Intrinsic value of EnerCare Inc. - ECI

Previous Close

$20.81

  Intrinsic Value

$18.97

stock screener

  Rating & Target

hold

-9%

Previous close

$20.81

 
Intrinsic value

$18.97

 
Up/down potential

-9%

 
Rating

hold

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

We calculate the intrinsic value of ECI 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 2.2

 

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, %
  76.60
  40.20
  36.68
  33.51
  30.66
  28.09
  25.79
  23.71
  21.84
  20.15
  18.64
  17.27
  16.05
  14.94
  13.95
  13.05
  12.25
  11.52
  10.87
  10.28
  9.75
  9.28
  8.85
  8.47
  8.12
  7.81
  7.53
  7.27
  7.05
  6.84
  6.66
Revenue, $m
  996
  1,396
  1,909
  2,548
  3,329
  4,265
  5,365
  6,636
  8,086
  9,715
  11,526
  13,516
  15,685
  18,029
  20,543
  23,225
  26,069
  29,073
  32,234
  35,548
  39,016
  42,636
  46,410
  50,340
  54,427
  58,677
  63,093
  67,683
  72,453
  77,410
  82,564
Variable operating expenses, $m
 
  1,213
  1,644
  2,183
  2,840
  3,627
  4,553
  5,623
  6,843
  8,214
  9,738
  11,375
  13,200
  15,172
  17,288
  19,545
  21,939
  24,466
  27,126
  29,916
  32,834
  35,881
  39,057
  42,363
  45,803
  49,379
  53,096
  56,958
  60,972
  65,144
  69,481
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
  908
  1,213
  1,644
  2,183
  2,840
  3,627
  4,553
  5,623
  6,843
  8,214
  9,738
  11,375
  13,200
  15,172
  17,288
  19,545
  21,939
  24,466
  27,126
  29,916
  32,834
  35,881
  39,057
  42,363
  45,803
  49,379
  53,096
  56,958
  60,972
  65,144
  69,481
Operating income, $m
  88
  183
  264
  365
  489
  637
  812
  1,013
  1,243
  1,501
  1,788
  2,142
  2,485
  2,857
  3,255
  3,680
  4,131
  4,607
  5,108
  5,633
  6,182
  6,756
  7,354
  7,977
  8,624
  9,298
  9,997
  10,725
  11,480
  12,266
  13,083
EBITDA, $m
  233
  388
  530
  708
  924
  1,184
  1,490
  1,843
  2,245
  2,698
  3,200
  3,753
  4,355
  5,006
  5,704
  6,449
  7,239
  8,073
  8,950
  9,871
  10,834
  11,839
  12,887
  13,978
  15,113
  16,293
  17,519
  18,794
  20,118
  21,494
  22,925
Interest expense (income), $m
  37
  41
  63
  92
  129
  173
  226
  288
  360
  442
  534
  636
  749
  872
  1,004
  1,146
  1,298
  1,459
  1,629
  1,807
  1,995
  2,191
  2,396
  2,609
  2,832
  3,063
  3,303
  3,553
  3,812
  4,082
  4,363
Earnings before tax, $m
  86
  142
  201
  273
  361
  465
  586
  725
  883
  1,059
  1,254
  1,505
  1,737
  1,985
  2,251
  2,534
  2,833
  3,148
  3,479
  3,825
  4,187
  4,565
  4,958
  5,367
  5,793
  6,235
  6,694
  7,172
  7,668
  8,184
  8,720
Tax expense, $m
  25
  38
  54
  74
  97
  125
  158
  196
  238
  286
  339
  406
  469
  536
  608
  684
  765
  850
  939
  1,033
  1,131
  1,233
  1,339
  1,449
  1,564
  1,683
  1,807
  1,936
  2,070
  2,210
  2,354
Net income, $m
  61
  104
  147
  199
  263
  339
  428
  530
  645
  773
  915
  1,099
  1,268
  1,449
  1,643
  1,850
  2,068
  2,298
  2,540
  2,792
  3,057
  3,332
  3,619
  3,918
  4,229
  4,551
  4,887
  5,235
  5,598
  5,974
  6,366

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  48
  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
  1,973
  2,701
  3,692
  4,929
  6,440
  8,249
  10,376
  12,836
  15,639
  18,791
  22,293
  26,144
  30,339
  34,872
  39,736
  44,922
  50,424
  56,234
  62,347
  68,759
  75,466
  82,469
  89,769
  97,369
  105,275
  113,495
  122,038
  130,915
  140,140
  149,729
  159,698
Adjusted assets (=assets-cash), $m
  1,925
  2,701
  3,692
  4,929
  6,440
  8,249
  10,376
  12,836
  15,639
  18,791
  22,293
  26,144
  30,339
  34,872
  39,736
  44,922
  50,424
  56,234
  62,347
  68,759
  75,466
  82,469
  89,769
  97,369
  105,275
  113,495
  122,038
  130,915
  140,140
  149,729
  159,698
Revenue / Adjusted assets
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
  0.517
Average production assets, $m
  1,212
  1,698
  2,321
  3,099
  4,049
  5,186
  6,523
  8,070
  9,832
  11,813
  14,015
  16,436
  19,073
  21,923
  24,981
  28,241
  31,700
  35,353
  39,196
  43,227
  47,443
  51,846
  56,435
  61,213
  66,184
  71,351
  76,722
  82,303
  88,102
  94,130
  100,398
Working capital, $m
  -285
  -96
  -132
  -176
  -230
  -294
  -370
  -458
  -558
  -670
  -795
  -933
  -1,082
  -1,244
  -1,417
  -1,603
  -1,799
  -2,006
  -2,224
  -2,453
  -2,692
  -2,942
  -3,202
  -3,473
  -3,755
  -4,049
  -4,353
  -4,670
  -4,999
  -5,341
  -5,697
Total debt, $m
  995
  1,475
  2,148
  2,990
  4,017
  5,248
  6,694
  8,367
  10,273
  12,416
  14,797
  17,416
  20,269
  23,351
  26,658
  30,185
  33,926
  37,877
  42,034
  46,394
  50,955
  55,717
  60,681
  65,849
  71,225
  76,814
  82,624
  88,660
  94,933
  101,454
  108,233
Total liabilities, $m
  1,356
  1,837
  2,510
  3,352
  4,379
  5,610
  7,056
  8,729
  10,635
  12,778
  15,159
  17,778
  20,631
  23,713
  27,020
  30,547
  34,288
  38,239
  42,396
  46,756
  51,317
  56,079
  61,043
  66,211
  71,587
  77,176
  82,986
  89,022
  95,295
  101,816
  108,595
Total equity, $m
  616
  864
  1,181
  1,577
  2,061
  2,640
  3,320
  4,108
  5,005
  6,013
  7,134
  8,366
  9,708
  11,159
  12,715
  14,375
  16,136
  17,995
  19,951
  22,003
  24,149
  26,390
  28,726
  31,158
  33,688
  36,318
  39,052
  41,893
  44,845
  47,913
  51,103
Total liabilities and equity, $m
  1,972
  2,701
  3,691
  4,929
  6,440
  8,250
  10,376
  12,837
  15,640
  18,791
  22,293
  26,144
  30,339
  34,872
  39,735
  44,922
  50,424
  56,234
  62,347
  68,759
  75,466
  82,469
  89,769
  97,369
  105,275
  113,494
  122,038
  130,915
  140,140
  149,729
  159,698
Debt-to-equity ratio
  1.615
  1.710
  1.820
  1.900
  1.950
  1.990
  2.020
  2.040
  2.050
  2.060
  2.070
  2.080
  2.090
  2.090
  2.100
  2.100
  2.100
  2.100
  2.110
  2.110
  2.110
  2.110
  2.110
  2.110
  2.110
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
Adjusted equity ratio
  0.296
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  61
  104
  147
  199
  263
  339
  428
  530
  645
  773
  915
  1,099
  1,268
  1,449
  1,643
  1,850
  2,068
  2,298
  2,540
  2,792
  3,057
  3,332
  3,619
  3,918
  4,229
  4,551
  4,887
  5,235
  5,598
  5,974
  6,366
Depreciation, amort., depletion, $m
  145
  205
  266
  342
  435
  547
  678
  829
  1,002
  1,196
  1,412
  1,611
  1,870
  2,149
  2,449
  2,769
  3,108
  3,466
  3,843
  4,238
  4,651
  5,083
  5,533
  6,001
  6,489
  6,995
  7,522
  8,069
  8,637
  9,228
  9,843
Funds from operations, $m
  147
  309
  412
  541
  699
  886
  1,106
  1,359
  1,647
  1,970
  2,328
  2,710
  3,138
  3,599
  4,092
  4,618
  5,176
  5,764
  6,382
  7,030
  7,708
  8,415
  9,152
  9,919
  10,717
  11,547
  12,409
  13,304
  14,235
  15,203
  16,209
Change in working capital, $m
  -18
  -28
  -35
  -44
  -54
  -65
  -76
  -88
  -100
  -112
  -125
  -137
  -150
  -162
  -174
  -185
  -196
  -207
  -218
  -229
  -239
  -250
  -260
  -271
  -282
  -293
  -305
  -317
  -329
  -342
  -356
Cash from operations, $m
  165
  336
  448
  586
  752
  951
  1,182
  1,447
  1,747
  2,082
  2,453
  2,848
  3,287
  3,760
  4,266
  4,803
  5,372
  5,971
  6,600
  7,259
  7,947
  8,665
  9,413
  10,191
  10,999
  11,840
  12,713
  13,621
  14,564
  15,545
  16,564
Maintenance CAPEX, $m
  0
  -119
  -166
  -228
  -304
  -397
  -508
  -640
  -791
  -964
  -1,158
  -1,374
  -1,611
  -1,870
  -2,149
  -2,449
  -2,769
  -3,108
  -3,466
  -3,843
  -4,238
  -4,651
  -5,083
  -5,533
  -6,001
  -6,489
  -6,995
  -7,522
  -8,069
  -8,637
  -9,228
New CAPEX, $m
  -154
  -487
  -623
  -778
  -950
  -1,137
  -1,337
  -1,546
  -1,762
  -1,981
  -2,202
  -2,421
  -2,637
  -2,850
  -3,058
  -3,261
  -3,459
  -3,653
  -3,843
  -4,031
  -4,217
  -4,403
  -4,589
  -4,778
  -4,970
  -5,167
  -5,371
  -5,581
  -5,800
  -6,028
  -6,267
Cash from investing activities, $m
  -518
  -606
  -789
  -1,006
  -1,254
  -1,534
  -1,845
  -2,186
  -2,553
  -2,945
  -3,360
  -3,795
  -4,248
  -4,720
  -5,207
  -5,710
  -6,228
  -6,761
  -7,309
  -7,874
  -8,455
  -9,054
  -9,672
  -10,311
  -10,971
  -11,656
  -12,366
  -13,103
  -13,869
  -14,665
  -15,495
Free cash flow, $m
  -353
  -269
  -342
  -420
  -501
  -584
  -664
  -739
  -806
  -863
  -907
  -947
  -961
  -960
  -941
  -906
  -856
  -789
  -709
  -614
  -507
  -389
  -259
  -120
  28
  184
  348
  518
  696
  879
  1,069
Issuance/(repayment) of debt, $m
  216
  528
  674
  841
  1,028
  1,230
  1,446
  1,673
  1,906
  2,143
  2,381
  2,619
  2,853
  3,083
  3,307
  3,527
  3,741
  3,951
  4,157
  4,360
  4,561
  4,762
  4,964
  5,168
  5,376
  5,589
  5,809
  6,037
  6,273
  6,520
  6,779
Issuance/(repurchase) of shares, $m
  230
  144
  171
  197
  220
  240
  253
  258
  252
  235
  205
  133
  75
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  447
  672
  845
  1,038
  1,248
  1,470
  1,699
  1,931
  2,158
  2,378
  2,586
  2,752
  2,928
  3,084
  3,307
  3,527
  3,741
  3,951
  4,157
  4,360
  4,561
  4,762
  4,964
  5,168
  5,376
  5,589
  5,809
  6,037
  6,273
  6,520
  6,779
Total cash flow (excl. dividends), $m
  95
  403
  503
  618
  747
  886
  1,035
  1,191
  1,352
  1,515
  1,680
  1,805
  1,966
  2,124
  2,366
  2,621
  2,886
  3,162
  3,448
  3,745
  4,054
  4,373
  4,704
  5,048
  5,404
  5,773
  6,157
  6,555
  6,969
  7,399
  7,847
Retained Cash Flow (-), $m
  -226
  -248
  -317
  -396
  -484
  -579
  -681
  -787
  -897
  -1,009
  -1,121
  -1,232
  -1,342
  -1,451
  -1,556
  -1,660
  -1,761
  -1,859
  -1,956
  -2,052
  -2,146
  -2,241
  -2,336
  -2,432
  -2,530
  -2,630
  -2,734
  -2,841
  -2,952
  -3,068
  -3,190
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
 
  155
  186
  222
  263
  307
  354
  404
  455
  507
  559
  572
  624
  674
  810
  961
  1,125
  1,302
  1,492
  1,694
  1,907
  2,132
  2,368
  2,616
  2,874
  3,143
  3,423
  3,714
  4,017
  4,331
  4,657
Discount rate, %
 
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
 
  142
  155
  168
  178
  185
  187
  185
  179
  169
  155
  131
  116
  100
  94
  86
  77
  66
  55
  44
  34
  26
  19
  13
  9
  6
  4
  2
  1
  1
  0
Current shareholders' claim on cash, %
  100
  93.8
  88.9
  84.9
  81.7
  79.1
  77.0
  75.4
  74.1
  73.1
  72.4
  72.1
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9
  71.9

Enercare Inc is a Canada-based company engaged in home services and sub-metering businesses. The Company operates through two segments: Home Services and Sub-metering. Its Home Services segment is engaged in the provision of water heaters, furnaces, air conditioners and other heating, ventilation and air conditioning (HVAC) rental products, protection plans and related services. Through its subsidiary, Enercare Solutions Inc., it operates the Home Services business, which has four business activities: Rentals, Protection Plans, HVAC Sales and Other. Its protection plans are maintenance protection plans and full service protection plans. Its Other category includes services, such as duct cleaning, plumbing work and other non-contracted chargeable services. Its Sub-metering segment is engaged in the provision of sub-metering equipment and billing services. The Company, through EnerCare Connections Inc., provides sub-metering services for electricity, thermal and water.

FINANCIAL RATIOS  of  EnerCare Inc. (ECI)

Valuation Ratios
P/E Ratio 35.5
Price to Sales 2.2
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 13.1
Price to Free Cash Flow 197.1
Growth Rates
Sales Growth Rate 76.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.9%
Cap. Spend. - 3 Yr. Gr. Rate 14.3%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 118.7%
Total Debt to Equity 161.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.8%
Return On Equity 12.1%
Return On Equity - 3 Yr. Avg. 10.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 53.8%
Gross Margin - 3 Yr. Avg. 62.3%
EBITDA Margin 26.9%
EBITDA Margin - 3 Yr. Avg. 37.2%
Operating Margin 8.8%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 8.6%
Pre-Tax Margin - 3 Yr. Avg. 9.9%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 7.1%
Effective Tax Rate 29.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.8%
Payout Ratio 139.3%

ECI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ECI stock intrinsic value calculation we used $996 million for the last fiscal year's total revenue generated by EnerCare Inc.. The default revenue input number comes from 2016 income statement of EnerCare 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 ECI stock valuation model: a) initial revenue growth rate of 40.2% 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 8.8%, whose default value for ECI is calculated based on our internal credit rating of EnerCare 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 EnerCare 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 ECI stock the variable cost ratio is equal to 88%.

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 ECI 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 4.3% for EnerCare Inc..

Corporate tax rate of 27% is the nominal tax rate for EnerCare 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 ECI 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 ECI are equal to 121.6%.

Life of production assets of 10.2 years is the average useful life of capital assets used in EnerCare 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 ECI is equal to -6.9%. 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 - $616 million for EnerCare 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 105.213 million for EnerCare 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 EnerCare Inc. at the current share price and the inputted number of shares is $2.2 billion.

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Financial statements of ECI
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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