Intrinsic value of Profire Energy - PFIE

Previous Close

$2.45

  Intrinsic Value

$7.01

stock screener

  Rating & Target

str. buy

+186%

Previous close

$2.45

 
Intrinsic value

$7.01

 
Up/down potential

+186%

 
Rating

str. buy

We calculate the intrinsic value of PFIE 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 0.1

 

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, %
  19.80
  18.32
  16.99
  15.79
  14.71
  13.74
  12.87
  12.08
  11.37
  10.73
  10.16
  9.64
  9.18
  8.76
  8.39
  8.05
  7.74
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
Revenue, $m
  46
  54
  63
  74
  84
  96
  108
  121
  135
  150
  165
  181
  197
  215
  233
  251
  271
  291
  312
  334
  357
  380
  405
  430
  457
  485
  513
  543
  575
  608
Variable operating expenses, $m
  18
  21
  25
  29
  33
  38
  42
  48
  53
  59
  64
  71
  77
  84
  91
  98
  106
  114
  122
  131
  139
  149
  158
  168
  179
  190
  201
  213
  225
  238
Fixed operating expenses, $m
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  24
  25
  25
  26
  26
  27
  28
  28
  29
  29
  30
  31
Total operating expenses, $m
  34
  38
  42
  46
  51
  56
  61
  67
  72
  79
  84
  92
  98
  106
  113
  121
  129
  138
  146
  156
  164
  175
  184
  195
  207
  218
  230
  242
  255
  269
Operating income, $m
  11
  16
  21
  27
  33
  40
  47
  55
  63
  71
  80
  89
  99
  109
  119
  130
  142
  154
  166
  179
  192
  206
  220
  235
  251
  267
  284
  302
  320
  339
EBITDA, $m
  13
  17
  23
  29
  35
  42
  50
  57
  66
  74
  84
  93
  103
  114
  124
  136
  148
  160
  172
  186
  199
  214
  229
  244
  260
  277
  295
  313
  332
  352
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
Earnings before tax, $m
  11
  16
  21
  27
  33
  40
  47
  54
  62
  71
  79
  89
  98
  108
  118
  129
  141
  152
  164
  177
  190
  204
  218
  233
  248
  265
  281
  299
  317
  336
Tax expense, $m
  3
  4
  6
  7
  9
  11
  13
  15
  17
  19
  21
  24
  26
  29
  32
  35
  38
  41
  44
  48
  51
  55
  59
  63
  67
  71
  76
  81
  86
  91
Net income, $m
  8
  12
  16
  20
  24
  29
  34
  40
  45
  51
  58
  65
  72
  79
  86
  94
  103
  111
  120
  129
  139
  149
  159
  170
  181
  193
  205
  218
  232
  245

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
  44
  52
  60
  70
  80
  91
  103
  116
  129
  143
  157
  172
  188
  204
  222
  239
  258
  277
  297
  318
  340
  362
  385
  410
  435
  461
  489
  518
  548
  579
Adjusted assets (=assets-cash), $m
  44
  52
  60
  70
  80
  91
  103
  116
  129
  143
  157
  172
  188
  204
  222
  239
  258
  277
  297
  318
  340
  362
  385
  410
  435
  461
  489
  518
  548
  579
Revenue / Adjusted assets
  1.045
  1.038
  1.050
  1.057
  1.050
  1.055
  1.049
  1.043
  1.047
  1.049
  1.051
  1.052
  1.048
  1.054
  1.050
  1.050
  1.050
  1.051
  1.051
  1.050
  1.050
  1.050
  1.052
  1.049
  1.051
  1.052
  1.049
  1.048
  1.049
  1.050
Average production assets, $m
  10
  12
  14
  16
  19
  21
  24
  27
  30
  33
  37
  40
  44
  48
  52
  56
  60
  65
  70
  74
  80
  85
  90
  96
  102
  108
  114
  121
  128
  136
Working capital, $m
  13
  16
  18
  21
  24
  28
  31
  35
  39
  43
  48
  52
  57
  62
  67
  73
  79
  84
  90
  97
  103
  110
  117
  125
  132
  141
  149
  158
  167
  176
Total debt, $m
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  17
  18
  20
  22
  24
  26
  28
  31
  33
  36
  38
  41
  43
  46
  49
  52
  56
  59
Total liabilities, $m
  5
  6
  7
  8
  9
  10
  11
  13
  14
  16
  17
  19
  20
  22
  24
  26
  28
  30
  32
  35
  37
  39
  42
  45
  47
  50
  53
  56
  60
  63
Total equity, $m
  39
  46
  54
  62
  72
  81
  92
  103
  115
  127
  140
  153
  167
  182
  197
  213
  230
  247
  265
  283
  303
  323
  343
  365
  388
  411
  436
  461
  488
  516
Total liabilities and equity, $m
  44
  52
  61
  70
  81
  91
  103
  116
  129
  143
  157
  172
  187
  204
  221
  239
  258
  277
  297
  318
  340
  362
  385
  410
  435
  461
  489
  517
  548
  579
Debt-to-equity ratio
  0.020
  0.040
  0.050
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.090
  0.090
  0.100
  0.100
  0.100
  0.100
  0.100
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
Adjusted equity ratio
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891
  0.891

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  12
  16
  20
  24
  29
  34
  40
  45
  51
  58
  65
  72
  79
  86
  94
  103
  111
  120
  129
  139
  149
  159
  170
  181
  193
  205
  218
  232
  245
Depreciation, amort., depletion, $m
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
Funds from operations, $m
  9
  13
  17
  21
  26
  31
  37
  42
  48
  55
  62
  69
  76
  84
  91
  100
  108
  117
  127
  136
  146
  157
  168
  179
  191
  203
  216
  230
  244
  258
Change in working capital, $m
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  9
Cash from operations, $m
  7
  11
  14
  19
  23
  28
  33
  39
  44
  51
  57
  64
  71
  78
  86
  94
  103
  111
  121
  130
  140
  150
  161
  172
  183
  195
  208
  221
  235
  249
Maintenance CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
New CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
Cash from investing activities, $m
  -3
  -3
  -3
  -3
  -4
  -5
  -5
  -5
  -6
  -6
  -6
  -8
  -8
  -8
  -9
  -9
  -9
  -11
  -11
  -12
  -12
  -13
  -13
  -15
  -15
  -16
  -16
  -18
  -19
  -19
Free cash flow, $m
  5
  8
  11
  15
  19
  23
  28
  33
  39
  45
  50
  57
  63
  70
  78
  85
  93
  101
  110
  118
  128
  137
  147
  157
  168
  179
  191
  203
  216
  229
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
Total cash flow (excl. dividends), $m
  5
  9
  12
  16
  20
  25
  30
  35
  40
  46
  52
  58
  65
  72
  80
  87
  95
  103
  112
  121
  130
  140
  150
  160
  171
  182
  194
  206
  219
  233
Retained Cash Flow (-), $m
  -7
  -7
  -8
  -9
  -9
  -10
  -10
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -24
  -26
  -27
  -28
Prev. year cash balance distribution, $m
  12
  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
  11
  2
  4
  7
  11
  15
  19
  24
  28
  34
  39
  45
  51
  58
  64
  71
  79
  86
  94
  102
  111
  120
  129
  138
  148
  159
  170
  181
  193
  205
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
  10
  1
  4
  6
  9
  11
  13
  15
  16
  18
  19
  19
  19
  19
  19
  18
  17
  16
  14
  13
  11
  10
  8
  7
  6
  5
  4
  3
  2
  2
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Profire Energy, Inc. is an oilfield technology company. The Company is primarily engaged in the business of developing combustion management technologies for the oil and gas industry. It specializes in the creation of burner-management systems, used on a range of oilfield natural-draft fire tube vessels. It offers burner-management systems, which help to ignite, monitor and manage the burner flame. Its solution, the PF3100, helps manage and synchronize custom applications helping oilfield producers meet deadlines through an off-the-shelf solution with dynamic customization. It also sells complementary oilfield products. Such products help manage fuel flow (such as valves and fuel trains), meter air flow (such as airplates), generate power on-site (such as solar packages), ignite and direct flame (such as flare stack igniter and nozzles), and other functions. In addition to the burner-management systems and complementary technologies, it also offers chemical-management systems.

FINANCIAL RATIOS  of  Profire Energy (PFIE)

Valuation Ratios
P/E Ratio 0
Price to Sales 7.8
Price to Book 3
Price to Tangible Book
Price to Cash Flow 62.1
Price to Free Cash Flow 62.1
Growth Rates
Sales Growth Rate -40.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate -100%
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 0%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 6.1%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 50%
Gross Margin - 3 Yr. Avg. 51.6%
EBITDA Margin 6.3%
EBITDA Margin - 3 Yr. Avg. 9.9%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 5.2%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 5.9%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 3.9%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 11.1%
Payout Ratio 0%

PFIE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PFIE stock intrinsic value calculation we used $38.286376 million for the last fiscal year's total revenue generated by Profire Energy. The default revenue input number comes from 0001 income statement of Profire Energy. 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 PFIE stock valuation model: a) initial revenue growth rate of 19.8% 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 PFIE is calculated based on our internal credit rating of Profire Energy, 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 Profire Energy.
    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 PFIE stock the variable cost ratio is equal to 39.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $16 million in the base year in the intrinsic value calculation for PFIE 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 Profire Energy.

Corporate tax rate of 27% is the nominal tax rate for Profire Energy. 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 PFIE 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 PFIE are equal to 22.3%.

Life of production assets of 10.4 years is the average useful life of capital assets used in Profire Energy 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 PFIE is equal to 29%. 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 - $44.047424 million for Profire Energy - 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 48.082 million for Profire Energy 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 Profire Energy at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
HON Honeywell Inte 150.32 242.19  str.buy
EMR Emerson Electr 68.49 71.84  hold
CSWI CSW Industrial 52.42 37.15  sell
TGEN Tecogen 3.69 0.17  str.sell

COMPANY NEWS

▶ Profire Energy, Inc. to Host Earnings Call   [Aug-09-18 11:00AM  ACCESSWIRE]
▶ Profire Energy, Inc. Set to Join Russell 3000® Index   [Jun-11-18 07:15PM  GlobeNewswire]
▶ Profire Energy, Inc. to Host Earnings Call   [Mar-08-18 10:00AM  ACCESSWIRE]
▶ Is KemPharm Inc (KMPH) A Good Stock To Buy?   [06:15AM  Insider Monkey]
▶ Is KemPharm Inc (KMPH) A Good Stock To Buy?   [06:15AM  at Insider Monkey]
▶ Profire Energy Announces Resignation of Board Member   [Jul-22-16 02:05PM  GlobeNewswire]

CONTACT US       ASSET ALLOCATION

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

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