Intrinsic value of SSR Mining Inc. - SSRM

Previous Close

$12.67

  Intrinsic Value

$4.44

stock screener

  Rating & Target

str. sell

-65%

Previous close

$12.67

 
Intrinsic value

$4.44

 
Up/down potential

-65%

 
Rating

str. sell

We calculate the intrinsic value of SSRM 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 1.5

 

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, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  429
  439
  451
  463
  477
  493
  509
  528
  547
  568
  591
  615
  640
  667
  696
  727
  759
  793
  829
  867
  907
  950
  995
  1,042
  1,091
  1,143
  1,198
  1,256
  1,317
  1,381
Variable operating expenses, $m
  332
  340
  348
  358
  369
  381
  393
  407
  422
  438
  450
  468
  488
  509
  531
  554
  578
  604
  632
  661
  692
  724
  758
  794
  832
  871
  913
  957
  1,004
  1,052
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
  332
  340
  348
  358
  369
  381
  393
  407
  422
  438
  450
  468
  488
  509
  531
  554
  578
  604
  632
  661
  692
  724
  758
  794
  832
  871
  913
  957
  1,004
  1,052
Operating income, $m
  97
  99
  102
  105
  109
  112
  116
  121
  125
  130
  141
  146
  152
  159
  166
  173
  181
  189
  197
  206
  216
  226
  237
  248
  260
  272
  285
  299
  313
  329
EBITDA, $m
  201
  205
  211
  216
  223
  230
  238
  247
  256
  265
  276
  287
  299
  312
  325
  339
  355
  371
  387
  405
  424
  444
  465
  487
  510
  534
  560
  587
  615
  645
Interest expense (income), $m
  8
  35
  36
  38
  40
  42
  45
  48
  51
  54
  58
  61
  66
  70
  75
  79
  85
  90
  96
  102
  109
  116
  123
  131
  139
  148
  157
  166
  176
  187
  198
Earnings before tax, $m
  62
  63
  64
  65
  66
  67
  68
  70
  71
  73
  79
  81
  82
  84
  86
  88
  90
  93
  95
  97
  100
  103
  106
  109
  112
  115
  119
  123
  127
  131
Tax expense, $m
  17
  17
  17
  18
  18
  18
  18
  19
  19
  20
  21
  22
  22
  23
  23
  24
  24
  25
  26
  26
  27
  28
  29
  29
  30
  31
  32
  33
  34
  35
Net income, $m
  46
  46
  47
  48
  48
  49
  50
  51
  52
  53
  58
  59
  60
  61
  63
  64
  66
  68
  69
  71
  73
  75
  77
  79
  82
  84
  87
  90
  92
  96

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
  1,180
  1,207
  1,238
  1,273
  1,311
  1,354
  1,400
  1,450
  1,503
  1,561
  1,623
  1,689
  1,759
  1,833
  1,912
  1,996
  2,085
  2,179
  2,278
  2,383
  2,493
  2,609
  2,732
  2,862
  2,998
  3,141
  3,292
  3,451
  3,618
  3,794
Adjusted assets (=assets-cash), $m
  1,180
  1,207
  1,238
  1,273
  1,311
  1,354
  1,400
  1,450
  1,503
  1,561
  1,623
  1,689
  1,759
  1,833
  1,912
  1,996
  2,085
  2,179
  2,278
  2,383
  2,493
  2,609
  2,732
  2,862
  2,998
  3,141
  3,292
  3,451
  3,618
  3,794
Revenue / Adjusted assets
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
  0.364
Average production assets, $m
  719
  735
  754
  775
  799
  825
  853
  883
  916
  951
  989
  1,029
  1,072
  1,117
  1,165
  1,216
  1,270
  1,328
  1,388
  1,452
  1,519
  1,590
  1,665
  1,744
  1,827
  1,914
  2,006
  2,103
  2,205
  2,312
Working capital, $m
  205
  210
  215
  221
  228
  236
  244
  252
  262
  272
  282
  294
  306
  319
  333
  347
  363
  379
  396
  415
  434
  454
  475
  498
  522
  547
  573
  600
  630
  660
Total debt, $m
  259
  271
  286
  303
  321
  341
  363
  386
  412
  439
  468
  499
  532
  568
  605
  645
  687
  731
  778
  827
  880
  935
  993
  1,054
  1,118
  1,186
  1,258
  1,333
  1,412
  1,495
Total liabilities, $m
  558
  571
  586
  602
  620
  640
  662
  686
  711
  738
  768
  799
  832
  867
  905
  944
  986
  1,031
  1,077
  1,127
  1,179
  1,234
  1,292
  1,354
  1,418
  1,486
  1,557
  1,632
  1,711
  1,795
Total equity, $m
  622
  636
  652
  671
  691
  713
  738
  764
  792
  823
  855
  890
  927
  966
  1,008
  1,052
  1,099
  1,148
  1,200
  1,256
  1,314
  1,375
  1,440
  1,508
  1,580
  1,655
  1,735
  1,819
  1,907
  1,999
Total liabilities and equity, $m
  1,180
  1,207
  1,238
  1,273
  1,311
  1,353
  1,400
  1,450
  1,503
  1,561
  1,623
  1,689
  1,759
  1,833
  1,913
  1,996
  2,085
  2,179
  2,277
  2,383
  2,493
  2,609
  2,732
  2,862
  2,998
  3,141
  3,292
  3,451
  3,618
  3,794
Debt-to-equity ratio
  0.420
  0.430
  0.440
  0.450
  0.460
  0.480
  0.490
  0.510
  0.520
  0.530
  0.550
  0.560
  0.570
  0.590
  0.600
  0.610
  0.630
  0.640
  0.650
  0.660
  0.670
  0.680
  0.690
  0.700
  0.710
  0.720
  0.720
  0.730
  0.740
  0.750
Adjusted equity ratio
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  46
  46
  47
  48
  48
  49
  50
  51
  52
  53
  58
  59
  60
  61
  63
  64
  66
  68
  69
  71
  73
  75
  77
  79
  82
  84
  87
  90
  92
  96
Depreciation, amort., depletion, $m
  103
  106
  108
  111
  114
  118
  122
  126
  130
  135
  135
  141
  147
  153
  160
  167
  174
  182
  190
  199
  208
  218
  228
  239
  250
  262
  275
  288
  302
  317
Funds from operations, $m
  149
  152
  155
  159
  163
  167
  172
  177
  182
  188
  193
  200
  207
  214
  222
  231
  240
  249
  259
  270
  281
  293
  305
  318
  332
  346
  362
  378
  394
  412
Change in working capital, $m
  4
  5
  5
  6
  7
  7
  8
  9
  9
  10
  11
  11
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
Cash from operations, $m
  145
  147
  150
  153
  156
  160
  164
  168
  173
  178
  182
  188
  195
  202
  209
  216
  224
  233
  242
  252
  262
  273
  284
  296
  308
  321
  335
  350
  365
  382
Maintenance CAPEX, $m
  -97
  -98
  -101
  -103
  -106
  -109
  -113
  -117
  -121
  -125
  -130
  -135
  -141
  -147
  -153
  -160
  -167
  -174
  -182
  -190
  -199
  -208
  -218
  -228
  -239
  -250
  -262
  -275
  -288
  -302
New CAPEX, $m
  -14
  -17
  -19
  -21
  -24
  -26
  -28
  -30
  -33
  -35
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -87
  -92
  -97
  -102
  -107
Cash from investing activities, $m
  -111
  -115
  -120
  -124
  -130
  -135
  -141
  -147
  -154
  -160
  -168
  -175
  -184
  -192
  -201
  -211
  -221
  -231
  -242
  -254
  -266
  -279
  -293
  -307
  -322
  -337
  -354
  -372
  -390
  -409
Free cash flow, $m
  34
  32
  30
  28
  26
  24
  23
  21
  19
  18
  15
  13
  11
  9
  8
  6
  4
  2
  0
  -2
  -4
  -6
  -9
  -11
  -14
  -16
  -19
  -22
  -24
  -28
Issuance/(repayment) of debt, $m
  11
  13
  15
  16
  18
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  40
  42
  44
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
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  
  11
  13
  15
  16
  18
  20
  22
  24
  25
  27
  29
  31
  33
  35
  37
  40
  42
  44
  47
  50
  52
  55
  58
  61
  64
  68
  71
  75
  79
  83
Total cash flow (excl. dividends), $m
  46
  45
  45
  45
  45
  45
  45
  45
  45
  45
  44
  44
  44
  45
  45
  45
  46
  46
  47
  47
  48
  49
  49
  50
  51
  52
  53
  54
  55
  56
Retained Cash Flow (-), $m
  -13
  -14
  -16
  -18
  -20
  -22
  -24
  -26
  -28
  -30
  -33
  -35
  -37
  -39
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -61
  -65
  -68
  -72
  -76
  -80
  -84
  -88
  -93
Prev. year cash balance distribution, $m
  366
  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
  398
  31
  28
  26
  24
  22
  20
  18
  16
  14
  11
  9
  7
  5
  3
  1
  -1
  -3
  -5
  -8
  -10
  -13
  -15
  -18
  -21
  -24
  -27
  -30
  -34
  -37
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
  382
  28
  25
  22
  19
  16
  14
  11
  9
  8
  5
  4
  3
  2
  1
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  0
  0
  0
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
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SSR Mining Inc, formerly Silver Standard Resources Inc, is a Canada-based resource company. The Company is engaged in the operation, acquisition, exploration and development of precious metal resource properties located in the Americas. The Company's segments include Pirquitas mine, Marigold mine, Seabee Gold Operation, and Exploration and evaluation properties. The Company has three producing mines and a portfolio of silver resource dominant projects located throughout the Americas. The Company is focused on silver production from the Pirquitas mine in Argentina and gold production from the Marigold mine in Nevada, the United States. The Company's other projects include Seabee Gold Operation in Saskatchewan, Canada and Pirquitas mine in Jujuy, Argentina. The Marigold mine produced approximately 205,116 ounces of gold. The Seabee Gold Operation produced approximately 77,640 ounces of gold. The Pirquitas mine produced approximately 10.4 million ounces of silver.

FINANCIAL RATIOS  of  SSR Mining Inc. (SSRM)

Valuation Ratios
P/E Ratio 23.3
Price to Sales 3.1
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 8.8
Price to Free Cash Flow 12.3
Growth Rates
Sales Growth Rate 30.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4%
Cap. Spend. - 3 Yr. Gr. Rate 5.9%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 24.4%
Total Debt to Equity 24.4%
Interest Coverage 11
Management Effectiveness
Return On Assets 6.2%
Ret/ On Assets - 3 Yr. Avg. -5.9%
Return On Total Capital 7.3%
Ret/ On T. Cap. - 3 Yr. Avg. -8.4%
Return On Equity 9.6%
Return On Equity - 3 Yr. Avg. -11.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 32.6%
Gross Margin - 3 Yr. Avg. 16.9%
EBITDA Margin 33.6%
EBITDA Margin - 3 Yr. Avg. 3.9%
Operating Margin 22.4%
Oper. Margin - 3 Yr. Avg. -5.3%
Pre-Tax Margin 16.5%
Pre-Tax Margin - 3 Yr. Avg. -15.3%
Net Profit Margin 13.2%
Net Profit Margin - 3 Yr. Avg. -20.6%
Effective Tax Rate 19.8%
Eff/ Tax Rate - 3 Yr. Avg. -6.8%
Payout Ratio 0%

SSRM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SSRM stock intrinsic value calculation we used $421 million for the last fiscal year's total revenue generated by SSR Mining Inc.. The default revenue input number comes from 0001 income statement of SSR Mining 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 SSRM stock valuation model: a) initial revenue growth rate of 2% 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 SSRM is calculated based on our internal credit rating of SSR Mining 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 SSR Mining 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 SSRM stock the variable cost ratio is equal to 77.4%.

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 SSRM 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 14% for SSR Mining Inc..

Corporate tax rate of 27% is the nominal tax rate for SSR Mining 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 SSRM 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 SSRM are equal to 167.4%.

Life of production assets of 7.3 years is the average useful life of capital assets used in SSR Mining 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 SSRM is equal to 47.8%. 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 - $974.147 million for SSR Mining 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 121.073 million for SSR Mining 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 SSR Mining Inc. at the current share price and the inputted number of shares is $1.5 billion.

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