Intrinsic value of Goldcorp Inc. - G

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$19.50

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$19.50

 
Intrinsic value

$5.19

 
Up/down potential

-73%

 
Rating

str. sell

 
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 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 17.0

 

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, %
  -19.78
  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
  4,742
  4,837
  4,948
  5,075
  5,218
  5,376
  5,550
  5,739
  5,943
  6,164
  6,400
  6,653
  6,923
  7,211
  7,517
  7,841
  8,184
  8,548
  8,933
  9,339
  9,768
  10,221
  10,699
  11,202
  11,732
  12,291
  12,879
  13,498
  14,149
  14,834
  15,555
Variable operating expenses, $m
 
  10,215
  10,450
  10,719
  11,020
  11,355
  11,721
  12,120
  12,552
  13,018
  13,518
  14,052
  14,622
  15,230
  15,875
  16,560
  17,285
  18,054
  18,866
  19,724
  20,631
  21,587
  22,595
  23,658
  24,778
  25,958
  27,200
  28,507
  29,883
  31,330
  32,852
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
  10,215
  10,450
  10,719
  11,020
  11,355
  11,721
  12,120
  12,552
  13,018
  13,518
  14,052
  14,622
  15,230
  15,875
  16,560
  17,285
  18,054
  18,866
  19,724
  20,631
  21,587
  22,595
  23,658
  24,778
  25,958
  27,200
  28,507
  29,883
  31,330
  32,852
Operating income, $m
  499
  -5,379
  -5,502
  -5,644
  -5,802
  -5,978
  -6,171
  -6,382
  -6,609
  -6,854
  -7,117
  -7,399
  -7,699
  -8,019
  -8,358
  -8,719
  -9,101
  -9,505
  -9,933
  -10,385
  -10,862
  -11,366
  -11,897
  -12,456
  -13,046
  -13,667
  -14,321
  -15,010
  -15,734
  -16,496
  -17,297
EBITDA, $m
  1,883
  -3,969
  -4,060
  -4,164
  -4,281
  -4,411
  -4,554
  -4,709
  -4,876
  -5,057
  -5,251
  -5,459
  -5,681
  -5,917
  -6,167
  -6,433
  -6,715
  -7,014
  -7,329
  -7,663
  -8,015
  -8,386
  -8,778
  -9,191
  -9,626
  -10,084
  -10,567
  -11,075
  -11,609
  -12,171
  -12,763
Interest expense (income), $m
  34
  130
  137
  146
  156
  168
  180
  194
  210
  226
  244
  263
  283
  305
  328
  352
  379
  406
  435
  466
  499
  534
  570
  608
  649
  691
  736
  784
  833
  886
  941
Earnings before tax, $m
  300
  -5,509
  -5,639
  -5,790
  -5,959
  -6,146
  -6,352
  -6,576
  -6,819
  -7,080
  -7,361
  -7,661
  -7,982
  -8,323
  -8,686
  -9,071
  -9,480
  -9,912
  -10,369
  -10,851
  -11,361
  -11,899
  -12,467
  -13,065
  -13,695
  -14,359
  -15,058
  -15,793
  -16,567
  -17,381
  -18,238
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
  -5,509
  -5,639
  -5,790
  -5,959
  -6,146
  -6,352
  -6,576
  -6,819
  -7,080
  -7,361
  -7,661
  -7,982
  -8,323
  -8,686
  -9,071
  -9,480
  -9,912
  -10,369
  -10,851
  -11,361
  -11,899
  -12,467
  -13,065
  -13,695
  -14,359
  -15,058
  -15,793
  -16,567
  -17,381
  -18,238

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
  29,314
  29,988
  30,759
  31,624
  32,583
  33,635
  34,781
  36,021
  37,356
  38,790
  40,324
  41,960
  43,703
  45,555
  47,520
  49,602
  51,807
  54,138
  56,601
  59,202
  61,946
  64,840
  67,890
  71,104
  74,489
  78,053
  81,805
  85,752
  89,905
  94,273
Adjusted assets (=assets-cash), $m
  28,774
  29,314
  29,988
  30,759
  31,624
  32,583
  33,635
  34,781
  36,021
  37,356
  38,790
  40,324
  41,960
  43,703
  45,555
  47,520
  49,602
  51,807
  54,138
  56,601
  59,202
  61,946
  64,840
  67,890
  71,104
  74,489
  78,053
  81,805
  85,752
  89,905
  94,273
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
  24,252
  24,810
  25,447
  26,163
  26,956
  27,827
  28,774
  29,800
  30,905
  32,091
  33,360
  34,714
  36,156
  37,688
  39,314
  41,036
  42,860
  44,789
  46,827
  48,978
  51,248
  53,643
  56,166
  58,825
  61,626
  64,574
  67,678
  70,944
  74,379
  77,993
Working capital, $m
  1,068
  813
  831
  853
  877
  903
  932
  964
  998
  1,036
  1,075
  1,118
  1,163
  1,211
  1,263
  1,317
  1,375
  1,436
  1,501
  1,569
  1,641
  1,717
  1,797
  1,882
  1,971
  2,065
  2,164
  2,268
  2,377
  2,492
  2,613
Total debt, $m
  3,725
  3,916
  4,172
  4,464
  4,792
  5,155
  5,554
  5,988
  6,458
  6,964
  7,507
  8,089
  8,709
  9,369
  10,071
  10,816
  11,605
  12,441
  13,324
  14,258
  15,243
  16,283
  17,380
  18,536
  19,754
  21,037
  22,388
  23,810
  25,306
  26,880
  28,536
Total liabilities, $m
  10,919
  11,110
  11,366
  11,658
  11,986
  12,349
  12,748
  13,182
  13,652
  14,158
  14,701
  15,283
  15,903
  16,563
  17,265
  18,010
  18,799
  19,635
  20,518
  21,452
  22,437
  23,477
  24,574
  25,730
  26,948
  28,231
  29,582
  31,004
  32,500
  34,074
  35,730
Total equity, $m
  18,125
  18,204
  18,623
  19,101
  19,639
  20,234
  20,887
  21,599
  22,369
  23,198
  24,089
  25,041
  26,057
  27,139
  28,289
  29,510
  30,803
  32,172
  33,620
  35,149
  36,764
  38,468
  40,265
  42,160
  44,156
  46,258
  48,471
  50,801
  53,252
  55,831
  58,544
Total liabilities and equity, $m
  29,044
  29,314
  29,989
  30,759
  31,625
  32,583
  33,635
  34,781
  36,021
  37,356
  38,790
  40,324
  41,960
  43,702
  45,554
  47,520
  49,602
  51,807
  54,138
  56,601
  59,201
  61,945
  64,839
  67,890
  71,104
  74,489
  78,053
  81,805
  85,752
  89,905
  94,274
Debt-to-equity ratio
  0.206
  0.220
  0.220
  0.230
  0.240
  0.250
  0.270
  0.280
  0.290
  0.300
  0.310
  0.320
  0.330
  0.350
  0.360
  0.370
  0.380
  0.390
  0.400
  0.410
  0.410
  0.420
  0.430
  0.440
  0.450
  0.450
  0.460
  0.470
  0.480
  0.480
  0.490
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
  -5,509
  -5,639
  -5,790
  -5,959
  -6,146
  -6,352
  -6,576
  -6,819
  -7,080
  -7,361
  -7,661
  -7,982
  -8,323
  -8,686
  -9,071
  -9,480
  -9,912
  -10,369
  -10,851
  -11,361
  -11,899
  -12,467
  -13,065
  -13,695
  -14,359
  -15,058
  -15,793
  -16,567
  -17,381
  -18,238
Depreciation, amort., depletion, $m
  1,384
  1,410
  1,442
  1,479
  1,521
  1,567
  1,618
  1,673
  1,733
  1,797
  1,866
  1,940
  2,018
  2,102
  2,191
  2,286
  2,386
  2,492
  2,604
  2,722
  2,848
  2,980
  3,119
  3,265
  3,420
  3,583
  3,754
  3,935
  4,125
  4,324
  4,534
Funds from operations, $m
  882
  -4,099
  -4,197
  -4,310
  -4,438
  -4,579
  -4,734
  -4,903
  -5,086
  -5,283
  -5,495
  -5,722
  -5,964
  -6,221
  -6,495
  -6,786
  -7,094
  -7,420
  -7,765
  -8,129
  -8,514
  -8,920
  -9,348
  -9,799
  -10,275
  -10,776
  -11,303
  -11,858
  -12,443
  -13,057
  -13,704
Change in working capital, $m
  -170
  16
  19
  21
  24
  27
  29
  32
  34
  37
  40
  43
  45
  48
  51
  54
  58
  61
  65
  68
  72
  76
  80
  85
  89
  94
  99
  104
  109
  115
  121
Cash from operations, $m
  1,052
  -4,158
  -4,216
  -4,332
  -4,462
  -4,605
  -4,763
  -4,935
  -5,120
  -5,320
  -5,535
  -5,764
  -6,009
  -6,270
  -6,546
  -6,840
  -7,151
  -7,481
  -7,829
  -8,197
  -8,586
  -8,996
  -9,428
  -9,884
  -10,364
  -10,870
  -11,402
  -11,962
  -12,552
  -13,172
  -13,825
Maintenance CAPEX, $m
  0
  -1,382
  -1,410
  -1,442
  -1,479
  -1,521
  -1,567
  -1,618
  -1,673
  -1,733
  -1,797
  -1,866
  -1,940
  -2,018
  -2,102
  -2,191
  -2,286
  -2,386
  -2,492
  -2,604
  -2,722
  -2,848
  -2,980
  -3,119
  -3,265
  -3,420
  -3,583
  -3,754
  -3,935
  -4,125
  -4,324
New CAPEX, $m
  -940
  -476
  -558
  -638
  -716
  -793
  -870
  -948
  -1,026
  -1,105
  -1,186
  -1,269
  -1,354
  -1,442
  -1,532
  -1,626
  -1,723
  -1,824
  -1,929
  -2,038
  -2,152
  -2,270
  -2,394
  -2,524
  -2,659
  -2,800
  -2,949
  -3,104
  -3,266
  -3,436
  -3,614
Cash from investing activities, $m
  -884
  -1,858
  -1,968
  -2,080
  -2,195
  -2,314
  -2,437
  -2,566
  -2,699
  -2,838
  -2,983
  -3,135
  -3,294
  -3,460
  -3,634
  -3,817
  -4,009
  -4,210
  -4,421
  -4,642
  -4,874
  -5,118
  -5,374
  -5,643
  -5,924
  -6,220
  -6,532
  -6,858
  -7,201
  -7,561
  -7,938
Free cash flow, $m
  168
  -6,017
  -6,183
  -6,412
  -6,657
  -6,920
  -7,201
  -7,500
  -7,819
  -8,158
  -8,518
  -8,899
  -9,303
  -9,729
  -10,181
  -10,657
  -11,160
  -11,690
  -12,250
  -12,839
  -13,460
  -14,114
  -14,802
  -15,526
  -16,288
  -17,090
  -17,933
  -18,820
  -19,753
  -20,733
  -21,763
Issuance/(repayment) of debt, $m
  -239
  191
  256
  292
  328
  363
  399
  434
  470
  506
  543
  581
  620
  660
  702
  745
  789
  835
  884
  934
  986
  1,040
  1,097
  1,156
  1,218
  1,283
  1,351
  1,422
  1,496
  1,574
  1,656
Issuance/(repurchase) of shares, $m
  4
  5,905
  6,347
  6,598
  6,866
  7,152
  7,455
  7,777
  8,119
  8,481
  8,865
  9,270
  9,699
  10,151
  10,629
  11,133
  11,664
  12,224
  12,814
  13,435
  14,089
  14,778
  15,502
  16,264
  17,066
  17,909
  18,796
  19,728
  20,708
  21,738
  22,820
Cash from financing (excl. dividends), $m  
  -266
  6,096
  6,603
  6,890
  7,194
  7,515
  7,854
  8,211
  8,589
  8,987
  9,408
  9,851
  10,319
  10,811
  11,331
  11,878
  12,453
  13,059
  13,698
  14,369
  15,075
  15,818
  16,599
  17,420
  18,284
  19,192
  20,147
  21,150
  22,204
  23,312
  24,476
Total cash flow (excl. dividends), $m
  -97
  -5,826
  -5,928
  -6,119
  -6,329
  -6,556
  -6,802
  -7,066
  -7,349
  -7,652
  -7,974
  -8,318
  -8,682
  -9,069
  -9,479
  -9,912
  -10,371
  -10,855
  -11,366
  -11,906
  -12,474
  -13,074
  -13,705
  -14,370
  -15,070
  -15,807
  -16,583
  -17,398
  -18,256
  -19,159
  -20,107
Retained Cash Flow (-), $m
  -766
  -349
  -419
  -479
  -537
  -595
  -653
  -711
  -770
  -830
  -890
  -952
  -1,016
  -1,082
  -1,150
  -1,220
  -1,293
  -1,369
  -1,448
  -1,530
  -1,615
  -1,704
  -1,797
  -1,894
  -1,996
  -2,102
  -2,213
  -2,330
  -2,451
  -2,579
  -2,713
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
 
  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, %
 
  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
 
  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
  74.0
  53.9
  39.2
  28.3
  20.4
  14.7
  10.5
  7.5
  5.3
  3.8
  2.7
  1.9
  1.3
  1.0
  0.7
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. The company primarily explores for gold, silver, lead, zinc, and copper. Its principal mining properties include the Red Lake, Porcupine, Musselwhite, and Éléonore mines in Canada; the Peñasquito and Los Filos mines in Mexico; the Marlin mine in Guatemala; the Cerro Negro and Alumbrera mines in Argentina; and the Pueblo Viejo mine in the Dominican Republic. The company was founded in 1954 and is headquartered in Vancouver, Canada.

FINANCIAL RATIOS  of  Goldcorp Inc. (G)

Valuation Ratios
P/E Ratio 76
Price to Sales 3.5
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 15.8
Price to Free Cash Flow 148.7
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 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 872.984 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 $17.0 billion.


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Stock chart of G 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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