Intrinsic value of Vermilion Energy Inc. - VET

Previous Close

$45.94

  Intrinsic Value

$3.32

stock screener

  Rating & Target

str. sell

-93%

  Value-price divergence*

0%

Previous close

$45.94

 
Intrinsic value

$3.32

 
Up/down potential

-93%

 
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 VET 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 5.5

 

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, %
  -5.15
  26.40
  24.26
  22.33
  20.60
  19.04
  17.64
  16.37
  15.24
  14.21
  13.29
  12.46
  11.72
  11.04
  10.44
  9.90
  9.41
  8.97
  8.57
  8.21
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.24
  6.12
  6.01
Revenue, $m
  829
  1,048
  1,302
  1,593
  1,921
  2,287
  2,690
  3,131
  3,607
  4,120
  4,668
  5,249
  5,864
  6,512
  7,192
  7,904
  8,647
  9,422
  10,230
  11,070
  11,943
  12,851
  13,795
  14,775
  15,794
  16,853
  17,955
  19,101
  20,294
  21,536
  22,830
Variable operating expenses, $m
 
  1,344
  1,671
  2,044
  2,465
  2,934
  3,451
  4,016
  4,628
  5,286
  5,989
  6,735
  7,524
  8,355
  9,227
  10,140
  11,094
  12,089
  13,125
  14,203
  15,323
  16,488
  17,699
  18,957
  20,264
  21,623
  23,036
  24,507
  26,037
  27,630
  29,290
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
  925
  1,344
  1,671
  2,044
  2,465
  2,934
  3,451
  4,016
  4,628
  5,286
  5,989
  6,735
  7,524
  8,355
  9,227
  10,140
  11,094
  12,089
  13,125
  14,203
  15,323
  16,488
  17,699
  18,957
  20,264
  21,623
  23,036
  24,507
  26,037
  27,630
  29,290
Operating income, $m
  -97
  -297
  -368
  -451
  -544
  -647
  -761
  -886
  -1,021
  -1,166
  -1,321
  -1,486
  -1,660
  -1,843
  -2,035
  -2,237
  -2,447
  -2,667
  -2,895
  -3,133
  -3,380
  -3,637
  -3,904
  -4,181
  -4,470
  -4,770
  -5,081
  -5,406
  -5,743
  -6,095
  -6,461
EBITDA, $m
  431
  215
  268
  327
  395
  470
  553
  644
  742
  847
  960
  1,079
  1,206
  1,339
  1,479
  1,625
  1,778
  1,937
  2,103
  2,276
  2,456
  2,642
  2,836
  3,038
  3,247
  3,465
  3,692
  3,927
  4,172
  4,428
  4,694
Interest expense (income), $m
  60
  59
  88
  121
  159
  202
  249
  302
  359
  421
  488
  560
  635
  715
  800
  888
  981
  1,078
  1,179
  1,284
  1,393
  1,507
  1,625
  1,748
  1,876
  2,009
  2,147
  2,290
  2,440
  2,595
  2,757
Earnings before tax, $m
  -223
  -356
  -457
  -572
  -703
  -849
  -1,011
  -1,188
  -1,380
  -1,587
  -1,809
  -2,045
  -2,295
  -2,558
  -2,835
  -3,125
  -3,428
  -3,744
  -4,074
  -4,417
  -4,773
  -5,144
  -5,529
  -5,930
  -6,346
  -6,778
  -7,228
  -7,696
  -8,183
  -8,689
  -9,217
Tax expense, $m
  -63
  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
  -160
  -356
  -457
  -572
  -703
  -849
  -1,011
  -1,188
  -1,380
  -1,587
  -1,809
  -2,045
  -2,295
  -2,558
  -2,835
  -3,125
  -3,428
  -3,744
  -4,074
  -4,417
  -4,773
  -5,144
  -5,529
  -5,930
  -6,346
  -6,778
  -7,228
  -7,696
  -8,183
  -8,689
  -9,217

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  63
  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
  4,087
  5,087
  6,321
  7,732
  9,325
  11,101
  13,059
  15,197
  17,512
  20,001
  22,659
  25,483
  28,468
  31,612
  34,913
  38,367
  41,976
  45,740
  49,659
  53,737
  57,977
  62,385
  66,965
  71,724
  76,671
  81,813
  87,160
  92,724
  98,514
  104,543
  110,824
Adjusted assets (=assets-cash), $m
  4,024
  5,087
  6,321
  7,732
  9,325
  11,101
  13,059
  15,197
  17,512
  20,001
  22,659
  25,483
  28,468
  31,612
  34,913
  38,367
  41,976
  45,740
  49,659
  53,737
  57,977
  62,385
  66,965
  71,724
  76,671
  81,813
  87,160
  92,724
  98,514
  104,543
  110,824
Revenue / Adjusted assets
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
  0.206
Average production assets, $m
  2,025
  2,560
  3,181
  3,891
  4,693
  5,587
  6,572
  7,648
  8,813
  10,066
  11,403
  12,824
  14,327
  15,909
  17,570
  19,309
  21,125
  23,019
  24,991
  27,044
  29,178
  31,396
  33,700
  36,096
  38,585
  41,173
  43,864
  46,664
  49,578
  52,612
  55,773
Working capital, $m
  -65
  -161
  -201
  -245
  -296
  -352
  -414
  -482
  -556
  -635
  -719
  -808
  -903
  -1,003
  -1,108
  -1,217
  -1,332
  -1,451
  -1,575
  -1,705
  -1,839
  -1,979
  -2,124
  -2,275
  -2,432
  -2,595
  -2,765
  -2,942
  -3,125
  -3,317
  -3,516
Total debt, $m
  1,382
  2,047
  2,817
  3,698
  4,692
  5,800
  7,022
  8,356
  9,801
  11,354
  13,012
  14,774
  16,637
  18,599
  20,658
  22,814
  25,066
  27,415
  29,860
  32,405
  35,051
  37,801
  40,659
  43,629
  46,715
  49,924
  53,261
  56,733
  60,346
  64,108
  68,027
Total liabilities, $m
  2,509
  3,174
  3,944
  4,825
  5,819
  6,927
  8,149
  9,483
  10,928
  12,481
  14,139
  15,901
  17,764
  19,726
  21,785
  23,941
  26,193
  28,542
  30,987
  33,532
  36,178
  38,928
  41,786
  44,756
  47,842
  51,051
  54,388
  57,860
  61,473
  65,235
  69,154
Total equity, $m
  1,578
  1,913
  2,377
  2,907
  3,506
  4,174
  4,910
  5,714
  6,585
  7,520
  8,520
  9,582
  10,704
  11,886
  13,127
  14,426
  15,783
  17,198
  18,672
  20,205
  21,799
  23,457
  25,179
  26,968
  28,828
  30,762
  32,772
  34,864
  37,041
  39,308
  41,670
Total liabilities and equity, $m
  4,087
  5,087
  6,321
  7,732
  9,325
  11,101
  13,059
  15,197
  17,513
  20,001
  22,659
  25,483
  28,468
  31,612
  34,912
  38,367
  41,976
  45,740
  49,659
  53,737
  57,977
  62,385
  66,965
  71,724
  76,670
  81,813
  87,160
  92,724
  98,514
  104,543
  110,824
Debt-to-equity ratio
  0.876
  1.070
  1.190
  1.270
  1.340
  1.390
  1.430
  1.460
  1.490
  1.510
  1.530
  1.540
  1.550
  1.560
  1.570
  1.580
  1.590
  1.590
  1.600
  1.600
  1.610
  1.610
  1.610
  1.620
  1.620
  1.620
  1.630
  1.630
  1.630
  1.630
  1.630
Adjusted equity ratio
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376
  0.376

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -160
  -356
  -457
  -572
  -703
  -849
  -1,011
  -1,188
  -1,380
  -1,587
  -1,809
  -2,045
  -2,295
  -2,558
  -2,835
  -3,125
  -3,428
  -3,744
  -4,074
  -4,417
  -4,773
  -5,144
  -5,529
  -5,930
  -6,346
  -6,778
  -7,228
  -7,696
  -8,183
  -8,689
  -9,217
Depreciation, amort., depletion, $m
  528
  512
  636
  778
  939
  1,117
  1,314
  1,530
  1,763
  2,013
  2,281
  2,565
  2,865
  3,182
  3,514
  3,862
  4,225
  4,604
  4,998
  5,409
  5,836
  6,279
  6,740
  7,219
  7,717
  8,235
  8,773
  9,333
  9,916
  10,522
  11,155
Funds from operations, $m
  518
  156
  180
  206
  236
  268
  304
  342
  382
  426
  471
  520
  570
  623
  679
  737
  797
  859
  924
  992
  1,062
  1,135
  1,211
  1,289
  1,371
  1,456
  1,545
  1,637
  1,733
  1,833
  1,937
Change in working capital, $m
  8
  -34
  -39
  -45
  -51
  -56
  -62
  -68
  -73
  -79
  -84
  -90
  -95
  -100
  -105
  -110
  -114
  -119
  -124
  -129
  -135
  -140
  -145
  -151
  -157
  -163
  -170
  -176
  -184
  -191
  -199
Cash from operations, $m
  510
  190
  219
  251
  286
  325
  366
  410
  456
  505
  556
  609
  665
  723
  784
  846
  911
  979
  1,049
  1,121
  1,197
  1,275
  1,356
  1,440
  1,528
  1,619
  1,714
  1,813
  1,917
  2,024
  2,136
Maintenance CAPEX, $m
  0
  -405
  -512
  -636
  -778
  -939
  -1,117
  -1,314
  -1,530
  -1,763
  -2,013
  -2,281
  -2,565
  -2,865
  -3,182
  -3,514
  -3,862
  -4,225
  -4,604
  -4,998
  -5,409
  -5,836
  -6,279
  -6,740
  -7,219
  -7,717
  -8,235
  -8,773
  -9,333
  -9,916
  -10,522
New CAPEX, $m
  -341
  -535
  -621
  -710
  -802
  -894
  -985
  -1,076
  -1,165
  -1,253
  -1,338
  -1,421
  -1,502
  -1,582
  -1,661
  -1,739
  -1,816
  -1,894
  -1,972
  -2,052
  -2,134
  -2,218
  -2,305
  -2,395
  -2,489
  -2,588
  -2,691
  -2,800
  -2,914
  -3,034
  -3,161
Cash from investing activities, $m
  -353
  -940
  -1,133
  -1,346
  -1,580
  -1,833
  -2,102
  -2,390
  -2,695
  -3,016
  -3,351
  -3,702
  -4,067
  -4,447
  -4,843
  -5,253
  -5,678
  -6,119
  -6,576
  -7,050
  -7,543
  -8,054
  -8,584
  -9,135
  -9,708
  -10,305
  -10,926
  -11,573
  -12,247
  -12,950
  -13,683
Free cash flow, $m
  157
  -750
  -914
  -1,095
  -1,293
  -1,507
  -1,737
  -1,981
  -2,239
  -2,510
  -2,795
  -3,092
  -3,402
  -3,724
  -4,059
  -4,406
  -4,767
  -5,140
  -5,527
  -5,929
  -6,346
  -6,779
  -7,228
  -7,695
  -8,180
  -8,685
  -9,211
  -9,759
  -10,330
  -10,926
  -11,547
Issuance/(repayment) of debt, $m
  -27
  665
  770
  881
  994
  1,108
  1,222
  1,334
  1,445
  1,553
  1,659
  1,762
  1,863
  1,962
  2,059
  2,156
  2,252
  2,348
  2,446
  2,545
  2,646
  2,750
  2,858
  2,970
  3,087
  3,209
  3,337
  3,471
  3,613
  3,762
  3,919
Issuance/(repurchase) of shares, $m
  0
  754
  921
  1,103
  1,302
  1,517
  1,747
  1,992
  2,251
  2,523
  2,809
  3,107
  3,417
  3,740
  4,076
  4,424
  4,785
  5,159
  5,548
  5,950
  6,368
  6,801
  7,251
  7,719
  8,206
  8,712
  9,239
  9,788
  10,360
  10,956
  11,579
Cash from financing (excl. dividends), $m  
  -26
  1,419
  1,691
  1,984
  2,296
  2,625
  2,969
  3,326
  3,696
  4,076
  4,468
  4,869
  5,280
  5,702
  6,135
  6,580
  7,037
  7,507
  7,994
  8,495
  9,014
  9,551
  10,109
  10,689
  11,293
  11,921
  12,576
  13,259
  13,973
  14,718
  15,498
Total cash flow (excl. dividends), $m
  126
  668
  776
  888
  1,002
  1,117
  1,232
  1,345
  1,457
  1,566
  1,672
  1,776
  1,878
  1,978
  2,076
  2,173
  2,270
  2,368
  2,466
  2,566
  2,668
  2,773
  2,881
  2,994
  3,112
  3,235
  3,364
  3,500
  3,643
  3,793
  3,951
Retained Cash Flow (-), $m
  281
  -754
  -921
  -1,103
  -1,302
  -1,517
  -1,747
  -1,992
  -2,251
  -2,523
  -2,809
  -3,107
  -3,417
  -3,740
  -4,076
  -4,424
  -4,785
  -5,159
  -5,548
  -5,950
  -6,368
  -6,801
  -7,251
  -7,719
  -8,206
  -8,712
  -9,239
  -9,788
  -10,360
  -10,956
  -11,579
Prev. year cash balance distribution, $m
 
  63
  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
 
  -22
  -144
  -215
  -299
  -399
  -515
  -647
  -794
  -957
  -1,136
  -1,330
  -1,539
  -1,763
  -2,000
  -2,251
  -2,515
  -2,792
  -3,082
  -3,385
  -3,700
  -4,029
  -4,370
  -4,725
  -5,094
  -5,477
  -5,874
  -6,288
  -6,717
  -7,163
  -7,628
Discount rate, %
 
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
 
  -21
  -127
  -175
  -226
  -276
  -324
  -367
  -403
  -430
  -447
  -454
  -451
  -438
  -415
  -386
  -351
  -312
  -272
  -232
  -193
  -157
  -125
  -97
  -73
  -54
  -38
  -27
  -18
  -12
  -8
Current shareholders' claim on cash, %
  100
  87.4
  76.7
  67.7
  59.9
  53.2
  47.5
  42.5
  38.2
  34.4
  31.0
  28.0
  25.4
  23.1
  21.0
  19.1
  17.5
  16.0
  14.6
  13.4
  12.2
  11.2
  10.3
  9.5
  8.7
  8.0
  7.4
  6.8
  6.2
  5.8
  5.3

Vermilion Energy Inc. produces oil and gas, and focuses on the acquisition, development and optimization of producing properties in North America, the Europe and Australia. Its segments include Canada, which includes production and assets focused in West Pembina near Drayton Valley, Alberta and Northgate in southeast Saskatchewan; France, which produces oil in France; Netherlands, which produces onshore gas and interests include over 24 onshore licenses and two offshore licenses; Germany, which holds interest in a four partner consortium; Ireland, which includes a non-operating interest in the offshore Corrib gas field located approximately 83 kilometers off the northwest coast of Ireland; Australia, which holds an operated working interest in the Wandoo field located approximately 80 kilometers offshore on the northwest shelf of Australia; the United States, which has interests in approximately 97,200 net acres of land in the Powder River Basin of northeastern Wyoming, and Corporate.

FINANCIAL RATIOS  of  Vermilion Energy Inc. (VET)

Valuation Ratios
P/E Ratio -34
Price to Sales 6.6
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 10.7
Price to Free Cash Flow 32.1
Growth Rates
Sales Growth Rate -5.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.9%
Cap. Spend. - 3 Yr. Gr. Rate -9.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 87.6%
Total Debt to Equity 87.6%
Interest Coverage -3
Management Effectiveness
Return On Assets -2.8%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital -5.1%
Ret/ On T. Cap. - 3 Yr. Avg. -0.9%
Return On Equity -9.3%
Return On Equity - 3 Yr. Avg. -2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 73.1%
Gross Margin - 3 Yr. Avg. 76.5%
EBITDA Margin 44%
EBITDA Margin - 3 Yr. Avg. 50.1%
Operating Margin -11.6%
Oper. Margin - 3 Yr. Avg. -1.7%
Pre-Tax Margin -26.9%
Pre-Tax Margin - 3 Yr. Avg. -5.6%
Net Profit Margin -19.3%
Net Profit Margin - 3 Yr. Avg. -7.9%
Effective Tax Rate 28.3%
Eff/ Tax Rate - 3 Yr. Avg. 22.5%
Payout Ratio -65.6%

VET stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VET stock intrinsic value calculation we used $829 million for the last fiscal year's total revenue generated by Vermilion Energy Inc.. The default revenue input number comes from 2016 income statement of Vermilion 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 VET stock valuation model: a) initial revenue growth rate of 26.4% 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 6.3%, whose default value for VET is calculated based on our internal credit rating of Vermilion 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 Vermilion 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 VET stock the variable cost ratio is equal to 128.3%.

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 VET 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 4.3% for Vermilion Energy Inc..

Corporate tax rate of 27% is the nominal tax rate for Vermilion 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 VET 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 VET are equal to 244.3%.

Life of production assets of 3.8 years is the average useful life of capital assets used in Vermilion 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 VET is equal to -15.4%. 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 - $1578 million for Vermilion 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 118.755 million for Vermilion 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 Vermilion Energy Inc. at the current share price and the inputted number of shares is $5.5 billion.

RELATED COMPANIES Price Int.Val. Rating
PXT Parex Resource 14.86 1.40  str.sell
ARX ARC Resources 17.94 2.29  str.sell
TOU Tourmaline Oil 26.25 6.25  str.sell
CPG Crescent Point 9.83 4.28  sell
ERF Enerplus Corpo 12.40 0.84  str.sell
BNP Bonavista Ener 3.08 1.48  sell
BTE Baytex Energy 3.61 2.10  sell
Financial statements of VET
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.