Intrinsic value of Parkland Fuel Corporation - PKI

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$31.11

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$31.11

 
Intrinsic value

$24.26

 
Up/down potential

-22%

 
Rating

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 PKI 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 3.0

 

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, %
  -0.54
  35.40
  32.36
  29.62
  27.16
  24.95
  22.95
  21.16
  19.54
  18.09
  16.78
  15.60
  14.54
  13.59
  12.73
  11.95
  11.26
  10.63
  10.07
  9.56
  9.11
  8.70
  8.33
  7.99
  7.69
  7.42
  7.18
  6.96
  6.77
  6.59
  6.43
Revenue, $m
  6,266
  8,484
  11,230
  14,556
  18,510
  23,127
  28,435
  34,451
  41,183
  48,631
  56,791
  65,650
  75,195
  85,411
  96,282
  107,792
  119,928
  132,680
  146,041
  160,007
  174,578
  189,759
  205,559
  221,991
  239,071
  256,822
  275,268
  294,438
  314,365
  335,085
  356,637
Variable operating expenses, $m
 
  8,337
  11,017
  14,264
  18,123
  22,630
  27,811
  33,682
  40,253
  47,523
  55,487
  64,078
  73,395
  83,367
  93,977
  105,211
  117,057
  129,504
  142,545
  156,176
  170,399
  185,217
  200,638
  216,677
  233,349
  250,674
  268,679
  287,390
  306,840
  327,064
  348,100
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
  6,140
  8,337
  11,017
  14,264
  18,123
  22,630
  27,811
  33,682
  40,253
  47,523
  55,487
  64,078
  73,395
  83,367
  93,977
  105,211
  117,057
  129,504
  142,545
  156,176
  170,399
  185,217
  200,638
  216,677
  233,349
  250,674
  268,679
  287,390
  306,840
  327,064
  348,100
Operating income, $m
  126
  147
  213
  292
  387
  498
  625
  769
  930
  1,108
  1,303
  1,571
  1,800
  2,044
  2,305
  2,580
  2,871
  3,176
  3,496
  3,830
  4,179
  4,542
  4,920
  5,314
  5,723
  6,148
  6,589
  7,048
  7,525
  8,021
  8,537
EBITDA, $m
  229
  282
  374
  485
  616
  770
  947
  1,147
  1,371
  1,619
  1,891
  2,186
  2,503
  2,844
  3,205
  3,589
  3,993
  4,417
  4,862
  5,327
  5,812
  6,317
  6,843
  7,391
  7,959
  8,550
  9,164
  9,802
  10,466
  11,156
  11,873
Interest expense (income), $m
  27
  34
  60
  92
  130
  176
  230
  291
  361
  439
  526
  621
  723
  834
  953
  1,079
  1,213
  1,354
  1,502
  1,657
  1,819
  1,988
  2,164
  2,348
  2,538
  2,737
  2,943
  3,157
  3,379
  3,611
  3,851
Earnings before tax, $m
  67
  113
  153
  201
  257
  321
  395
  477
  569
  669
  778
  951
  1,077
  1,210
  1,352
  1,501
  1,658
  1,822
  1,994
  2,173
  2,360
  2,554
  2,756
  2,966
  3,184
  3,411
  3,646
  3,891
  4,146
  4,410
  4,686
Tax expense, $m
  20
  31
  41
  54
  69
  87
  107
  129
  154
  181
  210
  257
  291
  327
  365
  405
  448
  492
  538
  587
  637
  690
  744
  801
  860
  921
  985
  1,051
  1,119
  1,191
  1,265
Net income, $m
  47
  83
  112
  147
  187
  235
  288
  348
  415
  488
  568
  694
  786
  883
  987
  1,096
  1,210
  1,330
  1,456
  1,587
  1,723
  1,865
  2,012
  2,165
  2,325
  2,490
  2,662
  2,840
  3,026
  3,219
  3,420

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  26
  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
  2,562
  3,433
  4,545
  5,891
  7,491
  9,360
  11,508
  13,942
  16,667
  19,681
  22,983
  26,568
  30,431
  34,565
  38,965
  43,623
  48,534
  53,695
  59,102
  64,754
  70,651
  76,794
  83,189
  89,838
  96,751
  103,934
  111,399
  119,158
  127,222
  135,607
  144,329
Adjusted assets (=assets-cash), $m
  2,536
  3,433
  4,545
  5,891
  7,491
  9,360
  11,508
  13,942
  16,667
  19,681
  22,983
  26,568
  30,431
  34,565
  38,965
  43,623
  48,534
  53,695
  59,102
  64,754
  70,651
  76,794
  83,189
  89,838
  96,751
  103,934
  111,399
  119,158
  127,222
  135,607
  144,329
Revenue / Adjusted assets
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
  2.471
Average production assets, $m
  726
  984
  1,303
  1,689
  2,147
  2,683
  3,299
  3,996
  4,777
  5,641
  6,588
  7,615
  8,723
  9,908
  11,169
  12,504
  13,912
  15,391
  16,941
  18,561
  20,251
  22,012
  23,845
  25,751
  27,732
  29,791
  31,931
  34,155
  36,466
  38,870
  41,370
Working capital, $m
  91
  492
  651
  844
  1,074
  1,341
  1,649
  1,998
  2,389
  2,821
  3,294
  3,808
  4,361
  4,954
  5,584
  6,252
  6,956
  7,695
  8,470
  9,280
  10,126
  11,006
  11,922
  12,875
  13,866
  14,896
  15,966
  17,077
  18,233
  19,435
  20,685
Total debt, $m
  837
  1,424
  2,183
  3,102
  4,195
  5,472
  6,939
  8,602
  10,462
  12,521
  14,776
  17,225
  19,863
  22,687
  25,692
  28,873
  32,228
  35,753
  39,446
  43,306
  47,333
  51,530
  55,897
  60,439
  65,160
  70,066
  75,165
  80,464
  85,971
  91,699
  97,656
Total liabilities, $m
  1,758
  2,345
  3,104
  4,023
  5,116
  6,393
  7,860
  9,523
  11,383
  13,442
  15,697
  18,146
  20,784
  23,608
  26,613
  29,794
  33,149
  36,674
  40,367
  44,227
  48,254
  52,451
  56,818
  61,360
  66,081
  70,987
  76,086
  81,385
  86,892
  92,620
  98,577
Total equity, $m
  804
  1,088
  1,441
  1,867
  2,375
  2,967
  3,648
  4,420
  5,283
  6,239
  7,286
  8,422
  9,647
  10,957
  12,352
  13,828
  15,385
  17,021
  18,735
  20,527
  22,396
  24,344
  26,371
  28,479
  30,670
  32,947
  35,314
  37,773
  40,329
  42,987
  45,752
Total liabilities and equity, $m
  2,562
  3,433
  4,545
  5,890
  7,491
  9,360
  11,508
  13,943
  16,666
  19,681
  22,983
  26,568
  30,431
  34,565
  38,965
  43,622
  48,534
  53,695
  59,102
  64,754
  70,650
  76,795
  83,189
  89,839
  96,751
  103,934
  111,400
  119,158
  127,221
  135,607
  144,329
Debt-to-equity ratio
  1.041
  1.310
  1.520
  1.660
  1.770
  1.840
  1.900
  1.950
  1.980
  2.010
  2.030
  2.050
  2.060
  2.070
  2.080
  2.090
  2.090
  2.100
  2.110
  2.110
  2.110
  2.120
  2.120
  2.120
  2.120
  2.130
  2.130
  2.130
  2.130
  2.130
  2.130
Adjusted equity ratio
  0.307
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317
  0.317

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  47
  83
  112
  147
  187
  235
  288
  348
  415
  488
  568
  694
  786
  883
  987
  1,096
  1,210
  1,330
  1,456
  1,587
  1,723
  1,865
  2,012
  2,165
  2,325
  2,490
  2,662
  2,840
  3,026
  3,219
  3,420
Depreciation, amort., depletion, $m
  103
  135
  161
  192
  229
  272
  322
  378
  441
  511
  587
  614
  703
  799
  901
  1,008
  1,122
  1,241
  1,366
  1,497
  1,633
  1,775
  1,923
  2,077
  2,236
  2,403
  2,575
  2,754
  2,941
  3,135
  3,336
Funds from operations, $m
  183
  218
  273
  339
  417
  507
  610
  727
  856
  999
  1,155
  1,308
  1,489
  1,682
  1,888
  2,104
  2,332
  2,572
  2,822
  3,083
  3,356
  3,640
  3,935
  4,242
  4,561
  4,892
  5,237
  5,595
  5,967
  6,354
  6,757
Change in working capital, $m
  18
  129
  159
  193
  229
  268
  308
  349
  390
  432
  473
  514
  554
  593
  630
  668
  704
  740
  775
  810
  845
  881
  916
  953
  991
  1,030
  1,070
  1,112
  1,156
  1,202
  1,250
Cash from operations, $m
  165
  122
  113
  146
  187
  239
  302
  378
  466
  567
  682
  794
  936
  1,090
  1,257
  1,437
  1,628
  1,832
  2,047
  2,273
  2,511
  2,759
  3,019
  3,289
  3,570
  3,863
  4,167
  4,483
  4,811
  5,152
  5,507
Maintenance CAPEX, $m
  0
  -59
  -79
  -105
  -136
  -173
  -216
  -266
  -322
  -385
  -455
  -531
  -614
  -703
  -799
  -901
  -1,008
  -1,122
  -1,241
  -1,366
  -1,497
  -1,633
  -1,775
  -1,923
  -2,077
  -2,236
  -2,403
  -2,575
  -2,754
  -2,941
  -3,135
New CAPEX, $m
  -95
  -259
  -318
  -386
  -459
  -536
  -616
  -698
  -781
  -864
  -946
  -1,028
  -1,107
  -1,185
  -1,261
  -1,335
  -1,408
  -1,479
  -1,550
  -1,620
  -1,690
  -1,761
  -1,833
  -1,906
  -1,981
  -2,059
  -2,140
  -2,224
  -2,312
  -2,403
  -2,500
Cash from investing activities, $m
  -191
  -318
  -397
  -491
  -595
  -709
  -832
  -964
  -1,103
  -1,249
  -1,401
  -1,559
  -1,721
  -1,888
  -2,060
  -2,236
  -2,416
  -2,601
  -2,791
  -2,986
  -3,187
  -3,394
  -3,608
  -3,829
  -4,058
  -4,295
  -4,543
  -4,799
  -5,066
  -5,344
  -5,635
Free cash flow, $m
  -26
  -195
  -284
  -345
  -408
  -470
  -530
  -586
  -637
  -682
  -720
  -764
  -786
  -799
  -803
  -799
  -788
  -769
  -744
  -713
  -676
  -635
  -589
  -540
  -488
  -433
  -375
  -316
  -255
  -192
  -128
Issuance/(repayment) of debt, $m
  88
  613
  759
  920
  1,093
  1,276
  1,467
  1,663
  1,861
  2,059
  2,255
  2,449
  2,638
  2,824
  3,005
  3,181
  3,355
  3,525
  3,693
  3,860
  4,028
  4,196
  4,367
  4,542
  4,721
  4,906
  5,099
  5,299
  5,508
  5,727
  5,957
Issuance/(repurchase) of shares, $m
  5
  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 from financing (excl. dividends), $m  
  93
  613
  759
  920
  1,093
  1,276
  1,467
  1,663
  1,861
  2,059
  2,255
  2,449
  2,638
  2,824
  3,005
  3,181
  3,355
  3,525
  3,693
  3,860
  4,028
  4,196
  4,367
  4,542
  4,721
  4,906
  5,099
  5,299
  5,508
  5,727
  5,957
Total cash flow (excl. dividends), $m
  68
  418
  475
  574
  685
  807
  937
  1,077
  1,223
  1,377
  1,535
  1,684
  1,853
  2,025
  2,202
  2,382
  2,567
  2,756
  2,949
  3,147
  3,351
  3,561
  3,778
  4,002
  4,233
  4,474
  4,723
  4,983
  5,253
  5,535
  5,829
Retained Cash Flow (-), $m
  9
  -284
  -352
  -427
  -507
  -592
  -681
  -772
  -864
  -956
  -1,047
  -1,137
  -1,225
  -1,311
  -1,395
  -1,477
  -1,557
  -1,636
  -1,714
  -1,792
  -1,869
  -1,948
  -2,027
  -2,108
  -2,191
  -2,277
  -2,366
  -2,459
  -2,556
  -2,658
  -2,765
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
 
  133
  122
  148
  178
  214
  257
  305
  360
  421
  489
  548
  628
  715
  807
  906
  1,010
  1,120
  1,235
  1,356
  1,482
  1,614
  1,751
  1,894
  2,042
  2,197
  2,357
  2,524
  2,697
  2,877
  3,064
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  123
  104
  114
  124
  134
  142
  148
  152
  152
  150
  140
  132
  122
  110
  97
  84
  70
  58
  46
  36
  27
  20
  14
  10
  7
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Parkland Fuel Corporation operates as an independent marketer and distributor of fuels and lubricants in Canada and the United States. The company operates through Retails Fuels, Commercial Fuels, Parkland USA, and Supply and Wholesale segments. The Retails Fuels segment supplies and supports a network of 1,075 retail gas stations under the Fas Gas Plus, Race Trac, Pioneer, Esso, and Chevron brand names. The Commercial Fuels segment offers bulk fuel, propane, heating oil, lubricants, agricultural inputs, and other related products and services to commercial, industrial, and residential customers in various industries, such as oil and gas, residential propane and heating fuel, construction, mining, forestry, fishing, and transportation. It provides its products under the Bluewave Energy, Columbia Fuels, Sparlings Propane, and Island Petroleum brands. The Parkland USA segment supplies and distributes refined petroleum products through third party rail and highway carriers; owns and operates retail service stations under the Superpumper brand name; and delivers lubricants. It has 40,000 barrels of terminal storage capacity; and owns a fleet of approximately 75 trucks which deliver wholesale fuels and commercial lubricants. It serves industrial and wholesale customers, retailers, small resellers, and commercial operators. The Supply and Wholesale segment engages in the wholesale of gas and diesel, gasoline blend stock, and drilling fluids; crude, asphalt, and fuel oils, such as gas oils; liquid petroleum gas, including propane, butane, condensate, and natural gas liquid mixes; and renewable fuels comprising ethanol and biodiesel. This segment has approximately 227,000 barrels of storage capacity at its Bowden, Alberta terminal; approximately 282,000 barrels of storage capacity in Quebec; and approximately 782,000 barrels of additional storage capacity in North America. Parkland Fuel Corporation was founded in 1977 and is headquartered in Red Deer, Canada.

FINANCIAL RATIOS  of  Parkland Fuel Corporation (PKI)

Valuation Ratios
P/E Ratio 63.7
Price to Sales 0.5
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 18.1
Price to Free Cash Flow 42.8
Growth Rates
Sales Growth Rate -0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30.1%
Cap. Spend. - 3 Yr. Gr. Rate 11.1%
Financial Strength
Quick Ratio 0
Current Ratio 0.5
LT Debt to Equity 66.9%
Total Debt to Equity 104.1%
Interest Coverage 3
Management Effectiveness
Return On Assets 3%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 3.2%
Ret/ On T. Cap. - 3 Yr. Avg. 4%
Return On Equity 5.8%
Return On Equity - 3 Yr. Avg. 7.2%
Asset Turnover 2.9
Profitability Ratios
Gross Margin 11.4%
Gross Margin - 3 Yr. Avg. 9.5%
EBITDA Margin 3.1%
EBITDA Margin - 3 Yr. Avg. 2.7%
Operating Margin 2%
Oper. Margin - 3 Yr. Avg. 1.5%
Pre-Tax Margin 1.1%
Pre-Tax Margin - 3 Yr. Avg. 1%
Net Profit Margin 0.8%
Net Profit Margin - 3 Yr. Avg. 0.7%
Effective Tax Rate 29.9%
Eff/ Tax Rate - 3 Yr. Avg. 30.6%
Payout Ratio 136.2%

PKI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PKI stock intrinsic value calculation we used $6266 million for the last fiscal year's total revenue generated by Parkland Fuel Corporation. The default revenue input number comes from 2016 income statement of Parkland Fuel Corporation. 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 PKI stock valuation model: a) initial revenue growth rate of 35.4% 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 8.1%, whose default value for PKI is calculated based on our internal credit rating of Parkland Fuel Corporation, 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 Parkland Fuel Corporation.
    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 PKI stock the variable cost ratio is equal to 98.5%.

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 PKI 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 4.2% for Parkland Fuel Corporation.

Corporate tax rate of 27% is the nominal tax rate for Parkland Fuel Corporation. 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 PKI 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 PKI are equal to 11.6%.

Life of production assets of 12.4 years is the average useful life of capital assets used in Parkland Fuel Corporation 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 PKI is equal to 5.8%. 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 - $804 million for Parkland Fuel Corporation - 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 95.943 million for Parkland Fuel Corporation 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 Parkland Fuel Corporation at the current share price and the inputted number of shares is $3.0 billion.


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Stock chart of PKI Financial statements of PKI
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