Intrinsic value of Tellurian Inc. - TELL

Previous Close

$9.95

  Intrinsic Value

$0.31

stock screener

  Rating & Target

str. sell

-97%

Previous close

$9.95

 
Intrinsic value

$0.31

 
Up/down potential

-97%

 
Rating

str. sell

We calculate the intrinsic value of TELL 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 2.4

 

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, %
  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
  10
  10
  11
  11
  11
  12
  12
  13
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
Variable operating expenses, $m
  457
  467
  479
  493
  508
  524
  542
  562
  582
  605
  629
  654
  681
  710
  741
  773
  808
  844
  882
  923
  966
  1,011
  1,058
  1,108
  1,161
  1,217
  1,275
  1,337
  1,401
  1,470
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
  457
  467
  479
  493
  508
  524
  542
  562
  582
  605
  629
  654
  681
  710
  741
  773
  808
  844
  882
  923
  966
  1,011
  1,058
  1,108
  1,161
  1,217
  1,275
  1,337
  1,401
  1,470
Operating income, $m
  -447
  -457
  -469
  -482
  -497
  -513
  -530
  -549
  -569
  -591
  -615
  -639
  -666
  -694
  -724
  -756
  -790
  -825
  -863
  -902
  -944
  -988
  -1,035
  -1,084
  -1,135
  -1,190
  -1,247
  -1,307
  -1,370
  -1,437
EBITDA, $m
  -443
  -453
  -464
  -477
  -492
  -508
  -525
  -544
  -564
  -586
  -609
  -633
  -660
  -688
  -717
  -749
  -782
  -817
  -855
  -894
  -935
  -979
  -1,025
  -1,073
  -1,125
  -1,178
  -1,235
  -1,295
  -1,357
  -1,423
Interest expense (income), $m
  0
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  16
Earnings before tax, $m
  -450
  -460
  -472
  -485
  -500
  -516
  -534
  -553
  -574
  -596
  -620
  -645
  -672
  -700
  -731
  -763
  -797
  -833
  -871
  -911
  -953
  -998
  -1,045
  -1,095
  -1,147
  -1,202
  -1,260
  -1,321
  -1,385
  -1,452
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
  -450
  -460
  -472
  -485
  -500
  -516
  -534
  -553
  -574
  -596
  -620
  -645
  -672
  -700
  -731
  -763
  -797
  -833
  -871
  -911
  -953
  -998
  -1,045
  -1,095
  -1,147
  -1,202
  -1,260
  -1,321
  -1,385
  -1,452

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
  329
  337
  345
  355
  366
  378
  390
  404
  419
  435
  453
  471
  491
  511
  533
  557
  581
  608
  635
  664
  695
  728
  762
  798
  836
  876
  918
  963
  1,009
  1,058
Adjusted assets (=assets-cash), $m
  329
  337
  345
  355
  366
  378
  390
  404
  419
  435
  453
  471
  491
  511
  533
  557
  581
  608
  635
  664
  695
  728
  762
  798
  836
  876
  918
  963
  1,009
  1,058
Revenue / Adjusted assets
  0.030
  0.030
  0.032
  0.031
  0.030
  0.032
  0.031
  0.032
  0.031
  0.030
  0.031
  0.032
  0.031
  0.031
  0.032
  0.031
  0.031
  0.031
  0.031
  0.032
  0.032
  0.032
  0.031
  0.031
  0.031
  0.031
  0.031
  0.031
  0.031
  0.031
Average production assets, $m
  126
  129
  132
  136
  140
  144
  149
  154
  160
  166
  173
  180
  187
  195
  204
  213
  222
  232
  243
  254
  266
  278
  291
  305
  319
  335
  351
  368
  385
  404
Working capital, $m
  -47
  -48
  -49
  -51
  -52
  -54
  -56
  -58
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -83
  -87
  -91
  -95
  -99
  -104
  -109
  -114
  -119
  -125
  -131
  -137
  -144
  -151
Total debt, $m
  58
  60
  63
  66
  70
  74
  78
  83
  88
  94
  99
  106
  112
  119
  127
  135
  143
  152
  161
  171
  181
  192
  204
  216
  229
  243
  257
  272
  288
  304
Total liabilities, $m
  111
  114
  117
  120
  124
  128
  132
  137
  142
  147
  153
  159
  166
  173
  180
  188
  197
  205
  215
  225
  235
  246
  258
  270
  283
  296
  310
  325
  341
  358
Total equity, $m
  218
  223
  229
  235
  242
  250
  258
  268
  278
  288
  300
  312
  325
  338
  353
  369
  385
  402
  421
  440
  460
  482
  504
  528
  553
  580
  608
  637
  668
  700
Total liabilities and equity, $m
  329
  337
  346
  355
  366
  378
  390
  405
  420
  435
  453
  471
  491
  511
  533
  557
  582
  607
  636
  665
  695
  728
  762
  798
  836
  876
  918
  962
  1,009
  1,058
Debt-to-equity ratio
  0.260
  0.270
  0.280
  0.280
  0.290
  0.300
  0.300
  0.310
  0.320
  0.320
  0.330
  0.340
  0.350
  0.350
  0.360
  0.370
  0.370
  0.380
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.430
Adjusted equity ratio
  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
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662
  0.662

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -450
  -460
  -472
  -485
  -500
  -516
  -534
  -553
  -574
  -596
  -620
  -645
  -672
  -700
  -731
  -763
  -797
  -833
  -871
  -911
  -953
  -998
  -1,045
  -1,095
  -1,147
  -1,202
  -1,260
  -1,321
  -1,385
  -1,452
Depreciation, amort., depletion, $m
  4
  4
  4
  5
  5
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
Funds from operations, $m
  -446
  -456
  -468
  -481
  -496
  -512
  -529
  -548
  -568
  -590
  -614
  -639
  -666
  -694
  -724
  -756
  -789
  -825
  -863
  -902
  -944
  -989
  -1,035
  -1,085
  -1,136
  -1,191
  -1,248
  -1,309
  -1,372
  -1,439
Change in working capital, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
Cash from operations, $m
  -445
  -455
  -466
  -479
  -494
  -510
  -527
  -546
  -566
  -588
  -611
  -636
  -663
  -691
  -721
  -752
  -786
  -821
  -859
  -898
  -940
  -984
  -1,030
  -1,079
  -1,131
  -1,185
  -1,242
  -1,302
  -1,365
  -1,432
Maintenance CAPEX, $m
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
New CAPEX, $m
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
Cash from investing activities, $m
  -6
  -7
  -7
  -8
  -9
  -10
  -10
  -10
  -11
  -11
  -13
  -13
  -13
  -14
  -15
  -16
  -16
  -17
  -19
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
Free cash flow, $m
  -451
  -462
  -474
  -488
  -503
  -519
  -537
  -556
  -577
  -600
  -624
  -649
  -676
  -705
  -736
  -768
  -802
  -839
  -877
  -918
  -960
  -1,005
  -1,053
  -1,103
  -1,156
  -1,211
  -1,269
  -1,331
  -1,395
  -1,463
Issuance/(repayment) of debt, $m
  1
  3
  3
  3
  4
  4
  4
  5
  5
  5
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  14
  15
  16
  17
Issuance/(repurchase) of shares, $m
  451
  465
  478
  492
  507
  524
  543
  562
  584
  607
  631
  657
  685
  714
  745
  778
  813
  850
  889
  930
  974
  1,019
  1,068
  1,119
  1,172
  1,228
  1,288
  1,350
  1,416
  1,485
Cash from financing (excl. dividends), $m  
  452
  468
  481
  495
  511
  528
  547
  567
  589
  612
  637
  663
  692
  721
  752
  786
  821
  859
  898
  940
  984
  1,030
  1,080
  1,131
  1,185
  1,242
  1,302
  1,365
  1,432
  1,502
Total cash flow (excl. dividends), $m
  0
  6
  7
  8
  8
  9
  10
  11
  12
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
Retained Cash Flow (-), $m
  -451
  -465
  -478
  -492
  -507
  -524
  -543
  -562
  -584
  -607
  -631
  -657
  -685
  -714
  -745
  -778
  -813
  -850
  -889
  -930
  -974
  -1,019
  -1,068
  -1,119
  -1,172
  -1,228
  -1,288
  -1,350
  -1,416
  -1,485
Prev. year cash balance distribution, $m
  81
  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
  -370
  -459
  -471
  -484
  -499
  -515
  -533
  -552
  -572
  -594
  -618
  -643
  -670
  -698
  -728
  -760
  -794
  -830
  -868
  -908
  -950
  -994
  -1,041
  -1,091
  -1,143
  -1,197
  -1,255
  -1,316
  -1,380
  -1,447
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
  -355
  -420
  -410
  -399
  -387
  -374
  -360
  -345
  -329
  -311
  -293
  -274
  -255
  -234
  -214
  -193
  -173
  -153
  -134
  -115
  -98
  -83
  -68
  -56
  -44
  -35
  -27
  -20
  -15
  -11
Current shareholders' claim on cash, %
  79.5
  62.8
  49.5
  39.1
  30.8
  24.3
  19.1
  15.0
  11.8
  9.3
  7.3
  5.7
  4.5
  3.5
  2.8
  2.2
  1.7
  1.3
  1.1
  0.8
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1

Tellurian Inc., formerly Magellan Petroleum Corporation, is an oil and gas exploration and production company. The Company focuses on the development of liquefied natural gas (LNG) projects along the United States Gulf Coast through its subsidiary, Tellurian Investments Inc. The Company owns interests in the Horse Hill-1 well and related licenses in the Weald Basin, onshore the United Kingdom, and an exploration block, NT/P82, in the Bonaparte Basin, offshore Northern Territory, Australia. The Horse Hill-1 well has identified prospects from the Portland sandstone and Kimmeridge Clay limestone formations.

FINANCIAL RATIOS  of  Tellurian Inc. (TELL)

Valuation Ratios
P/E Ratio -29.3
Price to Sales 0
Price to Book 29.3
Price to Tangible Book
Price to Cash Flow -19.5
Price to Free Cash Flow -19.5
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 -100%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -10.8%
Ret/ On Assets - 3 Yr. Avg. -41.2%
Return On Total Capital -20%
Ret/ On T. Cap. - 3 Yr. Avg. -57.3%
Return On Equity -21.1%
Return On Equity - 3 Yr. Avg. -58.1%
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%

TELL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TELL stock intrinsic value calculation we used $10 million for the last fiscal year's total revenue generated by Tellurian Inc.. The default revenue input number comes from 0001 income statement of Tellurian 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 TELL 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 TELL is calculated based on our internal credit rating of Tellurian 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 Tellurian 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 TELL stock the variable cost ratio is equal to 4480%.

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 TELL 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 Tellurian Inc..

Corporate tax rate of 27% is the nominal tax rate for Tellurian 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 TELL 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 TELL are equal to 1232.2%.

Life of production assets of 78.6 years is the average useful life of capital assets used in Tellurian 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 TELL is equal to -460.5%. 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 - $297.934 million for Tellurian 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 240.481 million for Tellurian 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 Tellurian Inc. at the current share price and the inputted number of shares is $2.4 billion.

RELATED COMPANIES Price Int.Val. Rating
TELL Tellurian Inc. 9.95 0.31  str.sell
GTLS Chart Industri 88.73 50.49  sell

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