Intrinsic value of EnerCare Inc. - ECI

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$20.96

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$20.96

 
Intrinsic value

$21.73

 
Up/down potential

+4%

 
Rating

hold

 
Value-price divergence* premium content

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

We calculate the intrinsic value of ECI 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 2.2

 

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, %
  76.60
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  996
  1,594
  2,462
  3,682
  5,343
  7,538
  10,362
  13,909
  18,264
  23,501
  29,684
  36,861
  45,066
  54,319
  64,629
  75,992
  88,397
  101,826
  116,258
  131,668
  148,034
  165,334
  183,550
  202,669
  222,682
  243,586
  265,383
  288,083
  311,700
  336,258
  361,781
Variable operating expenses, $m
 
  1,380
  2,111
  3,139
  4,537
  6,385
  8,764
  11,751
  15,419
  19,829
  25,036
  31,042
  37,952
  45,745
  54,427
  63,997
  74,444
  85,753
  97,906
  110,884
  124,666
  139,236
  154,577
  170,678
  187,532
  205,135
  223,492
  242,609
  262,498
  283,179
  304,674
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
  908
  1,380
  2,111
  3,139
  4,537
  6,385
  8,764
  11,751
  15,419
  19,829
  25,036
  31,042
  37,952
  45,745
  54,427
  63,997
  74,444
  85,753
  97,906
  110,884
  124,666
  139,236
  154,577
  170,678
  187,532
  205,135
  223,492
  242,609
  262,498
  283,179
  304,674
Operating income, $m
  88
  214
  351
  544
  806
  1,152
  1,598
  2,158
  2,845
  3,672
  4,648
  5,818
  7,114
  8,574
  10,202
  11,995
  13,954
  16,073
  18,351
  20,784
  23,367
  26,098
  28,974
  31,992
  35,151
  38,450
  41,891
  45,474
  49,202
  53,079
  57,108
EBITDA, $m
  233
  442
  683
  1,021
  1,481
  2,090
  2,873
  3,857
  5,064
  6,516
  8,230
  10,220
  12,495
  15,061
  17,919
  21,070
  24,509
  28,233
  32,234
  36,507
  41,044
  45,841
  50,892
  56,193
  61,742
  67,537
  73,581
  79,875
  86,423
  93,232
  100,309
Interest expense (income), $m
  37
  41
  74
  124
  192
  286
  410
  569
  770
  1,015
  1,311
  1,660
  2,065
  2,528
  3,051
  3,633
  4,274
  4,974
  5,732
  6,547
  7,417
  8,341
  9,317
  10,346
  11,425
  12,554
  13,734
  14,965
  16,246
  17,579
  18,966
Earnings before tax, $m
  86
  173
  276
  420
  613
  866
  1,188
  1,588
  2,076
  2,657
  3,337
  4,158
  5,048
  6,046
  7,151
  8,363
  9,680
  11,099
  12,619
  14,237
  15,950
  17,757
  19,656
  21,646
  23,726
  25,896
  28,157
  30,509
  32,956
  35,499
  38,142
Tax expense, $m
  25
  47
  75
  113
  166
  234
  321
  429
  560
  717
  901
  1,123
  1,363
  1,632
  1,931
  2,258
  2,613
  2,997
  3,407
  3,844
  4,307
  4,795
  5,307
  5,844
  6,406
  6,992
  7,602
  8,238
  8,898
  9,585
  10,298
Net income, $m
  61
  126
  202
  307
  448
  632
  867
  1,160
  1,515
  1,939
  2,436
  3,036
  3,685
  4,414
  5,220
  6,105
  7,066
  8,102
  9,212
  10,393
  11,644
  12,963
  14,349
  15,802
  17,320
  18,904
  20,554
  22,272
  24,058
  25,915
  27,844

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  48
  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
  1,971
  3,076
  4,753
  7,108
  10,314
  14,551
  20,005
  26,852
  35,258
  45,369
  57,305
  71,159
  86,999
  104,863
  124,767
  146,703
  170,651
  196,576
  224,435
  254,185
  285,779
  319,177
  354,344
  391,254
  429,889
  470,243
  512,322
  556,144
  601,738
  649,146
  698,420
Adjusted assets (=assets-cash), $m
  1,923
  3,076
  4,753
  7,108
  10,314
  14,551
  20,005
  26,852
  35,258
  45,369
  57,305
  71,159
  86,999
  104,863
  124,767
  146,703
  170,651
  196,576
  224,435
  254,185
  285,779
  319,177
  354,344
  391,254
  429,889
  470,243
  512,322
  556,144
  601,738
  649,146
  698,420
Revenue / Adjusted assets
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
  0.518
Average production assets, $m
  1,213
  1,941
  2,999
  4,485
  6,507
  9,181
  12,621
  16,942
  22,245
  28,624
  36,155
  44,896
  54,890
  66,161
  78,718
  92,559
  107,668
  124,024
  141,602
  160,371
  180,305
  201,377
  223,564
  246,851
  271,227
  296,688
  323,236
  350,885
  379,651
  409,562
  440,650
Working capital, $m
  -285
  -110
  -170
  -254
  -369
  -520
  -715
  -960
  -1,260
  -1,622
  -2,048
  -2,543
  -3,110
  -3,748
  -4,459
  -5,243
  -6,099
  -7,026
  -8,022
  -9,085
  -10,214
  -11,408
  -12,665
  -13,984
  -15,365
  -16,807
  -18,311
  -19,878
  -21,507
  -23,202
  -24,963
Total debt, $m
  995
  1,732
  2,872
  4,474
  6,653
  9,535
  13,243
  17,899
  23,616
  30,491
  38,607
  48,028
  58,799
  70,947
  84,481
  99,398
  115,683
  133,312
  152,256
  172,486
  193,970
  216,681
  240,594
  265,693
  291,964
  319,405
  348,019
  377,818
  408,822
  441,059
  474,565
Total liabilities, $m
  1,354
  2,092
  3,232
  4,834
  7,013
  9,895
  13,603
  18,259
  23,976
  30,851
  38,967
  48,388
  59,159
  71,307
  84,841
  99,758
  116,043
  133,672
  152,616
  172,846
  194,330
  217,041
  240,954
  266,053
  292,324
  319,765
  348,379
  378,178
  409,182
  441,419
  474,925
Total equity, $m
  616
  984
  1,521
  2,275
  3,300
  4,656
  6,401
  8,593
  11,283
  14,518
  18,337
  22,771
  27,840
  33,556
  39,925
  46,945
  54,608
  62,904
  71,819
  81,339
  91,449
  102,137
  113,390
  125,201
  137,564
  150,478
  163,943
  177,966
  192,556
  207,727
  223,494
Total liabilities and equity, $m
  1,970
  3,076
  4,753
  7,109
  10,313
  14,551
  20,004
  26,852
  35,259
  45,369
  57,304
  71,159
  86,999
  104,863
  124,766
  146,703
  170,651
  196,576
  224,435
  254,185
  285,779
  319,178
  354,344
  391,254
  429,888
  470,243
  512,322
  556,144
  601,738
  649,146
  698,419
Debt-to-equity ratio
  1.615
  1.760
  1.890
  1.970
  2.020
  2.050
  2.070
  2.080
  2.090
  2.100
  2.110
  2.110
  2.110
  2.110
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
  2.120
Adjusted equity ratio
  0.296
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320
  0.320

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  61
  126
  202
  307
  448
  632
  867
  1,160
  1,515
  1,939
  2,436
  3,036
  3,685
  4,414
  5,220
  6,105
  7,066
  8,102
  9,212
  10,393
  11,644
  12,963
  14,349
  15,802
  17,320
  18,904
  20,554
  22,272
  24,058
  25,915
  27,844
Depreciation, amort., depletion, $m
  145
  228
  332
  477
  676
  938
  1,275
  1,699
  2,219
  2,844
  3,582
  4,402
  5,381
  6,486
  7,717
  9,074
  10,556
  12,159
  13,883
  15,723
  17,677
  19,743
  21,918
  24,201
  26,591
  29,087
  31,690
  34,400
  37,221
  40,153
  43,201
Funds from operations, $m
  147
  354
  534
  784
  1,123
  1,570
  2,142
  2,858
  3,734
  4,783
  6,018
  7,437
  9,067
  10,900
  12,938
  15,179
  17,622
  20,262
  23,094
  26,116
  29,321
  32,706
  36,267
  40,003
  43,911
  47,991
  52,244
  56,672
  61,279
  66,068
  71,045
Change in working capital, $m
  -18
  -41
  -60
  -84
  -115
  -151
  -195
  -245
  -300
  -361
  -427
  -495
  -566
  -638
  -711
  -784
  -856
  -927
  -996
  -1,063
  -1,129
  -1,194
  -1,257
  -1,319
  -1,381
  -1,442
  -1,504
  -1,566
  -1,630
  -1,694
  -1,761
Cash from operations, $m
  165
  540
  593
  868
  1,238
  1,721
  2,337
  3,103
  4,034
  5,145
  6,445
  7,932
  9,633
  11,538
  13,649
  15,963
  18,478
  21,188
  24,090
  27,179
  30,450
  33,899
  37,524
  41,322
  45,292
  49,433
  53,748
  58,239
  62,908
  67,762
  72,806
Maintenance CAPEX, $m
  0
  -119
  -190
  -294
  -440
  -638
  -900
  -1,237
  -1,661
  -2,181
  -2,806
  -3,545
  -4,402
  -5,381
  -6,486
  -7,717
  -9,074
  -10,556
  -12,159
  -13,883
  -15,723
  -17,677
  -19,743
  -21,918
  -24,201
  -26,591
  -29,087
  -31,690
  -34,400
  -37,221
  -40,153
New CAPEX, $m
  -154
  -728
  -1,058
  -1,486
  -2,022
  -2,674
  -3,441
  -4,320
  -5,304
  -6,379
  -7,531
  -8,741
  -9,994
  -11,271
  -12,557
  -13,840
  -15,109
  -16,356
  -17,577
  -18,770
  -19,934
  -21,072
  -22,188
  -23,287
  -24,376
  -25,461
  -26,549
  -27,648
  -28,766
  -29,910
  -31,088
Cash from investing activities, $m
  -518
  -847
  -1,248
  -1,780
  -2,462
  -3,312
  -4,341
  -5,557
  -6,965
  -8,560
  -10,337
  -12,286
  -14,396
  -16,652
  -19,043
  -21,557
  -24,183
  -26,912
  -29,736
  -32,653
  -35,657
  -38,749
  -41,931
  -45,205
  -48,577
  -52,052
  -55,636
  -59,338
  -63,166
  -67,131
  -71,241
Free cash flow, $m
  -353
  -307
  -655
  -912
  -1,224
  -1,590
  -2,003
  -2,455
  -2,930
  -3,415
  -3,892
  -4,353
  -4,762
  -5,114
  -5,395
  -5,595
  -5,706
  -5,724
  -5,646
  -5,473
  -5,206
  -4,849
  -4,406
  -3,883
  -3,285
  -2,618
  -1,888
  -1,100
  -259
  631
  1,565
Issuance/(repayment) of debt, $m
  216
  785
  1,140
  1,602
  2,180
  2,881
  3,708
  4,656
  5,716
  6,875
  8,116
  9,421
  10,771
  12,148
  13,534
  14,917
  16,285
  17,629
  18,945
  20,230
  21,484
  22,711
  23,914
  25,098
  26,272
  27,441
  28,614
  29,799
  31,004
  32,237
  33,506
Issuance/(repurchase) of shares, $m
  230
  0
  51
  64
  70
  65
  40
  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 financing (excl. dividends), $m  
  447
  785
  1,191
  1,666
  2,250
  2,946
  3,748
  4,656
  5,716
  6,875
  8,116
  9,421
  10,771
  12,148
  13,534
  14,917
  16,285
  17,629
  18,945
  20,230
  21,484
  22,711
  23,914
  25,098
  26,272
  27,441
  28,614
  29,799
  31,004
  32,237
  33,506
Total cash flow (excl. dividends), $m
  95
  478
  485
  690
  956
  1,291
  1,705
  2,202
  2,786
  3,460
  4,224
  5,068
  6,009
  7,034
  8,140
  9,322
  10,579
  11,905
  13,298
  14,756
  16,278
  17,862
  19,507
  21,215
  22,987
  24,823
  26,726
  28,699
  30,745
  32,868
  35,071
Retained Cash Flow (-), $m
  -226
  -368
  -537
  -754
  -1,026
  -1,356
  -1,745
  -2,191
  -2,690
  -3,235
  -3,819
  -4,434
  -5,069
  -5,717
  -6,369
  -7,020
  -7,663
  -8,296
  -8,915
  -9,520
  -10,110
  -10,687
  -11,253
  -11,811
  -12,363
  -12,913
  -13,465
  -14,023
  -14,590
  -15,170
  -15,768
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
 
  109
  0
  0
  0
  0
  0
  10
  96
  225
  405
  634
  940
  1,317
  1,771
  2,303
  2,915
  3,609
  4,383
  5,237
  6,168
  7,174
  8,254
  9,404
  10,623
  11,910
  13,261
  14,676
  16,155
  17,698
  19,303
Discount rate, %
 
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
  21.18
  22.24
  23.35
  24.52
  25.74
  27.03
  28.38
  29.80
  31.29
  32.85
  34.50
  36.22
PV of cash for distribution, $m
 
  100
  0
  0
  0
  0
  0
  5
  38
  75
  113
  145
  175
  196
  206
  207
  198
  182
  160
  136
  111
  87
  66
  48
  34
  23
  15
  9
  6
  3
  2
Current shareholders' claim on cash, %
  100
  100.0
  98.5
  97.4
  96.5
  96.0
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8
  95.8

Enercare Inc., through its subsidiaries, provides home and commercial services, and energy solutions in Ontario. The company's Home Services segment provides a portfolio of rental water heaters, HVAC, and other assets, as well as contracted protection plans; and other chargeable service offerings primarily to residential customers. It also engages in the sale and installation of residential furnaces, boilers, air conditioners, and other equipment. Enercare's Submetering segment provides equipment and services to allow submetering and remote measurement of electricity and water consumption in individual units in condominiums, apartment building, and commercial properties. It also designs and manufactures energy management meters for multi-unit residential, commercial, and institutional applications; and offers chargeable services, such as on demand repairs and maintenance, and duct cleaning, as well as royalties on the services performed by third party franchisees. Enercare Inc. was founded in 2002 and is headquartered in Toronto, Canada.

FINANCIAL RATIOS  of  EnerCare Inc. (ECI)

Valuation Ratios
P/E Ratio 35.8
Price to Sales 2.2
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 13.2
Price to Free Cash Flow 198.5
Growth Rates
Sales Growth Rate 76.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 33.9%
Cap. Spend. - 3 Yr. Gr. Rate 14.3%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 118.7%
Total Debt to Equity 161.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.8%
Return On Equity 12.1%
Return On Equity - 3 Yr. Avg. 10.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 53.8%
Gross Margin - 3 Yr. Avg. 62.3%
EBITDA Margin 26.9%
EBITDA Margin - 3 Yr. Avg. 37.2%
Operating Margin 8.8%
Oper. Margin - 3 Yr. Avg. 9.9%
Pre-Tax Margin 8.6%
Pre-Tax Margin - 3 Yr. Avg. 9.9%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 7.1%
Effective Tax Rate 29.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.8%
Payout Ratio 139.3%

ECI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ECI stock intrinsic value calculation we used $996 million for the last fiscal year's total revenue generated by EnerCare Inc.. The default revenue input number comes from 2016 income statement of EnerCare 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 ECI stock valuation model: a) initial revenue growth rate of 60% 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 8.8%, whose default value for ECI is calculated based on our internal credit rating of EnerCare 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 EnerCare 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 ECI stock the variable cost ratio is equal to 88%.

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 ECI 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 4.3% for EnerCare Inc..

Corporate tax rate of 27% is the nominal tax rate for EnerCare 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 ECI 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 ECI are equal to 121.8%.

Life of production assets of 10.2 years is the average useful life of capital assets used in EnerCare 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 ECI is equal to -6.9%. 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 - $616 million for EnerCare 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 103.499 million for EnerCare 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 EnerCare Inc. at the current share price and the inputted number of shares is $2.2 billion.


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Stock chart of ECI Financial statements of ECI
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