Intrinsic value of U S Concrete, Inc. - USCR

Previous Close

$40.75

  Intrinsic Value

$35.45

stock screener

  Rating & Target

hold

-13%

Previous close

$40.75

 
Intrinsic value

$35.45

 
Up/down potential

-13%

 
Rating

hold

We calculate the intrinsic value of USCR 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, %
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
Revenue, $m
  1,633
  1,764
  1,901
  2,043
  2,191
  2,344
  2,504
  2,670
  2,842
  3,022
  3,209
  3,403
  3,606
  3,818
  4,038
  4,269
  4,509
  4,760
  5,022
  5,296
  5,583
  5,883
  6,197
  6,525
  6,869
  7,230
  7,607
  8,002
  8,417
  8,851
Variable operating expenses, $m
  1,525
  1,645
  1,770
  1,900
  2,034
  2,174
  2,320
  2,471
  2,629
  2,793
  2,928
  3,105
  3,290
  3,483
  3,684
  3,894
  4,114
  4,343
  4,582
  4,832
  5,094
  5,367
  5,654
  5,954
  6,267
  6,596
  6,940
  7,301
  7,679
  8,075
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
  1,525
  1,645
  1,770
  1,900
  2,034
  2,174
  2,320
  2,471
  2,629
  2,793
  2,928
  3,105
  3,290
  3,483
  3,684
  3,894
  4,114
  4,343
  4,582
  4,832
  5,094
  5,367
  5,654
  5,954
  6,267
  6,596
  6,940
  7,301
  7,679
  8,075
Operating income, $m
  107
  119
  131
  143
  156
  170
  184
  198
  213
  229
  281
  298
  316
  335
  354
  374
  395
  417
  440
  464
  489
  516
  543
  572
  602
  634
  667
  701
  738
  776
EBITDA, $m
  225
  244
  263
  282
  303
  324
  346
  369
  393
  417
  443
  470
  498
  527
  558
  589
  623
  657
  694
  731
  771
  812
  856
  901
  949
  998
  1,051
  1,105
  1,162
  1,222
Interest expense (income), $m
  25
  47
  53
  59
  65
  72
  79
  86
  93
  101
  109
  117
  126
  135
  145
  154
  165
  175
  186
  198
  210
  223
  236
  250
  265
  280
  296
  313
  330
  349
  368
Earnings before tax, $m
  60
  66
  72
  78
  84
  91
  98
  105
  112
  120
  164
  172
  181
  190
  200
  209
  220
  231
  242
  254
  266
  279
  293
  307
  322
  338
  354
  371
  389
  408
Tax expense, $m
  16
  18
  19
  21
  23
  25
  26
  28
  30
  32
  44
  46
  49
  51
  54
  57
  59
  62
  65
  69
  72
  75
  79
  83
  87
  91
  96
  100
  105
  110
Net income, $m
  44
  48
  52
  57
  62
  66
  71
  77
  82
  88
  120
  126
  132
  139
  146
  153
  160
  168
  177
  185
  194
  204
  214
  224
  235
  246
  258
  271
  284
  298

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
  1,487
  1,607
  1,731
  1,861
  1,995
  2,135
  2,280
  2,431
  2,589
  2,752
  2,922
  3,100
  3,284
  3,477
  3,678
  3,888
  4,106
  4,335
  4,574
  4,824
  5,085
  5,358
  5,644
  5,943
  6,256
  6,584
  6,928
  7,288
  7,665
  8,061
Adjusted assets (=assets-cash), $m
  1,487
  1,607
  1,731
  1,861
  1,995
  2,135
  2,280
  2,431
  2,589
  2,752
  2,922
  3,100
  3,284
  3,477
  3,678
  3,888
  4,106
  4,335
  4,574
  4,824
  5,085
  5,358
  5,644
  5,943
  6,256
  6,584
  6,928
  7,288
  7,665
  8,061
Revenue / Adjusted assets
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
  1.098
Average production assets, $m
  898
  970
  1,045
  1,124
  1,205
  1,289
  1,377
  1,468
  1,563
  1,662
  1,765
  1,872
  1,983
  2,100
  2,221
  2,348
  2,480
  2,618
  2,762
  2,913
  3,071
  3,236
  3,408
  3,589
  3,778
  3,976
  4,184
  4,401
  4,629
  4,868
Working capital, $m
  88
  95
  103
  110
  118
  127
  135
  144
  153
  163
  173
  184
  195
  206
  218
  231
  243
  257
  271
  286
  301
  318
  335
  352
  371
  390
  411
  432
  455
  478
Total debt, $m
  803
  896
  992
  1,092
  1,196
  1,303
  1,416
  1,532
  1,654
  1,780
  1,911
  2,048
  2,191
  2,339
  2,495
  2,656
  2,825
  3,002
  3,186
  3,379
  3,581
  3,792
  4,012
  4,243
  4,485
  4,738
  5,004
  5,282
  5,573
  5,878
Total liabilities, $m
  1,148
  1,240
  1,336
  1,436
  1,540
  1,648
  1,760
  1,877
  1,998
  2,125
  2,256
  2,393
  2,536
  2,684
  2,839
  3,001
  3,170
  3,347
  3,531
  3,724
  3,925
  4,136
  4,357
  4,588
  4,830
  5,083
  5,348
  5,626
  5,918
  6,223
Total equity, $m
  339
  366
  395
  424
  455
  487
  520
  554
  590
  627
  666
  707
  749
  793
  839
  886
  936
  988
  1,043
  1,100
  1,159
  1,222
  1,287
  1,355
  1,426
  1,501
  1,580
  1,662
  1,748
  1,838
Total liabilities and equity, $m
  1,487
  1,606
  1,731
  1,860
  1,995
  2,135
  2,280
  2,431
  2,588
  2,752
  2,922
  3,100
  3,285
  3,477
  3,678
  3,887
  4,106
  4,335
  4,574
  4,824
  5,084
  5,358
  5,644
  5,943
  6,256
  6,584
  6,928
  7,288
  7,666
  8,061
Debt-to-equity ratio
  2.370
  2.440
  2.510
  2.570
  2.630
  2.680
  2.720
  2.760
  2.800
  2.840
  2.870
  2.900
  2.930
  2.950
  2.970
  3.000
  3.020
  3.040
  3.060
  3.070
  3.090
  3.100
  3.120
  3.130
  3.140
  3.160
  3.170
  3.180
  3.190
  3.200
Adjusted equity ratio
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228
  0.228

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  44
  48
  52
  57
  62
  66
  71
  77
  82
  88
  120
  126
  132
  139
  146
  153
  160
  168
  177
  185
  194
  204
  214
  224
  235
  246
  258
  271
  284
  298
Depreciation, amort., depletion, $m
  118
  125
  132
  139
  146
  154
  162
  170
  179
  188
  162
  172
  182
  193
  204
  215
  228
  240
  253
  267
  282
  297
  313
  329
  347
  365
  384
  404
  425
  447
Funds from operations, $m
  162
  173
  184
  196
  208
  220
  233
  247
  261
  276
  281
  297
  314
  331
  349
  368
  388
  409
  430
  453
  476
  501
  526
  553
  582
  611
  642
  675
  709
  744
Change in working capital, $m
  7
  7
  7
  8
  8
  8
  9
  9
  9
  10
  10
  11
  11
  11
  12
  12
  13
  14
  14
  15
  15
  16
  17
  18
  19
  19
  20
  21
  22
  23
Cash from operations, $m
  155
  166
  177
  188
  200
  212
  225
  238
  252
  266
  271
  287
  303
  320
  338
  356
  375
  395
  416
  438
  461
  485
  510
  536
  563
  592
  622
  653
  686
  721
Maintenance CAPEX, $m
  -76
  -82
  -89
  -96
  -103
  -111
  -118
  -126
  -135
  -143
  -152
  -162
  -172
  -182
  -193
  -204
  -215
  -228
  -240
  -253
  -267
  -282
  -297
  -313
  -329
  -347
  -365
  -384
  -404
  -425
New CAPEX, $m
  -70
  -72
  -75
  -78
  -81
  -84
  -88
  -91
  -95
  -99
  -103
  -107
  -112
  -116
  -121
  -127
  -132
  -138
  -144
  -151
  -158
  -165
  -173
  -181
  -189
  -198
  -208
  -217
  -228
  -239
Cash from investing activities, $m
  -146
  -154
  -164
  -174
  -184
  -195
  -206
  -217
  -230
  -242
  -255
  -269
  -284
  -298
  -314
  -331
  -347
  -366
  -384
  -404
  -425
  -447
  -470
  -494
  -518
  -545
  -573
  -601
  -632
  -664
Free cash flow, $m
  9
  11
  12
  14
  15
  17
  19
  20
  22
  24
  16
  18
  20
  22
  24
  25
  27
  29
  31
  34
  36
  38
  40
  42
  45
  47
  49
  52
  55
  57
Issuance/(repayment) of debt, $m
  89
  93
  96
  100
  104
  108
  112
  117
  121
  126
  131
  137
  143
  149
  155
  162
  169
  176
  184
  193
  202
  211
  221
  231
  242
  253
  265
  278
  291
  305
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  
  89
  93
  96
  100
  104
  108
  112
  117
  121
  126
  131
  137
  143
  149
  155
  162
  169
  176
  184
  193
  202
  211
  221
  231
  242
  253
  265
  278
  291
  305
Total cash flow (excl. dividends), $m
  98
  103
  109
  114
  119
  125
  131
  137
  143
  150
  147
  155
  162
  170
  179
  187
  196
  206
  216
  226
  237
  249
  261
  273
  286
  300
  315
  330
  346
  363
Retained Cash Flow (-), $m
  -27
  -27
  -28
  -30
  -31
  -32
  -33
  -34
  -36
  -37
  -39
  -40
  -42
  -44
  -46
  -48
  -50
  -52
  -54
  -57
  -60
  -62
  -65
  -68
  -71
  -75
  -78
  -82
  -86
  -90
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
  72
  76
  80
  84
  89
  93
  98
  103
  108
  113
  109
  114
  120
  126
  133
  140
  147
  154
  161
  169
  178
  186
  196
  205
  215
  226
  236
  248
  260
  273
Discount rate, %
  9.50
  9.98
  10.47
  11.00
  11.55
  12.12
  12.73
  13.37
  14.04
  14.74
  15.47
  16.25
  17.06
  17.91
  18.81
  19.75
  20.74
  21.77
  22.86
  24.01
  25.21
  26.47
  27.79
  29.18
  30.64
  32.17
  33.78
  35.47
  37.24
  39.10
PV of cash for distribution, $m
  65
  63
  59
  56
  51
  47
  42
  38
  33
  29
  22
  19
  16
  13
  10
  8
  6
  4
  3
  2
  2
  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

U.S. Concrete, Inc. is a producer of ready-mixed concrete in select geographic markets in the United States. The Company conducts its operations through two business segments: ready-mixed concrete and aggregate products. The ready-mixed concrete segment engages principally in the formulation, production and delivery of ready-mixed concrete to its customers' job sites. The aggregate products segment produces crushed stone, sand and gravel. The Company' other products include its building materials stores, hauling operations, aggregates distribution terminals, lime slurry, brokered product sales, a recycled aggregates operation, and concrete blocks. The Company also offers the ARIDUS Rapid Drying Concrete technology. As of December 20, 2017, the Company operated 165 standard ready-mixed concrete plants, 17 volumetric ready-mixed concrete plants, 18 producing aggregates facilities, three aggregates distribution terminals, two lime slurry facilities, and one recycled aggregates facility.

FINANCIAL RATIOS  of  U S Concrete, Inc. (USCR)

Valuation Ratios
P/E Ratio 71.1
Price to Sales 0.5
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 5.7
Price to Free Cash Flow 8.9
Growth Rates
Sales Growth Rate 19.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 60%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 228.6%
Total Debt to Equity 237.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.1%
Ret/ On Assets - 3 Yr. Avg. 4.8%
Return On Total Capital 1.7%
Ret/ On T. Cap. - 3 Yr. Avg. 2.4%
Return On Equity 5.6%
Return On Equity - 3 Yr. Avg. 8%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 21.1%
Gross Margin - 3 Yr. Avg. 20.2%
EBITDA Margin 9.5%
EBITDA Margin - 3 Yr. Avg. 8.4%
Operating Margin 6.4%
Oper. Margin - 3 Yr. Avg. 6.9%
Pre-Tax Margin 2.7%
Pre-Tax Margin - 3 Yr. Avg. 1.9%
Net Profit Margin 0.8%
Net Profit Margin - 3 Yr. Avg. 1.1%
Effective Tax Rate 67.7%
Eff/ Tax Rate - 3 Yr. Avg. 17%
Payout Ratio 0%

USCR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the USCR stock intrinsic value calculation we used $1506 million for the last fiscal year's total revenue generated by U S Concrete, Inc.. The default revenue input number comes from 0001 income statement of U S Concrete, 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 USCR stock valuation model: a) initial revenue growth rate of 8.4% 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 9.5%, whose default value for USCR is calculated based on our internal credit rating of U S Concrete, 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 U S Concrete, 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 USCR stock the variable cost ratio is equal to 93.6%.

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 USCR 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 6.6% for U S Concrete, Inc..

Corporate tax rate of 27% is the nominal tax rate for U S Concrete, 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 USCR 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 USCR are equal to 55%.

Life of production assets of 10.9 years is the average useful life of capital assets used in U S Concrete, 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 USCR is equal to 5.4%. 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 - $312.4 million for U S Concrete, 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 16.647 million for U S Concrete, 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 U S Concrete, Inc. at the current share price and the inputted number of shares is $0.7 billion.

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