Intrinsic value of Superior Drilling Products - SDPI

Previous Close

$1.82

  Intrinsic Value

$0.08

stock screener

  Rating & Target

str. sell

-95%

Previous close

$1.82

 
Intrinsic value

$0.08

 
Up/down potential

-95%

 
Rating

str. sell

We calculate the intrinsic value of SDPI 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, %
  33.30
  30.47
  27.92
  25.63
  23.57
  21.71
  20.04
  18.54
  17.18
  15.96
  14.87
  13.88
  12.99
  12.19
  11.47
  10.83
  10.24
  9.72
  9.25
  8.82
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
Revenue, $m
  21
  27
  35
  44
  54
  66
  79
  93
  109
  127
  146
  166
  187
  210
  234
  260
  286
  314
  343
  373
  405
  438
  472
  507
  544
  582
  622
  663
  706
  751
Variable operating expenses, $m
  44
  57
  73
  92
  113
  137
  165
  195
  229
  265
  304
  346
  391
  438
  489
  542
  597
  655
  716
  779
  845
  913
  984
  1,058
  1,135
  1,215
  1,298
  1,384
  1,473
  1,567
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
  44
  57
  73
  92
  113
  137
  165
  195
  229
  265
  304
  346
  391
  438
  489
  542
  597
  655
  716
  779
  845
  913
  984
  1,058
  1,135
  1,215
  1,298
  1,384
  1,473
  1,567
Operating income, $m
  -23
  -30
  -38
  -48
  -59
  -72
  -86
  -102
  -119
  -138
  -158
  -180
  -203
  -228
  -254
  -282
  -311
  -341
  -373
  -405
  -440
  -475
  -512
  -551
  -591
  -632
  -675
  -720
  -767
  -816
EBITDA, $m
  -19
  -25
  -32
  -40
  -50
  -61
  -73
  -87
  -101
  -118
  -135
  -154
  -174
  -195
  -217
  -241
  -266
  -291
  -318
  -347
  -376
  -406
  -438
  -471
  -505
  -540
  -577
  -616
  -656
  -697
Interest expense (income), $m
  0
  1
  1
  1
  2
  2
  3
  3
  4
  5
  6
  7
  7
  9
  10
  11
  12
  13
  15
  16
  18
  19
  21
  23
  24
  26
  28
  30
  32
  34
  37
Earnings before tax, $m
  -24
  -31
  -40
  -50
  -61
  -75
  -89
  -106
  -124
  -144
  -165
  -188
  -212
  -238
  -265
  -294
  -324
  -356
  -389
  -423
  -459
  -496
  -535
  -575
  -617
  -660
  -706
  -752
  -801
  -852
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
  -24
  -31
  -40
  -50
  -61
  -75
  -89
  -106
  -124
  -144
  -165
  -188
  -212
  -238
  -265
  -294
  -324
  -356
  -389
  -423
  -459
  -496
  -535
  -575
  -617
  -660
  -706
  -752
  -801
  -852

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
  36
  47
  60
  76
  94
  114
  137
  163
  190
  221
  254
  289
  326
  366
  408
  452
  499
  547
  598
  651
  706
  763
  822
  884
  948
  1,015
  1,084
  1,156
  1,231
  1,309
Adjusted assets (=assets-cash), $m
  36
  47
  60
  76
  94
  114
  137
  163
  190
  221
  254
  289
  326
  366
  408
  452
  499
  547
  598
  651
  706
  763
  822
  884
  948
  1,015
  1,084
  1,156
  1,231
  1,309
Revenue / Adjusted assets
  0.583
  0.574
  0.583
  0.579
  0.574
  0.579
  0.577
  0.571
  0.574
  0.575
  0.575
  0.574
  0.574
  0.574
  0.574
  0.575
  0.573
  0.574
  0.574
  0.573
  0.574
  0.574
  0.574
  0.574
  0.574
  0.573
  0.574
  0.574
  0.574
  0.574
Average production assets, $m
  16
  21
  27
  34
  42
  52
  62
  74
  86
  100
  115
  131
  148
  166
  185
  205
  226
  248
  271
  295
  320
  345
  372
  400
  429
  459
  491
  523
  557
  593
Working capital, $m
  3
  4
  5
  7
  8
  10
  12
  14
  17
  19
  22
  25
  28
  32
  35
  39
  43
  47
  52
  56
  61
  66
  71
  77
  82
  88
  94
  100
  107
  113
Total debt, $m
  17
  22
  29
  36
  45
  55
  66
  78
  92
  107
  123
  140
  158
  178
  198
  220
  242
  266
  290
  316
  343
  371
  400
  430
  461
  493
  527
  562
  599
  637
Total liabilities, $m
  18
  23
  29
  37
  46
  56
  67
  79
  93
  108
  124
  141
  159
  178
  199
  220
  243
  267
  291
  317
  344
  371
  400
  430
  462
  494
  528
  563
  599
  637
Total equity, $m
  19
  24
  31
  39
  48
  59
  70
  83
  98
  113
  130
  148
  167
  188
  209
  232
  256
  281
  307
  334
  362
  391
  422
  453
  486
  520
  556
  593
  631
  671
Total liabilities and equity, $m
  37
  47
  60
  76
  94
  115
  137
  162
  191
  221
  254
  289
  326
  366
  408
  452
  499
  548
  598
  651
  706
  762
  822
  883
  948
  1,014
  1,084
  1,156
  1,230
  1,308
Debt-to-equity ratio
  0.910
  0.920
  0.920
  0.930
  0.930
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.940
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
  0.950
Adjusted equity ratio
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513
  0.513

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -24
  -31
  -40
  -50
  -61
  -75
  -89
  -106
  -124
  -144
  -165
  -188
  -212
  -238
  -265
  -294
  -324
  -356
  -389
  -423
  -459
  -496
  -535
  -575
  -617
  -660
  -706
  -752
  -801
  -852
Depreciation, amort., depletion, $m
  4
  5
  6
  7
  9
  11
  13
  15
  18
  21
  23
  26
  30
  33
  37
  41
  45
  50
  54
  59
  64
  69
  74
  80
  86
  92
  98
  105
  111
  119
Funds from operations, $m
  -20
  -26
  -34
  -42
  -52
  -64
  -76
  -91
  -106
  -123
  -142
  -161
  -182
  -205
  -228
  -253
  -279
  -306
  -335
  -364
  -395
  -427
  -460
  -495
  -531
  -568
  -607
  -648
  -690
  -734
Change in working capital, $m
  1
  1
  1
  1
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  6
  7
Cash from operations, $m
  -21
  -27
  -35
  -44
  -54
  -65
  -78
  -93
  -109
  -126
  -144
  -164
  -186
  -208
  -232
  -257
  -283
  -310
  -339
  -369
  -400
  -432
  -466
  -500
  -537
  -574
  -613
  -654
  -696
  -740
Maintenance CAPEX, $m
  -3
  -3
  -4
  -5
  -7
  -8
  -10
  -12
  -15
  -17
  -20
  -23
  -26
  -30
  -33
  -37
  -41
  -45
  -50
  -54
  -59
  -64
  -69
  -74
  -80
  -86
  -92
  -98
  -105
  -111
New CAPEX, $m
  -4
  -5
  -6
  -7
  -8
  -9
  -10
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -31
  -33
  -34
  -35
Cash from investing activities, $m
  -7
  -8
  -10
  -12
  -15
  -17
  -20
  -24
  -28
  -31
  -35
  -39
  -43
  -48
  -52
  -57
  -62
  -67
  -73
  -78
  -84
  -90
  -96
  -102
  -109
  -116
  -123
  -131
  -139
  -146
Free cash flow, $m
  -27
  -35
  -45
  -56
  -69
  -83
  -99
  -117
  -136
  -157
  -179
  -203
  -229
  -256
  -284
  -314
  -345
  -378
  -412
  -447
  -484
  -522
  -562
  -603
  -646
  -690
  -737
  -785
  -835
  -887
Issuance/(repayment) of debt, $m
  4
  5
  6
  8
  9
  10
  11
  12
  14
  15
  16
  17
  18
  19
  20
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  32
  34
  35
  36
  38
Issuance/(repurchase) of shares, $m
  28
  37
  46
  58
  70
  85
  101
  119
  138
  159
  181
  206
  231
  258
  287
  317
  348
  381
  415
  450
  487
  525
  565
  607
  650
  695
  741
  789
  840
  892
Cash from financing (excl. dividends), $m  
  32
  42
  52
  66
  79
  95
  112
  131
  152
  174
  197
  223
  249
  277
  307
  339
  371
  405
  440
  476
  514
  553
  594
  637
  681
  727
  775
  824
  876
  930
Total cash flow (excl. dividends), $m
  5
  7
  8
  9
  10
  12
  13
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  28
  29
  30
  31
  33
  34
  35
  37
  38
  40
  41
  43
Retained Cash Flow (-), $m
  -28
  -37
  -46
  -58
  -70
  -85
  -101
  -119
  -138
  -159
  -181
  -206
  -231
  -258
  -287
  -317
  -348
  -381
  -415
  -450
  -487
  -525
  -565
  -607
  -650
  -695
  -741
  -789
  -840
  -892
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
  -23
  -30
  -39
  -48
  -60
  -73
  -88
  -104
  -122
  -142
  -163
  -186
  -211
  -236
  -264
  -292
  -322
  -354
  -387
  -421
  -457
  -494
  -533
  -573
  -614
  -658
  -703
  -750
  -798
  -849
Discount rate, %
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
  -22
  -26
  -31
  -36
  -41
  -45
  -49
  -51
  -53
  -54
  -53
  -52
  -49
  -46
  -42
  -37
  -33
  -28
  -24
  -19
  -15
  -12
  -9
  -7
  -5
  -3
  -2
  -2
  -1
  -1
Current shareholders' claim on cash, %
  61.3
  37.5
  23.2
  14.6
  9.2
  5.9
  3.8
  2.5
  1.6
  1.1
  0.7
  0.5
  0.3
  0.2
  0.1
  0.1
  0.1
  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

Superior Drilling Products, Inc., a drilling and completion tool technology company, manufactures, repairs, sells, and rents drilling tools in the United States and internationally. It is involved in the design and manufacture of new drill bit and horizontal drill string enhancement tools for the oil, natural gas, and mining services industries; and the refurbishment of polycrystalline diamond compact drill bits. The company’s horizontal drilling tools include Drill N Ream, a well bore conditioning tool; Strider, a drill string oscillation system; V-Stream, an advanced conditioning system; and Dedicated Reamer Stinger that is used to enhance dedicated reamer operations. It serves companies operating in the exploration and production of oil and natural gas. The company was formerly known as SD Company, Inc. and changed its name to Superior Drilling Products, Inc. in May 2014. Superior Drilling Products, Inc. was founded in 1999 and is headquartered in Vernal, Utah.

FINANCIAL RATIOS  of  Superior Drilling Products (SDPI)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
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 NaN
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. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

SDPI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SDPI stock intrinsic value calculation we used $15.595659 million for the last fiscal year's total revenue generated by Superior Drilling Products. The default revenue input number comes from 0001 income statement of Superior Drilling Products. 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 SDPI stock valuation model: a) initial revenue growth rate of 33.3% 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 6.6%, whose default value for SDPI is calculated based on our internal credit rating of Superior Drilling Products, 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 Superior Drilling Products.
    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 SDPI stock the variable cost ratio is equal to 212.5%.

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 SDPI 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 6.1% for Superior Drilling Products.

Corporate tax rate of 27% is the nominal tax rate for Superior Drilling Products. 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 SDPI 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 SDPI are equal to 78.9%.

Life of production assets of 4.4 years is the average useful life of capital assets used in Superior Drilling Products 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 SDPI is equal to 15.1%. 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 - $14.302576 million for Superior Drilling Products - 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 24.535 million for Superior Drilling Products 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 Superior Drilling Products at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

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