Intrinsic value of Surge Energy Inc. - SGY

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$2.65

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$2.65

 
Intrinsic value

$0.87

 
Up/down potential

-67%

 
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 SGY 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 0.6

 

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, %
  -24.74
  23.30
  21.47
  19.82
  18.34
  17.01
  15.81
  14.73
  13.75
  12.88
  12.09
  11.38
  10.74
  10.17
  9.65
  9.19
  8.77
  8.39
  8.05
  7.75
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
Revenue, $m
  146
  180
  219
  262
  310
  363
  420
  482
  548
  619
  694
  773
  856
  943
  1,034
  1,129
  1,228
  1,331
  1,438
  1,549
  1,665
  1,785
  1,910
  2,040
  2,175
  2,316
  2,462
  2,614
  2,773
  2,938
  3,110
Variable operating expenses, $m
 
  440
  535
  641
  758
  887
  1,027
  1,179
  1,341
  1,513
  1,696
  1,889
  2,092
  2,305
  2,527
  2,760
  3,002
  3,253
  3,515
  3,788
  4,071
  4,365
  4,670
  4,988
  5,318
  5,662
  6,019
  6,392
  6,779
  7,183
  7,604
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
  177
  440
  535
  641
  758
  887
  1,027
  1,179
  1,341
  1,513
  1,696
  1,889
  2,092
  2,305
  2,527
  2,760
  3,002
  3,253
  3,515
  3,788
  4,071
  4,365
  4,670
  4,988
  5,318
  5,662
  6,019
  6,392
  6,779
  7,183
  7,604
Operating income, $m
  -32
  -260
  -316
  -379
  -448
  -524
  -607
  -697
  -792
  -894
  -1,002
  -1,117
  -1,236
  -1,362
  -1,494
  -1,631
  -1,774
  -1,923
  -2,078
  -2,239
  -2,406
  -2,580
  -2,760
  -2,948
  -3,143
  -3,346
  -3,558
  -3,777
  -4,007
  -4,245
  -4,494
EBITDA, $m
  52
  -157
  -190
  -228
  -270
  -316
  -366
  -420
  -478
  -539
  -604
  -673
  -745
  -821
  -900
  -983
  -1,069
  -1,159
  -1,252
  -1,349
  -1,450
  -1,555
  -1,664
  -1,777
  -1,895
  -2,017
  -2,144
  -2,277
  -2,415
  -2,559
  -2,709
Interest expense (income), $m
  0
  6
  8
  11
  15
  19
  23
  28
  33
  38
  44
  50
  56
  63
  70
  77
  85
  93
  101
  110
  118
  128
  137
  147
  158
  169
  180
  192
  204
  217
  230
Earnings before tax, $m
  -32
  -266
  -324
  -390
  -463
  -543
  -630
  -724
  -825
  -932
  -1,046
  -1,166
  -1,293
  -1,425
  -1,563
  -1,708
  -1,859
  -2,015
  -2,178
  -2,348
  -2,524
  -2,707
  -2,898
  -3,095
  -3,301
  -3,515
  -3,738
  -3,969
  -4,211
  -4,462
  -4,724
Tax expense, $m
  -2
  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
  -30
  -266
  -324
  -390
  -463
  -543
  -630
  -724
  -825
  -932
  -1,046
  -1,166
  -1,293
  -1,425
  -1,563
  -1,708
  -1,859
  -2,015
  -2,178
  -2,348
  -2,524
  -2,707
  -2,898
  -3,095
  -3,301
  -3,515
  -3,738
  -3,969
  -4,211
  -4,462
  -4,724

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  1,115
  1,374
  1,669
  2,000
  2,367
  2,769
  3,207
  3,680
  4,186
  4,725
  5,296
  5,898
  6,532
  7,196
  7,891
  8,616
  9,371
  10,157
  10,975
  11,826
  12,709
  13,627
  14,582
  15,573
  16,605
  17,677
  18,793
  19,955
  21,165
  22,426
  23,741
Adjusted assets (=assets-cash), $m
  1,115
  1,374
  1,669
  2,000
  2,367
  2,769
  3,207
  3,680
  4,186
  4,725
  5,296
  5,898
  6,532
  7,196
  7,891
  8,616
  9,371
  10,157
  10,975
  11,826
  12,709
  13,627
  14,582
  15,573
  16,605
  17,677
  18,793
  19,955
  21,165
  22,426
  23,741
Revenue / Adjusted assets
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
Average production assets, $m
  1,056
  1,302
  1,582
  1,895
  2,243
  2,624
  3,039
  3,486
  3,966
  4,477
  5,018
  5,589
  6,189
  6,819
  7,477
  8,164
  8,879
  9,624
  10,399
  11,205
  12,042
  12,912
  13,816
  14,756
  15,733
  16,750
  17,807
  18,908
  20,055
  21,250
  22,495
Working capital, $m
  -15
  -19
  -23
  -27
  -32
  -37
  -43
  -50
  -56
  -64
  -71
  -80
  -88
  -97
  -106
  -116
  -126
  -137
  -148
  -160
  -171
  -184
  -197
  -210
  -224
  -239
  -254
  -269
  -286
  -303
  -320
Total debt, $m
  161
  239
  327
  427
  537
  659
  790
  933
  1,085
  1,247
  1,419
  1,600
  1,791
  1,991
  2,200
  2,418
  2,646
  2,882
  3,129
  3,384
  3,650
  3,927
  4,214
  4,513
  4,823
  5,146
  5,482
  5,832
  6,196
  6,575
  6,971
Total liabilities, $m
  336
  414
  502
  602
  712
  834
  965
  1,108
  1,260
  1,422
  1,594
  1,775
  1,966
  2,166
  2,375
  2,593
  2,821
  3,057
  3,304
  3,559
  3,825
  4,102
  4,389
  4,688
  4,998
  5,321
  5,657
  6,007
  6,371
  6,750
  7,146
Total equity, $m
  779
  961
  1,167
  1,398
  1,654
  1,936
  2,242
  2,572
  2,926
  3,302
  3,702
  4,123
  4,566
  5,030
  5,516
  6,022
  6,550
  7,100
  7,672
  8,266
  8,884
  9,526
  10,193
  10,886
  11,607
  12,356
  13,137
  13,949
  14,795
  15,676
  16,595
Total liabilities and equity, $m
  1,115
  1,375
  1,669
  2,000
  2,366
  2,770
  3,207
  3,680
  4,186
  4,724
  5,296
  5,898
  6,532
  7,196
  7,891
  8,615
  9,371
  10,157
  10,976
  11,825
  12,709
  13,628
  14,582
  15,574
  16,605
  17,677
  18,794
  19,956
  21,166
  22,426
  23,741
Debt-to-equity ratio
  0.207
  0.250
  0.280
  0.310
  0.320
  0.340
  0.350
  0.360
  0.370
  0.380
  0.380
  0.390
  0.390
  0.400
  0.400
  0.400
  0.400
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
  0.420
Adjusted equity ratio
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699
  0.699

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -30
  -266
  -324
  -390
  -463
  -543
  -630
  -724
  -825
  -932
  -1,046
  -1,166
  -1,293
  -1,425
  -1,563
  -1,708
  -1,859
  -2,015
  -2,178
  -2,348
  -2,524
  -2,707
  -2,898
  -3,095
  -3,301
  -3,515
  -3,738
  -3,969
  -4,211
  -4,462
  -4,724
Depreciation, amort., depletion, $m
  84
  103
  126
  150
  178
  208
  241
  277
  315
  355
  398
  444
  491
  541
  593
  648
  705
  764
  825
  889
  956
  1,025
  1,097
  1,171
  1,249
  1,329
  1,413
  1,501
  1,592
  1,686
  1,785
Funds from operations, $m
  44
  -162
  -199
  -240
  -285
  -335
  -389
  -447
  -510
  -577
  -648
  -723
  -801
  -884
  -970
  -1,060
  -1,154
  -1,252
  -1,353
  -1,459
  -1,569
  -1,683
  -1,801
  -1,924
  -2,052
  -2,186
  -2,324
  -2,469
  -2,619
  -2,776
  -2,939
Change in working capital, $m
  -11
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
Cash from operations, $m
  55
  -174
  -195
  -235
  -280
  -329
  -383
  -441
  -503
  -570
  -640
  -715
  -793
  -875
  -961
  -1,050
  -1,144
  -1,241
  -1,342
  -1,447
  -1,557
  -1,670
  -1,788
  -1,911
  -2,039
  -2,171
  -2,309
  -2,453
  -2,603
  -2,759
  -2,921
Maintenance CAPEX, $m
  0
  -84
  -103
  -126
  -150
  -178
  -208
  -241
  -277
  -315
  -355
  -398
  -444
  -491
  -541
  -593
  -648
  -705
  -764
  -825
  -889
  -956
  -1,025
  -1,097
  -1,171
  -1,249
  -1,329
  -1,413
  -1,501
  -1,592
  -1,686
New CAPEX, $m
  -74
  -246
  -280
  -314
  -348
  -381
  -415
  -447
  -479
  -511
  -541
  -571
  -600
  -629
  -658
  -687
  -716
  -745
  -775
  -806
  -837
  -870
  -904
  -940
  -977
  -1,016
  -1,058
  -1,101
  -1,147
  -1,195
  -1,246
Cash from investing activities, $m
  -49
  -330
  -383
  -440
  -498
  -559
  -623
  -688
  -756
  -826
  -896
  -969
  -1,044
  -1,120
  -1,199
  -1,280
  -1,364
  -1,450
  -1,539
  -1,631
  -1,726
  -1,826
  -1,929
  -2,037
  -2,148
  -2,265
  -2,387
  -2,514
  -2,648
  -2,787
  -2,932
Free cash flow, $m
  6
  -504
  -578
  -674
  -778
  -889
  -1,006
  -1,130
  -1,260
  -1,395
  -1,537
  -1,684
  -1,837
  -1,995
  -2,160
  -2,330
  -2,507
  -2,691
  -2,881
  -3,078
  -3,283
  -3,496
  -3,717
  -3,947
  -4,187
  -4,436
  -4,696
  -4,967
  -5,250
  -5,545
  -5,853
Issuance/(repayment) of debt, $m
  12
  78
  89
  100
  110
  121
  132
  142
  152
  162
  172
  181
  191
  200
  209
  218
  227
  237
  246
  256
  266
  276
  287
  299
  310
  323
  336
  350
  364
  380
  396
Issuance/(repurchase) of shares, $m
  5
  608
  695
  806
  924
  1,049
  1,180
  1,318
  1,461
  1,610
  1,764
  1,924
  2,089
  2,260
  2,436
  2,619
  2,808
  3,004
  3,206
  3,417
  3,635
  3,861
  4,097
  4,342
  4,597
  4,863
  5,140
  5,430
  5,732
  6,047
  6,376
Cash from financing (excl. dividends), $m  
  16
  686
  784
  906
  1,034
  1,170
  1,312
  1,460
  1,613
  1,772
  1,936
  2,105
  2,280
  2,460
  2,645
  2,837
  3,035
  3,241
  3,452
  3,673
  3,901
  4,137
  4,384
  4,641
  4,907
  5,186
  5,476
  5,780
  6,096
  6,427
  6,772
Total cash flow (excl. dividends), $m
  22
  -426
  -489
  -575
  -668
  -768
  -874
  -988
  -1,107
  -1,233
  -1,365
  -1,502
  -1,646
  -1,795
  -1,951
  -2,112
  -2,280
  -2,454
  -2,635
  -2,822
  -3,017
  -3,220
  -3,430
  -3,649
  -3,876
  -4,113
  -4,360
  -4,617
  -4,886
  -5,165
  -5,458
Retained Cash Flow (-), $m
  33
  -182
  -206
  -231
  -256
  -281
  -306
  -330
  -354
  -377
  -399
  -421
  -443
  -464
  -485
  -507
  -528
  -550
  -572
  -594
  -618
  -642
  -667
  -693
  -721
  -750
  -780
  -812
  -846
  -881
  -919
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
 
  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, %
 
  4.70
  4.94
  5.18
  5.44
  5.71
  6.00
  6.30
  6.61
  6.94
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.77
  11.31
  11.88
  12.47
  13.09
  13.75
  14.44
  15.16
  15.92
  16.71
  17.55
  18.42
  19.35
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
  49.4
  25.3
  13.3
  7.1
  3.9
  2.2
  1.2
  0.7
  0.4
  0.2
  0.1
  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

Surge Energy Inc. engages in the exploration, development, and production of oil and gas properties in western Canada. The company holds working interests in the Valhalla/Wembley and Nipisi properties located in northwestern Alberta; Windfall property located in western Alberta; and Nevis property located to the east of Red Deer, Alberta covering an area of approximately 134,336 net developed acres. It also holds working interests in the Sparky assets located between Provost and Wainwright in eastern Alberta and western Saskatchewan, as well as Silver Lake property to the west of Provost in eastern Alberta that covers an area of 117,395 net developed and 43,179 net undeveloped acres; and Southwest Saskatchewan properties covering an area of 21,672 net developed and 12,712 net undeveloped acres located to the southwest of Swift Current, Saskatchewan. The company was formerly known as Zapata Energy Corporation and changed its name to Surge Energy Inc. in June 2010. Surge Energy Inc. was incorporated in 1998 and is headquartered in Calgary, Canada.

FINANCIAL RATIOS  of  Surge Energy Inc. (SGY)

Valuation Ratios
P/E Ratio -19.9
Price to Sales 4.1
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 10.9
Price to Free Cash Flow -31.5
Growth Rates
Sales Growth Rate -24.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.9%
Cap. Spend. - 3 Yr. Gr. Rate -10.1%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 20.7%
Total Debt to Equity 20.7%
Interest Coverage 0
Management Effectiveness
Return On Assets -2.7%
Ret/ On Assets - 3 Yr. Avg. -6.1%
Return On Total Capital -3.2%
Ret/ On T. Cap. - 3 Yr. Avg. -7.3%
Return On Equity -3.8%
Return On Equity - 3 Yr. Avg. -10%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 60.3%
Gross Margin - 3 Yr. Avg. 63.4%
EBITDA Margin 35.6%
EBITDA Margin - 3 Yr. Avg. -7.2%
Operating Margin -21.2%
Oper. Margin - 3 Yr. Avg. -59.5%
Pre-Tax Margin -21.9%
Pre-Tax Margin - 3 Yr. Avg. -59.7%
Net Profit Margin -20.5%
Net Profit Margin - 3 Yr. Avg. -46.1%
Effective Tax Rate 6.3%
Eff/ Tax Rate - 3 Yr. Avg. 23.4%
Payout Ratio -73.3%

SGY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SGY stock intrinsic value calculation we used $146 million for the last fiscal year's total revenue generated by Surge Energy Inc.. The default revenue input number comes from 2016 income statement of Surge 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 SGY stock valuation model: a) initial revenue growth rate of 23.3% 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 4.7%, whose default value for SGY is calculated based on our internal credit rating of Surge 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 Surge 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 SGY stock the variable cost ratio is equal to 244.5%.

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 SGY 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 Surge Energy Inc..

Corporate tax rate of 27% is the nominal tax rate for Surge 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 SGY 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 SGY are equal to 723.3%.

Life of production assets of 12.6 years is the average useful life of capital assets used in Surge 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 SGY is equal to -10.3%. 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 - $779 million for Surge 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 224.043 million for Surge 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 Surge Energy Inc. at the current share price and the inputted number of shares is $0.6 billion.


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Stock chart of SGY Financial statements of SGY
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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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