Intrinsic value of Crescent Point Energy Corp. - CPG

Previous Close

$9.13

  Intrinsic Value

$4.28

stock screener

  Rating & Target

str. sell

-53%

Previous close

$9.13

 
Intrinsic value

$4.28

 
Up/down potential

-53%

 
Rating

str. sell

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of CPG 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 2016), $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 5.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -7.57
  24.20
  22.28
  20.55
  19.00
  17.60
  16.34
  15.20
  14.18
  13.26
  12.44
  11.69
  11.03
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.00
  5.90
Revenue, $m
  2,185
  2,714
  3,318
  4,000
  4,760
  5,598
  6,513
  7,503
  8,567
  9,703
  10,910
  12,186
  13,530
  14,940
  16,416
  17,958
  19,566
  21,240
  22,982
  24,793
  26,676
  28,633
  30,666
  32,779
  34,976
  37,260
  39,637
  42,110
  44,686
  47,369
  50,166
Variable operating expenses, $m
 
  4,770
  5,827
  7,020
  8,349
  9,813
  11,412
  13,144
  15,004
  16,991
  19,101
  21,307
  23,656
  26,122
  28,703
  31,399
  34,210
  37,137
  40,183
  43,351
  46,642
  50,063
  53,618
  57,313
  61,154
  65,148
  69,303
  73,628
  78,132
  82,824
  87,714
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
  3,242
  4,770
  5,827
  7,020
  8,349
  9,813
  11,412
  13,144
  15,004
  16,991
  19,101
  21,307
  23,656
  26,122
  28,703
  31,399
  34,210
  37,137
  40,183
  43,351
  46,642
  50,063
  53,618
  57,313
  61,154
  65,148
  69,303
  73,628
  78,132
  82,824
  87,714
Operating income, $m
  -1,058
  -2,056
  -2,509
  -3,019
  -3,588
  -4,215
  -4,900
  -5,641
  -6,437
  -7,288
  -8,191
  -9,121
  -10,127
  -11,182
  -12,287
  -13,441
  -14,644
  -15,897
  -17,201
  -18,557
  -19,966
  -21,431
  -22,952
  -24,534
  -26,178
  -27,888
  -29,667
  -31,518
  -33,446
  -35,454
  -37,548
EBITDA, $m
  1,162
  684
  836
  1,008
  1,199
  1,411
  1,641
  1,890
  2,159
  2,445
  2,749
  3,071
  3,409
  3,764
  4,136
  4,525
  4,930
  5,352
  5,791
  6,247
  6,722
  7,215
  7,727
  8,259
  8,813
  9,388
  9,987
  10,610
  11,259
  11,936
  12,640
Interest expense (income), $m
  158
  145
  206
  275
  353
  439
  535
  640
  753
  874
  1,004
  1,142
  1,288
  1,442
  1,603
  1,771
  1,948
  2,131
  2,323
  2,522
  2,729
  2,944
  3,168
  3,400
  3,641
  3,892
  4,154
  4,425
  4,708
  5,002
  5,309
Earnings before tax, $m
  -1,314
  -2,201
  -2,714
  -3,294
  -3,941
  -4,655
  -5,435
  -6,280
  -7,190
  -8,162
  -9,195
  -10,263
  -11,415
  -12,624
  -13,890
  -15,212
  -16,592
  -18,029
  -19,524
  -21,079
  -22,695
  -24,375
  -26,120
  -27,934
  -29,820
  -31,780
  -33,820
  -35,943
  -38,154
  -40,456
  -42,856
Tax expense, $m
  -381
  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
Net income, $m
  -933
  -2,201
  -2,714
  -3,294
  -3,941
  -4,655
  -5,435
  -6,280
  -7,190
  -8,162
  -9,195
  -10,263
  -11,415
  -12,624
  -13,890
  -15,212
  -16,592
  -18,029
  -19,524
  -21,079
  -22,695
  -24,375
  -26,120
  -27,934
  -29,820
  -31,780
  -33,820
  -35,943
  -38,154
  -40,456
  -42,856

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  13
  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
  16,164
  20,102
  24,581
  29,633
  35,262
  41,467
  48,241
  55,576
  63,458
  71,876
  80,816
  90,268
  100,220
  110,665
  121,600
  133,021
  144,930
  157,333
  170,237
  183,655
  197,601
  212,094
  227,154
  242,807
  259,079
  276,001
  293,605
  311,928
  331,007
  350,883
  371,601
Adjusted assets (=assets-cash), $m
  16,151
  20,102
  24,581
  29,633
  35,262
  41,467
  48,241
  55,576
  63,458
  71,876
  80,816
  90,268
  100,220
  110,665
  121,600
  133,021
  144,930
  157,333
  170,237
  183,655
  197,601
  212,094
  227,154
  242,807
  259,079
  276,001
  293,605
  311,928
  331,007
  350,883
  371,601
Revenue / Adjusted assets
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
Average production assets, $m
  15,084
  18,733
  22,907
  27,615
  32,861
  38,643
  44,956
  51,791
  59,137
  66,982
  75,313
  84,121
  93,395
  103,130
  113,319
  123,963
  135,061
  146,619
  158,645
  171,149
  184,146
  197,651
  211,686
  226,273
  241,437
  257,207
  273,612
  290,687
  308,467
  326,990
  346,296
Working capital, $m
  -439
  -448
  -548
  -660
  -785
  -924
  -1,075
  -1,238
  -1,414
  -1,601
  -1,800
  -2,011
  -2,232
  -2,465
  -2,709
  -2,963
  -3,228
  -3,505
  -3,792
  -4,091
  -4,402
  -4,724
  -5,060
  -5,409
  -5,771
  -6,148
  -6,540
  -6,948
  -7,373
  -7,816
  -8,277
Total debt, $m
  3,821
  5,409
  7,228
  9,279
  11,564
  14,084
  16,834
  19,812
  23,012
  26,430
  30,059
  33,897
  37,937
  42,178
  46,617
  51,254
  56,090
  61,125
  66,364
  71,812
  77,474
  83,358
  89,473
  95,828
  102,434
  109,304
  116,452
  123,891
  131,637
  139,707
  148,118
Total liabilities, $m
  6,572
  8,161
  9,980
  12,031
  14,316
  16,836
  19,586
  22,564
  25,764
  29,182
  32,811
  36,649
  40,689
  44,930
  49,369
  54,006
  58,842
  63,877
  69,116
  74,564
  80,226
  86,110
  92,225
  98,580
  105,186
  112,056
  119,204
  126,643
  134,389
  142,459
  150,870
Total equity, $m
  9,591
  11,941
  14,601
  17,602
  20,946
  24,631
  28,655
  33,012
  37,694
  42,694
  48,005
  53,619
  59,531
  65,735
  72,230
  79,014
  86,088
  93,456
  101,121
  109,091
  117,375
  125,984
  134,930
  144,227
  153,893
  163,945
  174,402
  185,285
  196,618
  208,425
  220,731
Total liabilities and equity, $m
  16,163
  20,102
  24,581
  29,633
  35,262
  41,467
  48,241
  55,576
  63,458
  71,876
  80,816
  90,268
  100,220
  110,665
  121,599
  133,020
  144,930
  157,333
  170,237
  183,655
  197,601
  212,094
  227,155
  242,807
  259,079
  276,001
  293,606
  311,928
  331,007
  350,884
  371,601
Debt-to-equity ratio
  0.398
  0.450
  0.500
  0.530
  0.550
  0.570
  0.590
  0.600
  0.610
  0.620
  0.630
  0.630
  0.640
  0.640
  0.650
  0.650
  0.650
  0.650
  0.660
  0.660
  0.660
  0.660
  0.660
  0.660
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
  0.670
Adjusted equity ratio
  0.593
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -933
  -2,201
  -2,714
  -3,294
  -3,941
  -4,655
  -5,435
  -6,280
  -7,190
  -8,162
  -9,195
  -10,263
  -11,415
  -12,624
  -13,890
  -15,212
  -16,592
  -18,029
  -19,524
  -21,079
  -22,695
  -24,375
  -26,120
  -27,934
  -29,820
  -31,780
  -33,820
  -35,943
  -38,154
  -40,456
  -42,856
Depreciation, amort., depletion, $m
  2,220
  2,740
  3,345
  4,027
  4,788
  5,626
  6,541
  7,531
  8,596
  9,733
  10,940
  12,191
  13,536
  14,946
  16,423
  17,966
  19,574
  21,249
  22,992
  24,804
  26,688
  28,645
  30,679
  32,793
  34,991
  37,276
  39,654
  42,129
  44,705
  47,390
  50,188
Funds from operations, $m
  1,494
  539
  631
  733
  847
  971
  1,106
  1,251
  1,406
  1,570
  1,745
  1,928
  2,121
  2,323
  2,534
  2,753
  2,982
  3,220
  3,468
  3,725
  3,993
  4,271
  4,559
  4,859
  5,171
  5,496
  5,834
  6,185
  6,552
  6,933
  7,331
Change in working capital, $m
  -30
  -87
  -100
  -113
  -125
  -138
  -151
  -163
  -176
  -188
  -199
  -211
  -222
  -233
  -244
  -254
  -265
  -276
  -287
  -299
  -311
  -323
  -335
  -349
  -362
  -377
  -392
  -408
  -425
  -443
  -461
Cash from operations, $m
  1,524
  626
  730
  846
  972
  1,109
  1,257
  1,414
  1,581
  1,758
  1,944
  2,139
  2,343
  2,555
  2,777
  3,008
  3,248
  3,497
  3,755
  4,024
  4,303
  4,593
  4,895
  5,208
  5,534
  5,873
  6,226
  6,593
  6,977
  7,376
  7,793
Maintenance CAPEX, $m
  0
  -2,186
  -2,715
  -3,320
  -4,002
  -4,762
  -5,600
  -6,515
  -7,506
  -8,571
  -9,708
  -10,915
  -12,191
  -13,536
  -14,946
  -16,423
  -17,966
  -19,574
  -21,249
  -22,992
  -24,804
  -26,688
  -28,645
  -30,679
  -32,793
  -34,991
  -37,276
  -39,654
  -42,129
  -44,705
  -47,390
New CAPEX, $m
  -1,396
  -3,650
  -4,174
  -4,708
  -5,246
  -5,783
  -6,313
  -6,835
  -7,346
  -7,845
  -8,332
  -8,808
  -9,274
  -9,734
  -10,190
  -10,643
  -11,099
  -11,558
  -12,026
  -12,504
  -12,996
  -13,506
  -14,035
  -14,587
  -15,164
  -15,770
  -16,406
  -17,075
  -17,780
  -18,523
  -19,307
Cash from investing activities, $m
  -1,360
  -5,836
  -6,889
  -8,028
  -9,248
  -10,545
  -11,913
  -13,350
  -14,852
  -16,416
  -18,040
  -19,723
  -21,465
  -23,270
  -25,136
  -27,066
  -29,065
  -31,132
  -33,275
  -35,496
  -37,800
  -40,194
  -42,680
  -45,266
  -47,957
  -50,761
  -53,682
  -56,729
  -59,909
  -63,228
  -66,697
Free cash flow, $m
  164
  -5,209
  -6,158
  -7,182
  -8,276
  -9,436
  -10,657
  -11,936
  -13,270
  -14,657
  -16,095
  -17,584
  -19,123
  -20,714
  -22,359
  -24,059
  -25,817
  -27,636
  -29,519
  -31,472
  -33,497
  -35,600
  -37,785
  -40,058
  -42,424
  -44,888
  -47,456
  -50,135
  -52,932
  -55,852
  -58,904
Issuance/(repayment) of debt, $m
  -553
  1,601
  1,818
  2,051
  2,285
  2,519
  2,750
  2,978
  3,200
  3,418
  3,630
  3,837
  4,041
  4,241
  4,439
  4,637
  4,835
  5,036
  5,239
  5,448
  5,662
  5,884
  6,115
  6,355
  6,606
  6,870
  7,147
  7,439
  7,746
  8,070
  8,411
Issuance/(repurchase) of shares, $m
  623
  4,551
  5,375
  6,295
  7,285
  8,340
  9,459
  10,637
  11,872
  13,162
  14,506
  15,877
  17,326
  18,828
  20,384
  21,996
  23,666
  25,396
  27,189
  29,049
  30,979
  32,983
  35,066
  37,232
  39,485
  41,832
  44,277
  46,827
  49,487
  52,263
  55,163
Cash from financing (excl. dividends), $m  
  84
  6,152
  7,193
  8,346
  9,570
  10,859
  12,209
  13,615
  15,072
  16,580
  18,136
  19,714
  21,367
  23,069
  24,823
  26,633
  28,501
  30,432
  32,428
  34,497
  36,641
  38,867
  41,181
  43,587
  46,091
  48,702
  51,424
  54,266
  57,233
  60,333
  63,574
Total cash flow (excl. dividends), $m
  249
  943
  1,035
  1,164
  1,294
  1,424
  1,552
  1,679
  1,802
  1,923
  2,041
  2,131
  2,244
  2,355
  2,465
  2,575
  2,685
  2,796
  2,909
  3,025
  3,144
  3,267
  3,395
  3,529
  3,668
  3,815
  3,969
  4,130
  4,301
  4,481
  4,670
Retained Cash Flow (-), $m
  534
  -4,551
  -5,375
  -6,295
  -7,285
  -8,340
  -9,459
  -10,637
  -11,872
  -13,162
  -14,506
  -15,877
  -17,326
  -18,828
  -20,384
  -21,996
  -23,666
  -25,396
  -27,189
  -29,049
  -30,979
  -32,983
  -35,066
  -37,232
  -39,485
  -41,832
  -44,277
  -46,827
  -49,487
  -52,263
  -55,163
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
 
  -3,608
  -4,340
  -5,131
  -5,990
  -6,916
  -7,907
  -8,959
  -10,070
  -11,240
  -12,465
  -13,747
  -15,083
  -16,474
  -17,920
  -19,422
  -20,981
  -22,600
  -24,280
  -26,024
  -27,835
  -29,716
  -31,671
  -33,703
  -35,817
  -38,017
  -40,309
  -42,696
  -45,186
  -47,782
  -50,492
Discount rate, %
 
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
 
  -3,430
  -3,902
  -4,341
  -4,741
  -5,091
  -5,377
  -5,590
  -5,724
  -5,773
  -5,738
  -5,621
  -5,426
  -5,161
  -4,837
  -4,466
  -4,060
  -3,633
  -3,199
  -2,770
  -2,356
  -1,969
  -1,614
  -1,298
  -1,022
  -788
  -594
  -438
  -314
  -220
  -150
Current shareholders' claim on cash, %
  100
  59.6
  36.3
  22.4
  14.1
  9.0
  5.8
  3.8
  2.5
  1.7
  1.1
  0.8
  0.5
  0.4
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Crescent Point Energy Corp. (Crescent Point) is a Canada-based oil and gas exploration, development and production company. The Company is an oil and gas producer with assets consisting of light and medium oil and natural gas reserves in Western Canada and the United States. Its crude oil and natural gas properties and related assets are located in the provinces of Saskatchewan, Alberta, British Columbia and Manitoba, and the states of North Dakota, Montana, Colorado and Utah. The Company holds a portfolio of assets in the Canadian portion of the Williston Basin. It holds interest in the Bakken and Torquay resource plays in the Canadian portion of the Williston Basin. The southwest Saskatchewan region contains two focus resource plays that the Company is developing. These include Shaunavon resource play and Viking light oil resource play. The Company holds interest in the Uinta Basin resource play located in northeast Utah.

FINANCIAL RATIOS  of  Crescent Point Energy Corp. (CPG)

Valuation Ratios
P/E Ratio -5.3
Price to Sales 2.3
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 3.2
Price to Free Cash Flow 38.6
Growth Rates
Sales Growth Rate -7.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.3%
Cap. Spend. - 3 Yr. Gr. Rate -5.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 38.9%
Total Debt to Equity 39.8%
Interest Coverage -7
Management Effectiveness
Return On Assets -4.9%
Ret/ On Assets - 3 Yr. Avg. -1.8%
Return On Total Capital -6.7%
Ret/ On T. Cap. - 3 Yr. Avg. -2.9%
Return On Equity -9.5%
Return On Equity - 3 Yr. Avg. -4.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 68.3%
Gross Margin - 3 Yr. Avg. 73.2%
EBITDA Margin 48.7%
EBITDA Margin - 3 Yr. Avg. 72.4%
Operating Margin -48.4%
Oper. Margin - 3 Yr. Avg. -38.7%
Pre-Tax Margin -60.1%
Pre-Tax Margin - 3 Yr. Avg. -32.6%
Net Profit Margin -42.7%
Net Profit Margin - 3 Yr. Avg. -21.6%
Effective Tax Rate 29%
Eff/ Tax Rate - 3 Yr. Avg. 35.4%
Payout Ratio -27.9%

CPG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPG stock intrinsic value calculation we used $2185 million for the last fiscal year's total revenue generated by Crescent Point Energy Corp.. The default revenue input number comes from 2016 income statement of Crescent Point Energy Corp.. 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 CPG stock valuation model: a) initial revenue growth rate of 24.2% 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 5.2%, whose default value for CPG is calculated based on our internal credit rating of Crescent Point Energy Corp., 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 Crescent Point Energy Corp..
    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 CPG stock the variable cost ratio is equal to 176%.

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 CPG 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 3.8% for Crescent Point Energy Corp..

Corporate tax rate of 27% is the nominal tax rate for Crescent Point Energy Corp.. 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 CPG 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 CPG are equal to 690.3%.

Life of production assets of 6.9 years is the average useful life of capital assets used in Crescent Point Energy Corp. 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 CPG is equal to -16.5%. 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 - $9591 million for Crescent Point Energy Corp. - 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 545.131 million for Crescent Point Energy Corp. 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 Crescent Point Energy Corp. at the current share price and the inputted number of shares is $5.0 billion.

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Financial statements of CPG
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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