Intrinsic value of Crescent Point Energy Corp. - CPG

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$13.36

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$13.36

 
Intrinsic value

$4.31

 
Up/down potential

-68%

 
Rating

str. sell

 
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*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 7.2

 

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
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
Revenue, $m
  2,185
  2,417
  2,659
  2,913
  3,177
  3,453
  3,740
  4,038
  4,348
  4,670
  5,005
  5,353
  5,715
  6,091
  6,482
  6,890
  7,313
  7,755
  8,215
  8,695
  9,196
  9,718
  10,263
  10,833
  11,429
  12,051
  12,702
  13,383
  14,096
  14,842
  15,623
Variable operating expenses, $m
 
  4,251
  4,675
  5,118
  5,581
  6,063
  6,564
  7,086
  7,628
  8,191
  8,777
  9,360
  9,992
  10,650
  11,334
  12,046
  12,787
  13,559
  14,364
  15,203
  16,078
  16,991
  17,945
  18,941
  19,982
  21,071
  22,209
  23,400
  24,646
  25,951
  27,317
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
  4,251
  4,675
  5,118
  5,581
  6,063
  6,564
  7,086
  7,628
  8,191
  8,777
  9,360
  9,992
  10,650
  11,334
  12,046
  12,787
  13,559
  14,364
  15,203
  16,078
  16,991
  17,945
  18,941
  19,982
  21,071
  22,209
  23,400
  24,646
  25,951
  27,317
Operating income, $m
  -1,058
  -1,834
  -2,016
  -2,205
  -2,403
  -2,610
  -2,824
  -3,048
  -3,280
  -3,521
  -3,771
  -4,007
  -4,277
  -4,559
  -4,852
  -5,157
  -5,474
  -5,804
  -6,149
  -6,508
  -6,883
  -7,274
  -7,682
  -8,108
  -8,554
  -9,020
  -9,507
  -10,017
  -10,550
  -11,109
  -11,693
EBITDA, $m
  1,162
  609
  670
  734
  801
  870
  942
  1,017
  1,096
  1,177
  1,261
  1,349
  1,440
  1,535
  1,633
  1,736
  1,843
  1,954
  2,070
  2,191
  2,317
  2,449
  2,586
  2,730
  2,880
  3,036
  3,201
  3,372
  3,552
  3,740
  3,937
Interest expense (income), $m
  158
  145
  172
  199
  228
  259
  290
  323
  357
  392
  429
  467
  507
  549
  592
  636
  683
  731
  782
  834
  889
  946
  1,006
  1,068
  1,133
  1,201
  1,273
  1,347
  1,425
  1,506
  1,592
Earnings before tax, $m
  -1,314
  -1,979
  -2,187
  -2,405
  -2,632
  -2,868
  -3,114
  -3,370
  -3,637
  -3,913
  -4,201
  -4,474
  -4,785
  -5,108
  -5,443
  -5,793
  -6,157
  -6,536
  -6,930
  -7,342
  -7,772
  -8,220
  -8,688
  -9,177
  -9,687
  -10,221
  -10,780
  -11,364
  -11,975
  -12,615
  -13,285
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
  -1,979
  -2,187
  -2,405
  -2,632
  -2,868
  -3,114
  -3,370
  -3,637
  -3,913
  -4,201
  -4,474
  -4,785
  -5,108
  -5,443
  -5,793
  -6,157
  -6,536
  -6,930
  -7,342
  -7,772
  -8,220
  -8,688
  -9,177
  -9,687
  -10,221
  -10,780
  -11,364
  -11,975
  -12,615
  -13,285

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
  17,901
  19,698
  21,576
  23,536
  25,578
  27,702
  29,912
  32,209
  34,596
  37,076
  39,654
  42,333
  45,119
  48,018
  51,034
  54,174
  57,445
  60,853
  64,407
  68,115
  71,985
  76,025
  80,245
  84,656
  89,267
  94,089
  99,134
  104,413
  109,940
  115,727
Adjusted assets (=assets-cash), $m
  16,151
  17,901
  19,698
  21,576
  23,536
  25,578
  27,702
  29,912
  32,209
  34,596
  37,076
  39,654
  42,333
  45,119
  48,018
  51,034
  54,174
  57,445
  60,853
  64,407
  68,115
  71,985
  76,025
  80,245
  84,656
  89,267
  94,089
  99,134
  104,413
  109,940
  115,727
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
  16,682
  18,357
  20,107
  21,933
  23,836
  25,816
  27,875
  30,015
  32,240
  34,551
  36,953
  39,450
  42,047
  44,748
  47,558
  50,485
  53,533
  56,709
  60,022
  63,477
  67,083
  70,848
  74,781
  78,891
  83,188
  87,682
  92,383
  97,303
  102,454
  107,847
Working capital, $m
  -439
  -399
  -439
  -481
  -524
  -570
  -617
  -666
  -717
  -771
  -826
  -883
  -943
  -1,005
  -1,070
  -1,137
  -1,207
  -1,280
  -1,356
  -1,435
  -1,517
  -1,603
  -1,693
  -1,787
  -1,886
  -1,988
  -2,096
  -2,208
  -2,326
  -2,449
  -2,578
Total debt, $m
  3,821
  4,516
  5,245
  6,008
  6,804
  7,633
  8,495
  9,392
  10,325
  11,294
  12,301
  13,347
  14,435
  15,566
  16,743
  17,968
  19,243
  20,570
  21,954
  23,397
  24,903
  26,474
  28,114
  29,828
  31,618
  33,490
  35,448
  37,496
  39,640
  41,884
  44,233
Total liabilities, $m
  6,572
  7,268
  7,997
  8,760
  9,556
  10,385
  11,247
  12,144
  13,077
  14,046
  15,053
  16,099
  17,187
  18,318
  19,495
  20,720
  21,995
  23,322
  24,706
  26,149
  27,655
  29,226
  30,866
  32,580
  34,370
  36,242
  38,200
  40,248
  42,392
  44,636
  46,985
Total equity, $m
  9,591
  10,633
  11,701
  12,816
  13,980
  15,193
  16,455
  17,768
  19,132
  20,550
  22,023
  23,554
  25,146
  26,801
  28,522
  30,314
  32,179
  34,122
  36,147
  38,258
  40,460
  42,759
  45,159
  47,666
  50,286
  53,024
  55,889
  58,886
  62,022
  65,304
  68,742
Total liabilities and equity, $m
  16,163
  17,901
  19,698
  21,576
  23,536
  25,578
  27,702
  29,912
  32,209
  34,596
  37,076
  39,653
  42,333
  45,119
  48,017
  51,034
  54,174
  57,444
  60,853
  64,407
  68,115
  71,985
  76,025
  80,246
  84,656
  89,266
  94,089
  99,134
  104,414
  109,940
  115,727
Debt-to-equity ratio
  0.398
  0.420
  0.450
  0.470
  0.490
  0.500
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.570
  0.580
  0.590
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
  0.620
  0.620
  0.630
  0.630
  0.630
  0.630
  0.640
  0.640
  0.640
  0.640
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
  -1,979
  -2,187
  -2,405
  -2,632
  -2,868
  -3,114
  -3,370
  -3,637
  -3,913
  -4,201
  -4,474
  -4,785
  -5,108
  -5,443
  -5,793
  -6,157
  -6,536
  -6,930
  -7,342
  -7,772
  -8,220
  -8,688
  -9,177
  -9,687
  -10,221
  -10,780
  -11,364
  -11,975
  -12,615
  -13,285
Depreciation, amort., depletion, $m
  2,220
  2,443
  2,686
  2,939
  3,204
  3,480
  3,767
  4,065
  4,375
  4,698
  5,033
  5,356
  5,717
  6,094
  6,485
  6,893
  7,317
  7,758
  8,219
  8,699
  9,200
  9,722
  10,268
  10,838
  11,434
  12,056
  12,708
  13,389
  14,102
  14,848
  15,630
Funds from operations, $m
  1,494
  464
  498
  535
  572
  612
  652
  695
  739
  784
  832
  881
  933
  986
  1,042
  1,100
  1,160
  1,223
  1,288
  1,357
  1,428
  1,502
  1,580
  1,661
  1,746
  1,835
  1,928
  2,025
  2,127
  2,233
  2,345
Change in working capital, $m
  -30
  -38
  -40
  -42
  -44
  -45
  -47
  -49
  -51
  -53
  -55
  -57
  -60
  -62
  -65
  -67
  -70
  -73
  -76
  -79
  -83
  -86
  -90
  -94
  -98
  -103
  -107
  -112
  -118
  -123
  -129
Cash from operations, $m
  1,524
  92
  538
  576
  616
  657
  700
  744
  790
  838
  887
  939
  992
  1,048
  1,106
  1,167
  1,230
  1,296
  1,364
  1,436
  1,510
  1,588
  1,670
  1,755
  1,844
  1,938
  2,035
  2,137
  2,244
  2,356
  2,474
Maintenance CAPEX, $m
  0
  -2,186
  -2,418
  -2,660
  -2,914
  -3,179
  -3,454
  -3,741
  -4,040
  -4,350
  -4,672
  -5,007
  -5,356
  -5,717
  -6,094
  -6,485
  -6,893
  -7,317
  -7,758
  -8,219
  -8,699
  -9,200
  -9,722
  -10,268
  -10,838
  -11,434
  -12,056
  -12,708
  -13,389
  -14,102
  -14,848
New CAPEX, $m
  -1,396
  -1,598
  -1,675
  -1,750
  -1,826
  -1,903
  -1,980
  -2,059
  -2,140
  -2,224
  -2,311
  -2,402
  -2,497
  -2,596
  -2,701
  -2,811
  -2,926
  -3,048
  -3,177
  -3,312
  -3,455
  -3,606
  -3,765
  -3,933
  -4,110
  -4,297
  -4,494
  -4,701
  -4,920
  -5,150
  -5,393
Cash from investing activities, $m
  -1,360
  -3,784
  -4,093
  -4,410
  -4,740
  -5,082
  -5,434
  -5,800
  -6,180
  -6,574
  -6,983
  -7,409
  -7,853
  -8,313
  -8,795
  -9,296
  -9,819
  -10,365
  -10,935
  -11,531
  -12,154
  -12,806
  -13,487
  -14,201
  -14,948
  -15,731
  -16,550
  -17,409
  -18,309
  -19,252
  -20,241
Free cash flow, $m
  164
  -3,692
  -3,554
  -3,834
  -4,124
  -4,424
  -4,735
  -5,057
  -5,390
  -5,737
  -6,097
  -6,471
  -6,860
  -7,266
  -7,688
  -8,129
  -8,589
  -9,069
  -9,571
  -10,095
  -10,643
  -11,217
  -11,817
  -12,446
  -13,104
  -13,793
  -14,515
  -15,271
  -16,064
  -16,896
  -17,767
Issuance/(repayment) of debt, $m
  -553
  708
  730
  763
  796
  829
  863
  897
  932
  969
  1,007
  1,047
  1,088
  1,131
  1,177
  1,225
  1,275
  1,328
  1,384
  1,443
  1,505
  1,571
  1,640
  1,714
  1,791
  1,872
  1,958
  2,048
  2,143
  2,244
  2,350
Issuance/(repurchase) of shares, $m
  623
  4,027
  3,892
  4,188
  4,493
  4,808
  5,134
  5,472
  5,822
  6,186
  6,563
  6,955
  7,364
  7,789
  8,233
  8,696
  9,179
  9,684
  10,212
  10,763
  11,340
  11,945
  12,577
  13,239
  13,933
  14,660
  15,421
  16,220
  17,057
  17,935
  18,855
Cash from financing (excl. dividends), $m  
  84
  4,735
  4,622
  4,951
  5,289
  5,637
  5,997
  6,369
  6,754
  7,155
  7,570
  8,002
  8,452
  8,920
  9,410
  9,921
  10,454
  11,012
  11,596
  12,206
  12,845
  13,516
  14,217
  14,953
  15,724
  16,532
  17,379
  18,268
  19,200
  20,179
  21,205
Total cash flow (excl. dividends), $m
  249
  -2,985
  -2,824
  -3,072
  -3,329
  -3,595
  -3,872
  -4,160
  -4,458
  -4,768
  -5,090
  -5,424
  -5,772
  -6,134
  -6,512
  -6,904
  -7,314
  -7,741
  -8,187
  -8,652
  -9,138
  -9,646
  -10,177
  -10,732
  -11,313
  -11,921
  -12,557
  -13,223
  -13,921
  -14,652
  -15,418
Retained Cash Flow (-), $m
  534
  -1,042
  -1,068
  -1,116
  -1,164
  -1,213
  -1,262
  -1,312
  -1,364
  -1,418
  -1,473
  -1,531
  -1,592
  -1,655
  -1,722
  -1,792
  -1,865
  -1,943
  -2,025
  -2,111
  -2,202
  -2,298
  -2,400
  -2,507
  -2,620
  -2,739
  -2,864
  -2,997
  -3,136
  -3,283
  -3,437
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
 
  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
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
 
  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
Current shareholders' claim on cash, %
  100
  64.3
  43.3
  29.4
  20.1
  13.8
  9.5
  6.6
  4.6
  3.2
  2.3
  1.6
  1.1
  0.8
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.1
  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 -7.8
Price to Sales 3.3
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 4.7
Price to Free Cash Flow 56.5
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 10.6% 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 542.278 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 $7.2 billion.


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Stock chart of CPG Financial statements of CPG
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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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