Intrinsic value of Alacer Gold Corp. - ASR

Previous Close

$2.04

  Intrinsic Value

$1.17

stock screener

  Rating & Target

sell

-43%

  Value-price divergence*

-66%

Previous close

$2.04

 
Intrinsic value

$1.17

 
Up/down potential

-43%

 
Rating

sell

 
Value-price divergence*

-66%

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

We calculate the intrinsic value of ASR 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 0.6

 

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, %
  -40.19
  13.70
  12.83
  12.05
  11.34
  10.71
  10.14
  9.62
  9.16
  8.75
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
  6.45
  6.31
  6.18
  6.06
  5.95
  5.86
  5.77
  5.69
  5.62
  5.56
  5.51
  5.46
  5.41
Revenue, $m
  192
  218
  246
  276
  307
  340
  375
  411
  448
  488
  528
  571
  615
  661
  708
  758
  809
  863
  919
  977
  1,037
  1,100
  1,165
  1,233
  1,305
  1,379
  1,456
  1,537
  1,622
  1,711
  1,803
Variable operating expenses, $m
 
  49
  55
  62
  69
  76
  84
  92
  100
  109
  118
  128
  138
  148
  159
  170
  181
  193
  206
  219
  232
  246
  261
  276
  292
  309
  326
  344
  363
  383
  404
Fixed operating expenses, $m
 
  160
  164
  168
  172
  176
  181
  185
  190
  195
  200
  205
  210
  215
  220
  226
  232
  237
  243
  249
  256
  262
  269
  275
  282
  289
  296
  304
  311
  319
  327
Total operating expenses, $m
  195
  209
  219
  230
  241
  252
  265
  277
  290
  304
  318
  333
  348
  363
  379
  396
  413
  430
  449
  468
  488
  508
  530
  551
  574
  598
  622
  648
  674
  702
  731
Operating income, $m
  -4
  10
  27
  46
  66
  87
  110
  133
  158
  184
  210
  238
  267
  298
  329
  362
  397
  432
  470
  508
  549
  591
  636
  682
  730
  781
  834
  889
  947
  1,008
  1,072
EBITDA, $m
  49
  10
  27
  46
  66
  87
  110
  133
  158
  184
  210
  238
  267
  298
  329
  362
  397
  432
  470
  508
  549
  591
  636
  682
  730
  781
  834
  889
  947
  1,008
  1,072
Interest expense (income), $m
  0
  0
  1
  3
  5
  6
  8
  10
  12
  14
  16
  18
  21
  23
  25
  28
  31
  33
  36
  39
  43
  46
  49
  53
  56
  60
  64
  69
  73
  78
  82
Earnings before tax, $m
  -3
  10
  26
  43
  62
  81
  102
  123
  146
  170
  194
  220
  247
  275
  304
  334
  366
  399
  433
  469
  506
  546
  586
  629
  674
  720
  769
  821
  874
  931
  990
Tax expense, $m
  -24
  3
  7
  12
  17
  22
  27
  33
  39
  46
  52
  59
  67
  74
  82
  90
  99
  108
  117
  127
  137
  147
  158
  170
  182
  195
  208
  222
  236
  251
  267
Net income, $m
  8
  7
  19
  32
  45
  59
  74
  90
  107
  124
  142
  161
  180
  201
  222
  244
  267
  291
  316
  342
  370
  398
  428
  459
  492
  526
  562
  599
  638
  679
  722

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  56
  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
  1,169
  1,262
  1,424
  1,595
  1,776
  1,966
  2,166
  2,374
  2,592
  2,818
  3,054
  3,300
  3,555
  3,820
  4,095
  4,382
  4,679
  4,988
  5,310
  5,645
  5,994
  6,357
  6,735
  7,130
  7,541
  7,970
  8,419
  8,887
  9,376
  9,888
  10,423
Adjusted assets (=assets-cash), $m
  1,113
  1,262
  1,424
  1,595
  1,776
  1,966
  2,166
  2,374
  2,592
  2,818
  3,054
  3,300
  3,555
  3,820
  4,095
  4,382
  4,679
  4,988
  5,310
  5,645
  5,994
  6,357
  6,735
  7,130
  7,541
  7,970
  8,419
  8,887
  9,376
  9,888
  10,423
Revenue / Adjusted assets
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
  0.173
Average production assets, $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
Working capital, $m
  364
  109
  123
  138
  154
  170
  187
  205
  224
  244
  264
  285
  307
  330
  354
  379
  405
  432
  459
  488
  518
  550
  583
  617
  652
  689
  728
  769
  811
  855
  902
Total debt, $m
  0
  40
  84
  130
  178
  229
  282
  338
  397
  457
  521
  586
  655
  726
  800
  876
  956
  1,039
  1,125
  1,215
  1,308
  1,406
  1,507
  1,613
  1,723
  1,838
  1,958
  2,084
  2,215
  2,352
  2,495
Total liabilities, $m
  298
  338
  382
  428
  476
  527
  580
  636
  695
  755
  819
  884
  953
  1,024
  1,098
  1,174
  1,254
  1,337
  1,423
  1,513
  1,606
  1,704
  1,805
  1,911
  2,021
  2,136
  2,256
  2,382
  2,513
  2,650
  2,793
Total equity, $m
  871
  924
  1,042
  1,168
  1,300
  1,439
  1,585
  1,738
  1,897
  2,063
  2,236
  2,415
  2,602
  2,796
  2,998
  3,207
  3,425
  3,652
  3,887
  4,132
  4,387
  4,653
  4,930
  5,219
  5,520
  5,834
  6,163
  6,505
  6,863
  7,238
  7,629
Total liabilities and equity, $m
  1,169
  1,262
  1,424
  1,596
  1,776
  1,966
  2,165
  2,374
  2,592
  2,818
  3,055
  3,299
  3,555
  3,820
  4,096
  4,381
  4,679
  4,989
  5,310
  5,645
  5,993
  6,357
  6,735
  7,130
  7,541
  7,970
  8,419
  8,887
  9,376
  9,888
  10,422
Debt-to-equity ratio
  0.000
  0.040
  0.080
  0.110
  0.140
  0.160
  0.180
  0.190
  0.210
  0.220
  0.230
  0.240
  0.250
  0.260
  0.270
  0.270
  0.280
  0.280
  0.290
  0.290
  0.300
  0.300
  0.310
  0.310
  0.310
  0.320
  0.320
  0.320
  0.320
  0.320
  0.330
Adjusted equity ratio
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732
  0.732

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8
  7
  19
  32
  45
  59
  74
  90
  107
  124
  142
  161
  180
  201
  222
  244
  267
  291
  316
  342
  370
  398
  428
  459
  492
  526
  562
  599
  638
  679
  722
Depreciation, amort., depletion, $m
  53
  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
Funds from operations, $m
  54
  7
  19
  32
  45
  59
  74
  90
  107
  124
  142
  161
  180
  201
  222
  244
  267
  291
  316
  342
  370
  398
  428
  459
  492
  526
  562
  599
  638
  679
  722
Change in working capital, $m
  4
  13
  14
  15
  16
  16
  17
  18
  19
  20
  20
  21
  22
  23
  24
  25
  26
  27
  28
  29
  30
  31
  33
  34
  36
  37
  39
  41
  42
  44
  46
Cash from operations, $m
  50
  -6
  5
  17
  29
  43
  57
  72
  88
  104
  121
  139
  158
  178
  198
  219
  241
  264
  288
  313
  340
  367
  395
  425
  456
  489
  523
  559
  596
  635
  676
Maintenance CAPEX, $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
New CAPEX, $m
  -199
  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 from investing activities, $m
  -260
  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
Free cash flow, $m
  -210
  -6
  5
  17
  29
  43
  57
  72
  88
  104
  121
  139
  158
  178
  198
  219
  241
  264
  288
  313
  340
  367
  395
  425
  456
  489
  523
  559
  596
  635
  676
Issuance/(repayment) of debt, $m
  0
  40
  43
  46
  48
  51
  53
  56
  58
  61
  63
  66
  68
  71
  74
  77
  80
  83
  86
  90
  93
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
Issuance/(repurchase) of shares, $m
  0
  102
  100
  94
  87
  80
  72
  62
  53
  42
  31
  19
  6
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  17
  142
  143
  140
  135
  131
  125
  118
  111
  103
  94
  85
  74
  71
  74
  77
  80
  83
  86
  90
  93
  97
  101
  106
  110
  115
  120
  125
  131
  137
  143
Total cash flow (excl. dividends), $m
  -198
  136
  148
  157
  165
  174
  182
  190
  199
  207
  216
  224
  233
  249
  272
  296
  321
  347
  375
  403
  433
  464
  497
  531
  567
  604
  643
  684
  727
  772
  820
Retained Cash Flow (-), $m
  -11
  -109
  -119
  -126
  -132
  -139
  -146
  -153
  -159
  -166
  -173
  -180
  -187
  -194
  -202
  -210
  -218
  -226
  -236
  -245
  -255
  -266
  -277
  -289
  -301
  -314
  -328
  -343
  -358
  -374
  -392
Prev. year cash balance distribution, $m
 
  56
  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
 
  83
  29
  31
  33
  35
  36
  38
  39
  41
  43
  45
  46
  55
  70
  86
  103
  121
  139
  158
  178
  198
  220
  242
  265
  290
  315
  341
  369
  398
  428
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
 
  80
  27
  27
  27
  27
  26
  26
  25
  24
  22
  21
  20
  21
  24
  25
  26
  26
  26
  24
  23
  21
  18
  16
  14
  11
  9
  7
  6
  4
  3
Current shareholders' claim on cash, %
  100
  84.9
  73.5
  65.1
  58.8
  54.1
  50.5
  47.8
  45.8
  44.4
  43.5
  43.0
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8
  42.8

Alacer Gold Corp., an intermediate gold mining company, engages in the mining, development, and exploration of mineral deposits in Turkey. It primarily holds 80% interest in the Çöpler gold mine located to the southwest of the city of Erzincan, Turkey. The company is based in Englewood, Colorado.

FINANCIAL RATIOS  of  Alacer Gold Corp. (ASR)

Valuation Ratios
P/E Ratio 74.5
Price to Sales 3.1
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 11.9
Price to Free Cash Flow -4
Growth Rates
Sales Growth Rate -40.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 126.1%
Cap. Spend. - 3 Yr. Gr. Rate 18.5%
Financial Strength
Quick Ratio NaN
Current Ratio 5.2
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.7%
Ret/ On Assets - 3 Yr. Avg. 5.2%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 6.8%
Return On Equity 0.9%
Return On Equity - 3 Yr. Avg. 6.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 13%
Gross Margin - 3 Yr. Avg. 30.3%
EBITDA Margin 26%
EBITDA Margin - 3 Yr. Avg. 41.4%
Operating Margin -1.6%
Oper. Margin - 3 Yr. Avg. 20%
Pre-Tax Margin -1.6%
Pre-Tax Margin - 3 Yr. Avg. 18.9%
Net Profit Margin 4.2%
Net Profit Margin - 3 Yr. Avg. 15.5%
Effective Tax Rate 800%
Eff/ Tax Rate - 3 Yr. Avg. 266.7%
Payout Ratio 0%

ASR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ASR stock intrinsic value calculation we used $192 million for the last fiscal year's total revenue generated by Alacer Gold Corp.. The default revenue input number comes from 2016 income statement of Alacer Gold 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 ASR stock valuation model: a) initial revenue growth rate of 13.7% 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 ASR is calculated based on our internal credit rating of Alacer Gold 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 Alacer Gold 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 ASR stock the variable cost ratio is equal to 22.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $156 million in the base year in the intrinsic value calculation for ASR 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 Alacer Gold Corp..

Corporate tax rate of 27% is the nominal tax rate for Alacer Gold 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 ASR 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 ASR are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in Alacer Gold 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 ASR is equal to 50%. 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 - $871 million for Alacer Gold 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 292.851 million for Alacer Gold 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 Alacer Gold Corp. at the current share price and the inputted number of shares is $0.6 billion.

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Stock chart of ASR Financial statements of ASR
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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