Intrinsic value of U.S. Lime&Minerals - USLM

Previous Close

$74.21

  Intrinsic Value

$28.40

stock screener

  Rating & Target

str. sell

-62%

Previous close

$74.21

 
Intrinsic value

$28.40

 
Up/down potential

-62%

 
Rating

str. sell

We calculate the intrinsic value of USLM 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 0.4

 

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, %
  7.50
  7.25
  7.02
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.78
  5.71
  5.64
  5.57
  5.51
  5.46
  5.42
  5.38
  5.34
  5.30
  5.27
  5.25
  5.22
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
Revenue, $m
  156
  167
  179
  191
  204
  217
  231
  245
  260
  275
  291
  308
  326
  344
  363
  383
  404
  426
  449
  473
  498
  524
  552
  581
  611
  643
  676
  710
  747
  785
Variable operating expenses, $m
  130
  139
  149
  159
  170
  181
  192
  204
  217
  229
  243
  257
  272
  287
  303
  320
  337
  355
  375
  395
  415
  437
  460
  484
  509
  536
  564
  593
  623
  655
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
  130
  139
  149
  159
  170
  181
  192
  204
  217
  229
  243
  257
  272
  287
  303
  320
  337
  355
  375
  395
  415
  437
  460
  484
  509
  536
  564
  593
  623
  655
Operating income, $m
  26
  28
  30
  32
  34
  36
  38
  41
  43
  46
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  87
  92
  96
  101
  107
  112
  118
  124
  130
EBITDA, $m
  44
  47
  50
  53
  57
  61
  65
  69
  73
  77
  82
  86
  91
  96
  102
  107
  113
  119
  126
  132
  139
  147
  154
  163
  171
  180
  189
  199
  209
  220
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
Earnings before tax, $m
  26
  28
  29
  31
  33
  35
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  65
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  113
  119
  125
Tax expense, $m
  7
  7
  8
  8
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  17
  18
  18
  19
  20
  22
  23
  24
  25
  26
  28
  29
  31
  32
  34
Net income, $m
  19
  20
  22
  23
  24
  26
  27
  29
  31
  33
  34
  36
  38
  41
  43
  45
  47
  50
  53
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91

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
  164
  176
  188
  201
  215
  228
  243
  258
  274
  290
  307
  325
  343
  363
  383
  404
  426
  449
  473
  498
  525
  553
  582
  612
  644
  677
  712
  749
  787
  827
Adjusted assets (=assets-cash), $m
  164
  176
  188
  201
  215
  228
  243
  258
  274
  290
  307
  325
  343
  363
  383
  404
  426
  449
  473
  498
  525
  553
  582
  612
  644
  677
  712
  749
  787
  827
Revenue / Adjusted assets
  0.951
  0.949
  0.952
  0.950
  0.949
  0.952
  0.951
  0.950
  0.949
  0.948
  0.948
  0.948
  0.950
  0.948
  0.948
  0.948
  0.948
  0.949
  0.949
  0.950
  0.949
  0.948
  0.948
  0.949
  0.949
  0.950
  0.949
  0.948
  0.949
  0.949
Average production assets, $m
  115
  124
  132
  141
  151
  160
  171
  181
  192
  204
  216
  228
  241
  255
  269
  284
  299
  315
  332
  350
  369
  388
  408
  430
  452
  475
  500
  526
  553
  581
Working capital, $m
  25
  27
  29
  31
  33
  35
  38
  40
  42
  45
  47
  50
  53
  56
  59
  62
  66
  69
  73
  77
  81
  85
  90
  95
  100
  105
  110
  116
  122
  128
Total debt, $m
  2
  4
  5
  7
  9
  12
  14
  16
  18
  21
  23
  26
  29
  32
  35
  38
  42
  45
  49
  53
  57
  61
  65
  70
  75
  80
  85
  91
  96
  103
Total liabilities, $m
  25
  27
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  58
  61
  65
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
  120
  126
Total equity, $m
  139
  149
  160
  171
  182
  194
  206
  219
  232
  246
  260
  275
  291
  307
  325
  343
  361
  381
  401
  423
  445
  469
  493
  519
  546
  574
  604
  635
  667
  702
Total liabilities and equity, $m
  164
  176
  189
  202
  215
  229
  243
  258
  274
  290
  307
  324
  343
  362
  383
  404
  426
  449
  473
  499
  525
  553
  581
  612
  644
  677
  712
  749
  787
  828
Debt-to-equity ratio
  0.010
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.070
  0.080
  0.080
  0.090
  0.100
  0.100
  0.100
  0.110
  0.110
  0.120
  0.120
  0.120
  0.120
  0.130
  0.130
  0.130
  0.130
  0.140
  0.140
  0.140
  0.140
  0.140
  0.150
Adjusted equity ratio
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848
  0.848

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  19
  20
  22
  23
  24
  26
  27
  29
  31
  33
  34
  36
  38
  41
  43
  45
  47
  50
  53
  55
  58
  61
  64
  68
  71
  75
  79
  83
  87
  91
Depreciation, amort., depletion, $m
  18
  19
  20
  22
  23
  25
  26
  28
  30
  31
  33
  35
  37
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  73
  77
  81
  85
  89
Funds from operations, $m
  37
  39
  42
  45
  48
  51
  54
  57
  60
  64
  68
  72
  76
  80
  84
  89
  94
  99
  104
  109
  115
  121
  127
  134
  141
  148
  156
  164
  172
  181
Change in working capital, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Cash from operations, $m
  35
  37
  40
  43
  45
  48
  51
  55
  58
  61
  65
  69
  73
  77
  81
  85
  90
  95
  100
  105
  111
  117
  123
  129
  136
  143
  150
  158
  166
  175
Maintenance CAPEX, $m
  -17
  -18
  -19
  -20
  -22
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
  -73
  -77
  -81
  -85
New CAPEX, $m
  -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
  -25
  -26
  -27
  -28
Cash from investing activities, $m
  -25
  -26
  -28
  -29
  -31
  -33
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -51
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -76
  -80
  -84
  -88
  -93
  -98
  -103
  -108
  -113
Free cash flow, $m
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  22
  23
  25
  26
  28
  29
  31
  33
  35
  36
  38
  41
  43
  45
  47
  50
  53
  55
  58
  61
Issuance/(repayment) of debt, $m
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
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  
  2
  2
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
Total cash flow (excl. dividends), $m
  12
  13
  14
  15
  16
  18
  19
  20
  21
  23
  24
  26
  27
  29
  31
  32
  34
  36
  38
  40
  43
  45
  47
  50
  52
  55
  58
  61
  64
  67
Retained Cash Flow (-), $m
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
Prev. year cash balance distribution, $m
  76
  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
  78
  3
  4
  4
  5
  6
  7
  7
  8
  9
  10
  11
  12
  13
  14
  15
  16
  17
  18
  19
  20
  21
  23
  24
  25
  27
  28
  30
  31
  33
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
  75
  3
  3
  4
  4
  4
  4
  5
  5
  5
  5
  5
  4
  4
  4
  4
  3
  3
  3
  2
  2
  2
  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
  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

United States Lime & Minerals, Inc. is a manufacturer of lime and limestone products. The Company's segments include Lime and Limestone operations, and Natural gas interests. The Company, through its Lime and Limestone Operations, is a manufacturer of lime and limestone products, supplying primarily the construction, environmental (including municipal sanitation and water treatment facilities, and flue gas treatment processes), industrial, metals (including steel producers), roof shingle, oil and gas services, and agriculture (including poultry and cattle feed producers) industries. The Company operates lime and limestone plants and distribution facilities in Arkansas, Colorado, Louisiana, Oklahoma and Texas. The Company, through its subsidiary, U.S. Lime Company-O & G, LLC (U.S. Lime O & G), had royalty interests with respect to oil and gas rights on the Company's approximately 3,800 acres of land located in Johnson County, Texas, in the Barnett Shale Formation, at December 31, 2016.

FINANCIAL RATIOS  of  U.S. Lime&Minerals (USLM)

Valuation Ratios
P/E Ratio 23
Price to Sales 3
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 10.9
Price to Free Cash Flow 20.7
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 63.6%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
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 8.8%
Ret/ On Assets - 3 Yr. Avg. 8.8%
Return On Total Capital 10.4%
Ret/ On T. Cap. - 3 Yr. Avg. 9.8%
Return On Equity 10.4%
Return On Equity - 3 Yr. Avg. 10.5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 23.7%
Gross Margin - 3 Yr. Avg. 23.5%
EBITDA Margin 28.8%
EBITDA Margin - 3 Yr. Avg. 27.8%
Operating Margin 16.5%
Oper. Margin - 3 Yr. Avg. 16.4%
Pre-Tax Margin 17.3%
Pre-Tax Margin - 3 Yr. Avg. 15.9%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 11.8%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 25.2%
Payout Ratio 16.7%

USLM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the USLM stock intrinsic value calculation we used $144.844 million for the last fiscal year's total revenue generated by U.S. Lime&Minerals. The default revenue input number comes from 0001 income statement of U.S. Lime&Minerals. 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 USLM stock valuation model: a) initial revenue growth rate of 7.5% 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 USLM is calculated based on our internal credit rating of U.S. Lime&Minerals, 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. Lime&Minerals.
    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 USLM stock the variable cost ratio is equal to 83.4%.

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 USLM 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 U.S. Lime&Minerals.

Corporate tax rate of 27% is the nominal tax rate for U.S. Lime&Minerals. 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 USLM 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 USLM are equal to 74%.

Life of production assets of 6.5 years is the average useful life of capital assets used in U.S. Lime&Minerals 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 USLM is equal to 16.3%. 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 - $205.252 million for U.S. Lime&Minerals - 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 5.598 million for U.S. Lime&Minerals 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. Lime&Minerals at the current share price and the inputted number of shares is $0.4 billion.

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COMPANY NEWS

▶ United States Lime: 3Q Earnings Snapshot   [Oct-30-18 07:21PM  Associated Press]
▶ United States Lime: 2Q Earnings Snapshot   [Jul-25-18 06:44PM  Associated Press]
▶ United States Lime: 1Q Earnings Snapshot   [Apr-25-18 06:17PM  Associated Press]
▶ United States Lime posts 4Q profit   [Jan-30-18 06:25PM  Associated Press]
▶ United States Lime posts 3Q profit   [Oct-26-17 06:18PM  Associated Press]
▶ United States Lime posts 1Q profit   [Apr-25-17 06:29PM  Associated Press]
▶ United States Lime posts 4Q profit   [Jan-30-17 04:59PM  Associated Press]

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