Intrinsic value of Osisko Gold Royalties Ltd - OR

Previous Close

$12.56

  Intrinsic Value

$13.71

stock screener

  Rating & Target

hold

+9%

Previous close

$12.56

 
Intrinsic value

$13.71

 
Up/down potential

+9%

 
Rating

hold

We calculate the intrinsic value of OR 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 2.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  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
  101
  156
  233
  338
  477
  655
  880
  1,155
  1,487
  1,878
  2,332
  2,851
  3,436
  4,088
  4,807
  5,591
  6,441
  7,354
  8,328
  9,364
  10,458
  11,610
  12,819
  14,085
  15,408
  16,786
  18,222
  19,716
  21,269
  22,884
Variable operating expenses, $m
  33
  45
  63
  86
  116
  156
  205
  266
  339
  426
  515
  629
  759
  903
  1,061
  1,235
  1,422
  1,624
  1,839
  2,068
  2,309
  2,564
  2,831
  3,110
  3,402
  3,707
  4,024
  4,353
  4,696
  5,053
Fixed operating expenses, $m
  9
  9
  10
  10
  10
  10
  10
  11
  11
  11
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
Total operating expenses, $m
  42
  54
  73
  96
  126
  166
  215
  277
  350
  437
  526
  641
  771
  915
  1,073
  1,248
  1,435
  1,637
  1,853
  2,082
  2,323
  2,579
  2,846
  3,125
  3,418
  3,723
  4,040
  4,370
  4,713
  5,070
Operating income, $m
  58
  101
  161
  242
  350
  489
  664
  878
  1,136
  1,441
  1,805
  2,209
  2,665
  3,173
  3,733
  4,344
  5,006
  5,717
  6,476
  7,282
  8,134
  9,032
  9,974
  10,960
  11,990
  13,064
  14,182
  15,346
  16,556
  17,814
EBITDA, $m
  69
  112
  172
  254
  362
  501
  676
  890
  1,149
  1,453
  1,807
  2,212
  2,668
  3,177
  3,737
  4,349
  5,011
  5,723
  6,483
  7,290
  8,143
  9,042
  9,985
  10,972
  12,003
  13,078
  14,198
  15,363
  16,574
  17,833
Interest expense (income), $m
  0
  2
  6
  12
  21
  33
  48
  69
  94
  125
  163
  207
  258
  317
  383
  457
  538
  627
  723
  826
  937
  1,054
  1,177
  1,308
  1,445
  1,588
  1,737
  1,893
  2,056
  2,225
  2,400
Earnings before tax, $m
  57
  95
  149
  222
  318
  441
  595
  784
  1,011
  1,278
  1,598
  1,951
  2,348
  2,790
  3,276
  3,806
  4,379
  4,994
  5,650
  6,346
  7,081
  7,855
  8,666
  9,515
  10,402
  11,327
  12,289
  13,290
  14,331
  15,413
Tax expense, $m
  15
  26
  40
  60
  86
  119
  161
  212
  273
  345
  432
  527
  634
  753
  885
  1,028
  1,182
  1,348
  1,525
  1,713
  1,912
  2,121
  2,340
  2,569
  2,809
  3,058
  3,318
  3,588
  3,869
  4,162
Net income, $m
  41
  69
  109
  162
  232
  322
  435
  573
  738
  933
  1,167
  1,424
  1,714
  2,037
  2,391
  2,778
  3,196
  3,645
  4,124
  4,632
  5,169
  5,734
  6,326
  6,946
  7,594
  8,268
  8,971
  9,702
  10,462
  11,252

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
  1,461
  2,257
  3,375
  4,898
  6,910
  9,499
  12,751
  16,743
  21,544
  27,211
  33,790
  41,312
  49,795
  59,246
  69,663
  81,035
  93,345
  106,574
  120,701
  135,704
  151,563
  168,263
  185,789
  204,135
  223,298
  243,279
  264,088
  285,739
  308,251
  331,649
Adjusted assets (=assets-cash), $m
  1,461
  2,257
  3,375
  4,898
  6,910
  9,499
  12,751
  16,743
  21,544
  27,211
  33,790
  41,312
  49,795
  59,246
  69,663
  81,035
  93,345
  106,574
  120,701
  135,704
  151,563
  168,263
  185,789
  204,135
  223,298
  243,279
  264,088
  285,739
  308,251
  331,649
Revenue / Adjusted assets
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
  0.069
Average production assets, $m
  1
  1
  2
  3
  4
  5
  7
  9
  12
  15
  19
  23
  27
  33
  38
  45
  52
  59
  67
  75
  84
  93
  103
  113
  123
  134
  146
  158
  170
  183
Working capital, $m
  -10
  -15
  -22
  -32
  -45
  -62
  -84
  -110
  -141
  -178
  -221
  -271
  -326
  -388
  -457
  -531
  -612
  -699
  -791
  -890
  -993
  -1,103
  -1,218
  -1,338
  -1,464
  -1,595
  -1,731
  -1,873
  -2,021
  -2,174
Total debt, $m
  168
  345
  595
  934
  1,383
  1,960
  2,685
  3,576
  4,646
  5,910
  7,377
  9,055
  10,946
  13,054
  15,377
  17,913
  20,658
  23,608
  26,758
  30,104
  33,641
  37,365
  41,273
  45,364
  49,637
  54,093
  58,734
  63,562
  68,582
  73,800
Total liabilities, $m
  326
  503
  753
  1,092
  1,541
  2,118
  2,843
  3,734
  4,804
  6,068
  7,535
  9,213
  11,104
  13,212
  15,535
  18,071
  20,816
  23,766
  26,916
  30,262
  33,799
  37,523
  41,431
  45,522
  49,795
  54,251
  58,892
  63,720
  68,740
  73,958
Total equity, $m
  1,135
  1,754
  2,623
  3,805
  5,369
  7,381
  9,907
  13,009
  16,739
  21,143
  26,255
  32,099
  38,691
  46,034
  54,128
  62,964
  72,529
  82,808
  93,785
  105,442
  117,765
  130,740
  144,358
  158,613
  173,502
  189,028
  205,197
  222,019
  239,511
  257,691
Total liabilities and equity, $m
  1,461
  2,257
  3,376
  4,897
  6,910
  9,499
  12,750
  16,743
  21,543
  27,211
  33,790
  41,312
  49,795
  59,246
  69,663
  81,035
  93,345
  106,574
  120,701
  135,704
  151,564
  168,263
  185,789
  204,135
  223,297
  243,279
  264,089
  285,739
  308,251
  331,649
Debt-to-equity ratio
  0.150
  0.200
  0.230
  0.250
  0.260
  0.270
  0.270
  0.270
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.280
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
  0.290
Adjusted equity ratio
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777
  0.777

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  41
  69
  109
  162
  232
  322
  435
  573
  738
  933
  1,167
  1,424
  1,714
  2,037
  2,391
  2,778
  3,196
  3,645
  4,124
  4,632
  5,169
  5,734
  6,326
  6,946
  7,594
  8,268
  8,971
  9,702
  10,462
  11,252
Depreciation, amort., depletion, $m
  11
  11
  11
  11
  12
  12
  12
  12
  12
  13
  2
  2
  3
  4
  4
  5
  6
  6
  7
  8
  9
  10
  11
  12
  13
  14
  16
  17
  18
  20
Funds from operations, $m
  53
  81
  120
  173
  243
  334
  446
  585
  750
  946
  1,169
  1,427
  1,717
  2,040
  2,396
  2,783
  3,202
  3,652
  4,131
  4,640
  5,178
  5,744
  6,337
  6,958
  7,607
  8,283
  8,987
  9,719
  10,480
  11,271
Change in working capital, $m
  -4
  -5
  -7
  -10
  -13
  -17
  -21
  -26
  -31
  -37
  -43
  -49
  -56
  -62
  -68
  -75
  -81
  -87
  -93
  -98
  -104
  -109
  -115
  -120
  -126
  -131
  -136
  -142
  -148
  -153
Cash from operations, $m
  56
  86
  127
  183
  257
  351
  468
  611
  782
  983
  1,212
  1,476
  1,773
  2,102
  2,464
  2,858
  3,283
  3,738
  4,224
  4,739
  5,282
  5,853
  6,452
  7,079
  7,732
  8,414
  9,123
  9,861
  10,628
  11,425
Maintenance CAPEX, $m
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -3
  -4
  -4
  -5
  -6
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -16
  -17
  -18
New CAPEX, $m
  0
  0
  -1
  -1
  -1
  -1
  -2
  -2
  -3
  -3
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
Cash from investing activities, $m
  0
  0
  -1
  -1
  -1
  -1
  -3
  -3
  -4
  -4
  -6
  -6
  -7
  -8
  -10
  -10
  -12
  -13
  -14
  -15
  -17
  -18
  -20
  -21
  -23
  -24
  -25
  -28
  -29
  -31
Free cash flow, $m
  56
  85
  126
  182
  255
  349
  465
  608
  778
  978
  1,207
  1,470
  1,766
  2,094
  2,455
  2,847
  3,271
  3,725
  4,210
  4,723
  5,265
  5,835
  6,433
  7,057
  7,710
  8,390
  9,097
  9,833
  10,598
  11,393
Issuance/(repayment) of debt, $m
  122
  178
  249
  339
  449
  577
  725
  890
  1,071
  1,264
  1,467
  1,677
  1,892
  2,108
  2,323
  2,536
  2,745
  2,950
  3,150
  3,346
  3,537
  3,724
  3,908
  4,091
  4,273
  4,456
  4,640
  4,828
  5,020
  5,218
Issuance/(repurchase) of shares, $m
  383
  549
  760
  1,021
  1,332
  1,690
  2,092
  2,529
  2,992
  3,471
  3,945
  4,420
  4,877
  5,307
  5,702
  6,058
  6,369
  6,634
  6,852
  7,025
  7,154
  7,242
  7,292
  7,309
  7,296
  7,257
  7,198
  7,121
  7,030
  6,929
Cash from financing (excl. dividends), $m  
  505
  727
  1,009
  1,360
  1,781
  2,267
  2,817
  3,419
  4,063
  4,735
  5,412
  6,097
  6,769
  7,415
  8,025
  8,594
  9,114
  9,584
  10,002
  10,371
  10,691
  10,966
  11,200
  11,400
  11,569
  11,713
  11,838
  11,949
  12,050
  12,147
Total cash flow (excl. dividends), $m
  560
  812
  1,136
  1,542
  2,035
  2,616
  3,282
  4,027
  4,841
  5,713
  6,619
  7,567
  8,534
  9,509
  10,480
  11,441
  12,385
  13,310
  14,212
  15,094
  15,955
  16,801
  17,633
  18,457
  19,279
  20,103
  20,935
  21,782
  22,648
  23,540
Retained Cash Flow (-), $m
  -424
  -619
  -869
  -1,183
  -1,563
  -2,012
  -2,526
  -3,102
  -3,730
  -4,404
  -5,112
  -5,844
  -6,591
  -7,344
  -8,094
  -8,836
  -9,565
  -10,279
  -10,976
  -11,657
  -12,323
  -12,975
  -13,618
  -14,255
  -14,889
  -15,526
  -16,169
  -16,823
  -17,492
  -18,180
Prev. year cash balance distribution, $m
  501
  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
  637
  193
  267
  360
  472
  604
  756
  925
  1,111
  1,309
  1,507
  1,723
  1,943
  2,165
  2,386
  2,605
  2,820
  3,030
  3,236
  3,437
  3,633
  3,825
  4,015
  4,202
  4,389
  4,577
  4,767
  4,959
  5,157
  5,360
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  611
  177
  233
  296
  366
  439
  511
  578
  638
  686
  716
  735
  739
  727
  701
  662
  614
  558
  498
  437
  376
  317
  263
  214
  171
  134
  102
  77
  56
  40
Current shareholders' claim on cash, %
  75.1
  57.9
  45.7
  36.9
  30.4
  25.4
  21.7
  18.7
  16.4
  14.6
  13.1
  11.8
  10.8
  10.0
  9.3
  8.7
  8.2
  7.7
  7.4
  7.0
  6.8
  6.5
  6.3
  6.1
  5.9
  5.8
  5.7
  5.5
  5.4
  5.3

Osisko Gold Royalties Ltd (Osisko) is a Canada-based company engaged in the business of acquiring and managing precious metal and other interests in Canada and across the world. The Company's assets include the Canadian Malartic mine, located in Malartic, Quebec and Eleonore mine, located in the James Bay area in Quebec. It invests in equities of exploration and royalty companies, as well as holds interest in exploration and evaluation projects in over four prolific gold camps: the Abitibi Gold Belt, the James Bay area, the Cariboo mining district and the Guerrero Gold Belt in Mexico. It holds interest in Vezza gold property, which is located over 20 kilometers from Matagami, Quebec, and Cariboo Gold Project, which covers an area of approximately 1,160 square kilometers. It owns a portfolio of royalties, options on royalties and exclusive rights to participate in future royalty/stream financings on various projects, in Canada and the United States.

FINANCIAL RATIOS  of  Osisko Gold Royalties Ltd (OR)

Valuation Ratios
P/E Ratio 31.8
Price to Sales 21.2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 25.2
Price to Free Cash Flow -121.6
Growth Rates
Sales Growth Rate 40%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 64.1%
Cap. Spend. - 3 Yr. Gr. Rate 66.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 3.8%
Total Debt to Equity 3.8%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.4%
Ret/ On Assets - 3 Yr. Avg. 47.3%
Return On Total Capital 3.8%
Ret/ On T. Cap. - 3 Yr. Avg. 51.2%
Return On Equity 3.9%
Return On Equity - 3 Yr. Avg. 58.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 101.6%
EBITDA Margin - 3 Yr. Avg. 64%
Operating Margin 46%
Oper. Margin - 3 Yr. Avg. 24.8%
Pre-Tax Margin 82.5%
Pre-Tax Margin - 3 Yr. Avg. 56.9%
Net Profit Margin 66.7%
Net Profit Margin - 3 Yr. Avg. 3324.1%
Effective Tax Rate 19.2%
Eff/ Tax Rate - 3 Yr. Avg. 113.6%
Payout Ratio 35.7%

OR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OR stock intrinsic value calculation we used $63 million for the last fiscal year's total revenue generated by Osisko Gold Royalties Ltd. The default revenue input number comes from 2016 income statement of Osisko Gold Royalties Ltd. 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 OR 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 4.3%, whose default value for OR is calculated based on our internal credit rating of Osisko Gold Royalties Ltd, 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 Osisko Gold Royalties Ltd.
    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 OR stock the variable cost ratio is equal to 39.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9 million in the base year in the intrinsic value calculation for OR 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 3.5% for Osisko Gold Royalties Ltd.

Corporate tax rate of 27% is the nominal tax rate for Osisko Gold Royalties Ltd. 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 OR 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 OR are equal to 0.8%.

Life of production assets of 9.3 years is the average useful life of capital assets used in Osisko Gold Royalties Ltd 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 OR is equal to -9.5%. 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 - $1212 million for Osisko Gold Royalties Ltd - 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 157.025 million for Osisko Gold Royalties Ltd 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 Osisko Gold Royalties Ltd at the current share price and the inputted number of shares is $2.0 billion.

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