Intrinsic value of Goldcorp Inc. - G

Previous Close

$15.71

  Intrinsic Value

$5.23

stock screener

  Rating & Target

str. sell

-67%

  Value-price divergence*

0%

Previous close

$15.71

 
Intrinsic value

$5.23

 
Up/down potential

-67%

 
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 G 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 13.6

 

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, %
  -19.78
  9.20
  8.78
  8.40
  8.06
  7.76
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
  5.22
  5.20
Revenue, $m
  4,742
  5,178
  5,633
  6,106
  6,598
  7,110
  7,642
  8,195
  8,769
  9,366
  9,987
  10,632
  11,304
  12,003
  12,732
  13,491
  14,282
  15,107
  15,968
  16,867
  17,806
  18,788
  19,813
  20,886
  22,008
  23,182
  24,411
  25,698
  27,046
  28,457
  29,937
Variable operating expenses, $m
 
  10,936
  11,897
  12,896
  13,936
  15,017
  16,140
  17,307
  18,520
  19,781
  21,092
  22,456
  23,874
  25,351
  26,889
  28,492
  30,163
  31,906
  33,725
  35,624
  37,607
  39,680
  41,846
  44,111
  46,481
  48,961
  51,556
  54,274
  57,120
  60,102
  63,226
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
  4,244
  10,936
  11,897
  12,896
  13,936
  15,017
  16,140
  17,307
  18,520
  19,781
  21,092
  22,456
  23,874
  25,351
  26,889
  28,492
  30,163
  31,906
  33,725
  35,624
  37,607
  39,680
  41,846
  44,111
  46,481
  48,961
  51,556
  54,274
  57,120
  60,102
  63,226
Operating income, $m
  499
  -5,758
  -6,264
  -6,790
  -7,337
  -7,907
  -8,498
  -9,113
  -9,751
  -10,415
  -11,105
  -11,823
  -12,570
  -13,348
  -14,158
  -15,002
  -15,881
  -16,799
  -17,757
  -18,757
  -19,801
  -20,892
  -22,033
  -23,225
  -24,473
  -25,779
  -27,145
  -28,576
  -30,075
  -31,645
  -33,289
EBITDA, $m
  1,883
  -4,249
  -4,622
  -5,010
  -5,414
  -5,834
  -6,270
  -6,724
  -7,195
  -7,685
  -8,194
  -8,724
  -9,275
  -9,849
  -10,446
  -11,069
  -11,718
  -12,395
  -13,102
  -13,839
  -14,610
  -15,415
  -16,257
  -17,137
  -18,057
  -19,021
  -20,029
  -21,085
  -22,191
  -23,349
  -24,563
Interest expense (income), $m
  34
  130
  165
  201
  239
  279
  320
  363
  407
  453
  501
  551
  603
  657
  713
  772
  833
  896
  963
  1,032
  1,104
  1,180
  1,259
  1,341
  1,427
  1,518
  1,612
  1,711
  1,814
  1,923
  2,036
Earnings before tax, $m
  300
  -5,889
  -6,428
  -6,991
  -7,577
  -8,185
  -8,818
  -9,475
  -10,158
  -10,868
  -11,607
  -12,374
  -13,173
  -14,005
  -14,871
  -15,773
  -16,714
  -17,696
  -18,719
  -19,788
  -20,905
  -22,072
  -23,291
  -24,566
  -25,900
  -27,296
  -28,757
  -30,287
  -31,889
  -33,567
  -35,325
Tax expense, $m
  81
  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
  219
  -5,889
  -6,428
  -6,991
  -7,577
  -8,185
  -8,818
  -9,475
  -10,158
  -10,868
  -11,607
  -12,374
  -13,173
  -14,005
  -14,871
  -15,773
  -16,714
  -17,696
  -18,719
  -19,788
  -20,905
  -22,072
  -23,291
  -24,566
  -25,900
  -27,296
  -28,757
  -30,287
  -31,889
  -33,567
  -35,325

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  270
  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
  29,044
  31,383
  34,139
  37,007
  39,991
  43,092
  46,316
  49,665
  53,146
  56,764
  60,526
  64,439
  68,510
  72,748
  77,162
  81,762
  86,557
  91,558
  96,778
  102,226
  107,918
  113,865
  120,081
  126,582
  133,382
  140,498
  147,947
  155,746
  163,913
  172,469
  181,434
Adjusted assets (=assets-cash), $m
  28,774
  31,383
  34,139
  37,007
  39,991
  43,092
  46,316
  49,665
  53,146
  56,764
  60,526
  64,439
  68,510
  72,748
  77,162
  81,762
  86,557
  91,558
  96,778
  102,226
  107,918
  113,865
  120,081
  126,582
  133,382
  140,498
  147,947
  155,746
  163,913
  172,469
  181,434
Revenue / Adjusted assets
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
Average production assets, $m
  23,776
  25,964
  28,243
  30,616
  33,085
  35,651
  38,317
  41,088
  43,968
  46,962
  50,074
  53,311
  56,679
  60,185
  63,837
  67,642
  71,609
  75,747
  80,065
  84,573
  89,281
  94,201
  99,344
  104,723
  110,348
  116,236
  122,398
  128,850
  135,607
  142,686
  150,102
Working capital, $m
  1,068
  870
  946
  1,026
  1,109
  1,195
  1,284
  1,377
  1,473
  1,574
  1,678
  1,786
  1,899
  2,017
  2,139
  2,266
  2,399
  2,538
  2,683
  2,834
  2,991
  3,156
  3,329
  3,509
  3,697
  3,895
  4,101
  4,317
  4,544
  4,781
  5,029
Total debt, $m
  3,725
  4,700
  5,745
  6,832
  7,962
  9,138
  10,360
  11,629
  12,948
  14,320
  15,745
  17,228
  18,771
  20,378
  22,050
  23,794
  25,611
  27,507
  29,485
  31,550
  33,707
  35,961
  38,317
  40,781
  43,358
  46,055
  48,878
  51,834
  54,929
  58,172
  61,569
Total liabilities, $m
  10,919
  11,894
  12,939
  14,026
  15,156
  16,332
  17,554
  18,823
  20,142
  21,514
  22,939
  24,422
  25,965
  27,572
  29,244
  30,988
  32,805
  34,701
  36,679
  38,744
  40,901
  43,155
  45,511
  47,975
  50,552
  53,249
  56,072
  59,028
  62,123
  65,366
  68,763
Total equity, $m
  18,125
  19,489
  21,200
  22,981
  24,834
  26,760
  28,762
  30,842
  33,004
  35,251
  37,587
  40,016
  42,545
  45,177
  47,918
  50,774
  53,752
  56,858
  60,099
  63,483
  67,017
  70,710
  74,570
  78,607
  82,830
  87,249
  91,875
  96,718
  101,790
  107,103
  112,670
Total liabilities and equity, $m
  29,044
  31,383
  34,139
  37,007
  39,990
  43,092
  46,316
  49,665
  53,146
  56,765
  60,526
  64,438
  68,510
  72,749
  77,162
  81,762
  86,557
  91,559
  96,778
  102,227
  107,918
  113,865
  120,081
  126,582
  133,382
  140,498
  147,947
  155,746
  163,913
  172,469
  181,433
Debt-to-equity ratio
  0.206
  0.240
  0.270
  0.300
  0.320
  0.340
  0.360
  0.380
  0.390
  0.410
  0.420
  0.430
  0.440
  0.450
  0.460
  0.470
  0.480
  0.480
  0.490
  0.500
  0.500
  0.510
  0.510
  0.520
  0.520
  0.530
  0.530
  0.540
  0.540
  0.540
  0.550
Adjusted equity ratio
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621
  0.621

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  219
  -5,889
  -6,428
  -6,991
  -7,577
  -8,185
  -8,818
  -9,475
  -10,158
  -10,868
  -11,607
  -12,374
  -13,173
  -14,005
  -14,871
  -15,773
  -16,714
  -17,696
  -18,719
  -19,788
  -20,905
  -22,072
  -23,291
  -24,566
  -25,900
  -27,296
  -28,757
  -30,287
  -31,889
  -33,567
  -35,325
Depreciation, amort., depletion, $m
  1,384
  1,510
  1,642
  1,780
  1,924
  2,073
  2,228
  2,389
  2,556
  2,730
  2,911
  3,099
  3,295
  3,499
  3,711
  3,933
  4,163
  4,404
  4,655
  4,917
  5,191
  5,477
  5,776
  6,089
  6,416
  6,758
  7,116
  7,491
  7,884
  8,296
  8,727
Funds from operations, $m
  882
  -4,379
  -4,786
  -5,211
  -5,653
  -6,113
  -6,590
  -7,086
  -7,602
  -8,138
  -8,695
  -9,275
  -9,878
  -10,506
  -11,159
  -11,841
  -12,551
  -13,292
  -14,065
  -14,871
  -15,714
  -16,595
  -17,515
  -18,478
  -19,485
  -20,538
  -21,641
  -22,796
  -24,005
  -25,272
  -26,599
Change in working capital, $m
  -170
  73
  76
  80
  83
  86
  89
  93
  96
  100
  104
  108
  113
  117
  122
  127
  133
  139
  145
  151
  158
  165
  172
  180
  189
  197
  206
  216
  226
  237
  249
Cash from operations, $m
  1,052
  -4,452
  -4,863
  -5,291
  -5,736
  -6,199
  -6,679
  -7,179
  -7,698
  -8,238
  -8,800
  -9,383
  -9,991
  -10,623
  -11,282
  -11,968
  -12,684
  -13,430
  -14,209
  -15,022
  -15,872
  -16,760
  -17,688
  -18,658
  -19,673
  -20,736
  -21,848
  -23,012
  -24,231
  -25,509
  -26,847
Maintenance CAPEX, $m
  0
  -1,382
  -1,510
  -1,642
  -1,780
  -1,924
  -2,073
  -2,228
  -2,389
  -2,556
  -2,730
  -2,911
  -3,099
  -3,295
  -3,499
  -3,711
  -3,933
  -4,163
  -4,404
  -4,655
  -4,917
  -5,191
  -5,477
  -5,776
  -6,089
  -6,416
  -6,758
  -7,116
  -7,491
  -7,884
  -8,296
New CAPEX, $m
  -940
  -2,188
  -2,280
  -2,373
  -2,468
  -2,566
  -2,667
  -2,771
  -2,880
  -2,993
  -3,112
  -3,237
  -3,368
  -3,506
  -3,652
  -3,805
  -3,967
  -4,138
  -4,318
  -4,508
  -4,708
  -4,920
  -5,143
  -5,378
  -5,626
  -5,887
  -6,162
  -6,452
  -6,757
  -7,078
  -7,417
Cash from investing activities, $m
  -884
  -3,570
  -3,790
  -4,015
  -4,248
  -4,490
  -4,740
  -4,999
  -5,269
  -5,549
  -5,842
  -6,148
  -6,467
  -6,801
  -7,151
  -7,516
  -7,900
  -8,301
  -8,722
  -9,163
  -9,625
  -10,111
  -10,620
  -11,154
  -11,715
  -12,303
  -12,920
  -13,568
  -14,248
  -14,962
  -15,713
Free cash flow, $m
  168
  -8,023
  -8,652
  -9,306
  -9,984
  -10,688
  -11,419
  -12,178
  -12,967
  -13,788
  -14,642
  -15,532
  -16,458
  -17,425
  -18,433
  -19,485
  -20,584
  -21,731
  -22,931
  -24,185
  -25,497
  -26,870
  -28,307
  -29,812
  -31,388
  -33,038
  -34,768
  -36,580
  -38,480
  -40,471
  -42,559
Issuance/(repayment) of debt, $m
  -239
  975
  1,044
  1,087
  1,131
  1,175
  1,222
  1,269
  1,319
  1,371
  1,426
  1,483
  1,543
  1,606
  1,673
  1,743
  1,817
  1,896
  1,978
  2,065
  2,157
  2,254
  2,356
  2,464
  2,577
  2,697
  2,823
  2,956
  3,096
  3,243
  3,398
Issuance/(repurchase) of shares, $m
  4
  7,523
  8,139
  8,772
  9,429
  10,111
  10,819
  11,555
  12,320
  13,115
  13,943
  14,804
  15,701
  16,637
  17,612
  18,630
  19,692
  20,801
  21,961
  23,172
  24,439
  25,765
  27,152
  28,603
  30,123
  31,715
  33,383
  35,130
  36,961
  38,880
  40,893
Cash from financing (excl. dividends), $m  
  -266
  8,498
  9,183
  9,859
  10,560
  11,286
  12,041
  12,824
  13,639
  14,486
  15,369
  16,287
  17,244
  18,243
  19,285
  20,373
  21,509
  22,697
  23,939
  25,237
  26,596
  28,019
  29,508
  31,067
  32,700
  34,412
  36,206
  38,086
  40,057
  42,123
  44,291
Total cash flow (excl. dividends), $m
  -97
  475
  532
  554
  576
  599
  622
  647
  672
  699
  726
  755
  786
  818
  852
  888
  926
  966
  1,008
  1,052
  1,099
  1,148
  1,200
  1,255
  1,313
  1,374
  1,438
  1,506
  1,577
  1,652
  1,731
Retained Cash Flow (-), $m
  -766
  -7,523
  -8,139
  -8,772
  -9,429
  -10,111
  -10,819
  -11,555
  -12,320
  -13,115
  -13,943
  -14,804
  -15,701
  -16,637
  -17,612
  -18,630
  -19,692
  -20,801
  -21,961
  -23,172
  -24,439
  -25,765
  -27,152
  -28,603
  -30,123
  -31,715
  -33,383
  -35,130
  -36,961
  -38,880
  -40,893
Prev. year cash balance distribution, $m
 
  270
  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
 
  -6,778
  -7,607
  -8,219
  -8,853
  -9,512
  -10,197
  -10,909
  -11,648
  -12,417
  -13,216
  -14,049
  -14,915
  -15,818
  -16,760
  -17,742
  -18,766
  -19,836
  -20,953
  -22,120
  -23,340
  -24,617
  -25,951
  -27,348
  -28,810
  -30,341
  -31,945
  -33,624
  -35,384
  -37,229
  -39,162
Discount rate, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  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
PV of cash for distribution, $m
 
  -6,461
  -6,881
  -7,019
  -7,100
  -7,123
  -7,086
  -6,989
  -6,833
  -6,619
  -6,352
  -6,037
  -5,678
  -5,285
  -4,863
  -4,424
  -3,975
  -3,525
  -3,085
  -2,660
  -2,260
  -1,890
  -1,554
  -1,256
  -996
  -775
  -590
  -440
  -321
  -228
  -158
Current shareholders' claim on cash, %
  100
  64.1
  41.2
  26.6
  17.2
  11.1
  7.2
  4.7
  3.1
  2.0
  1.3
  0.9
  0.6
  0.4
  0.2
  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

Goldcorp Inc. is a gold producer engaged in the operation, exploration, development and acquisition of precious metal properties in Canada, the United States, Mexico, and Central and South America. The Company is engaged in the sale of gold, silver, lead, zinc and copper. The Company's segments include Red Lake Gold Mines Ontario Partnership (Red Lake), Goldcorp Canada Ltd./Goldcorp Inc. (Porcupine), Musselwhite, Les Mines Opinaca Ltee (Eleonore), Minera Penasquito S.A. de C.V. and Camino Rojo S.A. de C.V. (Penasquito), Desarrollos Mineros San Luis S.A. de C.V. (Los Filos), Montana Exploradora de Guatemala S.A. (Marlin), Oroplata S.A. (Cerro Negro), Corredor SpA (Project Corridor), Minera Alumbrera Limited (Alumbrera), El Morro and Pueblo Viejo Dominicana Corporation (Pueblo Viejo). The Company's principal product is gold dore with the refined gold bullion sold primarily in the London spot market.

FINANCIAL RATIOS  of  Goldcorp Inc. (G)

Valuation Ratios
P/E Ratio 61.2
Price to Sales 2.8
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 12.8
Price to Free Cash Flow 119.8
Growth Rates
Sales Growth Rate -19.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -43%
Cap. Spend. - 3 Yr. Gr. Rate -20.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0.7
LT Debt to Equity 20.6%
Total Debt to Equity 20.6%
Interest Coverage 10
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. -7.7%
Return On Total Capital 1%
Ret/ On T. Cap. - 3 Yr. Avg. -10.7%
Return On Equity 1.2%
Return On Equity - 3 Yr. Avg. -12.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 12.3%
Gross Margin - 3 Yr. Avg. 12.3%
EBITDA Margin 36.2%
EBITDA Margin - 3 Yr. Avg. -28.7%
Operating Margin 10.5%
Oper. Margin - 3 Yr. Avg. -58.1%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. -58.9%
Net Profit Margin 4.6%
Net Profit Margin - 3 Yr. Avg. -51.1%
Effective Tax Rate 27%
Eff/ Tax Rate - 3 Yr. Avg. 18.1%
Payout Ratio 59.8%

G stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the G stock intrinsic value calculation we used $4742 million for the last fiscal year's total revenue generated by Goldcorp Inc.. The default revenue input number comes from 2016 income statement of Goldcorp 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 G stock valuation model: a) initial revenue growth rate of 9.2% 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 4.9%, whose default value for G is calculated based on our internal credit rating of Goldcorp 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 Goldcorp 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 G stock the variable cost ratio is equal to 211.2%.

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 G 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 3.5% for Goldcorp Inc..

Corporate tax rate of 27% is the nominal tax rate for Goldcorp 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 G 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 G are equal to 501.4%.

Life of production assets of 17.2 years is the average useful life of capital assets used in Goldcorp 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 G is equal to 16.8%. 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 - $18125 million for Goldcorp 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 866.871 million for Goldcorp 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 Goldcorp Inc. at the current share price and the inputted number of shares is $13.6 billion.

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Financial statements of G
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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