Intrinsic value of Cactus, Inc. - WHD

Previous Close

$37.72

  Intrinsic Value

$68.14

stock screener

  Rating & Target

str. buy

+81%

Previous close

$37.72

 
Intrinsic value

$68.14

 
Up/down potential

+81%

 
Rating

str. buy

We calculate the intrinsic value of WHD 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 2.8

 

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, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  546
  843
  1,261
  1,829
  2,581
  3,548
  4,762
  6,253
  8,046
  10,163
  12,620
  15,429
  18,597
  22,127
  26,017
  30,265
  34,862
  39,803
  45,079
  50,682
  56,605
  62,842
  69,388
  76,240
  83,396
  90,859
  98,631
  106,717
  115,124
  123,863
Variable operating expenses, $m
  317
  489
  730
  1,059
  1,494
  2,054
  2,756
  3,619
  4,657
  5,882
  7,303
  8,928
  10,761
  12,804
  15,055
  17,513
  20,173
  23,032
  26,085
  29,327
  32,755
  36,364
  40,152
  44,116
  48,258
  52,576
  57,073
  61,752
  66,617
  71,674
Fixed operating expenses, $m
  56
  57
  59
  60
  61
  63
  64
  65
  67
  68
  70
  71
  73
  75
  76
  78
  80
  81
  83
  85
  87
  89
  91
  93
  95
  97
  99
  101
  103
  106
Total operating expenses, $m
  373
  546
  789
  1,119
  1,555
  2,117
  2,820
  3,684
  4,724
  5,950
  7,373
  8,999
  10,834
  12,879
  15,131
  17,591
  20,253
  23,113
  26,168
  29,412
  32,842
  36,453
  40,243
  44,209
  48,353
  52,673
  57,172
  61,853
  66,720
  71,780
Operating income, $m
  173
  297
  472
  710
  1,025
  1,431
  1,942
  2,568
  3,322
  4,213
  5,247
  6,430
  7,763
  9,249
  10,886
  12,674
  14,609
  16,689
  18,911
  21,270
  23,764
  26,389
  29,146
  32,031
  35,044
  38,186
  41,459
  44,864
  48,404
  52,083
EBITDA, $m
  202
  342
  538
  806
  1,160
  1,617
  2,190
  2,894
  3,742
  4,742
  5,904
  7,232
  8,730
  10,399
  12,239
  14,248
  16,422
  18,759
  21,255
  23,905
  26,707
  29,657
  32,754
  35,995
  39,381
  42,911
  46,587
  50,413
  54,390
  58,524
Interest expense (income), $m
  0
  21
  28
  45
  69
  102
  145
  201
  271
  357
  460
  582
  724
  886
  1,068
  1,272
  1,496
  1,741
  2,006
  2,291
  2,595
  2,918
  3,260
  3,619
  3,997
  4,392
  4,805
  5,235
  5,683
  6,149
  6,634
Earnings before tax, $m
  152
  269
  427
  641
  924
  1,286
  1,741
  2,298
  2,966
  3,753
  4,665
  5,706
  6,877
  8,180
  9,614
  11,178
  12,868
  14,683
  16,620
  18,674
  20,845
  23,130
  25,526
  28,034
  30,652
  33,382
  36,224
  39,181
  42,255
  45,450
Tax expense, $m
  41
  73
  115
  173
  249
  347
  470
  620
  801
  1,013
  1,260
  1,541
  1,857
  2,209
  2,596
  3,018
  3,474
  3,964
  4,487
  5,042
  5,628
  6,245
  6,892
  7,569
  8,276
  9,013
  9,780
  10,579
  11,409
  12,271
Net income, $m
  111
  197
  312
  468
  674
  939
  1,271
  1,677
  2,165
  2,740
  3,406
  4,165
  5,020
  5,971
  7,018
  8,160
  9,394
  10,719
  12,132
  13,632
  15,217
  16,885
  18,634
  20,465
  22,376
  24,369
  26,443
  28,602
  30,846
  33,178

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
  426
  659
  985
  1,429
  2,016
  2,772
  3,720
  4,885
  6,286
  7,940
  9,859
  12,054
  14,529
  17,287
  20,326
  23,644
  27,236
  31,096
  35,218
  39,595
  44,223
  49,095
  54,209
  59,562
  65,153
  70,984
  77,055
  83,372
  89,941
  96,768
Adjusted assets (=assets-cash), $m
  426
  659
  985
  1,429
  2,016
  2,772
  3,720
  4,885
  6,286
  7,940
  9,859
  12,054
  14,529
  17,287
  20,326
  23,644
  27,236
  31,096
  35,218
  39,595
  44,223
  49,095
  54,209
  59,562
  65,153
  70,984
  77,055
  83,372
  89,941
  96,768
Revenue / Adjusted assets
  1.282
  1.279
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
  1.280
Average production assets, $m
  142
  219
  328
  476
  671
  922
  1,238
  1,626
  2,092
  2,642
  3,281
  4,012
  4,835
  5,753
  6,765
  7,869
  9,064
  10,349
  11,721
  13,177
  14,717
  16,339
  18,041
  19,822
  21,683
  23,623
  25,644
  27,746
  29,932
  32,204
Working capital, $m
  177
  274
  410
  594
  839
  1,153
  1,548
  2,032
  2,615
  3,303
  4,101
  5,014
  6,044
  7,191
  8,456
  9,836
  11,330
  12,936
  14,651
  16,472
  18,397
  20,424
  22,551
  24,778
  27,104
  29,529
  32,055
  34,683
  37,415
  40,255
Total debt, $m
  338
  547
  840
  1,240
  1,768
  2,448
  3,302
  4,351
  5,611
  7,100
  8,827
  10,803
  13,030
  15,512
  18,247
  21,234
  24,466
  27,940
  31,650
  35,590
  39,755
  44,140
  48,742
  53,560
  58,592
  63,839
  69,304
  74,989
  80,901
  87,045
Total liabilities, $m
  384
  593
  886
  1,286
  1,814
  2,495
  3,348
  4,397
  5,657
  7,146
  8,873
  10,849
  13,076
  15,558
  18,294
  21,280
  24,512
  27,987
  31,696
  35,636
  39,801
  44,186
  48,788
  53,606
  58,638
  63,885
  69,350
  75,035
  80,947
  87,091
Total equity, $m
  43
  66
  98
  143
  202
  277
  372
  489
  629
  794
  986
  1,205
  1,453
  1,729
  2,033
  2,364
  2,724
  3,110
  3,522
  3,960
  4,422
  4,910
  5,421
  5,956
  6,515
  7,098
  7,706
  8,337
  8,994
  9,677
Total liabilities and equity, $m
  427
  659
  984
  1,429
  2,016
  2,772
  3,720
  4,886
  6,286
  7,940
  9,859
  12,054
  14,529
  17,287
  20,327
  23,644
  27,236
  31,097
  35,218
  39,596
  44,223
  49,096
  54,209
  59,562
  65,153
  70,983
  77,056
  83,372
  89,941
  96,768
Debt-to-equity ratio
  7.920
  8.300
  8.530
  8.680
  8.770
  8.830
  8.880
  8.910
  8.930
  8.940
  8.950
  8.960
  8.970
  8.970
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
  9.000
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  111
  197
  312
  468
  674
  939
  1,271
  1,677
  2,165
  2,740
  3,406
  4,165
  5,020
  5,971
  7,018
  8,160
  9,394
  10,719
  12,132
  13,632
  15,217
  16,885
  18,634
  20,465
  22,376
  24,369
  26,443
  28,602
  30,846
  33,178
Depreciation, amort., depletion, $m
  29
  45
  66
  96
  135
  185
  248
  326
  419
  529
  656
  802
  967
  1,151
  1,353
  1,574
  1,813
  2,070
  2,344
  2,635
  2,943
  3,268
  3,608
  3,964
  4,337
  4,725
  5,129
  5,549
  5,986
  6,441
Funds from operations, $m
  140
  241
  378
  564
  809
  1,124
  1,519
  2,003
  2,584
  3,269
  4,062
  4,967
  5,987
  7,122
  8,371
  9,733
  11,207
  12,789
  14,476
  16,268
  18,160
  20,152
  22,242
  24,429
  26,713
  29,093
  31,572
  34,151
  36,832
  39,619
Change in working capital, $m
  66
  97
  136
  185
  244
  314
  395
  485
  583
  688
  799
  913
  1,030
  1,147
  1,264
  1,380
  1,494
  1,606
  1,715
  1,821
  1,925
  2,027
  2,127
  2,227
  2,326
  2,425
  2,526
  2,628
  2,732
  2,840
Cash from operations, $m
  74
  145
  242
  379
  565
  810
  1,125
  1,519
  2,001
  2,581
  3,263
  4,055
  4,958
  5,975
  7,107
  8,353
  9,712
  11,183
  12,762
  14,447
  16,235
  18,125
  20,115
  22,202
  24,387
  26,668
  29,046
  31,523
  34,100
  36,779
Maintenance CAPEX, $m
  -18
  -28
  -44
  -66
  -95
  -134
  -184
  -248
  -325
  -418
  -528
  -656
  -802
  -967
  -1,151
  -1,353
  -1,574
  -1,813
  -2,070
  -2,344
  -2,635
  -2,943
  -3,268
  -3,608
  -3,964
  -4,337
  -4,725
  -5,129
  -5,549
  -5,986
New CAPEX, $m
  -53
  -77
  -109
  -148
  -195
  -251
  -316
  -388
  -466
  -550
  -639
  -730
  -824
  -918
  -1,012
  -1,104
  -1,195
  -1,285
  -1,372
  -1,457
  -1,540
  -1,622
  -1,702
  -1,781
  -1,861
  -1,940
  -2,021
  -2,102
  -2,186
  -2,272
Cash from investing activities, $m
  -71
  -105
  -153
  -214
  -290
  -385
  -500
  -636
  -791
  -968
  -1,167
  -1,386
  -1,626
  -1,885
  -2,163
  -2,457
  -2,769
  -3,098
  -3,442
  -3,801
  -4,175
  -4,565
  -4,970
  -5,389
  -5,825
  -6,277
  -6,746
  -7,231
  -7,735
  -8,258
Free cash flow, $m
  3
  39
  90
  166
  274
  424
  624
  883
  1,210
  1,612
  2,096
  2,668
  3,332
  4,090
  4,945
  5,896
  6,943
  8,085
  9,320
  10,646
  12,060
  13,560
  15,145
  16,813
  18,561
  20,391
  22,301
  24,292
  26,365
  28,521
Issuance/(repayment) of debt, $m
  81
  209
  294
  400
  528
  680
  854
  1,048
  1,261
  1,488
  1,728
  1,975
  2,228
  2,482
  2,735
  2,986
  3,233
  3,474
  3,710
  3,940
  4,165
  4,385
  4,603
  4,818
  5,032
  5,247
  5,464
  5,685
  5,912
  6,144
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  
  81
  209
  294
  400
  528
  680
  854
  1,048
  1,261
  1,488
  1,728
  1,975
  2,228
  2,482
  2,735
  2,986
  3,233
  3,474
  3,710
  3,940
  4,165
  4,385
  4,603
  4,818
  5,032
  5,247
  5,464
  5,685
  5,912
  6,144
Total cash flow (excl. dividends), $m
  84
  248
  383
  565
  803
  1,104
  1,478
  1,932
  2,471
  3,100
  3,824
  4,643
  5,559
  6,572
  7,680
  8,882
  10,176
  11,559
  13,030
  14,586
  16,225
  17,946
  19,748
  21,630
  23,594
  25,638
  27,766
  29,977
  32,276
  34,665
Retained Cash Flow (-), $m
  -79
  -23
  -33
  -44
  -59
  -76
  -95
  -116
  -140
  -165
  -192
  -219
  -248
  -276
  -304
  -332
  -359
  -386
  -412
  -438
  -463
  -487
  -511
  -535
  -559
  -583
  -607
  -632
  -657
  -683
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
  5
  225
  351
  521
  744
  1,029
  1,383
  1,815
  2,331
  2,935
  3,632
  4,424
  5,312
  6,296
  7,376
  8,550
  9,817
  11,173
  12,618
  14,148
  15,762
  17,458
  19,236
  21,095
  23,034
  25,055
  27,158
  29,346
  31,619
  33,982
Discount rate, %
  13.80
  14.49
  15.21
  15.98
  16.77
  17.61
  18.49
  19.42
  20.39
  21.41
  22.48
  23.60
  24.78
  26.02
  27.32
  28.69
  30.12
  31.63
  33.21
  34.87
  36.62
  38.45
  40.37
  42.39
  44.51
  46.73
  49.07
  51.52
  54.10
  56.80
PV of cash for distribution, $m
  4
  171
  229
  288
  343
  389
  422
  439
  439
  422
  390
  348
  299
  247
  197
  151
  112
  79
  54
  36
  22
  14
  8
  4
  2
  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

FINANCIAL RATIOS  of  Cactus, Inc. (WHD)

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

WHD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WHD stock intrinsic value calculation we used $341 million for the last fiscal year's total revenue generated by Cactus, Inc.. The default revenue input number comes from 0001 income statement of Cactus, 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 WHD stock valuation model: a) initial revenue growth rate of 60% 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 13.8%, whose default value for WHD is calculated based on our internal credit rating of Cactus, 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 Cactus, 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 WHD stock the variable cost ratio is equal to 58.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $55 million in the base year in the intrinsic value calculation for WHD 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 8.2% for Cactus, Inc..

Corporate tax rate of 27% is the nominal tax rate for Cactus, 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 WHD 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 WHD are equal to 26%.

Life of production assets of 4 years is the average useful life of capital assets used in Cactus, 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 WHD is equal to 32.5%. 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 - $-36.217 million for Cactus, 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 75.013 million for Cactus, 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 Cactus, Inc. at the current share price and the inputted number of shares is $2.8 billion.

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