Intrinsic value of Crew Energy Inc. - CR

Previous Close

$4.04

  Intrinsic Value

$1.38

stock screener

  Rating & Target

str. sell

-66%

  Value-price divergence*

0%

Previous close

$4.04

 
Intrinsic value

$1.38

 
Up/down potential

-66%

 
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 CR 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, %
  1.34
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  151
  154
  158
  162
  166
  171
  177
  183
  189
  196
  204
  212
  220
  230
  239
  250
  261
  272
  284
  297
  311
  325
  341
  357
  374
  391
  410
  430
  451
  472
  495
Variable operating expenses, $m
 
  246
  251
  258
  265
  273
  282
  292
  302
  313
  325
  338
  352
  366
  382
  398
  416
  434
  454
  475
  496
  519
  544
  569
  596
  625
  655
  686
  719
  754
  791
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
  218
  246
  251
  258
  265
  273
  282
  292
  302
  313
  325
  338
  352
  366
  382
  398
  416
  434
  454
  475
  496
  519
  544
  569
  596
  625
  655
  686
  719
  754
  791
Operating income, $m
  -67
  -92
  -94
  -96
  -99
  -102
  -105
  -109
  -113
  -117
  -121
  -126
  -131
  -137
  -143
  -149
  -155
  -162
  -170
  -177
  -185
  -194
  -203
  -213
  -223
  -233
  -244
  -256
  -269
  -282
  -295
EBITDA, $m
  18
  -5
  -5
  -6
  -6
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
Interest expense (income), $m
  15
  15
  16
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  42
  44
  47
  49
  52
  55
  58
  62
  65
  69
  73
Earnings before tax, $m
  -86
  -107
  -110
  -113
  -116
  -120
  -124
  -129
  -134
  -139
  -145
  -151
  -158
  -165
  -172
  -180
  -188
  -197
  -207
  -216
  -227
  -238
  -250
  -262
  -275
  -289
  -303
  -318
  -334
  -351
  -368
Tax expense, $m
  -21
  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
  -65
  -107
  -110
  -113
  -116
  -120
  -124
  -129
  -134
  -139
  -145
  -151
  -158
  -165
  -172
  -180
  -188
  -197
  -207
  -216
  -227
  -238
  -250
  -262
  -275
  -289
  -303
  -318
  -334
  -351
  -368

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  1,239
  1,262
  1,291
  1,325
  1,362
  1,403
  1,449
  1,498
  1,551
  1,609
  1,671
  1,737
  1,807
  1,882
  1,962
  2,047
  2,136
  2,231
  2,332
  2,438
  2,550
  2,668
  2,792
  2,924
  3,062
  3,208
  3,361
  3,523
  3,693
  3,872
  4,060
Adjusted assets (=assets-cash), $m
  1,239
  1,262
  1,291
  1,325
  1,362
  1,403
  1,449
  1,498
  1,551
  1,609
  1,671
  1,737
  1,807
  1,882
  1,962
  2,047
  2,136
  2,231
  2,332
  2,438
  2,550
  2,668
  2,792
  2,924
  3,062
  3,208
  3,361
  3,523
  3,693
  3,872
  4,060
Revenue / Adjusted assets
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
  0.122
Average production assets, $m
  1,205
  1,229
  1,257
  1,289
  1,325
  1,366
  1,410
  1,458
  1,510
  1,566
  1,626
  1,690
  1,759
  1,832
  1,909
  1,992
  2,079
  2,171
  2,269
  2,372
  2,481
  2,596
  2,718
  2,845
  2,980
  3,122
  3,271
  3,429
  3,594
  3,768
  3,951
Working capital, $m
  -28
  -28
  -29
  -30
  -31
  -32
  -33
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -53
  -55
  -58
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -83
  -87
  -92
Total debt, $m
  235
  243
  253
  264
  277
  291
  306
  323
  341
  360
  381
  403
  427
  452
  479
  508
  538
  570
  604
  639
  677
  717
  759
  803
  850
  899
  951
  1,005
  1,063
  1,123
  1,186
Total liabilities, $m
  417
  425
  435
  446
  459
  473
  488
  505
  523
  542
  563
  585
  609
  634
  661
  690
  720
  752
  786
  821
  859
  899
  941
  985
  1,032
  1,081
  1,133
  1,187
  1,245
  1,305
  1,368
Total equity, $m
  822
  837
  856
  878
  903
  930
  960
  993
  1,028
  1,067
  1,108
  1,151
  1,198
  1,248
  1,301
  1,357
  1,416
  1,479
  1,546
  1,616
  1,690
  1,769
  1,851
  1,938
  2,030
  2,127
  2,229
  2,336
  2,448
  2,567
  2,692
Total liabilities and equity, $m
  1,239
  1,262
  1,291
  1,324
  1,362
  1,403
  1,448
  1,498
  1,551
  1,609
  1,671
  1,736
  1,807
  1,882
  1,962
  2,047
  2,136
  2,231
  2,332
  2,437
  2,549
  2,668
  2,792
  2,923
  3,062
  3,208
  3,362
  3,523
  3,693
  3,872
  4,060
Debt-to-equity ratio
  0.286
  0.290
  0.300
  0.300
  0.310
  0.310
  0.320
  0.330
  0.330
  0.340
  0.340
  0.350
  0.360
  0.360
  0.370
  0.370
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.410
  0.410
  0.420
  0.420
  0.430
  0.430
  0.430
  0.440
  0.440
Adjusted equity ratio
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663
  0.663

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -65
  -107
  -110
  -113
  -116
  -120
  -124
  -129
  -134
  -139
  -145
  -151
  -158
  -165
  -172
  -180
  -188
  -197
  -207
  -216
  -227
  -238
  -250
  -262
  -275
  -289
  -303
  -318
  -334
  -351
  -368
Depreciation, amort., depletion, $m
  85
  87
  89
  91
  93
  96
  99
  103
  106
  110
  114
  119
  124
  129
  134
  140
  146
  153
  160
  167
  175
  183
  191
  200
  210
  220
  230
  241
  253
  265
  278
Funds from operations, $m
  77
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -38
  -40
  -42
  -44
  -47
  -49
  -52
  -55
  -58
  -62
  -65
  -69
  -72
  -77
  -81
  -85
  -90
Change in working capital, $m
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
Cash from operations, $m
  77
  -20
  -21
  -21
  -22
  -23
  -24
  -25
  -26
  -28
  -29
  -31
  -32
  -34
  -36
  -38
  -40
  -42
  -45
  -47
  -50
  -52
  -55
  -59
  -62
  -65
  -69
  -73
  -77
  -81
  -86
Maintenance CAPEX, $m
  0
  -85
  -87
  -89
  -91
  -93
  -96
  -99
  -103
  -106
  -110
  -114
  -119
  -124
  -129
  -134
  -140
  -146
  -153
  -160
  -167
  -175
  -183
  -191
  -200
  -210
  -220
  -230
  -241
  -253
  -265
New CAPEX, $m
  -112
  -24
  -28
  -32
  -36
  -40
  -44
  -48
  -52
  -56
  -60
  -64
  -69
  -73
  -78
  -82
  -87
  -92
  -98
  -103
  -109
  -115
  -121
  -128
  -135
  -142
  -149
  -157
  -165
  -174
  -183
Cash from investing activities, $m
  -110
  -109
  -115
  -121
  -127
  -133
  -140
  -147
  -155
  -162
  -170
  -178
  -188
  -197
  -207
  -216
  -227
  -238
  -251
  -263
  -276
  -290
  -304
  -319
  -335
  -352
  -369
  -387
  -406
  -427
  -448
Free cash flow, $m
  -33
  -129
  -135
  -142
  -149
  -156
  -164
  -172
  -181
  -190
  -199
  -209
  -220
  -231
  -242
  -255
  -267
  -281
  -295
  -310
  -326
  -342
  -360
  -378
  -397
  -417
  -438
  -460
  -484
  -508
  -534
Issuance/(repayment) of debt, $m
  7
  8
  10
  11
  13
  14
  15
  17
  18
  19
  21
  22
  24
  25
  27
  29
  30
  32
  34
  36
  38
  40
  42
  44
  47
  49
  52
  54
  57
  60
  63
Issuance/(repurchase) of shares, $m
  26
  122
  129
  135
  141
  147
  154
  162
  169
  177
  186
  195
  204
  214
  225
  236
  248
  260
  273
  287
  301
  316
  332
  349
  367
  385
  405
  425
  447
  469
  493
Cash from financing (excl. dividends), $m  
  33
  130
  139
  146
  154
  161
  169
  179
  187
  196
  207
  217
  228
  239
  252
  265
  278
  292
  307
  323
  339
  356
  374
  393
  414
  434
  457
  479
  504
  529
  556
Total cash flow (excl. dividends), $m
  0
  2
  3
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  11
  11
  12
  13
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
Retained Cash Flow (-), $m
  24
  -122
  -129
  -135
  -141
  -147
  -154
  -162
  -169
  -177
  -186
  -195
  -204
  -214
  -225
  -236
  -248
  -260
  -273
  -287
  -301
  -316
  -332
  -349
  -367
  -385
  -405
  -425
  -447
  -469
  -493
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
 
  -120
  -126
  -131
  -137
  -143
  -149
  -156
  -163
  -170
  -179
  -187
  -196
  -206
  -216
  -226
  -237
  -249
  -261
  -274
  -288
  -302
  -318
  -334
  -350
  -368
  -387
  -406
  -427
  -448
  -471
Discount rate, %
 
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
 
  -114
  -113
  -110
  -108
  -104
  -101
  -96
  -92
  -87
  -81
  -75
  -69
  -63
  -57
  -51
  -45
  -39
  -33
  -28
  -23
  -19
  -15
  -12
  -9
  -7
  -5
  -4
  -3
  -2
  -1
Current shareholders' claim on cash, %
  100
  83.1
  68.7
  56.5
  46.4
  37.9
  30.9
  25.1
  20.4
  16.5
  13.3
  10.7
  8.6
  6.9
  5.6
  4.5
  3.6
  2.9
  2.3
  1.8
  1.5
  1.2
  0.9
  0.7
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1

Crew Energy Inc is a Canada-based oil and gas exploration, development and production company. It is a growth-oriented oil and natural gas producer. The Company's activities are primarily focused in the Montney Resource situated in northeast British Columbia. Its Montney Resource is complemented by its Lloydminster heavy oil property in Alberta and Saskatchewan. Its Montney area assets include: Septimus/West Septimus, Tower, Groundbirch, Attachie and Portage, which are situated south and west of Fort Staint John, British Columbia. Its operations include liquid rich natural gas and light oil production from the siltstone Montney formation. The Montney property is developed with long-reach horizontal wells. Production from Lloydminster property is comprised of a range of 12 to 14 degrees American Petroleum Institute (API) heavy oil, which is conventionally produced.

FINANCIAL RATIOS  of  Crew Energy Inc. (CR)

Valuation Ratios
P/E Ratio -9.1
Price to Sales 3.9
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 7.7
Price to Free Cash Flow -16.9
Growth Rates
Sales Growth Rate 1.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -54.8%
Cap. Spend. - 3 Yr. Gr. Rate -16.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 28.6%
Total Debt to Equity 28.6%
Interest Coverage -5
Management Effectiveness
Return On Assets -4.3%
Ret/ On Assets - 3 Yr. Avg. -9.8%
Return On Total Capital -6.1%
Ret/ On T. Cap. - 3 Yr. Avg. -13.4%
Return On Equity -7.8%
Return On Equity - 3 Yr. Avg. -17.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 67.5%
Gross Margin - 3 Yr. Avg. 67.9%
EBITDA Margin 9.3%
EBITDA Margin - 3 Yr. Avg. -12.8%
Operating Margin -44.4%
Oper. Margin - 3 Yr. Avg. -48.5%
Pre-Tax Margin -57%
Pre-Tax Margin - 3 Yr. Avg. -75.6%
Net Profit Margin -43%
Net Profit Margin - 3 Yr. Avg. -57.9%
Effective Tax Rate 24.4%
Eff/ Tax Rate - 3 Yr. Avg. 22.4%
Payout Ratio 0%

CR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CR stock intrinsic value calculation we used $151 million for the last fiscal year's total revenue generated by Crew Energy Inc.. The default revenue input number comes from 2016 income statement of Crew Energy Inc.. 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 CR stock valuation model: a) initial revenue growth rate of 2% 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 5.3%, whose default value for CR is calculated based on our internal credit rating of Crew Energy Inc., 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 Crew Energy Inc..
    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 CR stock the variable cost ratio is equal to 159.6%.

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 CR 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 6.5% for Crew Energy Inc..

Corporate tax rate of 27% is the nominal tax rate for Crew Energy Inc.. 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 CR 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 CR are equal to 797.7%.

Life of production assets of 14.2 years is the average useful life of capital assets used in Crew Energy Inc. 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 CR is equal to -18.5%. 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 - $822 million for Crew Energy Inc. - 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 148.909 million for Crew Energy Inc. 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 Crew Energy Inc. at the current share price and the inputted number of shares is $0.6 billion.

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Financial statements of CR
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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