Intrinsic value of Polar Power, Inc. - POLA

Previous Close

$4.00

  Intrinsic Value

$211.34

stock screener

  Rating & Target

str. buy

+999%

Previous close

$4.00

 
Intrinsic value

$211.34

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of POLA 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 0.0

 

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
  22
  35
  52
  75
  106
  146
  196
  257
  330
  417
  518
  633
  764
  908
  1,068
  1,243
  1,431
  1,634
  1,851
  2,081
  2,324
  2,580
  2,849
  3,130
  3,424
  3,730
  4,049
  4,381
  4,727
  5,085
Variable operating expenses, $m
  3
  5
  7
  11
  15
  21
  28
  37
  47
  60
  74
  91
  109
  130
  153
  178
  205
  234
  265
  298
  332
  369
  407
  448
  490
  533
  579
  627
  676
  727
Fixed operating expenses, $m
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
Total operating expenses, $m
  15
  18
  20
  24
  28
  35
  42
  51
  62
  75
  89
  107
  125
  146
  170
  195
  222
  252
  283
  317
  351
  388
  427
  468
  511
  554
  601
  649
  699
  750
Operating income, $m
  7
  17
  32
  51
  77
  111
  154
  206
  269
  343
  429
  527
  638
  762
  899
  1,048
  1,209
  1,383
  1,568
  1,765
  1,973
  2,192
  2,422
  2,662
  2,914
  3,176
  3,449
  3,733
  4,028
  4,335
EBITDA, $m
  7
  18
  32
  52
  79
  113
  156
  209
  272
  347
  435
  534
  647
  772
  911
  1,062
  1,225
  1,401
  1,589
  1,788
  1,999
  2,221
  2,454
  2,697
  2,952
  3,218
  3,494
  3,782
  4,081
  4,392
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  2
  2
  3
  4
  4
  5
  6
  7
  8
  9
  11
  12
  13
  15
  17
  18
  20
  22
  24
  25
  27
Earnings before tax, $m
  7
  17
  31
  51
  77
  111
  153
  205
  267
  341
  426
  524
  635
  758
  894
  1,042
  1,202
  1,374
  1,558
  1,754
  1,961
  2,178
  2,407
  2,646
  2,895
  3,156
  3,427
  3,709
  4,003
  4,308
Tax expense, $m
  2
  5
  8
  14
  21
  30
  41
  55
  72
  92
  115
  142
  171
  205
  241
  281
  325
  371
  421
  474
  529
  588
  650
  714
  782
  852
  925
  1,001
  1,081
  1,163
Net income, $m
  5
  12
  23
  37
  56
  81
  112
  149
  195
  249
  311
  383
  463
  553
  652
  760
  878
  1,003
  1,138
  1,280
  1,431
  1,590
  1,757
  1,931
  2,114
  2,304
  2,502
  2,708
  2,922
  3,145

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
  19
  29
  43
  62
  88
  121
  162
  213
  274
  346
  430
  526
  634
  754
  886
  1,031
  1,188
  1,356
  1,536
  1,727
  1,929
  2,141
  2,364
  2,598
  2,841
  3,096
  3,360
  3,636
  3,922
  4,220
Adjusted assets (=assets-cash), $m
  19
  29
  43
  62
  88
  121
  162
  213
  274
  346
  430
  526
  634
  754
  886
  1,031
  1,188
  1,356
  1,536
  1,727
  1,929
  2,141
  2,364
  2,598
  2,841
  3,096
  3,360
  3,636
  3,922
  4,220
Revenue / Adjusted assets
  1.158
  1.207
  1.209
  1.210
  1.205
  1.207
  1.210
  1.207
  1.204
  1.205
  1.205
  1.203
  1.205
  1.204
  1.205
  1.206
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
  1.205
Average production assets, $m
  1
  2
  3
  4
  6
  8
  11
  14
  18
  23
  29
  35
  43
  51
  60
  70
  80
  92
  104
  117
  130
  144
  160
  175
  192
  209
  227
  245
  265
  285
Working capital, $m
  11
  17
  26
  38
  53
  73
  98
  128
  165
  209
  259
  317
  382
  454
  534
  621
  716
  817
  925
  1,040
  1,162
  1,290
  1,424
  1,565
  1,712
  1,865
  2,025
  2,191
  2,363
  2,543
Total debt, $m
  1
  2
  4
  7
  10
  14
  20
  26
  34
  44
  55
  67
  81
  97
  114
  133
  153
  175
  198
  223
  249
  277
  306
  336
  368
  401
  436
  471
  509
  547
Total liabilities, $m
  2
  4
  6
  8
  11
  16
  21
  28
  36
  45
  56
  68
  82
  98
  115
  134
  154
  176
  200
  224
  251
  278
  307
  338
  369
  402
  437
  473
  510
  549
Total equity, $m
  16
  25
  37
  54
  76
  105
  141
  185
  239
  301
  374
  457
  551
  656
  771
  897
  1,033
  1,180
  1,336
  1,502
  1,678
  1,863
  2,057
  2,260
  2,472
  2,693
  2,924
  3,163
  3,413
  3,672
Total liabilities and equity, $m
  18
  29
  43
  62
  87
  121
  162
  213
  275
  346
  430
  525
  633
  754
  886
  1,031
  1,187
  1,356
  1,536
  1,726
  1,929
  2,141
  2,364
  2,598
  2,841
  3,095
  3,361
  3,636
  3,923
  4,221
Debt-to-equity ratio
  0.070
  0.100
  0.120
  0.130
  0.130
  0.140
  0.140
  0.140
  0.140
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
  0.150
Adjusted equity ratio
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5
  12
  23
  37
  56
  81
  112
  149
  195
  249
  311
  383
  463
  553
  652
  760
  878
  1,003
  1,138
  1,280
  1,431
  1,590
  1,757
  1,931
  2,114
  2,304
  2,502
  2,708
  2,922
  3,145
Depreciation, amort., depletion, $m
  0
  0
  1
  1
  1
  2
  2
  3
  4
  5
  6
  7
  9
  10
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
Funds from operations, $m
  5
  13
  24
  38
  57
  82
  114
  152
  199
  253
  317
  390
  472
  563
  664
  774
  894
  1,022
  1,158
  1,304
  1,457
  1,619
  1,789
  1,966
  2,152
  2,346
  2,547
  2,757
  2,975
  3,201
Change in working capital, $m
  4
  6
  9
  12
  15
  20
  25
  31
  37
  43
  50
  58
  65
  72
  80
  87
  94
  101
  108
  115
  122
  128
  134
  141
  147
  153
  160
  166
  173
  179
Cash from operations, $m
  1
  7
  15
  26
  42
  63
  89
  122
  162
  210
  267
  332
  407
  491
  584
  687
  799
  920
  1,050
  1,189
  1,336
  1,491
  1,654
  1,826
  2,005
  2,192
  2,388
  2,591
  2,802
  3,022
Maintenance CAPEX, $m
  0
  0
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -6
  -7
  -9
  -10
  -12
  -14
  -16
  -18
  -21
  -23
  -26
  -29
  -32
  -35
  -38
  -42
  -45
  -49
  -53
New CAPEX, $m
  0
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -11
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
Cash from investing activities, $m
  0
  -1
  -1
  -2
  -3
  -3
  -5
  -5
  -7
  -9
  -11
  -12
  -14
  -17
  -19
  -22
  -25
  -27
  -30
  -34
  -37
  -40
  -44
  -48
  -51
  -55
  -60
  -64
  -68
  -73
Free cash flow, $m
  0
  6
  14
  25
  39
  59
  84
  116
  155
  201
  256
  320
  393
  474
  565
  665
  775
  893
  1,020
  1,155
  1,299
  1,451
  1,610
  1,778
  1,954
  2,137
  2,328
  2,527
  2,734
  2,949
Issuance/(repayment) of debt, $m
  1
  1
  2
  3
  3
  4
  5
  7
  8
  9
  11
  12
  14
  16
  17
  19
  20
  22
  23
  25
  26
  28
  29
  30
  32
  33
  34
  36
  37
  39
Issuance/(repurchase) of shares, $m
  1
  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  
  2
  1
  2
  3
  3
  4
  5
  7
  8
  9
  11
  12
  14
  16
  17
  19
  20
  22
  23
  25
  26
  28
  29
  30
  32
  33
  34
  36
  37
  39
Total cash flow (excl. dividends), $m
  2
  7
  15
  27
  43
  63
  90
  123
  163
  211
  267
  332
  407
  490
  583
  684
  795
  915
  1,043
  1,180
  1,325
  1,478
  1,639
  1,808
  1,985
  2,170
  2,362
  2,563
  2,771
  2,988
Retained Cash Flow (-), $m
  -6
  -9
  -12
  -17
  -22
  -29
  -36
  -44
  -53
  -63
  -73
  -83
  -94
  -105
  -115
  -126
  -136
  -146
  -156
  -166
  -176
  -185
  -194
  -203
  -212
  -221
  -230
  -240
  -249
  -259
Prev. year cash balance distribution, $m
  13
  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
  9
  -2
  3
  10
  20
  35
  54
  78
  110
  148
  194
  249
  313
  385
  467
  558
  659
  768
  887
  1,014
  1,149
  1,293
  1,445
  1,605
  1,773
  1,949
  2,132
  2,323
  2,522
  2,729
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
  -2
  3
  8
  16
  25
  36
  49
  63
  78
  92
  106
  119
  129
  137
  142
  143
  141
  137
  129
  119
  107
  95
  82
  69
  57
  46
  36
  28
  21
Current shareholders' claim on cash, %
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6
  94.6

Polar Power, Inc. is engaged in designing, manufacturing and selling direct current (DC) power systems for applications primarily in the telecommunications, military, electric vehicle charging, cogeneration, distributed power and uninterruptable power supply markets. Within the telecommunications market, the Company's DC power systems provide DC power to service applications that do not have access to the utility grid (such as off-grid applications) or have critical power needs and cannot be without power in the event of utility grid failure (such as back-up power applications). Its product offerings include DC base power systems, DC hybrid power systems and DC solar hybrid power systems. The Company's technologies include Permanent Magnet Homopolar Hybrid (PMHH) Technology and Supra Controller Technology. Its power and control system architecture is controlled by its digital control system, Supra Controller, which contains software configured to meet specific application needs.

FINANCIAL RATIOS  of  Polar Power, Inc. (POLA)

Valuation Ratios
P/E Ratio 10.1
Price to Sales 1.8
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 40.6
Price to Free Cash Flow 40.6
Growth Rates
Sales Growth Rate 228.6%
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 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 25%
Ret/ On Assets - 3 Yr. Avg. 30.6%
Return On Total Capital 29.6%
Ret/ On T. Cap. - 3 Yr. Avg. 43.2%
Return On Equity 30.8%
Return On Equity - 3 Yr. Avg. 76.9%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 43.5%
Gross Margin - 3 Yr. Avg. 37.3%
EBITDA Margin 30.4%
EBITDA Margin - 3 Yr. Avg. 16.8%
Operating Margin 34.8%
Oper. Margin - 3 Yr. Avg. 18.3%
Pre-Tax Margin 30.4%
Pre-Tax Margin - 3 Yr. Avg. 16.8%
Net Profit Margin 17.4%
Net Profit Margin - 3 Yr. Avg. 12.5%
Effective Tax Rate 42.9%
Eff/ Tax Rate - 3 Yr. Avg. 14.3%
Payout Ratio 0%

POLA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the POLA stock intrinsic value calculation we used $14 million for the last fiscal year's total revenue generated by Polar Power, Inc.. The default revenue input number comes from 0001 income statement of Polar Power, 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 POLA 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 POLA is calculated based on our internal credit rating of Polar Power, 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 Polar Power, 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 POLA stock the variable cost ratio is equal to 14.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12 million in the base year in the intrinsic value calculation for POLA 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 Polar Power, Inc..

Corporate tax rate of 27% is the nominal tax rate for Polar Power, 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 POLA 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 POLA are equal to 5.6%.

Life of production assets of 3.1 years is the average useful life of capital assets used in Polar Power, 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 POLA is equal to 50%. 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 - $22.902802 million for Polar Power, 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 10.144 million for Polar Power, 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 Polar Power, Inc. at the current share price and the inputted number of shares is $0.0 billion.

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