Intrinsic value of Crescent Point Energy Corp. - CPG

Previous Close

$9.45

  Intrinsic Value

$4.28

stock screener

  Rating & Target

str. sell

-55%

Previous close

$9.45

 
Intrinsic value

$4.28

 
Up/down potential

-55%

 
Rating

str. sell

We calculate the intrinsic value of CPG 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 5.2

 

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, %
  -7.57
  17.70
  16.43
  15.29
  14.26
  13.33
  12.50
  11.75
  11.07
  10.47
  9.92
  9.43
  8.99
  8.59
  8.23
  7.91
  7.61
  7.35
  7.12
  6.91
  6.72
  6.54
  6.39
  6.25
  6.13
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
Revenue, $m
  2,185
  2,572
  2,994
  3,452
  3,944
  4,470
  5,029
  5,620
  6,242
  6,895
  7,579
  8,294
  9,039
  9,815
  10,623
  11,463
  12,336
  13,243
  14,185
  15,165
  16,183
  17,243
  18,344
  19,491
  20,685
  21,929
  23,225
  24,577
  25,987
  27,459
  28,996
Variable operating expenses, $m
 
  4,522
  5,261
  6,061
  6,922
  7,841
  8,818
  9,851
  10,939
  12,081
  13,277
  14,502
  15,805
  17,162
  18,574
  20,042
  21,569
  23,155
  24,803
  26,516
  28,296
  30,148
  32,074
  34,079
  36,167
  38,342
  40,608
  42,972
  45,438
  48,012
  50,699
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
  3,242
  4,522
  5,261
  6,061
  6,922
  7,841
  8,818
  9,851
  10,939
  12,081
  13,277
  14,502
  15,805
  17,162
  18,574
  20,042
  21,569
  23,155
  24,803
  26,516
  28,296
  30,148
  32,074
  34,079
  36,167
  38,342
  40,608
  42,972
  45,438
  48,012
  50,699
Operating income, $m
  -1,058
  -1,950
  -2,266
  -2,609
  -2,977
  -3,371
  -3,789
  -4,231
  -4,697
  -5,186
  -5,698
  -6,208
  -6,766
  -7,347
  -7,951
  -8,580
  -9,233
  -9,912
  -10,617
  -11,351
  -12,113
  -12,905
  -13,730
  -14,588
  -15,482
  -16,413
  -17,383
  -18,395
  -19,451
  -20,552
  -21,703
EBITDA, $m
  1,162
  648
  754
  870
  994
  1,126
  1,267
  1,416
  1,573
  1,737
  1,910
  2,090
  2,278
  2,473
  2,677
  2,888
  3,108
  3,337
  3,574
  3,821
  4,078
  4,345
  4,622
  4,911
  5,212
  5,525
  5,852
  6,193
  6,548
  6,919
  7,306
Interest expense (income), $m
  158
  145
  189
  238
  290
  346
  406
  470
  538
  609
  683
  762
  843
  928
  1,017
  1,109
  1,205
  1,305
  1,409
  1,517
  1,629
  1,745
  1,866
  1,992
  2,123
  2,259
  2,401
  2,550
  2,704
  2,865
  3,034
Earnings before tax, $m
  -1,314
  -2,095
  -2,456
  -2,847
  -3,267
  -3,717
  -4,195
  -4,701
  -5,235
  -5,795
  -6,382
  -6,969
  -7,609
  -8,275
  -8,968
  -9,689
  -10,438
  -11,217
  -12,026
  -12,867
  -13,741
  -14,650
  -15,596
  -16,580
  -17,605
  -18,672
  -19,785
  -20,945
  -22,155
  -23,418
  -24,736
Tax expense, $m
  -381
  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
Net income, $m
  -933
  -2,095
  -2,456
  -2,847
  -3,267
  -3,717
  -4,195
  -4,701
  -5,235
  -5,795
  -6,382
  -6,969
  -7,609
  -8,275
  -8,968
  -9,689
  -10,438
  -11,217
  -12,026
  -12,867
  -13,741
  -14,650
  -15,596
  -16,580
  -17,605
  -18,672
  -19,785
  -20,945
  -22,155
  -23,418
  -24,736

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  13
  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
  16,164
  19,050
  22,180
  25,571
  29,216
  33,112
  37,250
  41,627
  46,237
  51,077
  56,144
  61,437
  66,957
  72,707
  78,689
  84,910
  91,376
  98,095
  105,077
  112,334
  119,878
  127,723
  135,884
  144,377
  153,221
  162,434
  172,037
  182,051
  192,498
  203,402
  214,789
Adjusted assets (=assets-cash), $m
  16,151
  19,050
  22,180
  25,571
  29,216
  33,112
  37,250
  41,627
  46,237
  51,077
  56,144
  61,437
  66,957
  72,707
  78,689
  84,910
  91,376
  98,095
  105,077
  112,334
  119,878
  127,723
  135,884
  144,377
  153,221
  162,434
  172,037
  182,051
  192,498
  203,402
  214,789
Revenue / Adjusted assets
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
Average production assets, $m
  15,084
  17,753
  20,670
  23,829
  27,227
  30,857
  34,714
  38,792
  43,088
  47,599
  52,320
  57,253
  62,398
  67,756
  73,331
  79,128
  85,153
  91,415
  97,922
  104,685
  111,715
  119,025
  126,631
  134,546
  142,788
  151,373
  160,322
  169,654
  179,389
  189,551
  200,163
Working capital, $m
  -439
  -424
  -494
  -570
  -651
  -738
  -830
  -927
  -1,030
  -1,138
  -1,251
  -1,369
  -1,491
  -1,620
  -1,753
  -1,891
  -2,035
  -2,185
  -2,341
  -2,502
  -2,670
  -2,845
  -3,027
  -3,216
  -3,413
  -3,618
  -3,832
  -4,055
  -4,288
  -4,531
  -4,784
Total debt, $m
  3,821
  4,982
  6,253
  7,630
  9,110
  10,691
  12,372
  14,149
  16,020
  17,985
  20,042
  22,191
  24,433
  26,767
  29,196
  31,721
  34,346
  37,074
  39,909
  42,856
  45,918
  49,103
  52,417
  55,865
  59,456
  63,196
  67,095
  71,161
  75,402
  79,829
  84,452
Total liabilities, $m
  6,572
  7,734
  9,005
  10,382
  11,862
  13,443
  15,124
  16,901
  18,772
  20,737
  22,794
  24,943
  27,185
  29,519
  31,948
  34,473
  37,098
  39,826
  42,661
  45,608
  48,670
  51,855
  55,169
  58,617
  62,208
  65,948
  69,847
  73,913
  78,154
  82,581
  87,204
Total equity, $m
  9,591
  11,316
  13,175
  15,189
  17,355
  19,668
  22,127
  24,726
  27,465
  30,340
  33,349
  36,493
  39,773
  43,188
  46,741
  50,436
  54,277
  58,268
  62,416
  66,726
  71,207
  75,867
  80,715
  85,760
  91,013
  96,486
  102,190
  108,138
  114,344
  120,821
  127,584
Total liabilities and equity, $m
  16,163
  19,050
  22,180
  25,571
  29,217
  33,111
  37,251
  41,627
  46,237
  51,077
  56,143
  61,436
  66,958
  72,707
  78,689
  84,909
  91,375
  98,094
  105,077
  112,334
  119,877
  127,722
  135,884
  144,377
  153,221
  162,434
  172,037
  182,051
  192,498
  203,402
  214,788
Debt-to-equity ratio
  0.398
  0.440
  0.470
  0.500
  0.520
  0.540
  0.560
  0.570
  0.580
  0.590
  0.600
  0.610
  0.610
  0.620
  0.620
  0.630
  0.630
  0.640
  0.640
  0.640
  0.640
  0.650
  0.650
  0.650
  0.650
  0.650
  0.660
  0.660
  0.660
  0.660
  0.660
Adjusted equity ratio
  0.593
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594
  0.594

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -933
  -2,095
  -2,456
  -2,847
  -3,267
  -3,717
  -4,195
  -4,701
  -5,235
  -5,795
  -6,382
  -6,969
  -7,609
  -8,275
  -8,968
  -9,689
  -10,438
  -11,217
  -12,026
  -12,867
  -13,741
  -14,650
  -15,596
  -16,580
  -17,605
  -18,672
  -19,785
  -20,945
  -22,155
  -23,418
  -24,736
Depreciation, amort., depletion, $m
  2,220
  2,598
  3,021
  3,479
  3,971
  4,497
  5,056
  5,647
  6,270
  6,924
  7,608
  8,298
  9,043
  9,820
  10,628
  11,468
  12,341
  13,249
  14,192
  15,172
  16,191
  17,250
  18,352
  19,499
  20,694
  21,938
  23,235
  24,588
  25,998
  27,471
  29,009
Funds from operations, $m
  1,494
  503
  565
  632
  704
  780
  861
  946
  1,035
  1,129
  1,226
  1,328
  1,434
  1,545
  1,660
  1,779
  1,903
  2,032
  2,165
  2,305
  2,449
  2,600
  2,756
  2,919
  3,089
  3,266
  3,450
  3,643
  3,844
  4,054
  4,273
Change in working capital, $m
  -30
  -64
  -70
  -76
  -81
  -87
  -92
  -97
  -103
  -108
  -113
  -118
  -123
  -128
  -133
  -139
  -144
  -150
  -156
  -162
  -168
  -175
  -182
  -189
  -197
  -205
  -214
  -223
  -233
  -243
  -254
Cash from operations, $m
  1,524
  567
  635
  708
  785
  867
  953
  1,043
  1,138
  1,236
  1,339
  1,446
  1,557
  1,673
  1,793
  1,917
  2,047
  2,181
  2,321
  2,466
  2,617
  2,774
  2,938
  3,108
  3,286
  3,471
  3,664
  3,866
  4,077
  4,296
  4,526
Maintenance CAPEX, $m
  0
  -2,186
  -2,573
  -2,996
  -3,454
  -3,946
  -4,472
  -5,031
  -5,622
  -6,245
  -6,898
  -7,583
  -8,298
  -9,043
  -9,820
  -10,628
  -11,468
  -12,341
  -13,249
  -14,192
  -15,172
  -16,191
  -17,250
  -18,352
  -19,499
  -20,694
  -21,938
  -23,235
  -24,588
  -25,998
  -27,471
New CAPEX, $m
  -1,396
  -2,669
  -2,917
  -3,160
  -3,398
  -3,630
  -3,857
  -4,079
  -4,296
  -4,510
  -4,722
  -4,933
  -5,144
  -5,358
  -5,575
  -5,797
  -6,025
  -6,262
  -6,507
  -6,763
  -7,030
  -7,311
  -7,605
  -7,915
  -8,242
  -8,586
  -8,949
  -9,332
  -9,736
  -10,162
  -10,611
Cash from investing activities, $m
  -1,360
  -4,855
  -5,490
  -6,156
  -6,852
  -7,576
  -8,329
  -9,110
  -9,918
  -10,755
  -11,620
  -12,516
  -13,442
  -14,401
  -15,395
  -16,425
  -17,493
  -18,603
  -19,756
  -20,955
  -22,202
  -23,502
  -24,855
  -26,267
  -27,741
  -29,280
  -30,887
  -32,567
  -34,324
  -36,160
  -38,082
Free cash flow, $m
  164
  -4,288
  -4,855
  -5,448
  -6,066
  -6,709
  -7,376
  -8,066
  -8,780
  -9,518
  -10,281
  -11,069
  -11,885
  -12,728
  -13,602
  -14,507
  -15,446
  -16,421
  -17,434
  -18,488
  -19,585
  -20,727
  -21,917
  -23,159
  -24,455
  -25,808
  -27,223
  -28,701
  -30,247
  -31,864
  -33,556
Issuance/(repayment) of debt, $m
  -553
  1,174
  1,271
  1,377
  1,480
  1,581
  1,680
  1,777
  1,872
  1,965
  2,057
  2,149
  2,241
  2,334
  2,429
  2,526
  2,625
  2,728
  2,835
  2,946
  3,063
  3,185
  3,313
  3,448
  3,591
  3,741
  3,899
  4,065
  4,241
  4,427
  4,623
Issuance/(repurchase) of shares, $m
  623
  3,819
  4,315
  4,861
  5,433
  6,031
  6,654
  7,301
  7,973
  8,670
  9,391
  10,114
  10,888
  11,690
  12,522
  13,384
  14,279
  15,208
  16,174
  17,178
  18,222
  19,310
  20,444
  21,625
  22,858
  24,145
  25,489
  26,893
  28,360
  29,895
  31,500
Cash from financing (excl. dividends), $m  
  84
  4,993
  5,586
  6,238
  6,913
  7,612
  8,334
  9,078
  9,845
  10,635
  11,448
  12,263
  13,129
  14,024
  14,951
  15,910
  16,904
  17,936
  19,009
  20,124
  21,285
  22,495
  23,757
  25,073
  26,449
  27,886
  29,388
  30,958
  32,601
  34,322
  36,123
Total cash flow (excl. dividends), $m
  249
  706
  731
  790
  847
  903
  958
  1,012
  1,064
  1,116
  1,167
  1,193
  1,244
  1,296
  1,349
  1,402
  1,458
  1,515
  1,574
  1,636
  1,701
  1,768
  1,840
  1,915
  1,994
  2,077
  2,165
  2,257
  2,355
  2,458
  2,567
Retained Cash Flow (-), $m
  534
  -3,819
  -4,315
  -4,861
  -5,433
  -6,031
  -6,654
  -7,301
  -7,973
  -8,670
  -9,391
  -10,114
  -10,888
  -11,690
  -12,522
  -13,384
  -14,279
  -15,208
  -16,174
  -17,178
  -18,222
  -19,310
  -20,444
  -21,625
  -22,858
  -24,145
  -25,489
  -26,893
  -28,360
  -29,895
  -31,500
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
 
  -3,114
  -3,584
  -4,071
  -4,586
  -5,128
  -5,696
  -6,289
  -6,909
  -7,553
  -8,224
  -8,920
  -9,643
  -10,394
  -11,173
  -11,982
  -12,821
  -13,693
  -14,600
  -15,542
  -16,522
  -17,542
  -18,604
  -19,711
  -20,864
  -22,068
  -23,324
  -24,635
  -26,005
  -27,437
  -28,933
Discount rate, %
 
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
 
  -2,960
  -3,223
  -3,444
  -3,630
  -3,774
  -3,873
  -3,925
  -3,927
  -3,880
  -3,786
  -3,647
  -3,469
  -3,256
  -3,016
  -2,755
  -2,481
  -2,201
  -1,924
  -1,654
  -1,399
  -1,162
  -948
  -759
  -596
  -458
  -344
  -252
  -181
  -126
  -86
Current shareholders' claim on cash, %
  100
  63.7
  41.3
  27.0
  17.9
  12.0
  8.1
  5.5
  3.7
  2.6
  1.8
  1.2
  0.9
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Crescent Point Energy Corp. (Crescent Point) is a Canada-based oil and gas exploration, development and production company. The Company is an oil and gas producer with assets consisting of light and medium oil and natural gas reserves in Western Canada and the United States. Its crude oil and natural gas properties and related assets are located in the provinces of Saskatchewan, Alberta, British Columbia and Manitoba, and the states of North Dakota, Montana, Colorado and Utah. The Company holds a portfolio of assets in the Canadian portion of the Williston Basin. It holds interest in the Bakken and Torquay resource plays in the Canadian portion of the Williston Basin. The southwest Saskatchewan region contains two focus resource plays that the Company is developing. These include Shaunavon resource play and Viking light oil resource play. The Company holds interest in the Uinta Basin resource play located in northeast Utah.

FINANCIAL RATIOS  of  Crescent Point Energy Corp. (CPG)

Valuation Ratios
P/E Ratio -5.5
Price to Sales 2.3
Price to Book 0.5
Price to Tangible Book
Price to Cash Flow 3.4
Price to Free Cash Flow 40
Growth Rates
Sales Growth Rate -7.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.3%
Cap. Spend. - 3 Yr. Gr. Rate -5.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 38.9%
Total Debt to Equity 39.8%
Interest Coverage -7
Management Effectiveness
Return On Assets -4.9%
Ret/ On Assets - 3 Yr. Avg. -1.8%
Return On Total Capital -6.7%
Ret/ On T. Cap. - 3 Yr. Avg. -2.9%
Return On Equity -9.5%
Return On Equity - 3 Yr. Avg. -4.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 68.3%
Gross Margin - 3 Yr. Avg. 73.2%
EBITDA Margin 48.7%
EBITDA Margin - 3 Yr. Avg. 72.4%
Operating Margin -48.4%
Oper. Margin - 3 Yr. Avg. -38.7%
Pre-Tax Margin -60.1%
Pre-Tax Margin - 3 Yr. Avg. -32.6%
Net Profit Margin -42.7%
Net Profit Margin - 3 Yr. Avg. -21.6%
Effective Tax Rate 29%
Eff/ Tax Rate - 3 Yr. Avg. 35.4%
Payout Ratio -27.9%

CPG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CPG stock intrinsic value calculation we used $2185 million for the last fiscal year's total revenue generated by Crescent Point Energy Corp.. The default revenue input number comes from 2016 income statement of Crescent Point Energy 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 CPG stock valuation model: a) initial revenue growth rate of 17.7% 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 5.2%, whose default value for CPG is calculated based on our internal credit rating of Crescent Point Energy 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 Crescent Point Energy 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 CPG stock the variable cost ratio is equal to 176%.

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 CPG 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 3.8% for Crescent Point Energy Corp..

Corporate tax rate of 27% is the nominal tax rate for Crescent Point Energy 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 CPG 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 CPG are equal to 690.3%.

Life of production assets of 6.9 years is the average useful life of capital assets used in Crescent Point Energy 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 CPG is equal to -16.5%. 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 - $9591 million for Crescent Point Energy 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 545.802 million for Crescent Point Energy 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 Crescent Point Energy Corp. at the current share price and the inputted number of shares is $5.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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Financial statements of CPG
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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