Eff/ Tax Rate - 3 Yr. Avg. -12%
Payout Ratio -705.9%

PEGI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PEGI stock intrinsic value calculation we used $483 million for the last fiscal year's total revenue generated by Pattern Energy Group Inc.. The default revenue input number comes from 0001 income statement of Pattern Energy Group 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 PEGI stock valuation model: a) initial revenue growth rate of 2.4% 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 9.7%, whose default value for PEGI is calculated based on our internal credit rating of Pattern Energy Group 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 Pattern Energy Group 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 PEGI stock the variable cost ratio is equal to 97.5%.

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 PEGI 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 Pattern Energy Group Inc..

Corporate tax rate of 27% is the nominal tax rate for Pattern Energy Group 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 PEGI 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 PEGI are equal to 885%.

Life of production assets of 15.6 years is the average useful life of capital assets used in Pattern Energy Group 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 PEGI is equal to -31.1%. 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 - $1047 million for Pattern Energy Group 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 98.129 million for Pattern Energy Group 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 Pattern Energy Group Inc. at the current share price and the inputted number of shares is $2.1 billion.

RELATED COMPANIES Price Int.Val. Rating
NEP NextEra Energy 45.72 38.43  hold
TERP TerraForm Powe 13.69 0.54  str.sell

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.