A Look At The Intrinsic Value Of Oil States International, Inc. (NYSE:OIS)

Simply Wall St.05-24

Key Insights The projected fair value for Oil States International is US$5.29 based on 2 Stage Free Cash Flow to Equity With US$4.53 share price, Oil States International appears to be trading ...

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(NYSE:OIS)","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n The projected fair value for Oil States International is US$5.29 based on 2 Stage Free Cash Flow to Equity \n With US$4.53 share price, Oil States International appears to be trading ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-intrinsic-value-oil-states-134201175.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>A Look At The Intrinsic Value Of Oil States International, Inc. 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(NYSE:OIS)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-05-24 21:42 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/look-intrinsic-value-oil-states-134201175.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n The projected fair value for Oil States International is US$5.29 based on 2 Stage Free Cash Flow to Equity \n With US$4.53 share price, Oil States International appears to be trading ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-intrinsic-value-oil-states-134201175.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4179","symbol_name":"石油天然气设备与服务","start_time":0,"source_url":"https://finance.yahoo.com/news/look-intrinsic-value-oil-states-134201175.html","article_id":"2437053118","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/bdrdmnPRNBbldbP2ibp37w--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/92d26d55968bddf376addae5e476c381"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2437053118","pubTimestamp":1716558121,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"The projected fair value for Oil States International is US$5.29 based on 2 Stage Free Cash Flow to Equity. With US$4.53 share price, Oil States International appears to be trading close to its estimated fair value. The US$7.40 analyst price target for OIS is 40% more than our estimate of fair value. How far off is Oil States International, Inc.  from its intrinsic value?Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. We will use the Discounted Cash Flow  model on this occasion. It may sound complicated, but actually it is quite simple!We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.See our latest analysis for Oil States Internatio","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4179":"石油天然气设备与服务","OIS":"Oil States International Inc","NYSE":"纽交所","BK4211":"区域性银行","BK4100":"有线和卫星","FCF":"第一联邦金融","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","TV":"墨西哥电视"},"translate_title":"石油国家国际公司（纽约证券交易所代码：OIS）的内在价值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DCF":1,"FCF":1,"NYSE":1,"OIS":1,"TV":1},"content_text":"Key Insights\n\n The projected fair value for Oil States International is US$5.29 based on 2 Stage Free Cash Flow to Equity \n With US$4.53 share price, Oil States International appears to be trading close to its estimated fair value \n  The US$7.40 analyst price target for OIS is 40% more than our estimate of fair value \n\n How far off is Oil States International, Inc. (NYSE:OIS) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by estimating the company's future cash flows and discounting them to their present value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple! \n We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. \n See our latest analysis for Oil States International \n The Method \n We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: \n 10-year free cash flow (FCF) forecast \n\n\n\n\n2024\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n\n\n Levered FCF ($, Millions) \nUS$40.6m\nUS$35.1m\nUS$32.0m\nUS$30.2m\nUS$29.3m\nUS$28.9m\nUS$28.8m\nUS$28.9m\nUS$29.2m\nUS$29.7m\n\n\nGrowth Rate Estimate Source\nAnalyst x2\nAnalyst x2\nEst @ -8.79%\nEst @ -5.44%\nEst @ -3.10%\nEst @ -1.45%\nEst @ -0.30%\nEst @ 0.50%\nEst @ 1.07%\nEst @ 1.46%\n\n\n Present Value ($, Millions) Discounted @ 10% \nUS$36.9\nUS$28.8\nUS$23.8\nUS$20.4\nUS$18.0\nUS$16.1\nUS$14.5\nUS$13.2\nUS$12.1\nUS$11.2\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$195m\n We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.4%. We discount the terminal cash flows to today's value at a cost of equity of 10%. \nTerminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$30m× (1 + 2.4%) ÷ (10%– 2.4%) = US$385m\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= US$385m÷ ( 1 + 10%)10= US$145m\n The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$340m. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of US$4.5, the company appears about fair value at a 14% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. \n\n\n\n  NYSE:OIS Discounted Cash Flow May 24th 2024\n \n\n Important Assumptions \n We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Oil States International as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 10%, which is based on a levered beta of 1.714. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Oil States International\n\n\nStrength\n\nDebt is well covered by cash flow.\n\n\nBalance sheet summary for OIS.\n\n\n\nWeakness\n\nInterest payments on debt are not well covered.\n\n\nWhat are analysts forecasting for OIS?\n\n\n\nOpportunity\n\nExpected to breakeven next year.\n\n\nHas sufficient cash runway for more than 3 years based on current free cash flows.\n\n\nGood value based on P/S ratio and estimated fair value.\n\n\n\nThreat\n\nNo apparent threats visible for OIS.\n\n\n\n Next Steps: \n Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Oil States International, there are three pertinent items you should further research: \n\nFinancial Health: Does OIS have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.\nFuture Earnings: How does OIS's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.\n Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! \n\n PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2437053118"}