Discounted Cash Flow Calculation for CNSX:OPI using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
ESI Energy Services
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
Note: Free cash flow to equity valuations ignore the company's cash or debt.
CNSX:OPI DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
ESI Energy Services
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
ESI Energy Services
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
ESI Energy Services's share price is below the future cash flow value, and at a moderate discount (> 20%).
ESI Energy Services's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
ESI Energy Services's
is considered below, and whether this is a fair price.
Price based on past earnings
ESI Energy Services's earnings available for a low price, and how does
this compare to other companies in the same industry?
In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as ESI Energy Services has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.
This is quite a rare situation as 97% of companies covered by Simply Wall St do have past financial data. You can see them here.
Show me the analysis anyway
The future performance of a company is measured in the same way as past
performance, by looking at estimated
and how much profit it is expected to make.
Future estimates come from
professional analysts. Just like forecasting the weather, they don’t always get
Expected Trade Distributors industry annual growth in earnings.
Earnings growth vs Low Risk Savings
ESI Energy Services
expected to grow at an
Unable to compare ESI Energy Services's earnings growth to the low risk savings rate as no estimate data is available.
Growth vs Market Checks
Unable to compare ESI Energy Services's earnings growth to the Canada market average as no estimate data is available.
Unable to compare ESI Energy Services's revenue growth to the Canada market average as no estimate data is available.
Unable to determine if ESI Energy Services is high growth as no earnings estimate data is available.
Unable to determine if ESI Energy Services is high growth as no revenue estimate data is available.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
All data from ESI Energy Services Company Filings, last reported 4 months ago, and in
Trailing twelve months (TTM)
annual period rather than quarterly.
CNSX:OPI Past Financials Data
Date (Data in CAD Millions)
*GAAP earnings excluding extraordinary items.
Performance in 3 years
In the same way as past performance we look at the future estimated return
(profit) compared to the available
funds. We do this looking forward 3 years.
Unable to establish if ESI Energy Services will efficiently use shareholders’ funds in the future without estimates of Return on Equity.
Examine whether ESI Energy Services is trading at ESI Energy Services'san attractive price based on how much it is expected to earn in the future, and relative to its industry peers and the wider market.
ESI Energy Services's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
ESI Energy Services
has a total score of
2/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
ESI Energy Services's finances.
The net worth of a company is the difference between its assets and liabilities.
ESI Energy Services is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
ESI Energy Services's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
ESI Energy Services's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 6.7x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Robert R. Dunstan serves as the Chief Executive Officer and President of Ozzie's Pipeline Padder, Inc. Mr. Dunstan serves as Chief Executive Officer, President and a Director of ESI Energy Services, Inc. since November 2001 and served as its Interim Chief Financial Officer since November 30, 2016 until January 1, 2017.
Robert's compensation has been consistent with company performance over the past year, both up more than 20%.
Robert's remuneration is higher than average for companies of similar size in Canada.
Chief Financial Officer
VP & COO
Board of Directors Tenure
Average tenure and age of the
ESI Energy Services
board of directors in years:
The average tenure for the ESI Energy Services board of directors is over 10 years, this suggests they are a seasoned and experienced board.
Board of Directors
Who owns this company?
Recent Insider Trading
More shares have been bought than sold by ESI Energy Services individual insiders in the past 3 months, but not in substantial volumes.
Should ESI Energy Services Inc.’s (CNSX:OPI) Weak Investment Returns Worry You?
The formula for calculating the return on capital employed is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) Or for ESI Energy Services: 0.024 = CA$1.1m ÷ (CA$48m - CA$2.2m) (Based on the trailing twelve months to March 2019.) Therefore, ESI Energy Services has an ROCE of 2.4%. … ESI Energy Services's Current Liabilities And Their Impact On Its ROCE Current liabilities are short term bills and invoices that need to be paid in 12 months or less. … With barely any current liabilities, there is minimal impact on ESI Energy Services's admittedly low ROCE.
How Does ESI Energy Services Inc. (CNSX:OPI) Affect Your Portfolio Volatility?
Some investors use beta as a measure of how much a certain stock is impacted by market risk (volatility). … While we should keep in mind that Warren Buffett has cautioned that 'Volatility is far from synonymous with risk', beta is still a useful factor to consider. … Any stock with a beta of greater than one is considered more volatile than the market, while those with a beta below one are either less volatile or poorly correlated with the market.
What You Must Know About ESI Energy Services Inc's (CNSX:OPI) Financial Strength
Investors are always looking for growth in small-cap stocks like ESI Energy Services Inc (CNSX:OPI), with a market cap of CA$11m. … However, an important fact which most ignore is: how financially healthy is the business? … the current state of its operations and pathway to profitability.
What does ESI Energy Services Inc's (CNSX:OPI) Balance Sheet Tell Us About Its Future?
ESI Energy Services Inc (CNSX:OPI) is a small-cap stock with a market capitalization of CA$16.20m. … While investors primarily focus on the growth potential and competitive landscape of the small-cap companies, they end up ignoring a key aspect, which could be the biggest threat to its existence: its financial health. … So, understanding the company's financial health becomes
ESI Energy Services Inc. rents and sells backfill separation machines in the United States and Canada. The company offers padding machines, pipe layers, and oilfield services equipment. It serves mainline pipeline contractors, and renewables and utility construction contractors, as well as oilfield pipeline and construction contractors. ESI Energy Services Inc. was founded in 2001 and is headquartered in Calgary, Canada.
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