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

Previous Close

$60.20

  Intrinsic Value

$5.27

stock screener

  Rating & Target

str. sell

-91%

Previous close

$60.20

 
Intrinsic value

$5.27

 
Up/down potential

-91%

 
Rating

str. sell

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 0.4

 

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, %
  24.50
  22.55
  20.80
  19.22
  17.79
  16.51
  15.36
  14.33
  13.39
  12.55
  11.80
  11.12
  10.51
  9.96
  9.46
  9.01
  8.61
  8.25
  7.93
  7.63
  7.37
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
Revenue, $m
  545
  668
  807
  962
  1,133
  1,320
  1,523
  1,741
  1,975
  2,223
  2,485
  2,761
  3,051
  3,355
  3,672
  4,003
  4,348
  4,707
  5,080
  5,468
  5,871
  6,290
  6,725
  7,178
  7,648
  8,138
  8,647
  9,178
  9,730
  10,306
Variable operating expenses, $m
  520
  637
  770
  918
  1,081
  1,260
  1,453
  1,661
  1,884
  2,120
  2,370
  2,634
  2,911
  3,201
  3,503
  3,819
  4,148
  4,491
  4,847
  5,217
  5,601
  6,001
  6,416
  6,848
  7,296
  7,763
  8,249
  8,755
  9,283
  9,832
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
  520
  637
  770
  918
  1,081
  1,260
  1,453
  1,661
  1,884
  2,120
  2,370
  2,634
  2,911
  3,201
  3,503
  3,819
  4,148
  4,491
  4,847
  5,217
  5,601
  6,001
  6,416
  6,848
  7,296
  7,763
  8,249
  8,755
  9,283
  9,832
Operating income, $m
  25
  31
  37
  44
  52
  61
  70
  80
  91
  102
  114
  127
  140
  154
  169
  184
  200
  217
  234
  252
  270
  289
  309
  330
  352
  374
  398
  422
  448
  474
EBITDA, $m
  77
  95
  115
  137
  161
  188
  216
  247
  281
  316
  353
  392
  434
  477
  522
  569
  618
  669
  722
  777
  834
  894
  956
  1,020
  1,087
  1,157
  1,229
  1,304
  1,383
  1,465
Interest expense (income), $m
  4
  9
  13
  17
  21
  26
  32
  38
  45
  52
  59
  68
  76
  85
  95
  105
  115
  126
  137
  149
  161
  173
  187
  200
  214
  229
  245
  261
  277
  295
  313
Earnings before tax, $m
  16
  18
  20
  23
  26
  29
  32
  35
  39
  43
  47
  51
  55
  60
  64
  69
  74
  80
  85
  91
  97
  103
  109
  116
  123
  130
  137
  145
  153
  162
Tax expense, $m
  4
  5
  5
  6
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  19
  20
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  41
  44
Net income, $m
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  44
  47
  51
  54
  58
  62
  66
  71
  75
  80
  84
  89
  95
  100
  106
  112
  118

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
  488
  598
  722
  861
  1,014
  1,182
  1,364
  1,559
  1,768
  1,990
  2,225
  2,472
  2,732
  3,004
  3,288
  3,584
  3,893
  4,214
  4,548
  4,895
  5,256
  5,631
  6,021
  6,426
  6,847
  7,285
  7,741
  8,216
  8,711
  9,226
Adjusted assets (=assets-cash), $m
  488
  598
  722
  861
  1,014
  1,182
  1,364
  1,559
  1,768
  1,990
  2,225
  2,472
  2,732
  3,004
  3,288
  3,584
  3,893
  4,214
  4,548
  4,895
  5,256
  5,631
  6,021
  6,426
  6,847
  7,285
  7,741
  8,216
  8,711
  9,226
Revenue / Adjusted assets
  1.117
  1.117
  1.118
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
  1.117
Average production assets, $m
  351
  430
  520
  620
  730
  850
  981
  1,121
  1,272
  1,431
  1,600
  1,778
  1,965
  2,161
  2,365
  2,578
  2,800
  3,031
  3,272
  3,521
  3,781
  4,051
  4,331
  4,622
  4,925
  5,241
  5,569
  5,910
  6,266
  6,637
Working capital, $m
  47
  58
  70
  84
  99
  115
  133
  152
  172
  193
  216
  240
  265
  292
  319
  348
  378
  410
  442
  476
  511
  547
  585
  624
  665
  708
  752
  798
  847
  897
Total debt, $m
  237
  312
  396
  489
  593
  706
  829
  960
  1,101
  1,251
  1,410
  1,577
  1,752
  1,935
  2,127
  2,327
  2,536
  2,753
  2,978
  3,212
  3,456
  3,709
  3,972
  4,246
  4,530
  4,826
  5,134
  5,454
  5,788
  6,136
Total liabilities, $m
  329
  404
  488
  581
  685
  798
  920
  1,052
  1,193
  1,343
  1,502
  1,669
  1,844
  2,027
  2,219
  2,419
  2,628
  2,845
  3,070
  3,304
  3,548
  3,801
  4,064
  4,337
  4,622
  4,918
  5,225
  5,546
  5,880
  6,228
Total equity, $m
  159
  194
  235
  280
  330
  384
  443
  507
  575
  647
  723
  803
  888
  976
  1,069
  1,165
  1,265
  1,370
  1,478
  1,591
  1,708
  1,830
  1,957
  2,088
  2,225
  2,368
  2,516
  2,670
  2,831
  2,999
Total liabilities and equity, $m
  488
  598
  723
  861
  1,015
  1,182
  1,363
  1,559
  1,768
  1,990
  2,225
  2,472
  2,732
  3,003
  3,288
  3,584
  3,893
  4,215
  4,548
  4,895
  5,256
  5,631
  6,021
  6,425
  6,847
  7,286
  7,741
  8,216
  8,711
  9,227
Debt-to-equity ratio
  1.500
  1.600
  1.690
  1.750
  1.800
  1.840
  1.870
  1.900
  1.920
  1.930
  1.950
  1.960
  1.970
  1.980
  1.990
  2.000
  2.000
  2.010
  2.010
  2.020
  2.020
  2.030
  2.030
  2.030
  2.040
  2.040
  2.040
  2.040
  2.040
  2.050
Adjusted equity ratio
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  11
  13
  15
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  44
  47
  51
  54
  58
  62
  66
  71
  75
  80
  84
  89
  95
  100
  106
  112
  118
Depreciation, amort., depletion, $m
  52
  64
  78
  92
  109
  127
  146
  167
  190
  214
  239
  265
  293
  322
  353
  385
  418
  452
  488
  526
  564
  605
  646
  690
  735
  782
  831
  882
  935
  991
Funds from operations, $m
  64
  77
  92
  109
  128
  148
  170
  193
  218
  245
  273
  303
  334
  366
  400
  435
  472
  511
  550
  592
  635
  680
  726
  774
  825
  877
  931
  988
  1,047
  1,109
Change in working capital, $m
  9
  11
  12
  13
  15
  16
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  30
  31
  32
  34
  35
  36
  38
  39
  41
  43
  44
  46
  48
  50
Cash from operations, $m
  55
  67
  80
  96
  113
  132
  152
  174
  198
  223
  250
  279
  308
  340
  372
  407
  442
  479
  518
  558
  600
  643
  688
  735
  784
  834
  887
  942
  999
  1,058
Maintenance CAPEX, $m
  -42
  -52
  -64
  -78
  -92
  -109
  -127
  -146
  -167
  -190
  -214
  -239
  -265
  -293
  -322
  -353
  -385
  -418
  -452
  -488
  -526
  -564
  -605
  -646
  -690
  -735
  -782
  -831
  -882
  -935
New CAPEX, $m
  -69
  -79
  -89
  -100
  -110
  -121
  -131
  -141
  -150
  -160
  -169
  -178
  -187
  -196
  -204
  -213
  -222
  -231
  -240
  -250
  -260
  -270
  -280
  -291
  -303
  -315
  -328
  -342
  -356
  -371
Cash from investing activities, $m
  -111
  -131
  -153
  -178
  -202
  -230
  -258
  -287
  -317
  -350
  -383
  -417
  -452
  -489
  -526
  -566
  -607
  -649
  -692
  -738
  -786
  -834
  -885
  -937
  -993
  -1,050
  -1,110
  -1,173
  -1,238
  -1,306
Free cash flow, $m
  -56
  -65
  -73
  -82
  -90
  -98
  -105
  -113
  -120
  -126
  -132
  -138
  -144
  -149
  -154
  -160
  -165
  -170
  -175
  -180
  -185
  -191
  -197
  -203
  -209
  -216
  -223
  -231
  -239
  -248
Issuance/(repayment) of debt, $m
  65
  74
  84
  94
  103
  113
  123
  132
  141
  150
  158
  167
  175
  184
  192
  200
  208
  217
  225
  234
  244
  253
  263
  273
  284
  296
  308
  321
  334
  348
Issuance/(repurchase) of shares, $m
  20
  23
  26
  28
  31
  33
  36
  38
  39
  41
  42
  43
  44
  45
  45
  46
  46
  46
  46
  47
  47
  47
  47
  47
  47
  48
  48
  49
  49
  50
Cash from financing (excl. dividends), $m  
  85
  97
  110
  122
  134
  146
  159
  170
  180
  191
  200
  210
  219
  229
  237
  246
  254
  263
  271
  281
  291
  300
  310
  320
  331
  344
  356
  370
  383
  398
Total cash flow (excl. dividends), $m
  28
  32
  36
  40
  45
  49
  53
  57
  61
  65
  68
  72
  76
  79
  83
  86
  90
  93
  97
  101
  105
  109
  113
  118
  123
  127
  133
  138
  144
  150
Retained Cash Flow (-), $m
  -31
  -36
  -40
  -45
  -50
  -54
  -59
  -63
  -68
  -72
  -76
  -80
  -84
  -88
  -92
  -96
  -100
  -104
  -109
  -113
  -117
  -122
  -127
  -132
  -137
  -142
  -148
  -154
  -161
  -168
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
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
Discount rate, %
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -3
  -3
  -3
  -3
  -3
  -2
  -2
  -2
  -2
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  94.9
  90.4
  86.4
  82.9
  79.8
  77.1
  74.6
  72.5
  70.5
  68.8
  67.3
  65.9
  64.7
  63.6
  62.5
  61.6
  60.8
  60.0
  59.3
  58.6
  58.1
  57.5
  57.0
  56.5
  56.1
  55.6
  55.3
  54.9
  54.5
  54.2

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 (PTSI)

Valuation Ratios
P/E Ratio 35
Price to Sales 0.9
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 8.2
Price to Free Cash Flow -9.9
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 $437.838 million for the last fiscal year's total revenue generated by P.A.M. Transportation Services. The default revenue input number comes from 0001 income statement of P.A.M. Transportation Services. 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 24.5% 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 6.5%, whose default value for PTSI is calculated based on our internal credit rating of P.A.M. Transportation Services, 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.
    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 95.4%.

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 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.

Corporate tax rate of 27% is the nominal tax rate for P.A.M. Transportation Services. 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 64.4%.

Life of production assets of 6.7 years is the average useful life of capital assets used in P.A.M. Transportation Services 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 8.7%. 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 - $127.604 million for P.A.M. Transportation Services - 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 6.054 million for P.A.M. Transportation Services 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 at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ P.A.M. Transportation: 3Q Earnings Snapshot   [Oct-12-18 01:07PM  Associated Press]
▶ P.A.M. Transportation: 2Q Earnings Snapshot   [Jul-25-18 12:33PM  Associated Press]
▶ P.A.M. Transportation: 1Q Earnings Snapshot   [May-01-18 05:04AM  Associated Press]
▶ P.A.M. Transportation posts 4Q profit   [Feb-15-18 03:32PM  Associated Press]
▶ P.A.M. Transportation posts 3Q profit   [Oct-23-17 05:47PM  Associated Press]
▶ Transportation Stocks Keep Trucking Higher   [Oct-13-17 01:19PM  Zacks]
▶ P.A.M. Transportation posts 2Q profit   [Jul-27-17 03:50PM  Associated Press]
▶ P.A.M. Transportation posts 1Q profit   [Apr-27-17 05:44PM  Associated Press]
▶ P.A.M. Transportation posts 4Q profit   [02:46PM  Associated Press]
▶ Is KEYW Holding Corp. (KEYW) a Good Buy?   [Nov-29  10:45AM  at Insider Monkey]

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