Intrinsic value of Keyera Corp. - KEY

Previous Close

$38.88

  Intrinsic Value

$2.37

stock screener

  Rating & Target

str. sell

-94%

  Value-price divergence*

0%

Previous close

$38.88

 
Intrinsic value

$2.37

 
Up/down potential

-94%

 
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 KEY 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 7.3

 

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, %
  -0.48
  31.90
  29.21
  26.79
  24.61
  22.65
  20.88
  19.30
  17.87
  16.58
  15.42
  14.38
  13.44
  12.60
  11.84
  11.15
  10.54
  9.98
  9.49
  9.04
  8.63
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
  6.56
  6.41
  6.27
Revenue, $m
  2,509
  3,309
  4,276
  5,422
  6,756
  8,286
  10,016
  11,949
  14,084
  16,419
  18,951
  21,676
  24,590
  27,687
  30,965
  34,419
  38,046
  41,845
  45,814
  49,955
  54,268
  58,756
  63,423
  68,274
  73,316
  78,555
  83,999
  89,659
  95,545
  101,667
  108,038
Variable operating expenses, $m
 
  2,911
  3,759
  4,765
  5,936
  7,279
  8,798
  10,495
  12,369
  14,419
  16,642
  19,028
  21,586
  24,305
  27,182
  30,214
  33,399
  36,733
  40,218
  43,853
  47,639
  51,579
  55,676
  59,934
  64,360
  68,959
  73,739
  78,707
  83,874
  89,248
  94,841
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
  2,202
  2,911
  3,759
  4,765
  5,936
  7,279
  8,798
  10,495
  12,369
  14,419
  16,642
  19,028
  21,586
  24,305
  27,182
  30,214
  33,399
  36,733
  40,218
  43,853
  47,639
  51,579
  55,676
  59,934
  64,360
  68,959
  73,739
  78,707
  83,874
  89,248
  94,841
Operating income, $m
  307
  399
  517
  657
  820
  1,007
  1,218
  1,454
  1,715
  2,000
  2,310
  2,648
  3,004
  3,382
  3,782
  4,204
  4,647
  5,111
  5,596
  6,102
  6,629
  7,177
  7,747
  8,340
  8,956
  9,596
  10,261
  10,952
  11,671
  12,419
  13,197
EBITDA, $m
  479
  628
  812
  1,029
  1,283
  1,573
  1,902
  2,269
  2,674
  3,117
  3,598
  4,115
  4,668
  5,256
  5,879
  6,534
  7,223
  7,944
  8,698
  9,484
  10,303
  11,155
  12,041
  12,962
  13,919
  14,913
  15,947
  17,022
  18,139
  19,301
  20,511
Interest expense (income), $m
  84
  86
  135
  195
  265
  348
  442
  549
  668
  800
  944
  1,100
  1,269
  1,448
  1,640
  1,842
  2,055
  2,279
  2,513
  2,758
  3,014
  3,280
  3,557
  3,845
  4,144
  4,455
  4,779
  5,115
  5,464
  5,827
  6,205
Earnings before tax, $m
  307
  313
  382
  462
  554
  659
  776
  905
  1,047
  1,200
  1,365
  1,547
  1,735
  1,934
  2,143
  2,363
  2,592
  2,833
  3,083
  3,344
  3,615
  3,897
  4,190
  4,495
  4,811
  5,140
  5,482
  5,837
  6,207
  6,592
  6,992
Tax expense, $m
  90
  85
  103
  125
  150
  178
  210
  244
  283
  324
  369
  418
  468
  522
  579
  638
  700
  765
  832
  903
  976
  1,052
  1,131
  1,214
  1,299
  1,388
  1,480
  1,576
  1,676
  1,780
  1,888
Net income, $m
  217
  229
  279
  337
  405
  481
  566
  661
  764
  876
  997
  1,130
  1,267
  1,412
  1,564
  1,725
  1,893
  2,068
  2,251
  2,441
  2,639
  2,845
  3,059
  3,281
  3,512
  3,752
  4,002
  4,261
  4,531
  4,812
  5,104

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  16
  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
  4,957
  6,515
  8,417
  10,672
  13,299
  16,311
  19,717
  23,522
  27,724
  32,321
  37,305
  42,670
  48,405
  54,503
  60,955
  67,753
  74,894
  82,371
  90,185
  98,336
  106,826
  115,661
  124,848
  134,398
  144,322
  154,635
  165,353
  176,494
  188,080
  200,132
  212,674
Adjusted assets (=assets-cash), $m
  4,941
  6,515
  8,417
  10,672
  13,299
  16,311
  19,717
  23,522
  27,724
  32,321
  37,305
  42,670
  48,405
  54,503
  60,955
  67,753
  74,894
  82,371
  90,185
  98,336
  106,826
  115,661
  124,848
  134,398
  144,322
  154,635
  165,353
  176,494
  188,080
  200,132
  212,674
Revenue / Adjusted assets
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
  0.508
Average production assets, $m
  3,906
  5,153
  6,658
  8,441
  10,519
  12,901
  15,595
  18,605
  21,929
  25,564
  29,507
  33,750
  38,286
  43,109
  48,212
  53,590
  59,237
  65,152
  71,333
  77,779
  84,495
  91,483
  98,749
  106,303
  114,152
  122,309
  130,787
  139,599
  148,763
  158,295
  168,216
Working capital, $m
  46
  119
  154
  195
  243
  298
  361
  430
  507
  591
  682
  780
  885
  997
  1,115
  1,239
  1,370
  1,506
  1,649
  1,798
  1,954
  2,115
  2,283
  2,458
  2,639
  2,828
  3,024
  3,228
  3,440
  3,660
  3,889
Total debt, $m
  1,732
  2,702
  3,895
  5,309
  6,955
  8,844
  10,980
  13,365
  16,000
  18,882
  22,007
  25,371
  28,967
  32,790
  36,836
  41,098
  45,575
  50,264
  55,163
  60,274
  65,597
  71,136
  76,897
  82,884
  89,107
  95,573
  102,293
  109,279
  116,543
  124,100
  131,964
Total liabilities, $m
  3,115
  4,085
  5,278
  6,692
  8,338
  10,227
  12,363
  14,748
  17,383
  20,265
  23,390
  26,754
  30,350
  34,173
  38,219
  42,481
  46,958
  51,647
  56,546
  61,657
  66,980
  72,519
  78,280
  84,267
  90,490
  96,956
  103,676
  110,662
  117,926
  125,483
  133,347
Total equity, $m
  1,842
  2,430
  3,140
  3,981
  4,960
  6,084
  7,355
  8,774
  10,341
  12,056
  13,915
  15,916
  18,055
  20,330
  22,736
  25,272
  27,935
  30,725
  33,639
  36,679
  39,846
  43,141
  46,568
  50,130
  53,832
  57,679
  61,677
  65,832
  70,154
  74,649
  79,327
Total liabilities and equity, $m
  4,957
  6,515
  8,418
  10,673
  13,298
  16,311
  19,718
  23,522
  27,724
  32,321
  37,305
  42,670
  48,405
  54,503
  60,955
  67,753
  74,893
  82,372
  90,185
  98,336
  106,826
  115,660
  124,848
  134,397
  144,322
  154,635
  165,353
  176,494
  188,080
  200,132
  212,674
Debt-to-equity ratio
  0.940
  1.110
  1.240
  1.330
  1.400
  1.450
  1.490
  1.520
  1.550
  1.570
  1.580
  1.590
  1.600
  1.610
  1.620
  1.630
  1.630
  1.640
  1.640
  1.640
  1.650
  1.650
  1.650
  1.650
  1.660
  1.660
  1.660
  1.660
  1.660
  1.660
  1.660
Adjusted equity ratio
  0.370
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373
  0.373

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  217
  229
  279
  337
  405
  481
  566
  661
  764
  876
  997
  1,130
  1,267
  1,412
  1,564
  1,725
  1,893
  2,068
  2,251
  2,441
  2,639
  2,845
  3,059
  3,281
  3,512
  3,752
  4,002
  4,261
  4,531
  4,812
  5,104
Depreciation, amort., depletion, $m
  172
  229
  295
  372
  463
  566
  683
  814
  959
  1,117
  1,288
  1,467
  1,665
  1,874
  2,096
  2,330
  2,576
  2,833
  3,101
  3,382
  3,674
  3,978
  4,293
  4,622
  4,963
  5,318
  5,686
  6,070
  6,468
  6,882
  7,314
Funds from operations, $m
  284
  458
  574
  710
  867
  1,047
  1,250
  1,475
  1,723
  1,993
  2,285
  2,597
  2,931
  3,286
  3,661
  4,055
  4,468
  4,901
  5,352
  5,823
  6,313
  6,823
  7,352
  7,903
  8,475
  9,070
  9,688
  10,331
  10,999
  11,694
  12,418
Change in working capital, $m
  -129
  29
  35
  41
  48
  55
  62
  70
  77
  84
  91
  98
  105
  112
  118
  124
  131
  137
  143
  149
  155
  162
  168
  175
  181
  189
  196
  204
  212
  220
  229
Cash from operations, $m
  413
  429
  539
  669
  819
  992
  1,188
  1,406
  1,646
  1,909
  2,194
  2,499
  2,826
  3,174
  3,543
  3,930
  4,337
  4,764
  5,209
  5,674
  6,158
  6,661
  7,184
  7,729
  8,294
  8,882
  9,492
  10,127
  10,787
  11,474
  12,189
Maintenance CAPEX, $m
  0
  -170
  -224
  -289
  -367
  -457
  -561
  -678
  -809
  -953
  -1,111
  -1,283
  -1,467
  -1,665
  -1,874
  -2,096
  -2,330
  -2,576
  -2,833
  -3,101
  -3,382
  -3,674
  -3,978
  -4,293
  -4,622
  -4,963
  -5,318
  -5,686
  -6,070
  -6,468
  -6,882
New CAPEX, $m
  -567
  -1,247
  -1,505
  -1,784
  -2,077
  -2,382
  -2,694
  -3,009
  -3,324
  -3,636
  -3,942
  -4,243
  -4,536
  -4,823
  -5,103
  -5,378
  -5,648
  -5,915
  -6,180
  -6,447
  -6,715
  -6,988
  -7,267
  -7,553
  -7,850
  -8,157
  -8,477
  -8,812
  -9,164
  -9,532
  -9,920
Cash from investing activities, $m
  -761
  -1,417
  -1,729
  -2,073
  -2,444
  -2,839
  -3,255
  -3,687
  -4,133
  -4,589
  -5,053
  -5,526
  -6,003
  -6,488
  -6,977
  -7,474
  -7,978
  -8,491
  -9,013
  -9,548
  -10,097
  -10,662
  -11,245
  -11,846
  -12,472
  -13,120
  -13,795
  -14,498
  -15,234
  -16,000
  -16,802
Free cash flow, $m
  -348
  -987
  -1,190
  -1,405
  -1,625
  -1,847
  -2,068
  -2,282
  -2,487
  -2,680
  -2,860
  -3,027
  -3,177
  -3,313
  -3,435
  -3,543
  -3,640
  -3,726
  -3,804
  -3,874
  -3,939
  -4,001
  -4,060
  -4,118
  -4,177
  -4,239
  -4,303
  -4,372
  -4,446
  -4,526
  -4,614
Issuance/(repayment) of debt, $m
  127
  986
  1,193
  1,414
  1,647
  1,889
  2,136
  2,385
  2,635
  2,882
  3,125
  3,363
  3,596
  3,823
  4,045
  4,263
  4,477
  4,689
  4,899
  5,110
  5,323
  5,540
  5,760
  5,988
  6,222
  6,466
  6,720
  6,986
  7,264
  7,556
  7,864
Issuance/(repurchase) of shares, $m
  515
  359
  431
  504
  575
  642
  704
  758
  803
  838
  862
  871
  873
  863
  842
  811
  771
  721
  664
  599
  528
  450
  368
  281
  189
  94
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  625
  1,345
  1,624
  1,918
  2,222
  2,531
  2,840
  3,143
  3,438
  3,720
  3,987
  4,234
  4,469
  4,686
  4,887
  5,074
  5,248
  5,410
  5,563
  5,709
  5,851
  5,990
  6,128
  6,269
  6,411
  6,560
  6,720
  6,986
  7,264
  7,556
  7,864
Total cash flow (excl. dividends), $m
  277
  358
  434
  513
  597
  684
  772
  862
  952
  1,040
  1,128
  1,208
  1,291
  1,373
  1,453
  1,531
  1,608
  1,684
  1,759
  1,835
  1,912
  1,989
  2,068
  2,150
  2,234
  2,322
  2,417
  2,614
  2,818
  3,030
  3,250
Retained Cash Flow (-), $m
  -444
  -588
  -710
  -841
  -980
  -1,123
  -1,271
  -1,419
  -1,568
  -1,715
  -1,859
  -2,001
  -2,139
  -2,274
  -2,407
  -2,536
  -2,663
  -2,789
  -2,915
  -3,040
  -3,167
  -3,295
  -3,427
  -3,562
  -3,702
  -3,847
  -3,998
  -4,156
  -4,321
  -4,495
  -4,678
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
 
  -230
  -276
  -328
  -383
  -440
  -498
  -557
  -616
  -674
  -732
  -793
  -848
  -902
  -954
  -1,005
  -1,056
  -1,106
  -1,155
  -1,205
  -1,255
  -1,306
  -1,358
  -1,412
  -1,467
  -1,525
  -1,581
  -1,542
  -1,503
  -1,465
  -1,428
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  -215
  -240
  -263
  -282
  -294
  -300
  -300
  -294
  -281
  -265
  -246
  -222
  -197
  -172
  -147
  -124
  -102
  -82
  -65
  -50
  -38
  -28
  -21
  -15
  -10
  -7
  -4
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  95.3
  91.3
  87.7
  84.6
  82.0
  79.7
  77.6
  75.9
  74.4
  73.1
  71.9
  70.9
  70.1
  69.4
  68.8
  68.2
  67.8
  67.4
  67.1
  66.9
  66.7
  66.6
  66.5
  66.4
  66.4
  66.4
  66.4
  66.4
  66.4
  66.4

Keyera Corp. is engaged in energy midstream businesses, and operates in oil and gas sector between upstream and downstream sectors. The Company is organized into two business units: Gathering and Processing Business Unit and Liquids Business Unit. The Gathering and Processing Business Unit owns and operates raw gas gathering pipelines and processing plants, which collect and process raw natural gas, remove waste products and separate the economic components, primarily natural gas liquids (NGLs). The Liquids Business Unit consists of Liquids Infrastructure and Marketing segments. The Liquids Infrastructure segment owns and operates a network of facilities for processing, fractionation, storage and transportation of the by-products of natural gas processing, including NGLs. The Marketing segment markets a range of products associated with its infrastructure business lines, primarily propane, butane, condensate and iso-octane, and also engages in crude oil midstream activities.

FINANCIAL RATIOS  of  Keyera Corp. (KEY)

Valuation Ratios
P/E Ratio 33.3
Price to Sales 2.9
Price to Book 3.9
Price to Tangible Book
Price to Cash Flow 17.5
Price to Free Cash Flow -46.9
Growth Rates
Sales Growth Rate -0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.7%
Cap. Spend. - 3 Yr. Gr. Rate 10.8%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 90.8%
Total Debt to Equity 94%
Interest Coverage 5
Management Effectiveness
Return On Assets 6%
Ret/ On Assets - 3 Yr. Avg. 6.7%
Return On Total Capital 6.6%
Ret/ On T. Cap. - 3 Yr. Avg. 7.9%
Return On Equity 13.4%
Return On Equity - 3 Yr. Avg. 16.3%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 25.7%
Gross Margin - 3 Yr. Avg. 24.6%
EBITDA Margin 22.4%
EBITDA Margin - 3 Yr. Avg. 19.5%
Operating Margin 12.2%
Oper. Margin - 3 Yr. Avg. 11.1%
Pre-Tax Margin 12.2%
Pre-Tax Margin - 3 Yr. Avg. 11.1%
Net Profit Margin 8.6%
Net Profit Margin - 3 Yr. Avg. 7.7%
Effective Tax Rate 29.3%
Eff/ Tax Rate - 3 Yr. Avg. 30.5%
Payout Ratio 126.3%

KEY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KEY stock intrinsic value calculation we used $2509 million for the last fiscal year's total revenue generated by Keyera Corp.. The default revenue input number comes from 2016 income statement of Keyera Corp.. 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 KEY stock valuation model: a) initial revenue growth rate of 31.9% 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 6.9%, whose default value for KEY is calculated based on our internal credit rating of Keyera Corp., 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 Keyera Corp..
    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 KEY 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 KEY 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% for Keyera Corp..

Corporate tax rate of 27% is the nominal tax rate for Keyera Corp.. 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 KEY 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 KEY are equal to 155.7%.

Life of production assets of 23 years is the average useful life of capital assets used in Keyera Corp. 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 KEY is equal to 3.6%. 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 - $1842 million for Keyera Corp. - 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 188.394 million for Keyera Corp. 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 Keyera Corp. at the current share price and the inputted number of shares is $7.3 billion.

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Financial statements of KEY
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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