Intrinsic value of Yamana Gold Inc. - YRI

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$4.05

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$4.05

 
Intrinsic value

$1.43

 
Up/down potential

-65%

 
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 YRI 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 3.9

 

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, %
  3.87
  10.30
  9.77
  9.29
  8.86
  8.48
  8.13
  7.82
  7.53
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.80
  5.72
  5.64
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
Revenue, $m
  2,415
  2,664
  2,924
  3,196
  3,479
  3,774
  4,081
  4,400
  4,731
  5,076
  5,434
  5,806
  6,193
  6,595
  7,014
  7,449
  7,903
  8,376
  8,869
  9,383
  9,919
  10,479
  11,063
  11,674
  12,313
  12,981
  13,679
  14,410
  15,175
  15,976
  16,814
Variable operating expenses, $m
 
  5,830
  6,394
  6,983
  7,597
  8,236
  8,901
  9,592
  10,311
  11,057
  11,833
  12,582
  13,420
  14,292
  15,199
  16,143
  17,126
  18,151
  19,219
  20,333
  21,495
  22,708
  23,975
  25,299
  26,683
  28,130
  29,644
  31,227
  32,885
  34,620
  36,438
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
  3,055
  5,830
  6,394
  6,983
  7,597
  8,236
  8,901
  9,592
  10,311
  11,057
  11,833
  12,582
  13,420
  14,292
  15,199
  16,143
  17,126
  18,151
  19,219
  20,333
  21,495
  22,708
  23,975
  25,299
  26,683
  28,130
  29,644
  31,227
  32,885
  34,620
  36,438
Operating income, $m
  -640
  -3,167
  -3,470
  -3,787
  -4,118
  -4,462
  -4,820
  -5,193
  -5,579
  -5,981
  -6,399
  -6,776
  -7,227
  -7,697
  -8,185
  -8,694
  -9,223
  -9,775
  -10,350
  -10,950
  -11,576
  -12,229
  -12,912
  -13,625
  -14,370
  -15,149
  -15,964
  -16,817
  -17,710
  -18,645
  -19,623
EBITDA, $m
  -15
  -2,455
  -2,694
  -2,945
  -3,206
  -3,478
  -3,760
  -4,054
  -4,360
  -4,677
  -5,007
  -5,350
  -5,706
  -6,077
  -6,463
  -6,864
  -7,283
  -7,718
  -8,172
  -8,646
  -9,140
  -9,656
  -10,195
  -10,758
  -11,346
  -11,962
  -12,605
  -13,279
  -13,983
  -14,721
  -15,494
Interest expense (income), $m
  130
  118
  149
  182
  215
  251
  287
  326
  365
  407
  449
  494
  540
  588
  638
  691
  745
  801
  860
  921
  985
  1,052
  1,122
  1,195
  1,271
  1,350
  1,433
  1,520
  1,611
  1,706
  1,806
Earnings before tax, $m
  -832
  -3,285
  -3,620
  -3,969
  -4,333
  -4,713
  -5,108
  -5,518
  -5,945
  -6,388
  -6,849
  -7,270
  -7,768
  -8,285
  -8,824
  -9,384
  -9,968
  -10,576
  -11,210
  -11,872
  -12,561
  -13,282
  -14,034
  -14,819
  -15,641
  -16,499
  -17,398
  -18,337
  -19,321
  -20,351
  -21,429
Tax expense, $m
  -439
  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
  -416
  -3,285
  -3,620
  -3,969
  -4,333
  -4,713
  -5,108
  -5,518
  -5,945
  -6,388
  -6,849
  -7,270
  -7,768
  -8,285
  -8,824
  -9,384
  -9,968
  -10,576
  -11,210
  -11,872
  -12,561
  -13,282
  -14,034
  -14,819
  -15,641
  -16,499
  -17,398
  -18,337
  -19,321
  -20,351
  -21,429

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  234
  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
  11,892
  12,868
  14,126
  15,438
  16,807
  18,231
  19,714
  21,254
  22,856
  24,520
  26,250
  28,047
  29,916
  31,860
  33,882
  35,987
  38,179
  40,463
  42,844
  45,327
  47,918
  50,622
  53,447
  56,398
  59,483
  62,709
  66,083
  69,613
  73,308
  77,177
  81,228
Adjusted assets (=assets-cash), $m
  11,658
  12,868
  14,126
  15,438
  16,807
  18,231
  19,714
  21,254
  22,856
  24,520
  26,250
  28,047
  29,916
  31,860
  33,882
  35,987
  38,179
  40,463
  42,844
  45,327
  47,918
  50,622
  53,447
  56,398
  59,483
  62,709
  66,083
  69,613
  73,308
  77,177
  81,228
Revenue / Adjusted assets
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
  0.207
Average production assets, $m
  10,735
  11,840
  12,997
  14,205
  15,464
  16,775
  18,139
  19,557
  21,030
  22,561
  24,153
  25,807
  27,526
  29,315
  31,175
  33,112
  35,129
  37,230
  39,421
  41,706
  44,090
  46,578
  49,177
  51,893
  54,731
  57,699
  60,804
  64,052
  67,452
  71,012
  74,740
Working capital, $m
  104
  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 debt, $m
  2,359
  2,817
  3,428
  4,066
  4,731
  5,423
  6,144
  6,893
  7,671
  8,480
  9,320
  10,194
  11,102
  12,047
  13,030
  14,053
  15,118
  16,228
  17,385
  18,592
  19,851
  21,165
  22,538
  23,972
  25,472
  27,039
  28,679
  30,395
  32,191
  34,071
  36,040
Total liabilities, $m
  5,795
  6,254
  6,865
  7,503
  8,168
  8,860
  9,581
  10,330
  11,108
  11,917
  12,757
  13,631
  14,539
  15,484
  16,467
  17,490
  18,555
  19,665
  20,822
  22,029
  23,288
  24,602
  25,975
  27,409
  28,909
  30,476
  32,116
  33,832
  35,628
  37,508
  39,477
Total equity, $m
  6,096
  6,614
  7,261
  7,935
  8,639
  9,371
  10,133
  10,925
  11,748
  12,603
  13,492
  14,416
  15,377
  16,376
  17,415
  18,497
  19,624
  20,798
  22,022
  23,298
  24,630
  26,020
  27,472
  28,989
  30,574
  32,232
  33,966
  35,781
  37,680
  39,669
  41,751
Total liabilities and equity, $m
  11,891
  12,868
  14,126
  15,438
  16,807
  18,231
  19,714
  21,255
  22,856
  24,520
  26,249
  28,047
  29,916
  31,860
  33,882
  35,987
  38,179
  40,463
  42,844
  45,327
  47,918
  50,622
  53,447
  56,398
  59,483
  62,708
  66,082
  69,613
  73,308
  77,177
  81,228
Debt-to-equity ratio
  0.387
  0.430
  0.470
  0.510
  0.550
  0.580
  0.610
  0.630
  0.650
  0.670
  0.690
  0.710
  0.720
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.800
  0.810
  0.810
  0.820
  0.830
  0.830
  0.840
  0.840
  0.850
  0.850
  0.860
  0.860
Adjusted equity ratio
  0.503
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514
  0.514

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -416
  -3,285
  -3,620
  -3,969
  -4,333
  -4,713
  -5,108
  -5,518
  -5,945
  -6,388
  -6,849
  -7,270
  -7,768
  -8,285
  -8,824
  -9,384
  -9,968
  -10,576
  -11,210
  -11,872
  -12,561
  -13,282
  -14,034
  -14,819
  -15,641
  -16,499
  -17,398
  -18,337
  -19,321
  -20,351
  -21,429
Depreciation, amort., depletion, $m
  625
  712
  776
  843
  912
  985
  1,060
  1,138
  1,220
  1,304
  1,392
  1,426
  1,521
  1,620
  1,722
  1,829
  1,941
  2,057
  2,178
  2,304
  2,436
  2,573
  2,717
  2,867
  3,024
  3,188
  3,359
  3,539
  3,727
  3,923
  4,129
Funds from operations, $m
  846
  -2,573
  -2,844
  -3,126
  -3,421
  -3,728
  -4,048
  -4,380
  -4,725
  -5,084
  -5,457
  -5,844
  -6,247
  -6,666
  -7,101
  -7,555
  -8,027
  -8,519
  -9,032
  -9,567
  -10,126
  -10,708
  -11,317
  -11,952
  -12,617
  -13,312
  -14,038
  -14,799
  -15,594
  -16,427
  -17,300
Change in working capital, $m
  -52
  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 operations, $m
  898
  -3,012
  -2,844
  -3,126
  -3,421
  -3,728
  -4,048
  -4,380
  -4,725
  -5,084
  -5,457
  -5,844
  -6,247
  -6,666
  -7,101
  -7,555
  -8,027
  -8,519
  -9,032
  -9,567
  -10,126
  -10,708
  -11,317
  -11,952
  -12,617
  -13,312
  -14,038
  -14,799
  -15,594
  -16,427
  -17,300
Maintenance CAPEX, $m
  0
  -593
  -654
  -718
  -785
  -854
  -927
  -1,002
  -1,080
  -1,162
  -1,246
  -1,334
  -1,426
  -1,521
  -1,620
  -1,722
  -1,829
  -1,941
  -2,057
  -2,178
  -2,304
  -2,436
  -2,573
  -2,717
  -2,867
  -3,024
  -3,188
  -3,359
  -3,539
  -3,727
  -3,923
New CAPEX, $m
  -669
  -1,106
  -1,157
  -1,208
  -1,259
  -1,311
  -1,364
  -1,418
  -1,474
  -1,531
  -1,591
  -1,654
  -1,720
  -1,788
  -1,861
  -1,937
  -2,017
  -2,101
  -2,191
  -2,285
  -2,384
  -2,489
  -2,599
  -2,716
  -2,838
  -2,968
  -3,104
  -3,248
  -3,400
  -3,560
  -3,728
Cash from investing activities, $m
  -513
  -1,699
  -1,811
  -1,926
  -2,044
  -2,165
  -2,291
  -2,420
  -2,554
  -2,693
  -2,837
  -2,988
  -3,146
  -3,309
  -3,481
  -3,659
  -3,846
  -4,042
  -4,248
  -4,463
  -4,688
  -4,925
  -5,172
  -5,433
  -5,705
  -5,992
  -6,292
  -6,607
  -6,939
  -7,287
  -7,651
Free cash flow, $m
  385
  -4,711
  -4,655
  -5,052
  -5,465
  -5,894
  -6,338
  -6,800
  -7,279
  -7,777
  -8,294
  -8,832
  -9,392
  -9,975
  -10,582
  -11,214
  -11,874
  -12,562
  -13,280
  -14,030
  -14,814
  -15,633
  -16,489
  -17,385
  -18,322
  -19,303
  -20,330
  -21,406
  -22,533
  -23,714
  -24,951
Issuance/(repayment) of debt, $m
  -249
  587
  611
  638
  665
  692
  720
  749
  778
  809
  841
  874
  908
  945
  983
  1,023
  1,065
  1,110
  1,157
  1,207
  1,259
  1,314
  1,373
  1,434
  1,499
  1,568
  1,640
  1,716
  1,796
  1,880
  1,969
Issuance/(repurchase) of shares, $m
  0
  4,643
  4,690
  5,089
  5,504
  5,934
  6,380
  6,843
  7,324
  7,824
  8,343
  8,883
  9,444
  10,029
  10,638
  11,273
  11,935
  12,626
  13,347
  14,099
  14,886
  15,708
  16,568
  17,467
  18,409
  19,394
  20,425
  21,505
  22,637
  23,822
  25,065
Cash from financing (excl. dividends), $m  
  -378
  5,230
  5,301
  5,727
  6,169
  6,626
  7,100
  7,592
  8,102
  8,633
  9,184
  9,757
  10,352
  10,974
  11,621
  12,296
  13,000
  13,736
  14,504
  15,306
  16,145
  17,022
  17,941
  18,901
  19,908
  20,962
  22,065
  23,221
  24,433
  25,702
  27,034
Total cash flow (excl. dividends), $m
  8
  -4,124
  -4,044
  -4,414
  -4,800
  -5,201
  -5,618
  -6,051
  -6,501
  -6,968
  -7,454
  -7,959
  -8,484
  -9,030
  -9,599
  -10,191
  -10,808
  -11,452
  -12,123
  -12,823
  -13,554
  -14,318
  -15,116
  -15,951
  -16,823
  -17,736
  -18,691
  -19,690
  -20,737
  -21,834
  -22,982
Retained Cash Flow (-), $m
  445
  -623
  -646
  -675
  -703
  -732
  -762
  -792
  -823
  -855
  -889
  -924
  -961
  -999
  -1,039
  -1,082
  -1,127
  -1,174
  -1,224
  -1,276
  -1,332
  -1,390
  -1,452
  -1,517
  -1,586
  -1,658
  -1,734
  -1,815
  -1,899
  -1,989
  -2,082
Prev. year cash balance distribution, $m
 
  105
  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, %
 
  4.90
  5.15
  5.40
  5.67
  5.96
  6.25
  6.57
  6.89
  7.24
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.19
  10.70
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.21
  20.17
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
  47.5
  23.6
  11.8
  5.9
  3.0
  1.5
  0.8
  0.4
  0.2
  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
  0.0
  0.0

Yamana Gold Inc. engages in the exploration and development of precious metal properties in Brazil, Argentina, Chile, Mexico, and Canada. It explores for gold, silver, and copper. It primarily holds interests in the Chapada, El Peñón, Gualcamayo, Mercedes, Canadian Malartic, Minera Florida, and Jacobina properties. The company was formerly known as Yamana Resources Inc. and changed its name to Yamana Gold Inc. in July 2003. Yamana Gold Inc. was founded in 1980 and is based in Toronto, Canada.

FINANCIAL RATIOS  of  Yamana Gold Inc. (YRI)

Valuation Ratios
P/E Ratio -9.2
Price to Sales 1.6
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow 16.8
Growth Rates
Sales Growth Rate 3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 40%
Cap. Spend. - 3 Yr. Gr. Rate -12.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.2
LT Debt to Equity 36.6%
Total Debt to Equity 38.7%
Interest Coverage -5
Management Effectiveness
Return On Assets -2.9%
Ret/ On Assets - 3 Yr. Avg. -10.6%
Return On Total Capital -4.7%
Ret/ On T. Cap. - 3 Yr. Avg. -15.9%
Return On Equity -6.6%
Return On Equity - 3 Yr. Avg. -21.1%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 42.4%
Gross Margin - 3 Yr. Avg. 42.1%
EBITDA Margin -3.2%
EBITDA Margin - 3 Yr. Avg. -35.4%
Operating Margin -26.5%
Oper. Margin - 3 Yr. Avg. -63.2%
Pre-Tax Margin -34.5%
Pre-Tax Margin - 3 Yr. Avg. -68.6%
Net Profit Margin -17.2%
Net Profit Margin - 3 Yr. Avg. -71.8%
Effective Tax Rate 52.8%
Eff/ Tax Rate - 3 Yr. Avg. 10.6%
Payout Ratio -9.1%

YRI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the YRI stock intrinsic value calculation we used $2415 million for the last fiscal year's total revenue generated by Yamana Gold Inc.. The default revenue input number comes from 2016 income statement of Yamana Gold 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 YRI stock valuation model: a) initial revenue growth rate of 10.3% 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 4.9%, whose default value for YRI is calculated based on our internal credit rating of Yamana Gold 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 Yamana Gold 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 YRI stock the variable cost ratio is equal to 219.1%.

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 YRI 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 5.3% for Yamana Gold Inc..

Corporate tax rate of 27% is the nominal tax rate for Yamana Gold 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 YRI 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 YRI are equal to 444.5%.

Life of production assets of 18.1 years is the average useful life of capital assets used in Yamana Gold 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 YRI is equal to 0%. 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 - $6096 million for Yamana Gold 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 962.466 million for Yamana Gold 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 Yamana Gold Inc. at the current share price and the inputted number of shares is $3.9 billion.


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Stock chart of YRI Financial statements of YRI
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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