Intrinsic value of Whitecap Resources Inc. - WCP

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$9.66

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$9.66

 
Intrinsic value

$2.09

 
Up/down potential

-78%

 
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 WCP 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 3.5

 

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, %
  11.20
  35.00
  32.00
  29.30
  26.87
  24.68
  22.71
  20.94
  19.35
  17.91
  16.62
  15.46
  14.41
  13.47
  12.63
  11.86
  11.18
  10.56
  10.00
  9.50
  9.05
  8.65
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
Revenue, $m
  536
  724
  955
  1,235
  1,567
  1,954
  2,397
  2,899
  3,460
  4,080
  4,759
  5,494
  6,286
  7,133
  8,034
  8,987
  9,991
  11,046
  12,151
  13,306
  14,511
  15,765
  17,071
  18,429
  19,841
  21,307
  22,832
  24,416
  26,062
  27,775
  29,556
Variable operating expenses, $m
 
  1,632
  2,150
  2,776
  3,519
  4,385
  5,378
  6,501
  7,757
  9,144
  10,662
  12,297
  14,069
  15,965
  17,980
  20,113
  22,361
  24,722
  27,195
  29,780
  32,476
  35,284
  38,206
  41,245
  44,404
  47,687
  51,098
  54,644
  58,329
  62,161
  66,148
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
  296
  1,632
  2,150
  2,776
  3,519
  4,385
  5,378
  6,501
  7,757
  9,144
  10,662
  12,297
  14,069
  15,965
  17,980
  20,113
  22,361
  24,722
  27,195
  29,780
  32,476
  35,284
  38,206
  41,245
  44,404
  47,687
  51,098
  54,644
  58,329
  62,161
  66,148
Operating income, $m
  240
  -908
  -1,195
  -1,541
  -1,952
  -2,431
  -2,980
  -3,602
  -4,297
  -5,064
  -5,904
  -6,802
  -7,783
  -8,831
  -9,946
  -11,126
  -12,370
  -13,676
  -15,044
  -16,474
  -17,965
  -19,518
  -21,135
  -22,816
  -24,564
  -26,380
  -28,267
  -30,228
  -32,267
  -34,387
  -36,592
EBITDA, $m
  261
  -702
  -927
  -1,199
  -1,521
  -1,896
  -2,327
  -2,814
  -3,359
  -3,960
  -4,619
  -5,333
  -6,102
  -6,924
  -7,798
  -8,723
  -9,698
  -10,722
  -11,794
  -12,915
  -14,084
  -15,302
  -16,570
  -17,888
  -19,258
  -20,681
  -22,161
  -23,698
  -25,297
  -26,959
  -28,688
Interest expense (income), $m
  36
  34
  65
  103
  150
  204
  268
  341
  424
  517
  619
  731
  852
  983
  1,123
  1,271
  1,429
  1,594
  1,769
  1,951
  2,141
  2,340
  2,547
  2,763
  2,987
  3,220
  3,462
  3,713
  3,974
  4,246
  4,529
Earnings before tax, $m
  240
  -942
  -1,260
  -1,645
  -2,102
  -2,635
  -3,249
  -3,943
  -4,721
  -5,581
  -6,523
  -7,533
  -8,635
  -9,814
  -11,069
  -12,398
  -13,799
  -15,270
  -16,813
  -18,424
  -20,106
  -21,859
  -23,682
  -25,579
  -27,550
  -29,599
  -31,728
  -33,941
  -36,241
  -38,633
  -41,121
Tax expense, $m
  69
  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
  171
  -942
  -1,260
  -1,645
  -2,102
  -2,635
  -3,249
  -3,943
  -4,721
  -5,581
  -6,523
  -7,533
  -8,635
  -9,814
  -11,069
  -12,398
  -13,799
  -15,270
  -16,813
  -18,424
  -20,106
  -21,859
  -23,682
  -25,579
  -27,550
  -29,599
  -31,728
  -33,941
  -36,241
  -38,633
  -41,121

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
  5,135
  6,958
  9,184
  11,875
  15,066
  18,785
  23,052
  27,879
  33,274
  39,234
  45,756
  52,830
  60,445
  68,589
  77,249
  86,413
  96,071
  106,215
  116,840
  127,943
  139,525
  151,590
  164,146
  177,202
  190,774
  204,878
  219,535
  234,767
  250,600
  267,065
  284,192
Adjusted assets (=assets-cash), $m
  5,135
  6,958
  9,184
  11,875
  15,066
  18,785
  23,052
  27,879
  33,274
  39,234
  45,756
  52,830
  60,445
  68,589
  77,249
  86,413
  96,071
  106,215
  116,840
  127,943
  139,525
  151,590
  164,146
  177,202
  190,774
  204,878
  219,535
  234,767
  250,600
  267,065
  284,192
Revenue / Adjusted assets
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
  0.104
Average production assets, $m
  4,301
  5,805
  7,663
  9,908
  12,571
  15,674
  19,234
  23,262
  27,763
  32,737
  38,178
  44,081
  50,435
  57,230
  64,456
  72,102
  80,161
  88,625
  97,490
  106,755
  116,419
  126,486
  136,962
  147,856
  159,180
  170,949
  183,178
  195,887
  209,099
  222,837
  237,127
Working capital, $m
  -120
  -162
  -214
  -277
  -351
  -438
  -537
  -649
  -775
  -914
  -1,066
  -1,231
  -1,408
  -1,598
  -1,800
  -2,013
  -2,238
  -2,474
  -2,722
  -2,981
  -3,250
  -3,531
  -3,824
  -4,128
  -4,444
  -4,773
  -5,114
  -5,469
  -5,838
  -6,222
  -6,621
Total debt, $m
  773
  1,484
  2,352
  3,401
  4,646
  6,096
  7,760
  9,643
  11,747
  14,071
  16,615
  19,374
  22,344
  25,520
  28,897
  32,471
  36,238
  40,194
  44,338
  48,668
  53,185
  57,890
  62,787
  67,879
  73,172
  78,672
  84,388
  90,329
  96,504
  102,925
  109,605
Total liabilities, $m
  2,003
  2,714
  3,582
  4,631
  5,876
  7,326
  8,990
  10,873
  12,977
  15,301
  17,845
  20,604
  23,574
  26,750
  30,127
  33,701
  37,468
  41,424
  45,568
  49,898
  54,415
  59,120
  64,017
  69,109
  74,402
  79,902
  85,618
  91,559
  97,734
  104,155
  110,835
Total equity, $m
  3,132
  4,244
  5,602
  7,244
  9,190
  11,459
  14,061
  17,006
  20,297
  23,933
  27,911
  32,226
  36,872
  41,839
  47,122
  52,712
  58,603
  64,791
  71,272
  78,045
  85,110
  92,470
  100,129
  108,094
  116,372
  124,976
  133,916
  143,208
  152,866
  162,910
  173,357
Total liabilities and equity, $m
  5,135
  6,958
  9,184
  11,875
  15,066
  18,785
  23,051
  27,879
  33,274
  39,234
  45,756
  52,830
  60,446
  68,589
  77,249
  86,413
  96,071
  106,215
  116,840
  127,943
  139,525
  151,590
  164,146
  177,203
  190,774
  204,878
  219,534
  234,767
  250,600
  267,065
  284,192
Debt-to-equity ratio
  0.247
  0.350
  0.420
  0.470
  0.510
  0.530
  0.550
  0.570
  0.580
  0.590
  0.600
  0.600
  0.610
  0.610
  0.610
  0.620
  0.620
  0.620
  0.620
  0.620
  0.620
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
  0.630
Adjusted equity ratio
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610
  0.610

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  171
  -942
  -1,260
  -1,645
  -2,102
  -2,635
  -3,249
  -3,943
  -4,721
  -5,581
  -6,523
  -7,533
  -8,635
  -9,814
  -11,069
  -12,398
  -13,799
  -15,270
  -16,813
  -18,424
  -20,106
  -21,859
  -23,682
  -25,579
  -27,550
  -29,599
  -31,728
  -33,941
  -36,241
  -38,633
  -41,121
Depreciation, amort., depletion, $m
  21
  206
  268
  343
  431
  535
  653
  788
  938
  1,104
  1,285
  1,469
  1,681
  1,908
  2,149
  2,403
  2,672
  2,954
  3,250
  3,558
  3,881
  4,216
  4,565
  4,929
  5,306
  5,698
  6,106
  6,530
  6,970
  7,428
  7,904
Funds from operations, $m
  350
  -736
  -992
  -1,302
  -1,670
  -2,101
  -2,595
  -3,156
  -3,783
  -4,477
  -5,238
  -6,064
  -6,954
  -7,907
  -8,921
  -9,994
  -11,127
  -12,316
  -13,563
  -14,866
  -16,226
  -17,642
  -19,117
  -20,650
  -22,244
  -23,901
  -25,622
  -27,411
  -29,271
  -31,205
  -33,216
Change in working capital, $m
  -15
  -42
  -52
  -63
  -74
  -87
  -99
  -112
  -126
  -139
  -152
  -165
  -177
  -190
  -202
  -213
  -225
  -236
  -248
  -259
  -270
  -281
  -292
  -304
  -316
  -329
  -341
  -355
  -369
  -384
  -399
Cash from operations, $m
  365
  -281
  -940
  -1,240
  -1,596
  -2,014
  -2,496
  -3,043
  -3,657
  -4,338
  -5,086
  -5,899
  -6,777
  -7,717
  -8,719
  -9,781
  -10,902
  -12,080
  -13,315
  -14,607
  -15,956
  -17,361
  -18,824
  -20,346
  -21,928
  -23,572
  -25,281
  -27,057
  -28,902
  -30,821
  -32,817
Maintenance CAPEX, $m
  0
  -143
  -194
  -255
  -330
  -419
  -522
  -641
  -775
  -925
  -1,091
  -1,273
  -1,469
  -1,681
  -1,908
  -2,149
  -2,403
  -2,672
  -2,954
  -3,250
  -3,558
  -3,881
  -4,216
  -4,565
  -4,929
  -5,306
  -5,698
  -6,106
  -6,530
  -6,970
  -7,428
New CAPEX, $m
  -787
  -1,505
  -1,858
  -2,245
  -2,662
  -3,103
  -3,560
  -4,028
  -4,501
  -4,974
  -5,442
  -5,903
  -6,354
  -6,795
  -7,226
  -7,646
  -8,059
  -8,464
  -8,865
  -9,264
  -9,664
  -10,067
  -10,476
  -10,894
  -11,324
  -11,768
  -12,229
  -12,709
  -13,212
  -13,738
  -14,291
Cash from investing activities, $m
  -675
  -1,648
  -2,052
  -2,500
  -2,992
  -3,522
  -4,082
  -4,669
  -5,276
  -5,899
  -6,533
  -7,176
  -7,823
  -8,476
  -9,134
  -9,795
  -10,462
  -11,136
  -11,819
  -12,514
  -13,222
  -13,948
  -14,692
  -15,459
  -16,253
  -17,074
  -17,927
  -18,815
  -19,742
  -20,708
  -21,719
Free cash flow, $m
  -310
  -1,929
  -2,992
  -3,740
  -4,589
  -5,536
  -6,578
  -7,713
  -8,934
  -10,237
  -11,619
  -13,074
  -14,600
  -16,193
  -17,852
  -19,576
  -21,364
  -23,216
  -25,135
  -27,121
  -29,178
  -31,309
  -33,517
  -35,806
  -38,181
  -40,647
  -43,208
  -45,872
  -48,643
  -51,529
  -54,536
Issuance/(repayment) of debt, $m
  -103
  711
  868
  1,049
  1,244
  1,450
  1,664
  1,883
  2,104
  2,325
  2,543
  2,759
  2,970
  3,176
  3,377
  3,574
  3,767
  3,956
  4,144
  4,330
  4,517
  4,705
  4,897
  5,092
  5,293
  5,501
  5,716
  5,940
  6,175
  6,421
  6,680
Issuance/(repurchase) of shares, $m
  539
  2,331
  3,482
  4,332
  5,291
  6,354
  7,517
  8,775
  10,121
  11,549
  13,054
  14,631
  16,275
  17,985
  19,757
  21,592
  23,488
  25,448
  27,472
  29,564
  31,726
  33,963
  36,279
  38,678
  41,167
  43,749
  46,433
  49,223
  52,127
  55,151
  58,304
Cash from financing (excl. dividends), $m  
  427
  3,042
  4,350
  5,381
  6,535
  7,804
  9,181
  10,658
  12,225
  13,874
  15,597
  17,390
  19,245
  21,161
  23,134
  25,166
  27,255
  29,404
  31,616
  33,894
  36,243
  38,668
  41,176
  43,770
  46,460
  49,250
  52,149
  55,163
  58,302
  61,572
  64,984
Total cash flow (excl. dividends), $m
  117
  -1,219
  -2,123
  -2,691
  -3,344
  -4,086
  -4,914
  -5,830
  -6,830
  -7,913
  -9,075
  -10,315
  -11,630
  -13,017
  -14,475
  -16,002
  -17,597
  -19,260
  -20,991
  -22,791
  -24,661
  -26,604
  -28,620
  -30,714
  -32,888
  -35,146
  -37,492
  -39,932
  -42,468
  -45,108
  -47,856
Retained Cash Flow (-), $m
  -625
  -1,112
  -1,358
  -1,641
  -1,946
  -2,268
  -2,603
  -2,945
  -3,291
  -3,636
  -3,978
  -4,315
  -4,645
  -4,968
  -5,282
  -5,590
  -5,891
  -6,188
  -6,481
  -6,773
  -7,065
  -7,360
  -7,659
  -7,965
  -8,279
  -8,603
  -8,940
  -9,292
  -9,659
  -10,043
  -10,447
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, %
 
  4.50
  4.73
  4.96
  5.21
  5.47
  5.74
  6.03
  6.33
  6.65
  6.98
  7.33
  7.70
  8.08
  8.49
  8.91
  9.36
  9.82
  10.31
  10.83
  11.37
  11.94
  12.54
  13.16
  13.82
  14.51
  15.24
  16.00
  16.80
  17.64
  18.52
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
  59.9
  34.4
  20.3
  12.2
  7.5
  4.7
  3.0
  2.0
  1.3
  0.9
  0.6
  0.4
  0.3
  0.2
  0.1
  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

Whitecap Resources Inc. acquires, develops, optimizes, and produces crude oil and natural gas in western Canada. It has interests in the Kerrobert, Lucky Hills, Whiteside, and Eagle Lake properties located in West Central Saskatchewan; the Boundary Lake property located in northeast British Columbia; and Cardium producing properties located in the Pembina, Garrington, Ferrier, and Willesden Green areas of West Central Alberta. The company also owns interests in Elnora producing property located to the southeast of Red Deer, Alberta; the Deep Basin properties, including Karr, Simonette, Wapiti, and Elmworth located to the southwest of Grande Prairie, Alberta; and the Valhalla North property located in the Peace River Arch area of Alberta. It has proved reserves of 200 million barrels of oil equivalent (MMboe); and proved plus probable reserves of 278.9 MMboe. As of December 31, 2015, the company had 4,034.9 net wells. Whitecap Resources Inc. is headquartered in Calgary, Canada.

FINANCIAL RATIOS  of  Whitecap Resources Inc. (WCP)

Valuation Ratios
P/E Ratio 20.8
Price to Sales 6.6
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 9.7
Price to Free Cash Flow -8.4
Growth Rates
Sales Growth Rate 11.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 65.7%
Cap. Spend. - 3 Yr. Gr. Rate 6.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 24.7%
Total Debt to Equity 24.7%
Interest Coverage 8
Management Effectiveness
Return On Assets 4.2%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 2.7%
Return On Equity 6.1%
Return On Equity - 3 Yr. Avg. 3.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 70.1%
Gross Margin - 3 Yr. Avg. 75.7%
EBITDA Margin 55.4%
EBITDA Margin - 3 Yr. Avg. 62.6%
Operating Margin 44.8%
Oper. Margin - 3 Yr. Avg. -9.5%
Pre-Tax Margin 44.8%
Pre-Tax Margin - 3 Yr. Avg. -9.5%
Net Profit Margin 31.9%
Net Profit Margin - 3 Yr. Avg. -9.5%
Effective Tax Rate 28.8%
Eff/ Tax Rate - 3 Yr. Avg. 21.4%
Payout Ratio 68.4%

WCP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WCP stock intrinsic value calculation we used $536 million for the last fiscal year's total revenue generated by Whitecap Resources Inc.. The default revenue input number comes from 2016 income statement of Whitecap Resources 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 WCP stock valuation model: a) initial revenue growth rate of 35% 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 4.5%, whose default value for WCP is calculated based on our internal credit rating of Whitecap Resources 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 Whitecap Resources 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 WCP stock the variable cost ratio is equal to 226.1%.

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 WCP 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 4.4% for Whitecap Resources Inc..

Corporate tax rate of 27% is the nominal tax rate for Whitecap Resources 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 WCP 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 WCP are equal to 802.3%.

Life of production assets of 210.6 years is the average useful life of capital assets used in Whitecap Resources 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 WCP is equal to -22.4%. 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 - $3132 million for Whitecap Resources 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 359.762 million for Whitecap Resources 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 Whitecap Resources Inc. at the current share price and the inputted number of shares is $3.5 billion.


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Stock chart of WCP Financial statements of WCP
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