Intrinsic value of Power Corporation of Canada Subordinate - POW

Previous Close

$32.80

  Intrinsic Value

$104.30

stock screener

  Rating & Target

str. buy

+218%

Previous close

$32.80

 
Intrinsic value

$104.30

 
Up/down potential

+218%

 
Rating

str. buy

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

We calculate the intrinsic value of POW 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 13.6

 

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, %
  32.63
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  0
  51,765
  52,956
  54,317
  55,844
  57,538
  59,395
  61,418
  63,608
  65,967
  68,498
  71,207
  74,096
  77,173
  80,444
  83,914
  87,591
  91,484
  95,600
  99,950
  104,542
  109,388
  114,498
  119,885
  125,561
  131,538
  137,832
  144,456
  151,427
  158,761
  166,474
Variable operating expenses, $m
 
  44,913
  45,924
  47,080
  48,378
  49,816
  51,393
  53,111
  54,971
  56,974
  59,124
  60,474
  62,929
  65,542
  68,319
  71,267
  74,390
  77,696
  81,192
  84,886
  88,786
  92,901
  97,242
  101,816
  106,636
  111,713
  117,058
  122,684
  128,604
  134,833
  141,384
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
  46,288
  44,913
  45,924
  47,080
  48,378
  49,816
  51,393
  53,111
  54,971
  56,974
  59,124
  60,474
  62,929
  65,542
  68,319
  71,267
  74,390
  77,696
  81,192
  84,886
  88,786
  92,901
  97,242
  101,816
  106,636
  111,713
  117,058
  122,684
  128,604
  134,833
  141,384
Operating income, $m
  4,462
  6,852
  7,031
  7,237
  7,467
  7,722
  8,002
  8,307
  8,637
  8,992
  9,374
  10,732
  11,168
  11,631
  12,124
  12,647
  13,201
  13,788
  14,409
  15,064
  15,756
  16,487
  17,257
  18,069
  18,924
  19,825
  20,774
  21,772
  22,823
  23,928
  25,091
EBITDA, $m
  4,462
  8,609
  8,807
  9,034
  9,288
  9,569
  9,878
  10,215
  10,579
  10,971
  11,392
  11,843
  12,324
  12,835
  13,379
  13,956
  14,568
  15,215
  15,900
  16,623
  17,387
  18,193
  19,043
  19,939
  20,883
  21,877
  22,924
  24,026
  25,185
  26,405
  27,688
Interest expense (income), $m
  576
  586
  -142
  171
  528
  929
  1,373
  1,861
  2,392
  2,967
  3,586
  4,251
  4,961
  5,720
  6,528
  7,386
  8,297
  9,262
  10,284
  11,365
  12,507
  13,712
  14,984
  16,326
  17,740
  19,229
  20,799
  22,451
  24,190
  26,019
  27,944
Earnings before tax, $m
  3,850
  6,266
  7,173
  7,066
  6,939
  6,793
  6,629
  6,446
  6,245
  6,026
  5,788
  6,482
  6,206
  5,911
  5,596
  5,261
  4,904
  4,526
  4,124
  3,699
  3,250
  2,775
  2,273
  1,743
  1,185
  596
  -25
  -679
  -1,367
  -2,091
  -2,854
Tax expense, $m
  587
  1,692
  1,937
  1,908
  1,874
  1,834
  1,790
  1,740
  1,686
  1,627
  1,563
  1,750
  1,676
  1,596
  1,511
  1,420
  1,324
  1,222
  1,114
  999
  877
  749
  614
  471
  320
  161
  0
  0
  0
  0
  0
Net income, $m
  1,134
  4,574
  5,237
  5,158
  5,065
  4,959
  4,839
  4,705
  4,559
  4,399
  4,225
  4,732
  4,530
  4,315
  4,085
  3,841
  3,580
  3,304
  3,011
  2,700
  2,372
  2,025
  1,659
  1,272
  865
  435
  -25
  -679
  -1,367
  -2,091
  -2,854

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
  0
Total assets, $m
  422,903
  431,375
  441,297
  452,638
  465,371
  479,479
  494,959
  511,816
  530,063
  549,721
  570,818
  593,388
  617,471
  643,112
  670,364
  699,281
  729,926
  762,365
  796,669
  832,915
  871,185
  911,567
  954,153
  999,042
  1,046,338
  1,096,151
  1,148,598
  1,203,801
  1,261,891
  1,323,004
  1,387,285
Adjusted assets (=assets-cash), $m
  422,903
  431,375
  441,297
  452,638
  465,371
  479,479
  494,959
  511,816
  530,063
  549,721
  570,818
  593,388
  617,471
  643,112
  670,364
  699,281
  729,926
  762,365
  796,669
  832,915
  871,185
  911,567
  954,153
  999,042
  1,046,338
  1,096,151
  1,148,598
  1,203,801
  1,261,891
  1,323,004
  1,387,285
Revenue / Adjusted assets
  0.000
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
  0.120
Average production assets, $m
  7,928
  8,075
  8,261
  8,473
  8,712
  8,976
  9,266
  9,581
  9,923
  10,291
  10,686
  11,108
  11,559
  12,039
  12,549
  13,091
  13,664
  14,271
  14,914
  15,592
  16,309
  17,065
  17,862
  18,702
  19,587
  20,520
  21,502
  22,535
  23,623
  24,767
  25,970
Working capital, $m
  0
  466
  477
  489
  503
  518
  535
  553
  572
  594
  616
  641
  667
  695
  724
  755
  788
  823
  860
  900
  941
  984
  1,030
  1,079
  1,130
  1,184
  1,240
  1,300
  1,363
  1,429
  1,498
Total debt, $m
  16,747
  -4,055
  4,875
  15,082
  26,542
  39,239
  53,171
  68,343
  84,765
  102,457
  121,444
  141,757
  163,432
  186,509
  211,036
  237,061
  264,642
  293,836
  324,710
  357,332
  391,775
  428,118
  466,446
  506,846
  549,412
  594,244
  641,446
  691,129
  743,410
  798,412
  856,265
Total liabilities, $m
  409,039
  388,238
  397,167
  407,374
  418,834
  431,531
  445,463
  460,635
  477,057
  494,749
  513,736
  534,049
  555,724
  578,801
  603,328
  629,353
  656,934
  686,128
  717,002
  749,624
  784,067
  820,410
  858,738
  899,138
  941,704
  986,536
  1,033,738
  1,083,421
  1,135,702
  1,190,704
  1,248,557
Total equity, $m
  13,864
  43,138
  44,130
  45,264
  46,537
  47,948
  49,496
  51,182
  53,006
  54,972
  57,082
  59,339
  61,747
  64,311
  67,036
  69,928
  72,993
  76,236
  79,667
  83,292
  87,119
  91,157
  95,415
  99,904
  104,634
  109,615
  114,860
  120,380
  126,189
  132,300
  138,729
Total liabilities and equity, $m
  422,903
  431,376
  441,297
  452,638
  465,371
  479,479
  494,959
  511,817
  530,063
  549,721
  570,818
  593,388
  617,471
  643,112
  670,364
  699,281
  729,927
  762,364
  796,669
  832,916
  871,186
  911,567
  954,153
  999,042
  1,046,338
  1,096,151
  1,148,598
  1,203,801
  1,261,891
  1,323,004
  1,387,286
Debt-to-equity ratio
  1.208
  -0.090
  0.110
  0.330
  0.570
  0.820
  1.070
  1.340
  1.600
  1.860
  2.130
  2.390
  2.650
  2.900
  3.150
  3.390
  3.630
  3.850
  4.080
  4.290
  4.500
  4.700
  4.890
  5.070
  5.250
  5.420
  5.580
  5.740
  5.890
  6.030
  6.170
Adjusted equity ratio
  0.033
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,134
  4,574
  5,237
  5,158
  5,065
  4,959
  4,839
  4,705
  4,559
  4,399
  4,225
  4,732
  4,530
  4,315
  4,085
  3,841
  3,580
  3,304
  3,011
  2,700
  2,372
  2,025
  1,659
  1,272
  865
  435
  -25
  -679
  -1,367
  -2,091
  -2,854
Depreciation, amort., depletion, $m
  0
  1,757
  1,776
  1,797
  1,821
  1,847
  1,876
  1,908
  1,942
  1,979
  2,018
  1,111
  1,156
  1,204
  1,255
  1,309
  1,366
  1,427
  1,491
  1,559
  1,631
  1,706
  1,786
  1,870
  1,959
  2,052
  2,150
  2,254
  2,362
  2,477
  2,597
Funds from operations, $m
  6,299
  6,331
  7,013
  6,955
  6,887
  6,806
  6,715
  6,613
  6,501
  6,378
  6,244
  5,842
  5,686
  5,519
  5,340
  5,150
  4,947
  4,731
  4,502
  4,260
  4,003
  3,732
  3,445
  3,143
  2,823
  2,487
  2,125
  1,575
  995
  385
  -257
Change in working capital, $m
  -443
  9
  11
  12
  14
  15
  17
  18
  20
  21
  23
  24
  26
  28
  29
  31
  33
  35
  37
  39
  41
  44
  46
  48
  51
  54
  57
  60
  63
  66
  69
Cash from operations, $m
  6,742
  6,322
  7,002
  6,943
  6,873
  6,791
  6,699
  6,595
  6,481
  6,356
  6,221
  5,818
  5,660
  5,491
  5,311
  5,118
  4,914
  4,696
  4,465
  4,221
  3,962
  3,688
  3,399
  3,094
  2,772
  2,433
  2,069
  1,515
  933
  319
  -326
Maintenance CAPEX, $m
  0
  -793
  -808
  -826
  -847
  -871
  -898
  -927
  -958
  -992
  -1,029
  -1,069
  -1,111
  -1,156
  -1,204
  -1,255
  -1,309
  -1,366
  -1,427
  -1,491
  -1,559
  -1,631
  -1,706
  -1,786
  -1,870
  -1,959
  -2,052
  -2,150
  -2,254
  -2,362
  -2,477
New CAPEX, $m
  0
  -148
  -186
  -212
  -238
  -264
  -290
  -316
  -342
  -368
  -395
  -423
  -451
  -480
  -510
  -541
  -574
  -607
  -642
  -679
  -716
  -756
  -797
  -840
  -885
  -932
  -982
  -1,033
  -1,087
  -1,144
  -1,203
Cash from investing activities, $m
  -5,484
  -941
  -994
  -1,038
  -1,085
  -1,135
  -1,188
  -1,243
  -1,300
  -1,360
  -1,424
  -1,492
  -1,562
  -1,636
  -1,714
  -1,796
  -1,883
  -1,973
  -2,069
  -2,170
  -2,275
  -2,387
  -2,503
  -2,626
  -2,755
  -2,891
  -3,034
  -3,183
  -3,341
  -3,506
  -3,680
Free cash flow, $m
  1,258
  5,382
  6,009
  5,905
  5,787
  5,656
  5,511
  5,353
  5,182
  4,996
  4,797
  4,327
  4,099
  3,856
  3,597
  3,322
  3,031
  2,722
  2,396
  2,051
  1,686
  1,301
  896
  468
  17
  -458
  -965
  -1,668
  -2,408
  -3,187
  -4,006
Issuance/(repayment) of debt, $m
  1,417
  -20,802
  8,929
  10,207
  11,459
  12,698
  13,932
  15,171
  16,422
  17,692
  18,987
  20,313
  21,675
  23,078
  24,526
  26,026
  27,580
  29,195
  30,874
  32,622
  34,443
  36,344
  38,327
  40,400
  42,566
  44,832
  47,202
  49,683
  52,281
  55,002
  57,853
Issuance/(repurchase) of shares, $m
  -369
  24,699
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  420
  924
  1,455
  2,013
  2,600
  3,216
  3,865
  4,546
  5,270
  6,199
  7,176
  8,203
  9,282
Cash from financing (excl. dividends), $m  
  -298
  3,897
  8,929
  10,207
  11,459
  12,698
  13,932
  15,171
  16,422
  17,692
  18,987
  20,313
  21,675
  23,078
  24,526
  26,026
  27,580
  29,195
  31,294
  33,546
  35,898
  38,357
  40,927
  43,616
  46,431
  49,378
  52,472
  55,882
  59,457
  63,205
  67,135
Total cash flow (excl. dividends), $m
  759
  9,280
  14,938
  16,112
  17,246
  18,354
  19,443
  20,524
  21,604
  22,688
  23,784
  24,640
  25,773
  26,933
  28,123
  29,348
  30,611
  31,917
  33,689
  35,596
  37,584
  39,658
  41,823
  44,084
  46,448
  48,920
  51,506
  54,214
  57,049
  60,018
  63,128
Retained Cash Flow (-), $m
  114
  -29,274
  -992
  -1,134
  -1,273
  -1,411
  -1,548
  -1,686
  -1,825
  -1,966
  -2,110
  -2,257
  -2,408
  -2,564
  -2,725
  -2,892
  -3,064
  -3,244
  -3,430
  -3,625
  -3,827
  -4,038
  -4,259
  -4,489
  -4,730
  -4,981
  -5,270
  -6,199
  -7,176
  -8,203
  -9,282
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
 
  -19,994
  13,946
  14,978
  15,973
  16,943
  17,895
  18,839
  19,779
  20,723
  21,674
  22,383
  23,365
  24,369
  25,398
  26,456
  27,547
  28,673
  30,259
  31,972
  33,757
  35,620
  37,564
  39,595
  41,718
  43,939
  46,237
  48,015
  49,873
  51,815
  53,846
Discount rate, %
 
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
 
  -18,756
  12,197
  12,132
  11,899
  11,519
  11,015
  10,409
  9,720
  8,969
  8,177
  7,280
  6,474
  5,681
  4,916
  4,192
  3,521
  2,909
  2,397
  1,942
  1,544
  1,202
  916
  683
  497
  353
  244
  162
  105
  66
  40
Current shareholders' claim on cash, %
  100
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.5
  35.3
  34.9
  34.3
  33.5
  32.6
  31.5
  30.3
  29.0
  27.7
  26.2
  24.7
  23.2
  21.6

Power Corporation of Canada is a diversified management and holding company. The Company has interest in the financial services, renewable energy, communications and other business sectors. Its principal asset is the controlling interest in Power Financial Corporation (Power Financial). Its segments are Great-West Lifeco Inc. (Lifeco), IGM Financial Inc. (IGM) and Pargesa Holding SA (Pargesa). Lifeco offers life insurance, health insurance, retirement and investment services, and is engaged in the asset management and reinsurance business. IGM is a financial services company operating in Canada, primarily within the advice segment of the financial services market. Pargesa is a holding company with diversified interests in Europe-based companies active in various sectors, such as minerals-based specialty solutions for industry; cement, aggregates and concrete; testing, inspection and certification; wines and spirits, and electricity, natural gas and energy and environmental services.

FINANCIAL RATIOS  of  Power Corporation of Canada Subordinate (POW)

Valuation Ratios
P/E Ratio 12
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow 2
Price to Free Cash Flow 2
Growth Rates
Sales Growth Rate 32.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 117.6%
Total Debt to Equity 120.8%
Interest Coverage 8
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. 0.5%
Return On Total Capital 3.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 8.1%
Return On Equity - 3 Yr. Avg. 11.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 8.7%
EBITDA Margin - 3 Yr. Avg. 11.4%
Operating Margin 8.8%
Oper. Margin - 3 Yr. Avg. 10.9%
Pre-Tax Margin 7.6%
Pre-Tax Margin - 3 Yr. Avg. 10%
Net Profit Margin 2.2%
Net Profit Margin - 3 Yr. Avg. 3.4%
Effective Tax Rate 15.2%
Eff/ Tax Rate - 3 Yr. Avg. 16.3%
Payout Ratio 58.4%

POW stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the POW stock intrinsic value calculation we used $50750 million for the last fiscal year's total revenue generated by Power Corporation of Canada Subordinate . The default revenue input number comes from 2016 income statement of Power Corporation of Canada Subordinate . 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 POW stock valuation model: a) initial revenue growth rate of 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 6.6%, whose default value for POW is calculated based on our internal credit rating of Power Corporation of Canada Subordinate , 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 Power Corporation of Canada Subordinate .
    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 POW stock the variable cost ratio is equal to 86.8%.

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 POW 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 Power Corporation of Canada Subordinate .

Corporate tax rate of 27% is the nominal tax rate for Power Corporation of Canada Subordinate . 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 POW 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 POW are equal to 15.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Power Corporation of Canada Subordinate 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 POW is equal to 0.9%. 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 - $13864 million for Power Corporation of Canada Subordinate - 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 414.832 million for Power Corporation of Canada Subordinate 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 Power Corporation of Canada Subordinate at the current share price and the inputted number of shares is $13.6 billion.

RELATED COMPANIES Price Int.Val. Rating
PWF Power Financia 35.86 113.34  str.buy
GWO Great-West Lif 36.35 101.25  str.buy
SLF Sun Life Finan 50.01 199.60  str.buy
MFC Manulife Finan 26.02 48.08  str.buy
IAG Industrial All 58.02 219.82  str.buy
Financial statements of POW
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.