Intrinsic value of P.A.M. Transportation Services, Inc. - PTSI

Previous Close

$57.50

  Intrinsic Value

$357.48

stock screener

  Rating & Target

str. buy

+522%

Previous close

$57.50

 
Intrinsic value

$357.48

 
Up/down potential

+522%

 
Rating

str. buy

We calculate the intrinsic value of PTSI 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 0.3

 

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, %
  24.60
  22.64
  20.88
  19.29
  17.86
  16.57
  15.42
  14.37
  13.44
  12.59
  11.83
  11.15
  10.54
  9.98
  9.48
  9.04
  8.63
  8.27
  7.94
  7.65
  7.38
  7.14
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
Revenue, $m
  664
  814
  985
  1,174
  1,384
  1,614
  1,862
  2,130
  2,416
  2,720
  3,042
  3,382
  3,738
  4,111
  4,501
  4,908
  5,331
  5,772
  6,231
  6,707
  7,202
  7,717
  8,252
  8,807
  9,386
  9,987
  10,613
  11,264
  11,943
  12,650
Variable operating expenses, $m
  464
  569
  687
  820
  966
  1,126
  1,300
  1,487
  1,687
  1,899
  2,124
  2,360
  2,609
  2,870
  3,142
  3,426
  3,721
  4,029
  4,349
  4,681
  5,027
  5,386
  5,760
  6,148
  6,551
  6,971
  7,408
  7,862
  8,336
  8,830
Fixed operating expenses, $m
  125
  127
  130
  133
  136
  139
  142
  145
  148
  152
  155
  158
  162
  165
  169
  173
  177
  180
  184
  189
  193
  197
  201
  206
  210
  215
  220
  224
  229
  234
Total operating expenses, $m
  589
  696
  817
  953
  1,102
  1,265
  1,442
  1,632
  1,835
  2,051
  2,279
  2,518
  2,771
  3,035
  3,311
  3,599
  3,898
  4,209
  4,533
  4,870
  5,220
  5,583
  5,961
  6,354
  6,761
  7,186
  7,628
  8,086
  8,565
  9,064
Operating income, $m
  76
  119
  167
  222
  282
  348
  420
  498
  581
  670
  764
  863
  967
  1,076
  1,190
  1,309
  1,433
  1,563
  1,697
  1,837
  1,982
  2,134
  2,291
  2,454
  2,624
  2,801
  2,985
  3,177
  3,377
  3,586
EBITDA, $m
  138
  194
  258
  331
  410
  498
  593
  696
  806
  922
  1,046
  1,177
  1,314
  1,458
  1,608
  1,765
  1,928
  2,098
  2,275
  2,459
  2,651
  2,850
  3,057
  3,272
  3,495
  3,728
  3,970
  4,223
  4,486
  4,760
Interest expense (income), $m
  4
  12
  15
  19
  23
  28
  34
  40
  46
  53
  60
  68
  76
  85
  94
  103
  113
  124
  135
  146
  158
  170
  183
  196
  209
  224
  238
  254
  270
  287
  304
Earnings before tax, $m
  64
  103
  148
  198
  254
  315
  381
  452
  528
  610
  696
  787
  882
  982
  1,087
  1,196
  1,310
  1,428
  1,551
  1,679
  1,812
  1,951
  2,095
  2,245
  2,401
  2,563
  2,732
  2,908
  3,091
  3,282
Tax expense, $m
  17
  28
  40
  53
  68
  85
  103
  122
  143
  165
  188
  212
  238
  265
  293
  323
  354
  386
  419
  453
  489
  527
  566
  606
  648
  692
  738
  785
  835
  886
Net income, $m
  47
  75
  108
  145
  185
  230
  278
  330
  386
  445
  508
  574
  644
  717
  793
  873
  956
  1,042
  1,132
  1,226
  1,323
  1,424
  1,529
  1,639
  1,752
  1,871
  1,994
  2,123
  2,256
  2,396

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
  489
  599
  724
  864
  1,019
  1,187
  1,370
  1,567
  1,778
  2,002
  2,239
  2,488
  2,751
  3,025
  3,312
  3,611
  3,923
  4,247
  4,585
  4,935
  5,300
  5,678
  6,072
  6,481
  6,906
  7,349
  7,809
  8,289
  8,788
  9,309
Adjusted assets (=assets-cash), $m
  489
  599
  724
  864
  1,019
  1,187
  1,370
  1,567
  1,778
  2,002
  2,239
  2,488
  2,751
  3,025
  3,312
  3,611
  3,923
  4,247
  4,585
  4,935
  5,300
  5,678
  6,072
  6,481
  6,906
  7,349
  7,809
  8,289
  8,788
  9,309
Revenue / Adjusted assets
  1.358
  1.359
  1.360
  1.359
  1.358
  1.360
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
  1.359
Average production assets, $m
  351
  431
  521
  621
  732
  854
  985
  1,127
  1,278
  1,439
  1,609
  1,789
  1,977
  2,175
  2,381
  2,596
  2,820
  3,053
  3,296
  3,548
  3,810
  4,082
  4,365
  4,659
  4,965
  5,283
  5,614
  5,959
  6,318
  6,692
Working capital, $m
  40
  49
  59
  70
  83
  97
  112
  128
  145
  163
  183
  203
  224
  247
  270
  294
  320
  346
  374
  402
  432
  463
  495
  528
  563
  599
  637
  676
  717
  759
Total debt, $m
  283
  354
  435
  525
  624
  733
  851
  978
  1,113
  1,258
  1,410
  1,571
  1,740
  1,917
  2,101
  2,294
  2,495
  2,704
  2,921
  3,147
  3,381
  3,625
  3,879
  4,142
  4,416
  4,701
  4,998
  5,306
  5,628
  5,963
Total liabilities, $m
  315
  386
  467
  557
  656
  765
  882
  1,009
  1,145
  1,289
  1,442
  1,603
  1,771
  1,948
  2,133
  2,326
  2,526
  2,735
  2,953
  3,178
  3,413
  3,657
  3,910
  4,174
  4,448
  4,733
  5,029
  5,338
  5,660
  5,995
Total equity, $m
  174
  213
  258
  308
  363
  423
  488
  558
  633
  713
  797
  886
  979
  1,077
  1,179
  1,286
  1,397
  1,512
  1,632
  1,757
  1,887
  2,021
  2,162
  2,307
  2,459
  2,616
  2,780
  2,951
  3,129
  3,314
Total liabilities and equity, $m
  489
  599
  725
  865
  1,019
  1,188
  1,370
  1,567
  1,778
  2,002
  2,239
  2,489
  2,750
  3,025
  3,312
  3,612
  3,923
  4,247
  4,585
  4,935
  5,300
  5,678
  6,072
  6,481
  6,907
  7,349
  7,809
  8,289
  8,789
  9,309
Debt-to-equity ratio
  1.630
  1.660
  1.690
  1.710
  1.720
  1.730
  1.740
  1.750
  1.760
  1.760
  1.770
  1.770
  1.780
  1.780
  1.780
  1.780
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.790
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
  1.800
Adjusted equity ratio
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356
  0.356

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  47
  75
  108
  145
  185
  230
  278
  330
  386
  445
  508
  574
  644
  717
  793
  873
  956
  1,042
  1,132
  1,226
  1,323
  1,424
  1,529
  1,639
  1,752
  1,871
  1,994
  2,123
  2,256
  2,396
Depreciation, amort., depletion, $m
  62
  76
  91
  109
  128
  150
  173
  198
  224
  252
  282
  314
  347
  382
  418
  455
  495
  536
  578
  622
  668
  716
  766
  817
  871
  927
  985
  1,045
  1,108
  1,174
Funds from operations, $m
  108
  151
  199
  254
  314
  379
  451
  528
  610
  698
  790
  888
  991
  1,099
  1,211
  1,328
  1,451
  1,578
  1,711
  1,848
  1,992
  2,140
  2,295
  2,456
  2,623
  2,798
  2,979
  3,168
  3,365
  3,570
Change in working capital, $m
  8
  9
  10
  11
  13
  14
  15
  16
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  28
  29
  30
  31
  32
  33
  35
  36
  38
  39
  41
  42
Cash from operations, $m
  100
  142
  189
  242
  301
  366
  436
  512
  593
  679
  771
  868
  969
  1,076
  1,188
  1,304
  1,425
  1,552
  1,683
  1,820
  1,962
  2,109
  2,263
  2,423
  2,589
  2,762
  2,941
  3,129
  3,324
  3,528
Maintenance CAPEX, $m
  -50
  -62
  -76
  -91
  -109
  -128
  -150
  -173
  -198
  -224
  -252
  -282
  -314
  -347
  -382
  -418
  -455
  -495
  -536
  -578
  -622
  -668
  -716
  -766
  -817
  -871
  -927
  -985
  -1,045
  -1,108
New CAPEX, $m
  -69
  -80
  -90
  -100
  -111
  -121
  -132
  -142
  -151
  -161
  -170
  -179
  -188
  -197
  -206
  -215
  -224
  -233
  -243
  -252
  -262
  -272
  -283
  -294
  -306
  -318
  -331
  -345
  -359
  -374
Cash from investing activities, $m
  -119
  -142
  -166
  -191
  -220
  -249
  -282
  -315
  -349
  -385
  -422
  -461
  -502
  -544
  -588
  -633
  -679
  -728
  -779
  -830
  -884
  -940
  -999
  -1,060
  -1,123
  -1,189
  -1,258
  -1,330
  -1,404
  -1,482
Free cash flow, $m
  -18
  1
  24
  50
  81
  116
  155
  197
  244
  294
  348
  406
  467
  532
  600
  671
  746
  824
  905
  989
  1,077
  1,169
  1,264
  1,363
  1,466
  1,572
  1,684
  1,799
  1,920
  2,045
Issuance/(repayment) of debt, $m
  62
  71
  81
  90
  99
  109
  118
  127
  136
  144
  153
  161
  169
  177
  185
  193
  201
  209
  217
  226
  235
  244
  253
  263
  274
  285
  297
  309
  322
  335
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  
  62
  71
  81
  90
  99
  109
  118
  127
  136
  144
  153
  161
  169
  177
  185
  193
  201
  209
  217
  226
  235
  244
  253
  263
  274
  285
  297
  309
  322
  335
Total cash flow (excl. dividends), $m
  44
  72
  104
  140
  180
  225
  272
  324
  379
  438
  501
  567
  636
  709
  785
  864
  947
  1,033
  1,122
  1,215
  1,312
  1,413
  1,517
  1,626
  1,740
  1,857
  1,980
  2,108
  2,241
  2,380
Retained Cash Flow (-), $m
  -35
  -39
  -45
  -50
  -55
  -60
  -65
  -70
  -75
  -80
  -84
  -89
  -93
  -98
  -102
  -107
  -111
  -115
  -120
  -125
  -130
  -135
  -140
  -146
  -151
  -158
  -164
  -171
  -178
  -185
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
  9
  33
  60
  91
  126
  164
  207
  254
  304
  359
  416
  478
  543
  611
  682
  757
  836
  917
  1,002
  1,090
  1,182
  1,278
  1,377
  1,481
  1,588
  1,700
  1,816
  1,937
  2,063
  2,195
Discount rate, %
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
  9
  29
  49
  68
  87
  103
  118
  129
  137
  141
  142
  140
  135
  127
  117
  106
  93
  81
  69
  57
  46
  36
  28
  21
  16
  11
  8
  5
  3
  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

P.A.M. Transportation Services, Inc. is a holding company. The Company, through its subsidiaries, operates as a truckload transportation and logistics company. It operates in the motor carrier segment. It operates as a truckload dry van carrier transporting general commodities throughout the continental United States, as well as in certain Canadian provinces. It provides transportation services in Mexico under agreements with Mexican carriers. Its operations are classified into truckload services, or brokerage and logistics services. Truckload services include transportation services, in which it utilizes company owned trucks or independent operator owned trucks for the pickup and delivery of freight. The brokerage and logistics services consist of services, such as transportation scheduling, routing, mode selection, transloading and other services related to the transportation of freight, which may or may not involve the use of company owned or independent operator owned equipment.

FINANCIAL RATIOS  of  P.A.M. Transportation Services, Inc. (PTSI)

Valuation Ratios
P/E Ratio 33.5
Price to Sales 0.8
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 7.8
Price to Free Cash Flow -9.4
Growth Rates
Sales Growth Rate 3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -31.7%
Cap. Spend. - 3 Yr. Gr. Rate 3.6%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 133%
Total Debt to Equity 189.4%
Interest Coverage 6
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 6.7%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 14.7%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 74.1%
Gross Margin - 3 Yr. Avg. 74.1%
EBITDA Margin 14.1%
EBITDA Margin - 3 Yr. Avg. 15.2%
Operating Margin 4.6%
Oper. Margin - 3 Yr. Avg. 6.2%
Pre-Tax Margin 4.2%
Pre-Tax Margin - 3 Yr. Avg. 6%
Net Profit Margin 2.5%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 38.9%
Eff/ Tax Rate - 3 Yr. Avg. 39.9%
Payout Ratio 0%

PTSI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PTSI stock intrinsic value calculation we used $533 million for the last fiscal year's total revenue generated by P.A.M. Transportation Services, Inc.. The default revenue input number comes from 0001 income statement of P.A.M. Transportation Services, 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 PTSI stock valuation model: a) initial revenue growth rate of 24.6% 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 6.3%, whose default value for PTSI is calculated based on our internal credit rating of P.A.M. Transportation Services, 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 P.A.M. Transportation Services, 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 PTSI stock the variable cost ratio is equal to 69.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $122 million in the base year in the intrinsic value calculation for PTSI 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 P.A.M. Transportation Services, Inc..

Corporate tax rate of 27% is the nominal tax rate for P.A.M. Transportation Services, 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 PTSI 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 PTSI are equal to 52.9%.

Life of production assets of 5.7 years is the average useful life of capital assets used in P.A.M. Transportation Services, 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 PTSI is equal to 6%. 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 - $139.447 million for P.A.M. Transportation Services, 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 5.917 million for P.A.M. Transportation Services, 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 P.A.M. Transportation Services, Inc. at the current share price and the inputted number of shares is $0.3 billion.

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