Intrinsic value of Crescent Point Energy Corp. - CPG

Previous Close

$9.83

  Intrinsic Value

$4.56

stock screener

  Rating & Target

str. sell

-54%

  Value-price divergence*

-2%

Previous close

$9.83

 
Intrinsic value

$4.56

 
Up/down potential

-54%

 
Rating

str. sell

 
Value-price divergence*

-2%

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

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 5.0

 

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
  58.90
  53.51
  48.66
  44.29
  40.36
  36.83
  33.64
  30.78
  28.20
  25.88
  23.79
  21.91
  20.22
  18.70
  17.33
  16.10
  14.99
  13.99
  13.09
  12.28
  11.55
  10.90
  10.31
  9.78
  9.30
  8.87
  8.48
  8.13
  7.82
  7.54
Revenue, $m
  2,185
  3,472
  5,330
  7,923
  11,433
  16,047
  21,957
  29,345
  38,377
  49,200
  61,934
  76,671
  93,472
  112,375
  133,390
  156,507
  181,701
  208,934
  238,162
  269,338
  302,415
  337,353
  374,117
  412,681
  453,029
  495,158
  539,076
  584,803
  632,373
  681,830
  733,231
Variable operating expenses, $m
 
  6,096
  9,344
  13,879
  20,015
  28,083
  38,417
  51,333
  67,126
  86,050
  108,315
  134,056
  163,433
  196,484
  233,228
  273,648
  317,699
  365,315
  416,419
  470,928
  528,763
  589,851
  654,131
  721,559
  792,106
  865,768
  942,557
  1,022,509
  1,105,683
  1,192,157
  1,282,030
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
  6,096
  9,344
  13,879
  20,015
  28,083
  38,417
  51,333
  67,126
  86,050
  108,315
  134,056
  163,433
  196,484
  233,228
  273,648
  317,699
  365,315
  416,419
  470,928
  528,763
  589,851
  654,131
  721,559
  792,106
  865,768
  942,557
  1,022,509
  1,105,683
  1,192,157
  1,282,030
Operating income, $m
  -1,058
  -2,624
  -4,014
  -5,955
  -8,582
  -12,036
  -16,459
  -21,989
  -28,749
  -36,850
  -46,381
  -57,385
  -69,961
  -84,109
  -99,838
  -117,141
  -135,997
  -156,380
  -178,256
  -201,590
  -226,348
  -252,498
  -280,014
  -308,878
  -339,077
  -370,609
  -403,481
  -437,706
  -473,310
  -510,327
  -548,799
EBITDA, $m
  1,162
  875
  1,343
  1,996
  2,881
  4,043
  5,533
  7,394
  9,670
  12,397
  15,605
  19,319
  23,552
  28,315
  33,610
  39,435
  45,783
  52,645
  60,009
  67,864
  76,199
  85,002
  94,266
  103,982
  114,149
  124,764
  135,830
  147,352
  159,338
  171,799
  184,751
Interest expense (income), $m
  158
  145
  292
  505
  801
  1,202
  1,729
  2,405
  3,249
  4,281
  5,518
  6,973
  8,657
  10,578
  12,738
  15,139
  17,781
  20,661
  23,773
  27,113
  30,676
  34,456
  38,449
  42,650
  47,057
  51,668
  56,483
  61,502
  66,728
  72,164
  77,816
Earnings before tax, $m
  -1,314
  -2,769
  -4,307
  -6,460
  -9,383
  -13,238
  -18,189
  -24,393
  -31,998
  -41,131
  -51,899
  -64,359
  -78,618
  -94,687
  -112,576
  -132,280
  -153,779
  -177,041
  -202,029
  -228,703
  -257,024
  -286,954
  -318,463
  -351,528
  -386,134
  -422,278
  -459,963
  -499,208
  -540,038
  -582,491
  -626,615
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
  -2,769
  -4,307
  -6,460
  -9,383
  -13,238
  -18,189
  -24,393
  -31,998
  -41,131
  -51,899
  -64,359
  -78,618
  -94,687
  -112,576
  -132,280
  -153,779
  -177,041
  -202,029
  -228,703
  -257,024
  -286,954
  -318,463
  -351,528
  -386,134
  -422,278
  -459,963
  -499,208
  -540,038
  -582,491
  -626,615

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
  25,718
  39,480
  58,691
  84,687
  118,869
  162,646
  217,368
  284,274
  364,445
  458,771
  567,930
  692,388
  832,409
  988,075
  1,159,315
  1,345,936
  1,547,662
  1,764,164
  1,995,095
  2,240,114
  2,498,914
  2,771,238
  3,056,895
  3,355,771
  3,667,838
  3,993,156
  4,331,876
  4,684,243
  5,050,590
  5,431,342
Adjusted assets (=assets-cash), $m
  16,151
  25,718
  39,480
  58,691
  84,687
  118,869
  162,646
  217,368
  284,274
  364,445
  458,771
  567,930
  692,388
  832,409
  988,075
  1,159,315
  1,345,936
  1,547,662
  1,764,164
  1,995,095
  2,240,114
  2,498,914
  2,771,238
  3,056,895
  3,355,771
  3,667,838
  3,993,156
  4,331,876
  4,684,243
  5,050,590
  5,431,342
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
  23,967
  36,792
  54,694
  78,920
  110,775
  151,571
  202,566
  264,916
  339,628
  427,531
  529,257
  645,240
  775,726
  920,792
  1,080,371
  1,254,284
  1,442,274
  1,644,033
  1,859,239
  2,087,574
  2,328,751
  2,582,530
  2,848,735
  3,127,260
  3,418,077
  3,721,242
  4,036,897
  4,365,269
  4,706,670
  5,061,495
Working capital, $m
  -439
  -573
  -879
  -1,307
  -1,886
  -2,648
  -3,623
  -4,842
  -6,332
  -8,118
  -10,219
  -12,651
  -15,423
  -18,542
  -22,009
  -25,824
  -29,981
  -34,474
  -39,297
  -44,441
  -49,899
  -55,663
  -61,729
  -68,092
  -74,750
  -81,701
  -88,948
  -96,493
  -104,342
  -112,502
  -120,983
Total debt, $m
  3,821
  7,690
  13,277
  21,076
  31,631
  45,509
  63,282
  85,499
  112,663
  145,213
  183,509
  227,827
  278,358
  335,206
  398,407
  467,930
  543,698
  625,599
  713,499
  807,256
  906,734
  1,011,807
  1,122,371
  1,238,347
  1,359,691
  1,486,390
  1,618,469
  1,755,990
  1,899,051
  2,047,788
  2,202,373
Total liabilities, $m
  6,572
  10,442
  16,029
  23,828
  34,383
  48,261
  66,034
  88,251
  115,415
  147,965
  186,261
  230,579
  281,110
  337,958
  401,159
  470,682
  546,450
  628,351
  716,251
  810,008
  909,486
  1,014,559
  1,125,123
  1,241,099
  1,362,443
  1,489,142
  1,621,221
  1,758,742
  1,901,803
  2,050,540
  2,205,125
Total equity, $m
  9,591
  15,277
  23,451
  34,862
  50,304
  70,608
  96,612
  129,116
  168,859
  216,480
  272,510
  337,350
  411,278
  494,451
  586,917
  688,633
  799,486
  919,311
  1,047,913
  1,185,086
  1,330,628
  1,484,355
  1,646,115
  1,815,795
  1,993,328
  2,178,696
  2,371,935
  2,573,134
  2,782,440
  3,000,050
  3,226,217
Total liabilities and equity, $m
  16,163
  25,719
  39,480
  58,690
  84,687
  118,869
  162,646
  217,367
  284,274
  364,445
  458,771
  567,929
  692,388
  832,409
  988,076
  1,159,315
  1,345,936
  1,547,662
  1,764,164
  1,995,094
  2,240,114
  2,498,914
  2,771,238
  3,056,894
  3,355,771
  3,667,838
  3,993,156
  4,331,876
  4,684,243
  5,050,590
  5,431,342
Debt-to-equity ratio
  0.398
  0.500
  0.570
  0.600
  0.630
  0.640
  0.660
  0.660
  0.670
  0.670
  0.670
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
  0.680
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
  -2,769
  -4,307
  -6,460
  -9,383
  -13,238
  -18,189
  -24,393
  -31,998
  -41,131
  -51,899
  -64,359
  -78,618
  -94,687
  -112,576
  -132,280
  -153,779
  -177,041
  -202,029
  -228,703
  -257,024
  -286,954
  -318,463
  -351,528
  -386,134
  -422,278
  -459,963
  -499,208
  -540,038
  -582,491
  -626,615
Depreciation, amort., depletion, $m
  2,220
  3,499
  5,357
  7,952
  11,463
  16,080
  21,992
  29,383
  38,419
  49,247
  61,986
  76,704
  93,513
  112,424
  133,448
  156,576
  181,780
  209,025
  238,266
  269,455
  302,547
  337,500
  374,280
  412,860
  453,226
  495,373
  539,310
  585,058
  632,648
  682,126
  733,550
Funds from operations, $m
  1,494
  730
  1,051
  1,492
  2,080
  2,841
  3,803
  4,989
  6,421
  8,116
  10,087
  12,345
  14,895
  17,737
  20,872
  24,295
  28,002
  31,984
  36,236
  40,752
  45,523
  50,546
  55,817
  61,332
  67,092
  73,096
  79,347
  85,850
  92,610
  99,635
  106,935
Change in working capital, $m
  -30
  -212
  -307
  -428
  -579
  -761
  -975
  -1,219
  -1,490
  -1,786
  -2,101
  -2,432
  -2,772
  -3,119
  -3,467
  -3,814
  -4,157
  -4,493
  -4,823
  -5,144
  -5,458
  -5,765
  -6,066
  -6,363
  -6,657
  -6,951
  -7,246
  -7,545
  -7,849
  -8,160
  -8,481
Cash from operations, $m
  1,524
  942
  1,357
  1,920
  2,659
  3,603
  4,778
  6,208
  7,911
  9,901
  12,188
  14,777
  17,667
  20,856
  24,340
  28,110
  32,159
  36,478
  41,059
  45,896
  50,981
  56,311
  61,883
  67,695
  73,749
  80,047
  86,594
  93,395
  100,459
  107,796
  115,416
Maintenance CAPEX, $m
  0
  -2,186
  -3,473
  -5,332
  -7,927
  -11,438
  -16,054
  -21,967
  -29,357
  -38,394
  -49,221
  -61,961
  -76,704
  -93,513
  -112,424
  -133,448
  -156,576
  -181,780
  -209,025
  -238,266
  -269,455
  -302,547
  -337,500
  -374,280
  -412,860
  -453,226
  -495,373
  -539,310
  -585,058
  -632,648
  -682,126
New CAPEX, $m
  -1,396
  -8,883
  -12,825
  -17,902
  -24,226
  -31,855
  -40,796
  -50,995
  -62,350
  -74,712
  -87,902
  -101,726
  -115,983
  -130,487
  -145,066
  -159,579
  -173,913
  -187,989
  -201,760
  -215,206
  -228,335
  -241,177
  -253,780
  -266,205
  -278,524
  -290,817
  -303,165
  -315,655
  -328,372
  -341,401
  -354,825
Cash from investing activities, $m
  -1,360
  -11,069
  -16,298
  -23,234
  -32,153
  -43,293
  -56,850
  -72,962
  -91,707
  -113,106
  -137,123
  -163,687
  -192,687
  -224,000
  -257,490
  -293,027
  -330,489
  -369,769
  -410,785
  -453,472
  -497,790
  -543,724
  -591,280
  -640,485
  -691,384
  -744,043
  -798,538
  -854,965
  -913,430
  -974,049
  -1,036,951
Free cash flow, $m
  164
  -10,127
  -14,941
  -21,315
  -29,494
  -39,690
  -52,072
  -66,754
  -83,796
  -103,204
  -124,936
  -148,910
  -175,020
  -203,143
  -233,150
  -264,917
  -298,330
  -333,292
  -369,726
  -407,576
  -446,809
  -487,413
  -529,397
  -572,790
  -617,636
  -663,996
  -711,945
  -761,571
  -812,971
  -866,253
  -921,535
Issuance/(repayment) of debt, $m
  -553
  3,882
  5,587
  7,800
  10,554
  13,878
  17,773
  22,217
  27,164
  32,550
  38,296
  44,318
  50,530
  56,849
  63,200
  69,523
  75,768
  81,901
  87,900
  93,758
  99,478
  105,073
  110,563
  115,977
  121,344
  126,699
  132,079
  137,520
  143,061
  148,737
  154,585
Issuance/(repurchase) of shares, $m
  623
  8,454
  12,481
  17,871
  24,825
  33,543
  44,192
  56,898
  71,740
  88,753
  107,928
  129,199
  152,547
  177,859
  205,042
  233,996
  264,632
  296,866
  330,632
  365,876
  402,565
  440,681
  480,223
  521,208
  563,667
  607,645
  653,202
  700,408
  749,343
  800,101
  852,782
Cash from financing (excl. dividends), $m  
  84
  12,336
  18,068
  25,671
  35,379
  47,421
  61,965
  79,115
  98,904
  121,303
  146,224
  173,517
  203,077
  234,708
  268,242
  303,519
  340,400
  378,767
  418,532
  459,634
  502,043
  545,754
  590,786
  637,185
  685,011
  734,344
  785,281
  837,928
  892,404
  948,838
  1,007,367
Total cash flow (excl. dividends), $m
  249
  2,209
  3,128
  4,356
  5,885
  7,731
  9,894
  12,361
  15,108
  18,098
  21,289
  24,608
  28,056
  31,565
  35,092
  38,602
  42,070
  45,475
  48,806
  52,058
  55,234
  58,341
  61,390
  64,395
  67,375
  70,349
  73,336
  76,357
  79,434
  82,585
  85,832
Retained Cash Flow (-), $m
  534
  -8,454
  -12,481
  -17,871
  -24,825
  -33,543
  -44,192
  -56,898
  -71,740
  -88,753
  -107,928
  -129,199
  -152,547
  -177,859
  -205,042
  -233,996
  -264,632
  -296,866
  -330,632
  -365,876
  -402,565
  -440,681
  -480,223
  -521,208
  -563,667
  -607,645
  -653,202
  -700,408
  -749,343
  -800,101
  -852,782
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
 
  -6,245
  -9,354
  -13,515
  -18,939
  -25,812
  -34,298
  -44,537
  -56,633
  -70,655
  -86,639
  -104,591
  -124,490
  -146,295
  -169,950
  -195,394
  -222,562
  -251,391
  -281,826
  -313,818
  -347,331
  -382,340
  -418,834
  -456,813
  -496,292
  -537,297
  -579,866
  -624,050
  -669,910
  -717,516
  -766,949
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
 
  -5,937
  -8,410
  -11,434
  -14,991
  -18,999
  -23,326
  -27,793
  -32,190
  -36,293
  -39,883
  -42,764
  -44,782
  -45,833
  -45,877
  -44,930
  -43,069
  -40,416
  -37,132
  -33,398
  -29,404
  -25,333
  -21,350
  -17,593
  -14,167
  -11,140
  -8,548
  -6,395
  -4,661
  -3,306
  -2,279
Current shareholders' claim on cash, %
  100
  44.3
  20.4
  9.8
  4.8
  2.5
  1.3
  0.7
  0.4
  0.2
  0.1
  0.1
  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
  0.0
  0.0
  0.0
  0.0

Crescent Point Energy Corp. acquires, explores, develops, and produces oil and natural gas properties in Western Canada and the United States. The company's 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. Crescent Point Energy Corp. is headquartered in Calgary, Canada.

FINANCIAL RATIOS  of  Crescent Point Energy Corp. (CPG)

Valuation Ratios
P/E Ratio -5.7
Price to Sales 2.4
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 3.5
Price to Free Cash Flow 41.6
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 58.9% 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 512.235 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 $5.0 billion.

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Stock chart of CPG 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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