Intrinsic value of Seven Generations Energy Ltd. class A co - VII

Previous Close

$16.89

  Intrinsic Value

$2.70

stock screener

  Rating & Target

str. sell

-84%

Previous close

$16.89

 
Intrinsic value

$2.70

 
Up/down potential

-84%

 
Rating

str. sell

We calculate the intrinsic value of VII 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 6.0

 

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, %
  132.21
  42.70
  38.93
  35.54
  32.48
  29.73
  27.26
  25.04
  23.03
  21.23
  19.61
  18.15
  16.83
  15.65
  14.58
  13.62
  12.76
  11.99
  11.29
  10.66
  10.09
  9.58
  9.13
  8.71
  8.34
  8.01
  7.71
  7.44
  7.19
  6.97
  6.78
Revenue, $m
  1,240
  1,769
  2,458
  3,332
  4,414
  5,727
  7,288
  9,113
  11,212
  13,592
  16,256
  19,206
  22,439
  25,950
  29,734
  33,785
  38,097
  42,663
  47,478
  52,539
  57,841
  63,385
  69,169
  75,195
  81,467
  87,990
  94,771
  101,818
  109,141
  116,752
  124,663
Variable operating expenses, $m
 
  1,242
  1,726
  2,339
  3,099
  4,020
  5,116
  6,397
  7,870
  9,541
  11,412
  13,483
  15,752
  18,217
  20,873
  23,717
  26,744
  29,949
  33,330
  36,882
  40,605
  44,496
  48,556
  52,787
  57,190
  61,769
  66,529
  71,476
  76,617
  81,960
  87,513
Fixed operating expenses, $m
 
  112
  115
  117
  120
  123
  126
  130
  133
  136
  140
  143
  147
  150
  154
  158
  162
  166
  170
  174
  179
  183
  188
  192
  197
  202
  207
  212
  218
  223
  229
Total operating expenses, $m
  977
  1,354
  1,841
  2,456
  3,219
  4,143
  5,242
  6,527
  8,003
  9,677
  11,552
  13,626
  15,899
  18,367
  21,027
  23,875
  26,906
  30,115
  33,500
  37,056
  40,784
  44,679
  48,744
  52,979
  57,387
  61,971
  66,736
  71,688
  76,835
  82,183
  87,742
Operating income, $m
  263
  416
  618
  876
  1,195
  1,583
  2,045
  2,586
  3,208
  3,914
  4,705
  5,580
  6,540
  7,583
  8,707
  9,910
  11,191
  12,548
  13,979
  15,482
  17,058
  18,706
  20,425
  22,216
  24,080
  26,019
  28,035
  30,130
  32,307
  34,569
  36,921
EBITDA, $m
  747
  1,103
  1,573
  2,170
  2,910
  3,807
  4,876
  6,125
  7,562
  9,193
  11,018
  13,039
  15,255
  17,661
  20,254
  23,031
  25,987
  29,117
  32,418
  35,887
  39,522
  43,322
  47,288
  51,419
  55,719
  60,192
  64,841
  69,673
  74,694
  79,912
  85,336
Interest expense (income), $m
  140
  163
  253
  372
  522
  709
  934
  1,203
  1,517
  1,879
  2,288
  2,747
  3,255
  3,811
  4,416
  5,067
  5,764
  6,507
  7,293
  8,122
  8,993
  9,905
  10,860
  11,855
  12,893
  13,972
  15,095
  16,263
  17,476
  18,736
  20,046
Earnings before tax, $m
  -34
  253
  365
  504
  673
  875
  1,111
  1,383
  1,691
  2,036
  2,417
  2,833
  3,285
  3,772
  4,291
  4,843
  5,427
  6,041
  6,686
  7,361
  8,065
  8,800
  9,565
  10,360
  11,187
  12,047
  12,939
  13,867
  14,831
  15,833
  16,875
Tax expense, $m
  -8
  68
  99
  136
  182
  236
  300
  373
  457
  550
  652
  765
  887
  1,018
  1,159
  1,308
  1,465
  1,631
  1,805
  1,987
  2,178
  2,376
  2,583
  2,797
  3,021
  3,253
  3,494
  3,744
  4,004
  4,275
  4,556
Net income, $m
  -26
  185
  266
  368
  491
  639
  811
  1,009
  1,234
  1,486
  1,764
  2,068
  2,398
  2,753
  3,132
  3,535
  3,961
  4,410
  4,881
  5,373
  5,888
  6,424
  6,982
  7,563
  8,167
  8,794
  9,446
  10,123
  10,827
  11,558
  12,318

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  631
  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
  6,602
  8,507
  11,819
  16,019
  21,223
  27,533
  35,039
  43,811
  53,902
  65,344
  78,155
  92,337
  107,878
  124,758
  142,951
  162,428
  183,157
  205,110
  228,261
  252,590
  278,084
  304,734
  332,541
  361,514
  391,669
  423,031
  455,631
  489,511
  524,718
  561,307
  599,339
Adjusted assets (=assets-cash), $m
  5,971
  8,507
  11,819
  16,019
  21,223
  27,533
  35,039
  43,811
  53,902
  65,344
  78,155
  92,337
  107,878
  124,758
  142,951
  162,428
  183,157
  205,110
  228,261
  252,590
  278,084
  304,734
  332,541
  361,514
  391,669
  423,031
  455,631
  489,511
  524,718
  561,307
  599,339
Revenue / Adjusted assets
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
  0.208
Average production assets, $m
  4,430
  6,322
  8,784
  11,905
  15,772
  20,462
  26,040
  32,560
  40,059
  48,563
  58,084
  68,623
  80,173
  92,718
  106,239
  120,714
  136,119
  152,434
  169,640
  187,721
  206,667
  226,473
  247,139
  268,671
  291,082
  314,390
  338,618
  363,797
  389,962
  417,154
  445,419
Working capital, $m
  514
  -166
  -231
  -313
  -415
  -538
  -685
  -857
  -1,054
  -1,278
  -1,528
  -1,805
  -2,109
  -2,439
  -2,795
  -3,176
  -3,581
  -4,010
  -4,463
  -4,939
  -5,437
  -5,958
  -6,502
  -7,068
  -7,658
  -8,271
  -8,909
  -9,571
  -10,259
  -10,975
  -11,718
Total debt, $m
  2,112
  3,289
  4,829
  6,782
  9,201
  12,136
  15,626
  19,705
  24,397
  29,718
  35,675
  42,270
  49,496
  57,345
  65,805
  74,862
  84,501
  94,709
  105,474
  116,788
  128,642
  141,034
  153,965
  167,437
  181,459
  196,042
  211,202
  226,956
  243,327
  260,341
  278,026
Total liabilities, $m
  2,780
  3,956
  5,496
  7,449
  9,868
  12,803
  16,293
  20,372
  25,064
  30,385
  36,342
  42,937
  50,163
  58,012
  66,472
  75,529
  85,168
  95,376
  106,141
  117,455
  129,309
  141,701
  154,632
  168,104
  182,126
  196,709
  211,869
  227,623
  243,994
  261,008
  278,693
Total equity, $m
  3,823
  4,551
  6,323
  8,570
  11,354
  14,730
  18,746
  23,439
  28,837
  34,959
  41,813
  49,400
  57,715
  66,745
  76,479
  86,899
  97,989
  109,734
  122,120
  135,136
  148,775
  163,032
  177,909
  193,410
  209,543
  226,321
  243,763
  261,888
  280,724
  300,299
  320,647
Total liabilities and equity, $m
  6,603
  8,507
  11,819
  16,019
  21,222
  27,533
  35,039
  43,811
  53,901
  65,344
  78,155
  92,337
  107,878
  124,757
  142,951
  162,428
  183,157
  205,110
  228,261
  252,591
  278,084
  304,733
  332,541
  361,514
  391,669
  423,030
  455,632
  489,511
  524,718
  561,307
  599,340
Debt-to-equity ratio
  0.552
  0.720
  0.760
  0.790
  0.810
  0.820
  0.830
  0.840
  0.850
  0.850
  0.850
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.860
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
  0.870
Adjusted equity ratio
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535
  0.535

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -26
  185
  266
  368
  491
  639
  811
  1,009
  1,234
  1,486
  1,764
  2,068
  2,398
  2,753
  3,132
  3,535
  3,961
  4,410
  4,881
  5,373
  5,888
  6,424
  6,982
  7,563
  8,167
  8,794
  9,446
  10,123
  10,827
  11,558
  12,318
Depreciation, amort., depletion, $m
  484
  687
  955
  1,294
  1,714
  2,224
  2,830
  3,539
  4,354
  5,279
  6,313
  7,459
  8,714
  10,078
  11,548
  13,121
  14,796
  16,569
  18,439
  20,404
  22,464
  24,617
  26,863
  29,203
  31,639
  34,173
  36,806
  39,543
  42,387
  45,343
  48,415
Funds from operations, $m
  557
  872
  1,221
  1,662
  2,206
  2,863
  3,641
  4,549
  5,589
  6,765
  8,078
  9,527
  11,113
  12,831
  14,680
  16,656
  18,757
  20,979
  23,320
  25,778
  28,352
  31,041
  33,845
  36,767
  39,806
  42,967
  46,252
  49,666
  53,214
  56,901
  60,734
Change in working capital, $m
  -88
  -50
  -65
  -82
  -102
  -123
  -147
  -172
  -197
  -224
  -250
  -277
  -304
  -330
  -356
  -381
  -405
  -429
  -453
  -476
  -498
  -521
  -544
  -566
  -590
  -613
  -637
  -662
  -688
  -715
  -744
Cash from operations, $m
  645
  922
  1,286
  1,744
  2,307
  2,986
  3,788
  4,720
  5,786
  6,988
  8,328
  9,805
  11,417
  13,161
  15,036
  17,037
  19,162
  21,408
  23,773
  26,254
  28,850
  31,562
  34,389
  37,333
  40,396
  43,580
  46,890
  50,328
  53,902
  57,616
  61,477
Maintenance CAPEX, $m
  0
  -482
  -687
  -955
  -1,294
  -1,714
  -2,224
  -2,830
  -3,539
  -4,354
  -5,279
  -6,313
  -7,459
  -8,714
  -10,078
  -11,548
  -13,121
  -14,796
  -16,569
  -18,439
  -20,404
  -22,464
  -24,617
  -26,863
  -29,203
  -31,639
  -34,173
  -36,806
  -39,543
  -42,387
  -45,343
New CAPEX, $m
  -978
  -1,892
  -2,461
  -3,121
  -3,867
  -4,690
  -5,578
  -6,519
  -7,499
  -8,504
  -9,521
  -10,539
  -11,550
  -12,545
  -13,521
  -14,475
  -15,406
  -16,315
  -17,206
  -18,081
  -18,946
  -19,806
  -20,666
  -21,532
  -22,411
  -23,308
  -24,228
  -25,179
  -26,165
  -27,192
  -28,265
Cash from investing activities, $m
  -1,478
  -2,374
  -3,148
  -4,076
  -5,161
  -6,404
  -7,802
  -9,349
  -11,038
  -12,858
  -14,800
  -16,852
  -19,009
  -21,259
  -23,599
  -26,023
  -28,527
  -31,111
  -33,775
  -36,520
  -39,350
  -42,270
  -45,283
  -48,395
  -51,614
  -54,947
  -58,401
  -61,985
  -65,708
  -69,579
  -73,608
Free cash flow, $m
  -833
  -1,452
  -1,863
  -2,332
  -2,854
  -3,418
  -4,014
  -4,630
  -5,252
  -5,870
  -6,472
  -7,048
  -7,592
  -8,098
  -8,563
  -8,985
  -9,364
  -9,702
  -10,002
  -10,267
  -10,501
  -10,708
  -10,894
  -11,062
  -11,218
  -11,367
  -11,512
  -11,657
  -11,806
  -11,963
  -12,131
Issuance/(repayment) of debt, $m
  0
  1,177
  1,540
  1,953
  2,420
  2,934
  3,490
  4,079
  4,692
  5,321
  5,957
  6,594
  7,227
  7,849
  8,460
  9,057
  9,639
  10,208
  10,765
  11,313
  11,854
  12,392
  12,930
  13,472
  14,022
  14,583
  15,159
  15,754
  16,371
  17,014
  17,685
Issuance/(repurchase) of shares, $m
  1,103
  1,175
  1,505
  1,879
  2,293
  2,738
  3,205
  3,684
  4,164
  4,636
  5,090
  5,519
  5,916
  6,278
  6,601
  6,884
  7,129
  7,335
  7,505
  7,643
  7,751
  7,834
  7,894
  7,937
  7,966
  7,984
  7,996
  8,003
  8,009
  8,017
  8,029
Cash from financing (excl. dividends), $m  
  1,060
  2,352
  3,045
  3,832
  4,713
  5,672
  6,695
  7,763
  8,856
  9,957
  11,047
  12,113
  13,143
  14,127
  15,061
  15,941
  16,768
  17,543
  18,270
  18,956
  19,605
  20,226
  20,824
  21,409
  21,988
  22,567
  23,155
  23,757
  24,380
  25,031
  25,714
Total cash flow (excl. dividends), $m
  226
  899
  1,183
  1,500
  1,858
  2,254
  2,681
  3,133
  3,604
  4,087
  4,576
  5,065
  5,550
  6,029
  6,498
  6,956
  7,403
  7,840
  8,268
  8,689
  9,105
  9,518
  9,931
  10,348
  10,770
  11,201
  11,643
  12,100
  12,574
  13,068
  13,583
Retained Cash Flow (-), $m
  -2,036
  -1,359
  -1,772
  -2,247
  -2,784
  -3,376
  -4,016
  -4,693
  -5,398
  -6,122
  -6,854
  -7,587
  -8,314
  -9,031
  -9,733
  -10,420
  -11,090
  -11,745
  -12,386
  -13,016
  -13,639
  -14,258
  -14,877
  -15,501
  -16,133
  -16,779
  -17,441
  -18,126
  -18,836
  -19,575
  -20,347
Prev. year cash balance distribution, $m
 
  631
  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
 
  171
  -589
  -747
  -925
  -1,122
  -1,335
  -1,560
  -1,795
  -2,035
  -2,278
  -2,522
  -2,764
  -3,002
  -3,236
  -3,464
  -3,687
  -3,904
  -4,117
  -4,327
  -4,534
  -4,740
  -4,946
  -5,153
  -5,363
  -5,578
  -5,798
  -6,026
  -6,262
  -6,507
  -6,764
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
 
  163
  -535
  -642
  -749
  -850
  -941
  -1,017
  -1,075
  -1,112
  -1,127
  -1,120
  -1,093
  -1,047
  -986
  -912
  -830
  -742
  -653
  -565
  -480
  -402
  -330
  -266
  -211
  -164
  -125
  -93
  -68
  -48
  -34
Current shareholders' claim on cash, %
  100
  81.0
  66.8
  56.2
  48.0
  41.6
  36.5
  32.4
  29.1
  26.4
  24.2
  22.3
  20.7
  19.4
  18.2
  17.2
  16.4
  15.6
  15.0
  14.4
  13.9
  13.4
  13.0
  12.7
  12.3
  12.0
  11.8
  11.5
  11.3
  11.1
  10.9

Seven Generations Energy Ltd. is a Canada-based natural gas developer. The Company focuses on exploration, development and production of oil and natural gas properties in western Canada. The Company focuses on the acquisition, development and value optimization of tight and shale hydrocarbon resource plays. The Company focuses on Montney Kakwa River Project, which is located approximately 100 kilometers south of its operations in Grande Prairie, Alberta. The Kakwa River Project covers an area of approximately 544,000 net acres in the Kakwa area of northwest Alberta. The Company's natural gas production is processed at its Lator 1 Plant, Lator 2 Plant and Cutbank Plant, as well as at the Kakwa River Gas Plant. The Company's processing capacity at its Lator 1 Plant and Lator 2 Plant combined is approximately 260 million cubic feet per day (MMcf/d). The Company has an inventory of over 80 wells at various stages of construction and approximately 230 Montney horizontal wells.

FINANCIAL RATIOS  of  Seven Generations Energy Ltd. class A co (VII)

Valuation Ratios
P/E Ratio -227.6
Price to Sales 4.8
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 9.2
Price to Free Cash Flow -17.8
Growth Rates
Sales Growth Rate 132.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -25.3%
Cap. Spend. - 3 Yr. Gr. Rate 11.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 55.2%
Total Debt to Equity 55.2%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.6%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital -0.6%
Ret/ On T. Cap. - 3 Yr. Avg. 0.2%
Return On Equity -0.9%
Return On Equity - 3 Yr. Avg. -0.2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 47.6%
EBITDA Margin - 3 Yr. Avg. 61.5%
Operating Margin 21.2%
Oper. Margin - 3 Yr. Avg. 24.7%
Pre-Tax Margin -2.7%
Pre-Tax Margin - 3 Yr. Avg. 6.2%
Net Profit Margin -2.1%
Net Profit Margin - 3 Yr. Avg. -2.4%
Effective Tax Rate 23.5%
Eff/ Tax Rate - 3 Yr. Avg. 2.4%
Payout Ratio 0%

VII stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VII stock intrinsic value calculation we used $1240 million for the last fiscal year's total revenue generated by Seven Generations Energy Ltd. class A co. The default revenue input number comes from 2016 income statement of Seven Generations Energy Ltd. class A co. 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 VII stock valuation model: a) initial revenue growth rate of 42.7% 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 VII is calculated based on our internal credit rating of Seven Generations Energy Ltd. class A co, 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 Seven Generations Energy Ltd. class A co.
    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 VII stock the variable cost ratio is equal to 70.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $109 million in the base year in the intrinsic value calculation for VII 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 7.7% for Seven Generations Energy Ltd. class A co.

Corporate tax rate of 27% is the nominal tax rate for Seven Generations Energy Ltd. class A co. 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 VII 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 VII are equal to 357.3%.

Life of production assets of 9.2 years is the average useful life of capital assets used in Seven Generations Energy Ltd. class A co 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 VII is equal to -9.4%. 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 - $3823 million for Seven Generations Energy Ltd. class A co - 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 354.398 million for Seven Generations Energy Ltd. class A co 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 Seven Generations Energy Ltd. class A co at the current share price and the inputted number of shares is $6.0 billion.

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Financial statements of VII
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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