Intrinsic value of Smart Sand, Inc. - SND

Previous Close

$4.67

  Intrinsic Value

$1.15

stock screener

  Rating & Target

str. sell

-75%

Previous close

$4.67

 
Intrinsic value

$1.15

 
Up/down potential

-75%

 
Rating

str. sell

We calculate the intrinsic value of SND 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 0.2

 

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, %
  21.40
  19.76
  18.28
  16.96
  15.76
  14.68
  13.72
  12.84
  12.06
  11.35
  10.72
  10.15
  9.63
  9.17
  8.75
  8.38
  8.04
  7.74
  7.46
  7.22
  6.99
  6.79
  6.62
  6.45
  6.31
  6.18
  6.06
  5.95
  5.86
  5.77
Revenue, $m
  257
  308
  365
  426
  494
  566
  644
  726
  814
  906
  1,004
  1,105
  1,212
  1,323
  1,439
  1,559
  1,685
  1,815
  1,950
  2,091
  2,237
  2,389
  2,547
  2,712
  2,883
  3,061
  3,246
  3,440
  3,641
  3,851
Variable operating expenses, $m
  222
  265
  313
  366
  424
  486
  552
  623
  697
  776
  858
  945
  1,036
  1,130
  1,229
  1,332
  1,440
  1,551
  1,667
  1,787
  1,912
  2,042
  2,177
  2,317
  2,463
  2,616
  2,774
  2,939
  3,111
  3,291
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
  222
  265
  313
  366
  424
  486
  552
  623
  697
  776
  858
  945
  1,036
  1,130
  1,229
  1,332
  1,440
  1,551
  1,667
  1,787
  1,912
  2,042
  2,177
  2,317
  2,463
  2,616
  2,774
  2,939
  3,111
  3,291
Operating income, $m
  36
  43
  51
  60
  70
  81
  92
  104
  117
  130
  146
  161
  176
  192
  209
  227
  245
  264
  284
  304
  326
  348
  371
  395
  419
  445
  472
  500
  530
  560
EBITDA, $m
  59
  71
  84
  98
  113
  130
  147
  166
  187
  208
  230
  253
  278
  303
  330
  357
  386
  416
  447
  479
  513
  547
  584
  621
  661
  701
  744
  788
  834
  882
Interest expense (income), $m
  3
  4
  7
  9
  12
  15
  18
  21
  25
  29
  33
  37
  42
  47
  52
  57
  63
  69
  74
  81
  87
  94
  101
  108
  115
  123
  131
  140
  149
  158
  168
Earnings before tax, $m
  31
  36
  42
  49
  55
  63
  71
  79
  88
  97
  109
  119
  129
  141
  152
  164
  177
  190
  203
  217
  232
  247
  263
  279
  296
  314
  332
  352
  372
  393
Tax expense, $m
  8
  10
  11
  13
  15
  17
  19
  21
  24
  26
  29
  32
  35
  38
  41
  44
  48
  51
  55
  59
  63
  67
  71
  75
  80
  85
  90
  95
  100
  106
Net income, $m
  23
  27
  31
  35
  40
  46
  52
  58
  64
  71
  79
  87
  94
  103
  111
  120
  129
  138
  148
  159
  169
  180
  192
  204
  216
  229
  243
  257
  271
  287

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
  389
  466
  551
  644
  746
  855
  972
  1,097
  1,230
  1,369
  1,516
  1,670
  1,831
  1,998
  2,173
  2,355
  2,545
  2,742
  2,946
  3,159
  3,380
  3,609
  3,848
  4,096
  4,355
  4,624
  4,904
  5,196
  5,500
  5,818
Adjusted assets (=assets-cash), $m
  389
  466
  551
  644
  746
  855
  972
  1,097
  1,230
  1,369
  1,516
  1,670
  1,831
  1,998
  2,173
  2,355
  2,545
  2,742
  2,946
  3,159
  3,380
  3,609
  3,848
  4,096
  4,355
  4,624
  4,904
  5,196
  5,500
  5,818
Revenue / Adjusted assets
  0.661
  0.661
  0.662
  0.661
  0.662
  0.662
  0.663
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
Average production assets, $m
  260
  312
  369
  432
  500
  573
  651
  735
  824
  917
  1,016
  1,119
  1,226
  1,339
  1,456
  1,578
  1,705
  1,837
  1,974
  2,116
  2,264
  2,418
  2,578
  2,744
  2,917
  3,098
  3,285
  3,481
  3,685
  3,898
Working capital, $m
  30
  36
  43
  50
  58
  66
  75
  85
  95
  106
  117
  129
  142
  155
  168
  182
  197
  212
  228
  245
  262
  280
  298
  317
  337
  358
  380
  402
  426
  451
Total debt, $m
  72
  99
  128
  161
  196
  234
  274
  317
  363
  412
  462
  516
  571
  629
  690
  753
  818
  886
  957
  1,031
  1,107
  1,187
  1,269
  1,355
  1,445
  1,538
  1,635
  1,736
  1,841
  1,951
Total liabilities, $m
  135
  161
  191
  223
  258
  296
  336
  380
  425
  474
  525
  578
  633
  691
  752
  815
  880
  949
  1,019
  1,093
  1,169
  1,249
  1,331
  1,417
  1,507
  1,600
  1,697
  1,798
  1,903
  2,013
Total equity, $m
  254
  304
  360
  421
  488
  559
  636
  718
  804
  895
  991
  1,092
  1,197
  1,307
  1,421
  1,540
  1,664
  1,793
  1,927
  2,066
  2,210
  2,360
  2,517
  2,679
  2,848
  3,024
  3,207
  3,398
  3,597
  3,805
Total liabilities and equity, $m
  389
  465
  551
  644
  746
  855
  972
  1,098
  1,229
  1,369
  1,516
  1,670
  1,830
  1,998
  2,173
  2,355
  2,544
  2,742
  2,946
  3,159
  3,379
  3,609
  3,848
  4,096
  4,355
  4,624
  4,904
  5,196
  5,500
  5,818
Debt-to-equity ratio
  0.280
  0.320
  0.360
  0.380
  0.400
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.470
  0.480
  0.480
  0.490
  0.490
  0.490
  0.490
  0.500
  0.500
  0.500
  0.500
  0.500
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
  0.510
Adjusted equity ratio
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654
  0.654

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  23
  27
  31
  35
  40
  46
  52
  58
  64
  71
  79
  87
  94
  103
  111
  120
  129
  138
  148
  159
  169
  180
  192
  204
  216
  229
  243
  257
  271
  287
Depreciation, amort., depletion, $m
  23
  28
  32
  37
  43
  49
  56
  63
  70
  78
  84
  92
  101
  111
  120
  130
  141
  152
  163
  175
  187
  200
  213
  227
  241
  256
  272
  288
  305
  322
Funds from operations, $m
  46
  54
  63
  73
  84
  95
  107
  120
  134
  148
  163
  179
  196
  213
  231
  250
  270
  290
  311
  333
  356
  380
  405
  431
  457
  485
  514
  544
  576
  609
Change in working capital, $m
  5
  6
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  15
  16
  16
  17
  18
  18
  19
  20
  21
  22
  23
  24
  25
Cash from operations, $m
  41
  48
  57
  66
  76
  86
  98
  110
  124
  138
  152
  167
  183
  200
  218
  236
  255
  275
  296
  317
  339
  362
  386
  411
  437
  464
  492
  522
  552
  584
Maintenance CAPEX, $m
  -18
  -22
  -26
  -30
  -36
  -41
  -47
  -54
  -61
  -68
  -76
  -84
  -92
  -101
  -111
  -120
  -130
  -141
  -152
  -163
  -175
  -187
  -200
  -213
  -227
  -241
  -256
  -272
  -288
  -305
New CAPEX, $m
  -46
  -51
  -57
  -63
  -68
  -73
  -79
  -84
  -89
  -94
  -98
  -103
  -108
  -112
  -117
  -122
  -127
  -132
  -137
  -142
  -148
  -154
  -160
  -166
  -173
  -180
  -188
  -196
  -204
  -213
Cash from investing activities, $m
  -64
  -73
  -83
  -93
  -104
  -114
  -126
  -138
  -150
  -162
  -174
  -187
  -200
  -213
  -228
  -242
  -257
  -273
  -289
  -305
  -323
  -341
  -360
  -379
  -400
  -421
  -444
  -468
  -492
  -518
Free cash flow, $m
  -23
  -25
  -26
  -27
  -28
  -28
  -28
  -27
  -26
  -24
  -22
  -20
  -17
  -14
  -10
  -6
  -2
  2
  7
  11
  16
  21
  27
  32
  37
  43
  49
  55
  61
  67
Issuance/(repayment) of debt, $m
  24
  27
  29
  32
  35
  38
  41
  43
  46
  48
  51
  53
  56
  58
  61
  63
  66
  68
  71
  74
  76
  79
  83
  86
  89
  93
  97
  101
  105
  110
Issuance/(repurchase) of shares, $m
  22
  24
  25
  26
  26
  26
  25
  24
  22
  20
  17
  14
  11
  7
  3
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  46
  51
  54
  58
  61
  64
  66
  67
  68
  68
  68
  67
  67
  65
  64
  63
  66
  68
  71
  74
  76
  79
  83
  86
  89
  93
  97
  101
  105
  110
Total cash flow (excl. dividends), $m
  23
  25
  28
  31
  33
  36
  38
  40
  43
  45
  45
  47
  50
  52
  54
  57
  63
  70
  77
  85
  93
  101
  109
  118
  127
  136
  146
  156
  166
  177
Retained Cash Flow (-), $m
  -45
  -50
  -56
  -61
  -66
  -72
  -77
  -82
  -87
  -91
  -96
  -101
  -105
  -110
  -114
  -119
  -124
  -129
  -134
  -139
  -144
  -150
  -156
  -162
  -169
  -176
  -183
  -191
  -199
  -208
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
  -22
  -25
  -28
  -31
  -33
  -36
  -39
  -41
  -44
  -47
  -51
  -53
  -56
  -58
  -61
  -62
  -60
  -58
  -56
  -54
  -52
  -49
  -47
  -45
  -42
  -40
  -38
  -35
  -33
  -31
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
  -21
  -23
  -24
  -25
  -26
  -26
  -26
  -26
  -25
  -24
  -24
  -23
  -21
  -19
  -18
  -16
  -13
  -11
  -9
  -7
  -5
  -4
  -3
  -2
  -2
  -1
  -1
  -1
  0
  0
Current shareholders' claim on cash, %
  89.8
  81.6
  75.0
  69.7
  65.3
  61.8
  59.0
  56.6
  54.8
  53.3
  52.3
  51.5
  51.0
  50.6
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5
  50.5

Smart Sand, Inc. is a producer of Northern White raw frac sand, which is a proppant used to enhance hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells. The Company sells its products primarily to oil and natural gas exploration and production companies and oilfield service companies under a combination of long-term take-or-pay contracts and spot sales in the open market. It owns and operates a raw frac sand mine and related processing facility near Oakdale, Wisconsin. In addition to the Oakdale facility, it owns a second property in Jackson County, Wisconsin, known as Hixton site. Its sand reserves include a balanced concentration of coarse (20/40, 30/50 and 40/70 gradation) sands and fine (60/140 gradation) sand. Its reserves contain deposits of approximately 20% of 20/40 and coarser substrate, over 40% of 40/70 mesh substrate and approximately 40% of 100-mesh substrate. Its 30/50 gradation is a derivative of the 20/40 and 40/70 blends.

FINANCIAL RATIOS  of  Smart Sand, Inc. (SND)

Valuation Ratios
P/E Ratio 18.1
Price to Sales 3.1
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 6.7
Price to Free Cash Flow 7.6
Growth Rates
Sales Growth Rate 22.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -89.7%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 47
Current Ratio 0.1
LT Debt to Equity 0.7%
Total Debt to Equity 1.4%
Interest Coverage 8
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 9.9%
Return On Total Capital 9.3%
Ret/ On T. Cap. - 3 Yr. Avg. 11.2%
Return On Equity 13.7%
Return On Equity - 3 Yr. Avg. -95.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 55.9%
Gross Margin - 3 Yr. Avg. 56%
EBITDA Margin 49.2%
EBITDA Margin - 3 Yr. Avg. 39.3%
Operating Margin 32.2%
Oper. Margin - 3 Yr. Avg. 34.3%
Pre-Tax Margin 33.9%
Pre-Tax Margin - 3 Yr. Avg. 25.9%
Net Profit Margin 16.9%
Net Profit Margin - 3 Yr. Avg. 13%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 49.1%
Payout Ratio 0%

SND stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SND stock intrinsic value calculation we used $212 million for the last fiscal year's total revenue generated by Smart Sand, Inc.. The default revenue input number comes from 0001 income statement of Smart Sand, 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 SND stock valuation model: a) initial revenue growth rate of 21.4% 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 SND is calculated based on our internal credit rating of Smart Sand, 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 Smart Sand, 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 SND stock the variable cost ratio is equal to 86.3%.

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 SND 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 9.1% for Smart Sand, Inc..

Corporate tax rate of 27% is the nominal tax rate for Smart Sand, 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 SND 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 SND are equal to 101.2%.

Life of production assets of 12.1 years is the average useful life of capital assets used in Smart Sand, 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 SND is equal to 11.7%. 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 - $209.36 million for Smart Sand, 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 41.604 million for Smart Sand, 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 Smart Sand, Inc. at the current share price and the inputted number of shares is $0.2 billion.

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