Intrinsic value of SunCoke Energy - SXC

Previous Close

$10.51

  Intrinsic Value

$4.85

stock screener

  Rating & Target

str. sell

-54%

Previous close

$10.51

 
Intrinsic value

$4.85

 
Up/down potential

-54%

 
Rating

str. sell

We calculate the intrinsic value of SXC 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 0.7

 

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, %
  13.60
  12.74
  11.97
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
Revenue, $m
  1,513
  1,705
  1,909
  2,125
  2,351
  2,588
  2,835
  3,094
  3,363
  3,643
  3,934
  4,237
  4,552
  4,879
  5,219
  5,572
  5,940
  6,322
  6,720
  7,134
  7,565
  8,014
  8,483
  8,972
  9,482
  10,015
  10,571
  11,152
  11,760
  12,396
Variable operating expenses, $m
  1,372
  1,543
  1,725
  1,917
  2,118
  2,329
  2,550
  2,780
  3,019
  3,269
  3,504
  3,774
  4,054
  4,345
  4,648
  4,963
  5,290
  5,630
  5,985
  6,353
  6,737
  7,138
  7,555
  7,990
  8,445
  8,919
  9,415
  9,932
  10,474
  11,040
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
  1,372
  1,543
  1,725
  1,917
  2,118
  2,329
  2,550
  2,780
  3,019
  3,269
  3,504
  3,774
  4,054
  4,345
  4,648
  4,963
  5,290
  5,630
  5,985
  6,353
  6,737
  7,138
  7,555
  7,990
  8,445
  8,919
  9,415
  9,932
  10,474
  11,040
Operating income, $m
  141
  162
  184
  208
  233
  259
  286
  314
  343
  374
  430
  463
  498
  534
  571
  610
  650
  692
  735
  780
  827
  877
  928
  981
  1,037
  1,095
  1,156
  1,220
  1,286
  1,356
EBITDA, $m
  301
  339
  380
  423
  468
  515
  564
  616
  669
  725
  783
  843
  906
  971
  1,039
  1,109
  1,182
  1,258
  1,337
  1,420
  1,506
  1,595
  1,688
  1,786
  1,887
  1,993
  2,104
  2,220
  2,341
  2,467
Interest expense (income), $m
  58
  61
  77
  94
  111
  130
  150
  170
  192
  215
  238
  262
  288
  314
  341
  370
  399
  430
  462
  495
  530
  566
  604
  643
  684
  726
  770
  817
  865
  916
  969
Earnings before tax, $m
  80
  85
  91
  96
  102
  109
  115
  122
  129
  136
  168
  176
  184
  192
  201
  210
  219
  229
  240
  250
  261
  273
  285
  298
  311
  325
  340
  355
  371
  387
Tax expense, $m
  22
  23
  24
  26
  28
  29
  31
  33
  35
  37
  45
  47
  50
  52
  54
  57
  59
  62
  65
  68
  71
  74
  77
  80
  84
  88
  92
  96
  100
  105
Net income, $m
  58
  62
  66
  70
  75
  79
  84
  89
  94
  99
  123
  128
  134
  140
  147
  153
  160
  167
  175
  183
  191
  199
  208
  217
  227
  237
  248
  259
  271
  283

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
  2,338
  2,636
  2,951
  3,284
  3,633
  3,999
  4,382
  4,781
  5,197
  5,630
  6,081
  6,549
  7,035
  7,541
  8,066
  8,613
  9,180
  9,771
  10,386
  11,026
  11,692
  12,387
  13,111
  13,867
  14,655
  15,479
  16,338
  17,237
  18,176
  19,159
Adjusted assets (=assets-cash), $m
  2,338
  2,636
  2,951
  3,284
  3,633
  3,999
  4,382
  4,781
  5,197
  5,630
  6,081
  6,549
  7,035
  7,541
  8,066
  8,613
  9,180
  9,771
  10,386
  11,026
  11,692
  12,387
  13,111
  13,867
  14,655
  15,479
  16,338
  17,237
  18,176
  19,159
Revenue / Adjusted assets
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
  0.647
Average production assets, $m
  1,871
  2,109
  2,362
  2,628
  2,908
  3,201
  3,507
  3,827
  4,160
  4,506
  4,867
  5,241
  5,631
  6,035
  6,456
  6,893
  7,348
  7,820
  8,312
  8,824
  9,358
  9,914
  10,493
  11,098
  11,729
  12,388
  13,076
  13,795
  14,547
  15,334
Working capital, $m
  17
  19
  21
  23
  26
  28
  31
  34
  37
  40
  43
  47
  50
  54
  57
  61
  65
  70
  74
  78
  83
  88
  93
  99
  104
  110
  116
  123
  129
  136
Total debt, $m
  1,084
  1,320
  1,570
  1,834
  2,111
  2,401
  2,705
  3,021
  3,351
  3,695
  4,052
  4,423
  4,809
  5,210
  5,626
  6,060
  6,510
  6,978
  7,466
  7,973
  8,502
  9,053
  9,627
  10,226
  10,851
  11,504
  12,186
  12,899
  13,644
  14,423
Total liabilities, $m
  1,854
  2,090
  2,340
  2,604
  2,881
  3,171
  3,475
  3,792
  4,122
  4,465
  4,822
  5,193
  5,579
  5,980
  6,397
  6,830
  7,280
  7,749
  8,236
  8,743
  9,272
  9,823
  10,397
  10,996
  11,622
  12,274
  12,956
  13,669
  14,414
  15,193
Total equity, $m
  484
  546
  611
  680
  752
  828
  907
  990
  1,076
  1,166
  1,259
  1,356
  1,456
  1,561
  1,670
  1,783
  1,900
  2,023
  2,150
  2,282
  2,420
  2,564
  2,714
  2,870
  3,034
  3,204
  3,382
  3,568
  3,763
  3,966
Total liabilities and equity, $m
  2,338
  2,636
  2,951
  3,284
  3,633
  3,999
  4,382
  4,782
  5,198
  5,631
  6,081
  6,549
  7,035
  7,541
  8,067
  8,613
  9,180
  9,772
  10,386
  11,025
  11,692
  12,387
  13,111
  13,866
  14,656
  15,478
  16,338
  17,237
  18,177
  19,159
Debt-to-equity ratio
  2.240
  2.420
  2.570
  2.700
  2.810
  2.900
  2.980
  3.050
  3.120
  3.170
  3.220
  3.260
  3.300
  3.340
  3.370
  3.400
  3.430
  3.450
  3.470
  3.490
  3.510
  3.530
  3.550
  3.560
  3.580
  3.590
  3.600
  3.620
  3.630
  3.640
Adjusted equity ratio
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  58
  62
  66
  70
  75
  79
  84
  89
  94
  99
  123
  128
  134
  140
  147
  153
  160
  167
  175
  183
  191
  199
  208
  217
  227
  237
  248
  259
  271
  283
Depreciation, amort., depletion, $m
  160
  177
  196
  215
  235
  256
  279
  302
  326
  351
  353
  380
  408
  437
  468
  499
  532
  567
  602
  639
  678
  718
  760
  804
  850
  898
  948
  1,000
  1,054
  1,111
Funds from operations, $m
  218
  239
  262
  285
  310
  336
  363
  391
  420
  450
  475
  508
  542
  578
  615
  653
  693
  734
  777
  822
  869
  918
  969
  1,022
  1,077
  1,135
  1,195
  1,259
  1,325
  1,394
Change in working capital, $m
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
Cash from operations, $m
  216
  237
  260
  283
  307
  333
  360
  388
  417
  447
  472
  505
  539
  574
  611
  649
  689
  730
  773
  818
  864
  913
  963
  1,016
  1,071
  1,129
  1,189
  1,252
  1,318
  1,387
Maintenance CAPEX, $m
  -119
  -136
  -153
  -171
  -190
  -211
  -232
  -254
  -277
  -301
  -327
  -353
  -380
  -408
  -437
  -468
  -499
  -532
  -567
  -602
  -639
  -678
  -718
  -760
  -804
  -850
  -898
  -948
  -1,000
  -1,054
New CAPEX, $m
  -224
  -238
  -252
  -266
  -280
  -293
  -306
  -320
  -333
  -347
  -360
  -375
  -389
  -405
  -421
  -437
  -454
  -473
  -492
  -512
  -533
  -556
  -580
  -605
  -631
  -659
  -688
  -719
  -752
  -786
Cash from investing activities, $m
  -343
  -374
  -405
  -437
  -470
  -504
  -538
  -574
  -610
  -648
  -687
  -728
  -769
  -813
  -858
  -905
  -953
  -1,005
  -1,059
  -1,114
  -1,172
  -1,234
  -1,298
  -1,365
  -1,435
  -1,509
  -1,586
  -1,667
  -1,752
  -1,840
Free cash flow, $m
  -127
  -137
  -146
  -154
  -163
  -171
  -178
  -186
  -193
  -201
  -215
  -223
  -230
  -239
  -247
  -256
  -265
  -275
  -286
  -297
  -309
  -321
  -335
  -349
  -364
  -380
  -397
  -415
  -434
  -454
Issuance/(repayment) of debt, $m
  220
  236
  250
  264
  277
  290
  304
  317
  330
  343
  357
  371
  386
  401
  417
  433
  450
  468
  487
  507
  529
  551
  574
  599
  625
  653
  682
  713
  745
  779
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  
  220
  236
  250
  264
  277
  290
  304
  317
  330
  343
  357
  371
  386
  401
  417
  433
  450
  468
  487
  507
  529
  551
  574
  599
  625
  653
  682
  713
  745
  779
Total cash flow (excl. dividends), $m
  93
  100
  104
  109
  114
  120
  125
  131
  137
  143
  142
  149
  155
  162
  170
  177
  185
  193
  202
  211
  220
  230
  240
  250
  261
  273
  285
  298
  311
  325
Retained Cash Flow (-), $m
  -58
  -62
  -65
  -69
  -72
  -76
  -79
  -83
  -86
  -90
  -93
  -97
  -101
  -105
  -109
  -113
  -118
  -122
  -127
  -132
  -138
  -144
  -150
  -156
  -163
  -170
  -178
  -186
  -194
  -203
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
  35
  38
  39
  41
  42
  44
  46
  48
  51
  53
  49
  52
  55
  58
  61
  64
  67
  71
  74
  78
  82
  86
  90
  94
  98
  103
  107
  112
  117
  122
Discount rate, %
  8.30
  8.72
  9.15
  9.61
  10.09
  10.59
  11.12
  11.68
  12.26
  12.88
  13.52
  14.20
  14.91
  15.65
  16.43
  17.26
  18.12
  19.02
  19.97
  20.97
  22.02
  23.12
  24.28
  25.49
  26.77
  28.11
  29.51
  30.99
  32.54
  34.16
PV of cash for distribution, $m
  32
  32
  30
  28
  26
  24
  22
  20
  18
  16
  12
  11
  9
  8
  6
  5
  4
  3
  2
  2
  1
  1
  1
  0
  0
  0
  0
  0
  0
  0
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

SunCoke Energy, Inc. is a producer of coke in the Americas. The Company's segments include Domestic Coke, Brazil Coke, Coal Logistics, and Corporate and Other. The Domestic Coke segment consists of its Jewell Coke Company, L.P. (Jewell), Indiana Harbor Coke Company (Indiana Harbor), Haverhill Coke Company LLC (Haverhill), Gateway Energy and Coke Company, LLC (Granite City) and Middletown Coke Company, LLC (Middletown) cokemaking and heat recovery operations. The Brazil Coke segment consists of its operations in Vitoria, Brazil, where the Company operate a cokemaking facility, ArcelorMittal Brasil S.A. The Coal Logistics segment consists of its Convent Marine Terminal (CMT), Kanawha River Terminals, LLC (KRT), SunCoke Lake Terminal, LLC (Lake Terminal) and Dismal River Terminal, LLC (DRT) coal handling and/or mixing service operations. It designs, develops, builds, owns and operates five cokemaking facilities in the United States, as of December 31, 2016.

FINANCIAL RATIOS  of  SunCoke Energy (SXC)

Valuation Ratios
P/E Ratio 48.2
Price to Sales 0.6
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 3.1
Price to Free Cash Flow 4.4
Growth Rates
Sales Growth Rate -10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -15.8%
Cap. Spend. - 3 Yr. Gr. Rate -15.2%
Financial Strength
Quick Ratio 27
Current Ratio 0
LT Debt to Equity 273%
Total Debt to Equity 274.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 1.1%
Ret/ On T. Cap. - 3 Yr. Avg. -3.9%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. -9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 25.9%
Gross Margin - 3 Yr. Avg. 21.5%
EBITDA Margin 19.6%
EBITDA Margin - 3 Yr. Avg. 11.8%
Operating Margin 9.9%
Oper. Margin - 3 Yr. Avg. 3.9%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. -0.4%
Net Profit Margin 1.1%
Net Profit Margin - 3 Yr. Avg. -2.9%
Effective Tax Rate 11.8%
Eff/ Tax Rate - 3 Yr. Avg. 6.5%
Payout Ratio 0%

SXC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SXC stock intrinsic value calculation we used $1331.5 million for the last fiscal year's total revenue generated by SunCoke Energy. The default revenue input number comes from 0001 income statement of SunCoke Energy. 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 SXC stock valuation model: a) initial revenue growth rate of 13.6% 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 8.3%, whose default value for SXC is calculated based on our internal credit rating of SunCoke Energy, 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 SunCoke Energy.
    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 SXC stock the variable cost ratio is equal to 90.9%.

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 SXC 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 7.1% for SunCoke Energy.

Corporate tax rate of 27% is the nominal tax rate for SunCoke Energy. 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 SXC 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 SXC are equal to 123.7%.

Life of production assets of 13.8 years is the average useful life of capital assets used in SunCoke Energy 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 SXC is equal to 1.1%. 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 - $426.2 million for SunCoke Energy - 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 64.728 million for SunCoke Energy 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 SunCoke Energy at the current share price and the inputted number of shares is $0.7 billion.

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COMPANY NEWS

▶ SunCoke: 3Q Earnings Snapshot   [10:39AM  Associated Press]
▶ SunCoke: 2Q Earnings Snapshot   [08:19AM  Associated Press]
▶ 5 Top Stocks With a Handsome Net Profit Margin   [Jul-23-18 11:38AM  InvestorPlace]
▶ Adient CEO resigns, company slashes profit outlook   [Jun-11-18 01:07PM  Reuters]
▶ 3 Stocks to Snap Up on New Analyst Coverage   [Apr-19-18 10:09AM  Zacks]
▶ Top Ranked Momentum Stocks to Buy for March 8th   [Mar-08-18 07:20AM  Zacks]
▶ SunCoke posts 4Q profit   [07:05AM  Associated Press]
▶ Is It The Right Time To Buy SunCoke Energy Partners LP (SXCP)?   [Dec-02-17 12:00PM  Simply Wall St.]
▶ SunCoke posts 3Q profit   [Oct-26-17 07:51AM  Associated Press]

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