Intrinsic value of AltaGas Ltd. - ALA

Previous Close

$28.60

  Intrinsic Value

$5.45

stock screener

  Rating & Target

str. sell

-81%

  Value-price divergence*

0%

Previous close

$28.60

 
Intrinsic value

$5.45

 
Up/down potential

-81%

 
Rating

str. sell

 
Value-price divergence*

0%

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

We calculate the intrinsic value of ALA 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 4.9

 

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, %
  -0.14
  26.50
  24.35
  22.42
  20.67
  19.11
  17.70
  16.43
  15.28
  14.26
  13.33
  12.50
  11.75
  11.07
  10.47
  9.92
  9.43
  8.98
  8.59
  8.23
  7.90
  7.61
  7.35
  7.12
  6.91
  6.71
  6.54
  6.39
  6.25
  6.13
  6.01
Revenue, $m
  2,190
  2,770
  3,445
  4,217
  5,089
  6,061
  7,134
  8,306
  9,575
  10,940
  12,398
  13,947
  15,586
  17,312
  19,123
  21,020
  23,001
  25,068
  27,220
  29,460
  31,788
  34,208
  36,724
  39,337
  42,054
  44,878
  47,814
  50,869
  54,049
  57,359
  60,808
Variable operating expenses, $m
 
  2,343
  2,893
  3,522
  4,233
  5,025
  5,899
  6,854
  7,888
  9,001
  10,189
  11,366
  12,701
  14,107
  15,584
  17,129
  18,744
  20,428
  22,182
  24,007
  25,905
  27,877
  29,927
  32,057
  34,270
  36,571
  38,964
  41,454
  44,045
  46,743
  49,553
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
  1,809
  2,343
  2,893
  3,522
  4,233
  5,025
  5,899
  6,854
  7,888
  9,001
  10,189
  11,366
  12,701
  14,107
  15,584
  17,129
  18,744
  20,428
  22,182
  24,007
  25,905
  27,877
  29,927
  32,057
  34,270
  36,571
  38,964
  41,454
  44,045
  46,743
  49,553
Operating income, $m
  381
  427
  552
  695
  856
  1,036
  1,235
  1,452
  1,687
  1,939
  2,209
  2,581
  2,885
  3,204
  3,539
  3,891
  4,257
  4,640
  5,038
  5,453
  5,884
  6,332
  6,797
  7,281
  7,784
  8,306
  8,850
  9,415
  10,004
  10,616
  11,255
EBITDA, $m
  653
  827
  1,029
  1,260
  1,520
  1,810
  2,131
  2,481
  2,860
  3,268
  3,703
  4,166
  4,655
  5,171
  5,712
  6,278
  6,870
  7,487
  8,130
  8,799
  9,495
  10,218
  10,969
  11,750
  12,561
  13,404
  14,281
  15,194
  16,144
  17,132
  18,163
Interest expense (income), $m
  142
  135
  187
  248
  317
  395
  482
  578
  683
  796
  919
  1,049
  1,188
  1,335
  1,489
  1,651
  1,821
  1,998
  2,184
  2,376
  2,577
  2,785
  3,002
  3,227
  3,461
  3,704
  3,957
  4,220
  4,494
  4,778
  5,075
Earnings before tax, $m
  246
  292
  365
  447
  540
  642
  753
  874
  1,004
  1,143
  1,291
  1,532
  1,697
  1,870
  2,050
  2,239
  2,436
  2,641
  2,855
  3,076
  3,307
  3,546
  3,795
  4,054
  4,322
  4,602
  4,893
  5,195
  5,510
  5,838
  6,180
Tax expense, $m
  33
  79
  99
  121
  146
  173
  203
  236
  271
  309
  348
  414
  458
  505
  554
  605
  658
  713
  771
  831
  893
  958
  1,025
  1,095
  1,167
  1,243
  1,321
  1,403
  1,488
  1,576
  1,669
Net income, $m
  204
  213
  266
  327
  394
  468
  550
  638
  733
  834
  942
  1,119
  1,239
  1,365
  1,497
  1,635
  1,778
  1,928
  2,084
  2,246
  2,414
  2,589
  2,770
  2,959
  3,155
  3,359
  3,572
  3,792
  4,022
  4,262
  4,511

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  19
  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
  10,201
  12,885
  16,023
  19,614
  23,669
  28,192
  33,180
  38,631
  44,535
  50,883
  57,666
  64,872
  72,492
  80,519
  88,945
  97,767
  106,984
  116,595
  126,605
  137,021
  147,852
  159,109
  170,808
  182,964
  195,599
  208,733
  222,392
  236,601
  251,389
  266,787
  282,828
Adjusted assets (=assets-cash), $m
  10,182
  12,885
  16,023
  19,614
  23,669
  28,192
  33,180
  38,631
  44,535
  50,883
  57,666
  64,872
  72,492
  80,519
  88,945
  97,767
  106,984
  116,595
  126,605
  137,021
  147,852
  159,109
  170,808
  182,964
  195,599
  208,733
  222,392
  236,601
  251,389
  266,787
  282,828
Revenue / Adjusted assets
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
  0.215
Average production assets, $m
  7,464
  9,441
  11,740
  14,372
  17,343
  20,657
  24,312
  28,305
  32,632
  37,283
  42,253
  47,533
  53,117
  58,998
  65,172
  71,636
  78,389
  85,431
  92,766
  100,398
  108,334
  116,582
  125,154
  134,062
  143,319
  152,943
  162,951
  173,362
  184,198
  195,480
  207,234
Working capital, $m
  -257
  299
  372
  455
  550
  655
  770
  897
  1,034
  1,182
  1,339
  1,506
  1,683
  1,870
  2,065
  2,270
  2,484
  2,707
  2,940
  3,182
  3,433
  3,695
  3,966
  4,248
  4,542
  4,847
  5,164
  5,494
  5,837
  6,195
  6,567
Total debt, $m
  3,879
  5,346
  7,072
  9,047
  11,277
  13,764
  16,508
  19,506
  22,753
  26,245
  29,975
  33,939
  38,130
  42,544
  47,179
  52,031
  57,100
  62,386
  67,892
  73,621
  79,577
  85,769
  92,203
  98,889
  105,838
  113,062
  120,575
  128,389
  136,523
  144,992
  153,814
Total liabilities, $m
  5,620
  7,087
  8,813
  10,788
  13,018
  15,505
  18,249
  21,247
  24,494
  27,986
  31,716
  35,680
  39,871
  44,285
  48,920
  53,772
  58,841
  64,127
  69,633
  75,362
  81,318
  87,510
  93,944
  100,630
  107,579
  114,803
  122,316
  130,130
  138,264
  146,733
  155,555
Total equity, $m
  4,581
  5,798
  7,210
  8,827
  10,651
  12,686
  14,931
  17,384
  20,041
  22,897
  25,950
  29,192
  32,622
  36,234
  40,025
  43,995
  48,143
  52,468
  56,972
  61,660
  66,533
  71,599
  76,863
  82,334
  88,020
  93,930
  100,076
  106,470
  113,125
  120,054
  127,273
Total liabilities and equity, $m
  10,201
  12,885
  16,023
  19,615
  23,669
  28,191
  33,180
  38,631
  44,535
  50,883
  57,666
  64,872
  72,493
  80,519
  88,945
  97,767
  106,984
  116,595
  126,605
  137,022
  147,851
  159,109
  170,807
  182,964
  195,599
  208,733
  222,392
  236,600
  251,389
  266,787
  282,828
Debt-to-equity ratio
  0.847
  0.920
  0.980
  1.020
  1.060
  1.080
  1.110
  1.120
  1.140
  1.150
  1.160
  1.160
  1.170
  1.170
  1.180
  1.180
  1.190
  1.190
  1.190
  1.190
  1.200
  1.200
  1.200
  1.200
  1.200
  1.200
  1.200
  1.210
  1.210
  1.210
  1.210
Adjusted equity ratio
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  204
  213
  266
  327
  394
  468
  550
  638
  733
  834
  942
  1,119
  1,239
  1,365
  1,497
  1,635
  1,778
  1,928
  2,084
  2,246
  2,414
  2,589
  2,770
  2,959
  3,155
  3,359
  3,572
  3,792
  4,022
  4,262
  4,511
Depreciation, amort., depletion, $m
  272
  400
  477
  565
  664
  774
  896
  1,029
  1,173
  1,328
  1,494
  1,584
  1,771
  1,967
  2,172
  2,388
  2,613
  2,848
  3,092
  3,347
  3,611
  3,886
  4,172
  4,469
  4,777
  5,098
  5,432
  5,779
  6,140
  6,516
  6,908
Funds from operations, $m
  378
  614
  743
  891
  1,058
  1,242
  1,446
  1,667
  1,906
  2,163
  2,436
  2,703
  3,009
  3,331
  3,669
  4,023
  4,391
  4,776
  5,176
  5,592
  6,025
  6,475
  6,942
  7,428
  7,933
  8,458
  9,003
  9,571
  10,162
  10,778
  11,419
Change in working capital, $m
  -78
  63
  73
  83
  94
  105
  116
  127
  137
  147
  157
  167
  177
  186
  196
  205
  214
  223
  232
  242
  251
  261
  272
  282
  293
  305
  317
  330
  343
  358
  372
Cash from operations, $m
  456
  551
  670
  808
  963
  1,137
  1,330
  1,540
  1,769
  2,015
  2,279
  2,536
  2,832
  3,145
  3,474
  3,818
  4,177
  4,553
  4,944
  5,350
  5,774
  6,213
  6,671
  7,146
  7,639
  8,153
  8,686
  9,241
  9,819
  10,420
  11,047
Maintenance CAPEX, $m
  0
  -249
  -315
  -391
  -479
  -578
  -689
  -810
  -944
  -1,088
  -1,243
  -1,408
  -1,584
  -1,771
  -1,967
  -2,172
  -2,388
  -2,613
  -2,848
  -3,092
  -3,347
  -3,611
  -3,886
  -4,172
  -4,469
  -4,777
  -5,098
  -5,432
  -5,779
  -6,140
  -6,516
New CAPEX, $m
  -532
  -1,978
  -2,299
  -2,632
  -2,971
  -3,314
  -3,655
  -3,993
  -4,326
  -4,652
  -4,970
  -5,280
  -5,584
  -5,881
  -6,174
  -6,464
  -6,753
  -7,042
  -7,335
  -7,632
  -7,936
  -8,248
  -8,572
  -8,908
  -9,258
  -9,624
  -10,008
  -10,411
  -10,836
  -11,282
  -11,754
Cash from investing activities, $m
  -752
  -2,227
  -2,614
  -3,023
  -3,450
  -3,892
  -4,344
  -4,803
  -5,270
  -5,740
  -6,213
  -6,688
  -7,168
  -7,652
  -8,141
  -8,636
  -9,141
  -9,655
  -10,183
  -10,724
  -11,283
  -11,859
  -12,458
  -13,080
  -13,727
  -14,401
  -15,106
  -15,843
  -16,615
  -17,422
  -18,270
Free cash flow, $m
  -296
  -1,676
  -1,943
  -2,215
  -2,487
  -2,754
  -3,014
  -3,263
  -3,500
  -3,724
  -3,934
  -4,153
  -4,336
  -4,507
  -4,667
  -4,819
  -4,963
  -5,103
  -5,239
  -5,374
  -5,509
  -5,646
  -5,787
  -5,934
  -6,087
  -6,249
  -6,420
  -6,602
  -6,795
  -7,002
  -7,223
Issuance/(repayment) of debt, $m
  -208
  1,486
  1,726
  1,975
  2,230
  2,487
  2,744
  2,998
  3,247
  3,492
  3,730
  3,963
  4,191
  4,415
  4,634
  4,852
  5,069
  5,286
  5,506
  5,729
  5,957
  6,192
  6,434
  6,686
  6,949
  7,224
  7,512
  7,815
  8,133
  8,469
  8,823
Issuance/(repurchase) of shares, $m
  604
  1,004
  1,146
  1,290
  1,431
  1,567
  1,695
  1,815
  1,924
  2,023
  2,110
  2,124
  2,190
  2,247
  2,295
  2,335
  2,369
  2,397
  2,421
  2,441
  2,460
  2,477
  2,494
  2,511
  2,530
  2,551
  2,575
  2,602
  2,632
  2,667
  2,707
Cash from financing (excl. dividends), $m  
  386
  2,490
  2,872
  3,265
  3,661
  4,054
  4,439
  4,813
  5,171
  5,515
  5,840
  6,087
  6,381
  6,662
  6,929
  7,187
  7,438
  7,683
  7,927
  8,170
  8,417
  8,669
  8,928
  9,197
  9,479
  9,775
  10,087
  10,417
  10,765
  11,136
  11,530
Total cash flow (excl. dividends), $m
  91
  814
  928
  1,050
  1,174
  1,300
  1,425
  1,549
  1,671
  1,790
  1,907
  1,935
  2,046
  2,155
  2,262
  2,369
  2,474
  2,581
  2,688
  2,796
  2,908
  3,022
  3,141
  3,264
  3,392
  3,526
  3,667
  3,815
  3,970
  4,134
  4,307
Retained Cash Flow (-), $m
  -413
  -1,217
  -1,412
  -1,616
  -1,825
  -2,035
  -2,245
  -2,453
  -2,657
  -2,857
  -3,052
  -3,243
  -3,429
  -3,612
  -3,792
  -3,970
  -4,147
  -4,325
  -4,505
  -4,687
  -4,874
  -5,066
  -5,264
  -5,471
  -5,686
  -5,910
  -6,146
  -6,394
  -6,655
  -6,929
  -7,218
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
 
  -403
  -484
  -566
  -650
  -735
  -820
  -904
  -986
  -1,067
  -1,146
  -1,308
  -1,383
  -1,457
  -1,530
  -1,601
  -1,673
  -1,745
  -1,817
  -1,891
  -1,966
  -2,043
  -2,123
  -2,207
  -2,293
  -2,384
  -2,479
  -2,579
  -2,684
  -2,795
  -2,912
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  -373
  -411
  -438
  -454
  -460
  -454
  -439
  -416
  -386
  -351
  -335
  -292
  -249
  -209
  -172
  -139
  -110
  -85
  -64
  -47
  -34
  -24
  -17
  -11
  -7
  -5
  -3
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  83.0
  70.0
  59.9
  52.0
  45.7
  40.6
  36.5
  33.1
  30.2
  27.8
  25.8
  24.1
  22.7
  21.4
  20.3
  19.3
  18.4
  17.7
  17.0
  16.4
  15.8
  15.3
  14.9
  14.5
  14.1
  13.7
  13.4
  13.1
  12.8
  12.5

AltaGas Ltd is a Canada-based energy infrastructure company. The Company operates through three segments: Gas, Power and Utilities. The Gas segment transacts approximately two billion cubic feet per day (Bcf/d) of natural gas and includes natural gas gathering and processing, natural gas liquids extraction and separation, transmission, storage and natural gas marketing, as well as its interest in Petrogas Energy Corp. The Power segment includes generation assets located across North America with over 2,000 megawatt (MW) of capacity from over five fuel types, with opportunities to expand in California and across the United States, as well as the opportunity to develop new gas-fired and renewable generation in Alberta to replace coal. The Utilities segment serves over 560,000 customers through ownership of regulated natural gas distribution utilities across North America and a regulated natural gas storage utility in the United States, delivering natural gas to homes and businesses.

FINANCIAL RATIOS  of  AltaGas Ltd. (ALA)

Valuation Ratios
P/E Ratio 23.4
Price to Sales 2.2
Price to Book 1
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow -62.8
Growth Rates
Sales Growth Rate -0.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.3%
Cap. Spend. - 3 Yr. Gr. Rate -0.6%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 73.5%
Total Debt to Equity 84.7%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 2.4%
Return On Total Capital 2.4%
Ret/ On T. Cap. - 3 Yr. Avg. 1.7%
Return On Equity 4.7%
Return On Equity - 3 Yr. Avg. 3.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 53.6%
Gross Margin - 3 Yr. Avg. 47.6%
EBITDA Margin 30.1%
EBITDA Margin - 3 Yr. Avg. 22.8%
Operating Margin 17.4%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 11.2%
Pre-Tax Margin - 3 Yr. Avg. 7.6%
Net Profit Margin 9.3%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 13.4%
Eff/ Tax Rate - 3 Yr. Avg. 23.3%
Payout Ratio 178.9%

ALA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ALA stock intrinsic value calculation we used $2190 million for the last fiscal year's total revenue generated by AltaGas Ltd.. The default revenue input number comes from 2016 income statement of AltaGas 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 ALA stock valuation model: a) initial revenue growth rate of 26.5% 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 8.1%, whose default value for ALA is calculated based on our internal credit rating of AltaGas 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 AltaGas 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 ALA stock the variable cost ratio is equal to 85.4%.

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 ALA 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 AltaGas Ltd..

Corporate tax rate of 27% is the nominal tax rate for AltaGas 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 ALA 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 ALA are equal to 340.8%.

Life of production assets of 30.6 years is the average useful life of capital assets used in AltaGas 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 ALA is equal to 10.8%. 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 - $4581 million for AltaGas 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 170.891 million for AltaGas 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 AltaGas Ltd. at the current share price and the inputted number of shares is $4.9 billion.

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Financial statements of ALA
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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