Intrinsic value of Gran Tierra Energy Inc. - GTE

Previous Close

$3.29

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$3.29

 
Intrinsic value

$0.68

 
Up/down potential

-79%

 
Rating

str. sell

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of GTE 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 1.2

 

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, %
  5.07
  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
  394
  630
  974
  1,457
  2,113
  2,982
  4,099
  5,502
  7,225
  9,297
  11,742
  14,581
  17,827
  21,488
  25,566
  30,061
  34,968
  40,281
  45,989
  52,085
  58,559
  65,403
  72,609
  80,172
  88,089
  96,358
  104,981
  113,960
  123,303
  133,018
  143,114
Variable operating expenses, $m
 
  1,457
  2,244
  3,349
  4,853
  6,841
  9,400
  12,613
  16,557
  21,301
  26,901
  33,387
  40,819
  49,201
  58,539
  68,832
  80,068
  92,231
  105,303
  119,261
  134,085
  149,755
  166,255
  183,573
  201,700
  220,634
  240,377
  260,938
  282,330
  304,573
  327,692
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
  1,273
  1,457
  2,244
  3,349
  4,853
  6,841
  9,400
  12,613
  16,557
  21,301
  26,901
  33,387
  40,819
  49,201
  58,539
  68,832
  80,068
  92,231
  105,303
  119,261
  134,085
  149,755
  166,255
  183,573
  201,700
  220,634
  240,377
  260,938
  282,330
  304,573
  327,692
Operating income, $m
  -879
  -827
  -1,270
  -1,892
  -2,740
  -3,859
  -5,301
  -7,110
  -9,332
  -12,004
  -15,158
  -18,806
  -22,992
  -27,713
  -32,973
  -38,771
  -45,099
  -51,951
  -59,314
  -67,176
  -75,525
  -84,352
  -93,646
  -103,400
  -113,610
  -124,275
  -135,396
  -146,977
  -159,027
  -171,555
  -184,578
EBITDA, $m
  -690
  -623
  -962
  -1,438
  -2,087
  -2,945
  -4,048
  -5,434
  -7,135
  -9,181
  -11,596
  -14,399
  -17,605
  -21,220
  -25,247
  -29,686
  -34,532
  -39,778
  -45,416
  -51,435
  -57,829
  -64,587
  -71,703
  -79,172
  -86,990
  -95,156
  -103,671
  -112,538
  -121,764
  -131,358
  -141,328
Interest expense (income), $m
  8
  16
  40
  75
  124
  190
  278
  391
  534
  708
  918
  1,166
  1,453
  1,782
  2,153
  2,566
  3,021
  3,519
  4,057
  4,635
  5,252
  5,908
  6,602
  7,332
  8,098
  8,900
  9,737
  10,611
  11,520
  12,467
  13,451
Earnings before tax, $m
  -879
  -843
  -1,310
  -1,967
  -2,863
  -4,050
  -5,579
  -7,502
  -9,866
  -12,712
  -16,076
  -19,972
  -24,445
  -29,495
  -35,126
  -41,337
  -48,121
  -55,469
  -63,370
  -71,811
  -80,778
  -90,260
  -100,247
  -110,732
  -121,708
  -133,175
  -145,133
  -157,588
  -170,547
  -184,022
  -198,028
Tax expense, $m
  -250
  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
  -629
  -843
  -1,310
  -1,967
  -2,863
  -4,050
  -5,579
  -7,502
  -9,866
  -12,712
  -16,076
  -19,972
  -24,445
  -29,495
  -35,126
  -41,337
  -48,121
  -55,469
  -63,370
  -71,811
  -80,778
  -90,260
  -100,247
  -110,732
  -121,708
  -133,175
  -145,133
  -157,588
  -170,547
  -184,022
  -198,028

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  34
  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
  1,848
  2,905
  4,488
  6,712
  9,739
  13,741
  18,890
  25,356
  33,294
  42,842
  54,112
  67,195
  82,153
  99,022
  117,816
  138,531
  161,145
  185,625
  211,933
  240,025
  269,859
  301,397
  334,605
  369,458
  405,941
  444,047
  483,783
  525,163
  568,218
  612,984
  659,513
Adjusted assets (=assets-cash), $m
  1,814
  2,905
  4,488
  6,712
  9,739
  13,741
  18,890
  25,356
  33,294
  42,842
  54,112
  67,195
  82,153
  99,022
  117,816
  138,531
  161,145
  185,625
  211,933
  240,025
  269,859
  301,397
  334,605
  369,458
  405,941
  444,047
  483,783
  525,163
  568,218
  612,984
  659,513
Revenue / Adjusted assets
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
  0.217
Average production assets, $m
  596
  953
  1,472
  2,201
  3,193
  4,505
  6,194
  8,314
  10,917
  14,047
  17,743
  22,032
  26,937
  32,468
  38,630
  45,422
  52,837
  60,864
  69,490
  78,701
  88,483
  98,824
  109,713
  121,141
  133,103
  145,597
  158,626
  172,194
  186,311
  200,990
  216,246
Working capital, $m
  -31
  -104
  -161
  -240
  -349
  -492
  -676
  -908
  -1,192
  -1,534
  -1,937
  -2,406
  -2,941
  -3,545
  -4,218
  -4,960
  -5,770
  -6,646
  -7,588
  -8,594
  -9,662
  -10,792
  -11,981
  -13,228
  -14,535
  -15,899
  -17,322
  -18,803
  -20,345
  -21,948
  -23,614
Total debt, $m
  277
  691
  1,291
  2,134
  3,281
  4,798
  6,749
  9,200
  12,209
  15,827
  20,099
  25,057
  30,726
  37,119
  44,242
  52,093
  60,664
  69,942
  79,913
  90,559
  101,867
  113,819
  126,405
  139,615
  153,442
  167,884
  182,944
  198,627
  214,944
  231,911
  249,545
Total liabilities, $m
  688
  1,101
  1,701
  2,544
  3,691
  5,208
  7,159
  9,610
  12,619
  16,237
  20,509
  25,467
  31,136
  37,529
  44,652
  52,503
  61,074
  70,352
  80,323
  90,969
  102,277
  114,229
  126,815
  140,025
  153,852
  168,294
  183,354
  199,037
  215,354
  232,321
  249,955
Total equity, $m
  1,161
  1,804
  2,787
  4,168
  6,048
  8,533
  11,731
  15,746
  20,676
  26,605
  33,604
  41,728
  51,017
  61,492
  73,164
  86,028
  100,071
  115,273
  131,610
  149,056
  167,583
  187,168
  207,790
  229,434
  252,089
  275,753
  300,429
  326,126
  352,863
  380,663
  409,558
Total liabilities and equity, $m
  1,849
  2,905
  4,488
  6,712
  9,739
  13,741
  18,890
  25,356
  33,295
  42,842
  54,113
  67,195
  82,153
  99,021
  117,816
  138,531
  161,145
  185,625
  211,933
  240,025
  269,860
  301,397
  334,605
  369,459
  405,941
  444,047
  483,783
  525,163
  568,217
  612,984
  659,513
Debt-to-equity ratio
  0.239
  0.380
  0.460
  0.510
  0.540
  0.560
  0.580
  0.580
  0.590
  0.590
  0.600
  0.600
  0.600
  0.600
  0.600
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
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
  -629
  -843
  -1,310
  -1,967
  -2,863
  -4,050
  -5,579
  -7,502
  -9,866
  -12,712
  -16,076
  -19,972
  -24,445
  -29,495
  -35,126
  -41,337
  -48,121
  -55,469
  -63,370
  -71,811
  -80,778
  -90,260
  -100,247
  -110,732
  -121,708
  -133,175
  -145,133
  -157,588
  -170,547
  -184,022
  -198,028
Depreciation, amort., depletion, $m
  189
  204
  308
  454
  653
  915
  1,253
  1,677
  2,197
  2,823
  3,562
  4,406
  5,387
  6,494
  7,726
  9,084
  10,567
  12,173
  13,898
  15,740
  17,697
  19,765
  21,943
  24,228
  26,621
  29,119
  31,725
  34,439
  37,262
  40,198
  43,249
Funds from operations, $m
  126
  -639
  -1,002
  -1,513
  -2,211
  -3,135
  -4,326
  -5,825
  -7,668
  -9,889
  -12,514
  -15,565
  -19,058
  -23,002
  -27,400
  -32,252
  -37,553
  -43,297
  -49,472
  -56,070
  -63,081
  -70,495
  -78,305
  -86,503
  -95,088
  -104,055
  -113,408
  -123,149
  -133,285
  -143,824
  -154,779
Change in working capital, $m
  0
  -39
  -57
  -80
  -108
  -143
  -184
  -232
  -284
  -342
  -404
  -468
  -536
  -604
  -673
  -742
  -810
  -877
  -942
  -1,006
  -1,068
  -1,129
  -1,189
  -1,248
  -1,306
  -1,364
  -1,423
  -1,482
  -1,542
  -1,603
  -1,666
Cash from operations, $m
  126
  -638
  -945
  -1,434
  -2,102
  -2,992
  -4,142
  -5,594
  -7,384
  -9,547
  -12,110
  -15,097
  -18,522
  -22,398
  -26,727
  -31,510
  -36,744
  -42,420
  -48,530
  -55,065
  -62,013
  -69,366
  -77,116
  -85,256
  -93,781
  -102,691
  -111,985
  -121,667
  -131,743
  -142,222
  -153,113
Maintenance CAPEX, $m
  0
  -119
  -191
  -294
  -440
  -639
  -901
  -1,239
  -1,663
  -2,183
  -2,809
  -3,549
  -4,406
  -5,387
  -6,494
  -7,726
  -9,084
  -10,567
  -12,173
  -13,898
  -15,740
  -17,697
  -19,765
  -21,943
  -24,228
  -26,621
  -29,119
  -31,725
  -34,439
  -37,262
  -40,198
New CAPEX, $m
  -199
  -357
  -519
  -729
  -992
  -1,312
  -1,688
  -2,120
  -2,603
  -3,130
  -3,696
  -4,290
  -4,904
  -5,531
  -6,162
  -6,792
  -7,415
  -8,027
  -8,626
  -9,211
  -9,782
  -10,341
  -10,888
  -11,428
  -11,962
  -12,495
  -13,029
  -13,568
  -14,117
  -14,678
  -15,256
Cash from investing activities, $m
  -839
  -476
  -710
  -1,023
  -1,432
  -1,951
  -2,589
  -3,359
  -4,266
  -5,313
  -6,505
  -7,839
  -9,310
  -10,918
  -12,656
  -14,518
  -16,499
  -18,594
  -20,799
  -23,109
  -25,522
  -28,038
  -30,653
  -33,371
  -36,190
  -39,116
  -42,148
  -45,293
  -48,556
  -51,940
  -55,454
Free cash flow, $m
  -713
  -1,114
  -1,655
  -2,457
  -3,535
  -4,942
  -6,731
  -8,952
  -11,650
  -14,861
  -18,615
  -22,935
  -27,833
  -33,316
  -39,383
  -46,029
  -53,243
  -61,014
  -69,329
  -78,174
  -87,535
  -97,404
  -107,769
  -118,626
  -129,972
  -141,806
  -154,133
  -166,961
  -180,299
  -194,162
  -208,567
Issuance/(repayment) of debt, $m
  153
  414
  600
  843
  1,147
  1,517
  1,952
  2,451
  3,009
  3,618
  4,272
  4,958
  5,669
  6,393
  7,123
  7,851
  8,571
  9,278
  9,971
  10,647
  11,307
  11,953
  12,586
  13,209
  13,827
  14,442
  15,060
  15,683
  16,318
  16,967
  17,634
Issuance/(repurchase) of shares, $m
  173
  1,343
  2,038
  2,995
  4,268
  5,911
  7,978
  10,517
  13,571
  17,171
  21,343
  26,101
  31,453
  37,398
  43,931
  51,042
  58,716
  66,939
  75,695
  84,972
  94,755
  105,036
  115,805
  127,061
  138,800
  151,028
  163,749
  176,975
  190,718
  204,996
  219,827
Cash from financing (excl. dividends), $m  
  550
  1,757
  2,638
  3,838
  5,415
  7,428
  9,930
  12,968
  16,580
  20,789
  25,615
  31,059
  37,122
  43,791
  51,054
  58,893
  67,287
  76,217
  85,666
  95,619
  106,062
  116,989
  128,391
  140,270
  152,627
  165,470
  178,809
  192,658
  207,036
  221,963
  237,461
Total cash flow (excl. dividends), $m
  -162
  -700
  -1,055
  -1,614
  -2,388
  -3,426
  -4,780
  -6,502
  -8,641
  -11,242
  -14,344
  -17,977
  -22,164
  -26,923
  -32,260
  -38,178
  -44,672
  -51,736
  -59,358
  -67,527
  -76,228
  -85,451
  -95,183
  -105,417
  -116,145
  -127,364
  -139,074
  -151,278
  -163,982
  -177,196
  -190,933
Retained Cash Flow (-), $m
  192
  -677
  -983
  -1,381
  -1,880
  -2,485
  -3,198
  -4,015
  -4,930
  -5,929
  -6,999
  -8,124
  -9,289
  -10,476
  -11,671
  -12,864
  -14,043
  -15,202
  -16,337
  -17,445
  -18,527
  -19,585
  -20,622
  -21,644
  -22,656
  -23,664
  -24,676
  -25,697
  -26,737
  -27,800
  -28,895
Prev. year cash balance distribution, $m
 
  34
  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, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
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
  47.1
  22.8
  11.3
  5.8
  3.0
  1.6
  0.9
  0.5
  0.3
  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
  0.0
  0.0
  0.0
  0.0
  0.0

Gran Tierra Energy Inc., an independent energy company, engages in the acquisition, exploration, development, and production of oil and gas properties in Colombia, Peru, and Brazil. As of December 31, 2015, the company had total proved undeveloped reserves of 7.6 million barrels of oil equivalent (MMBOE), including 5.0 MMBOE in Colombia and 2.6 MMBOE in Brazil. Gran Tierra Energy Inc. was incorporated in 2003 and is headquartered in Calgary, Canada.

FINANCIAL RATIOS  of  Gran Tierra Energy Inc. (GTE)

Valuation Ratios
P/E Ratio -2
Price to Sales 3.3
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 10.2
Price to Free Cash Flow -17.6
Growth Rates
Sales Growth Rate 5.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -6.1%
Cap. Spend. - 3 Yr. Gr. Rate -15.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 23.9%
Total Debt to Equity 23.9%
Interest Coverage -109
Management Effectiveness
Return On Assets -36.7%
Ret/ On Assets - 3 Yr. Avg. -21.6%
Return On Total Capital -45.1%
Ret/ On T. Cap. - 3 Yr. Avg. -27.1%
Return On Equity -50%
Return On Equity - 3 Yr. Avg. -28.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 89.1%
Gross Margin - 3 Yr. Avg. 90%
EBITDA Margin -173.1%
EBITDA Margin - 3 Yr. Avg. -70.7%
Operating Margin -223.1%
Oper. Margin - 3 Yr. Avg. -119.6%
Pre-Tax Margin -223.1%
Pre-Tax Margin - 3 Yr. Avg. -119.6%
Net Profit Margin -159.6%
Net Profit Margin - 3 Yr. Avg. -95.5%
Effective Tax Rate 28.4%
Eff/ Tax Rate - 3 Yr. Avg. -230.7%
Payout Ratio 0%

GTE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GTE stock intrinsic value calculation we used $394 million for the last fiscal year's total revenue generated by Gran Tierra Energy Inc.. The default revenue input number comes from 2016 income statement of Gran Tierra 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 GTE 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 4.4%, whose default value for GTE is calculated based on our internal credit rating of Gran Tierra 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 Gran Tierra 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 GTE stock the variable cost ratio is equal to 232.5%.

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 GTE 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 5.8% for Gran Tierra Energy Inc..

Corporate tax rate of 27% is the nominal tax rate for Gran Tierra 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 GTE 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 GTE are equal to 151.1%.

Life of production assets of 3.9 years is the average useful life of capital assets used in Gran Tierra 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 GTE 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 - $1161 million for Gran Tierra 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 374.613 million for Gran Tierra 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 Gran Tierra Energy Inc. at the current share price and the inputted number of shares is $1.2 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
PXT Parex Resource 16.67 prem.  prem.
MVN Madalena Energ 0.145 prem.  prem.
Stock chart of GTE Financial statements of GTE
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.