Intrinsic value of Avangrid - AGR

Previous Close

$43.94

  Intrinsic Value

$230.04

stock screener

  Rating & Target

str. buy

+424%

  Value-price divergence*

0%

Previous close

$43.94

 
Intrinsic value

$230.04

 
Up/down potential

+424%

 
Rating

str. buy

 
Value-price divergence*

0%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AGR 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 13.6

 

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, %
  37.81
  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
  6.27
  6.14
Revenue, $m
  6,061
  7,781
  9,872
  12,309
  15,105
  18,268
  21,803
  25,709
  29,982
  34,617
  39,607
  44,944
  50,618
  56,623
  62,951
  69,598
  76,560
  83,836
  91,425
  99,331
  107,558
  116,114
  125,007
  134,248
  143,852
  153,833
  164,208
  174,997
  186,219
  197,898
  210,058
Variable operating expenses, $m
 
  4,484
  5,605
  6,911
  8,410
  10,106
  12,001
  14,095
  16,385
  18,870
  21,545
  24,094
  27,136
  30,355
  33,748
  37,311
  41,043
  44,943
  49,012
  53,250
  57,661
  62,247
  67,015
  71,969
  77,117
  82,468
  88,030
  93,814
  99,830
  106,091
  112,610
Fixed operating expenses, $m
 
  1,353
  1,387
  1,421
  1,457
  1,493
  1,531
  1,569
  1,608
  1,648
  1,690
  1,732
  1,775
  1,820
  1,865
  1,912
  1,960
  2,009
  2,059
  2,110
  2,163
  2,217
  2,272
  2,329
  2,388
  2,447
  2,508
  2,571
  2,635
  2,701
  2,769
Total operating expenses, $m
  4,824
  5,837
  6,992
  8,332
  9,867
  11,599
  13,532
  15,664
  17,993
  20,518
  23,235
  25,826
  28,911
  32,175
  35,613
  39,223
  43,003
  46,952
  51,071
  55,360
  59,824
  64,464
  69,287
  74,298
  79,505
  84,915
  90,538
  96,385
  102,465
  108,792
  115,379
Operating income, $m
  1,194
  1,944
  2,881
  3,976
  5,238
  6,669
  8,271
  10,045
  11,988
  14,098
  16,372
  19,118
  21,707
  24,448
  27,339
  30,376
  33,558
  36,884
  40,354
  43,970
  47,734
  51,649
  55,719
  59,950
  64,347
  68,918
  73,670
  78,612
  83,754
  89,106
  94,680
EBITDA, $m
  1,998
  2,257
  3,193
  4,289
  5,550
  6,981
  8,584
  10,357
  12,301
  14,411
  16,685
  19,118
  21,707
  24,448
  27,339
  30,376
  33,558
  36,884
  40,354
  43,970
  47,734
  51,649
  55,719
  59,950
  64,347
  68,918
  73,670
  78,612
  83,754
  89,106
  94,680
Interest expense (income), $m
  229
  226
  442
  699
  999
  1,343
  1,732
  2,167
  2,647
  3,173
  3,743
  4,356
  5,013
  5,710
  6,449
  7,227
  8,045
  8,901
  9,796
  10,729
  11,701
  12,713
  13,765
  14,859
  15,996
  17,177
  18,404
  19,680
  21,007
  22,387
  23,824
Earnings before tax, $m
  1,009
  1,718
  2,438
  3,277
  4,239
  5,326
  6,539
  7,878
  9,341
  10,926
  12,629
  14,761
  16,694
  18,738
  20,890
  23,148
  25,513
  27,983
  30,559
  33,241
  36,033
  38,936
  41,954
  45,091
  48,351
  51,741
  55,265
  58,931
  62,747
  66,719
  70,856
Tax expense, $m
  379
  464
  658
  885
  1,144
  1,438
  1,766
  2,127
  2,522
  2,950
  3,410
  3,986
  4,507
  5,059
  5,640
  6,250
  6,888
  7,555
  8,251
  8,975
  9,729
  10,513
  11,328
  12,175
  13,055
  13,970
  14,922
  15,911
  16,942
  18,014
  19,131
Net income, $m
  630
  1,254
  1,780
  2,392
  3,094
  3,888
  4,774
  5,751
  6,819
  7,976
  9,220
  10,776
  12,187
  13,679
  15,249
  16,898
  18,624
  20,427
  22,308
  24,266
  26,304
  28,423
  30,626
  32,916
  35,296
  37,771
  40,344
  43,020
  45,805
  48,705
  51,725

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  91
  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
  31,309
  40,317
  51,151
  63,776
  78,263
  94,654
  112,968
  133,205
  155,348
  179,365
  205,219
  232,868
  262,269
  293,382
  326,173
  360,613
  396,686
  434,382
  473,705
  514,668
  557,296
  601,625
  647,702
  695,587
  745,347
  797,062
  850,819
  906,719
  964,867
  1,025,381
  1,088,386
Adjusted assets (=assets-cash), $m
  31,218
  40,317
  51,151
  63,776
  78,263
  94,654
  112,968
  133,205
  155,348
  179,365
  205,219
  232,868
  262,269
  293,382
  326,173
  360,613
  396,686
  434,382
  473,705
  514,668
  557,296
  601,625
  647,702
  695,587
  745,347
  797,062
  850,819
  906,719
  964,867
  1,025,381
  1,088,386
Revenue / Adjusted assets
  0.194
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
  0.193
Average production assets, $m
  -4,728
  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
Working capital, $m
  -460
  -62
  -79
  -98
  -121
  -146
  -174
  -206
  -240
  -277
  -317
  -360
  -405
  -453
  -504
  -557
  -612
  -671
  -731
  -795
  -860
  -929
  -1,000
  -1,074
  -1,151
  -1,231
  -1,314
  -1,400
  -1,490
  -1,583
  -1,680
Total debt, $m
  5,010
  9,614
  15,204
  21,719
  29,194
  37,651
  47,102
  57,544
  68,969
  81,362
  94,703
  108,970
  124,141
  140,195
  157,115
  174,886
  193,500
  212,951
  233,242
  254,379
  276,374
  299,248
  323,024
  347,733
  373,409
  400,094
  427,833
  456,677
  486,681
  517,906
  550,417
Total liabilities, $m
  16,200
  20,804
  26,394
  32,909
  40,384
  48,841
  58,292
  68,734
  80,159
  92,552
  105,893
  120,160
  135,331
  151,385
  168,305
  186,076
  204,690
  224,141
  244,432
  265,569
  287,564
  310,438
  334,214
  358,923
  384,599
  411,284
  439,023
  467,867
  497,871
  529,096
  561,607
Total equity, $m
  15,109
  19,514
  24,757
  30,868
  37,879
  45,812
  54,677
  64,471
  75,188
  86,813
  99,326
  112,708
  126,938
  141,997
  157,868
  174,537
  191,996
  210,241
  229,273
  249,099
  269,731
  291,186
  313,488
  336,664
  360,748
  385,778
  411,797
  438,852
  466,996
  496,284
  526,779
Total liabilities and equity, $m
  31,309
  40,318
  51,151
  63,777
  78,263
  94,653
  112,969
  133,205
  155,347
  179,365
  205,219
  232,868
  262,269
  293,382
  326,173
  360,613
  396,686
  434,382
  473,705
  514,668
  557,295
  601,624
  647,702
  695,587
  745,347
  797,062
  850,820
  906,719
  964,867
  1,025,380
  1,088,386
Debt-to-equity ratio
  0.332
  0.490
  0.610
  0.700
  0.770
  0.820
  0.860
  0.890
  0.920
  0.940
  0.950
  0.970
  0.980
  0.990
  1.000
  1.000
  1.010
  1.010
  1.020
  1.020
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
Adjusted equity ratio
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  630
  1,254
  1,780
  2,392
  3,094
  3,888
  4,774
  5,751
  6,819
  7,976
  9,220
  10,776
  12,187
  13,679
  15,249
  16,898
  18,624
  20,427
  22,308
  24,266
  26,304
  28,423
  30,626
  32,916
  35,296
  37,771
  40,344
  43,020
  45,805
  48,705
  51,725
Depreciation, amort., depletion, $m
  804
  312
  312
  312
  312
  312
  312
  312
  312
  312
  312
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Funds from operations, $m
  1,209
  1,567
  2,092
  2,705
  3,407
  4,200
  5,086
  6,064
  7,132
  8,288
  9,532
  10,776
  12,187
  13,679
  15,249
  16,898
  18,624
  20,427
  22,308
  24,266
  26,304
  28,423
  30,626
  32,916
  35,296
  37,771
  40,344
  43,020
  45,805
  48,705
  51,725
Change in working capital, $m
  -352
  -14
  -17
  -19
  -22
  -25
  -28
  -31
  -34
  -37
  -40
  -43
  -45
  -48
  -51
  -53
  -56
  -58
  -61
  -63
  -66
  -68
  -71
  -74
  -77
  -80
  -83
  -86
  -90
  -93
  -97
Cash from operations, $m
  1,561
  1,331
  2,109
  2,724
  3,429
  4,226
  5,114
  6,095
  7,166
  8,325
  9,572
  10,819
  12,232
  13,727
  15,300
  16,952
  18,680
  20,486
  22,368
  24,329
  26,370
  28,492
  30,698
  32,990
  35,373
  37,851
  40,427
  43,106
  45,895
  48,798
  51,822
Maintenance CAPEX, $m
  0
  946
  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
New CAPEX, $m
  -1,707
  -4,728
  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 investing activities, $m
  -1,527
  -3,782
  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
Free cash flow, $m
  34
  -2,451
  2,109
  2,724
  3,429
  4,226
  5,114
  6,095
  7,166
  8,325
  9,572
  10,819
  12,232
  13,727
  15,300
  16,952
  18,680
  20,486
  22,368
  24,329
  26,370
  28,492
  30,698
  32,990
  35,373
  37,851
  40,427
  43,106
  45,895
  48,798
  51,822
Issuance/(repayment) of debt, $m
  124
  4,695
  5,590
  6,515
  7,475
  8,458
  9,450
  10,442
  11,425
  12,393
  13,341
  14,267
  15,171
  16,054
  16,920
  17,771
  18,614
  19,451
  20,291
  21,137
  21,996
  22,874
  23,776
  24,708
  25,676
  26,685
  27,739
  28,844
  30,004
  31,225
  32,511
Issuance/(repurchase) of shares, $m
  -7
  2,161
  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 financing (excl. dividends), $m  
  29
  6,856
  5,590
  6,515
  7,475
  8,458
  9,450
  10,442
  11,425
  12,393
  13,341
  14,267
  15,171
  16,054
  16,920
  17,771
  18,614
  19,451
  20,291
  21,137
  21,996
  22,874
  23,776
  24,708
  25,676
  26,685
  27,739
  28,844
  30,004
  31,225
  32,511
Total cash flow (excl. dividends), $m
  63
  2,244
  7,699
  9,239
  10,904
  12,683
  14,565
  16,537
  18,591
  20,718
  22,913
  25,085
  27,403
  29,781
  32,220
  34,723
  37,294
  39,937
  42,659
  45,466
  48,366
  51,366
  54,474
  57,699
  61,050
  64,535
  68,166
  71,950
  75,899
  80,023
  84,333
Retained Cash Flow (-), $m
  -56
  -4,405
  -5,243
  -6,111
  -7,012
  -7,933
  -8,864
  -9,795
  -10,717
  -11,624
  -12,513
  -13,382
  -14,230
  -15,059
  -15,871
  -16,669
  -17,459
  -18,245
  -19,032
  -19,826
  -20,632
  -21,455
  -22,302
  -23,176
  -24,084
  -25,030
  -26,019
  -27,055
  -28,144
  -29,289
  -30,494
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
  2,456
  3,128
  3,893
  4,750
  5,701
  6,742
  7,874
  9,094
  10,399
  11,703
  13,173
  14,722
  16,349
  18,054
  19,834
  21,692
  23,627
  25,640
  27,734
  29,910
  32,172
  34,523
  36,966
  39,505
  42,147
  44,895
  47,756
  50,735
  53,838
Discount rate, %
 
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
 
  0
  2,212
  2,655
  3,095
  3,516
  3,905
  4,245
  4,523
  4,729
  4,856
  4,865
  4,829
  4,712
  4,521
  4,265
  3,955
  3,606
  3,230
  2,842
  2,455
  2,081
  1,730
  1,410
  1,125
  878
  670
  499
  363
  257
  177
Current shareholders' claim on cash, %
  100
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3
  86.3

Avangrid, Inc. operates as an energy services holding company in the United States. It engages in the generation, transmission, and distribution of electricity, as well as distribution, transportation, and sale of natural gas. As of December 31, 2015, the company delivered electricity to approximately 2.2 million electric utility customers, as well as natural gas to approximately 984,000 natural gas public utility customers; and owned approximately 67.5 billion cubic feet of net working gas storage capacity. It also develops, constructs, and operates renewable energy generation facilities primarily using onshore wind power, as well as solar, biomass, and thermal power. The company delivers natural gas and electricity to residential, commercial, and institutional customers through its regulated utilities in New York, Maine, Connecticut, and Massachusetts; and sells its output to investor-owned utilities, public utilities, and other credit-worthy entities. It also generates and provides power and other services to federal and state agencies, as well as institutional retail and joint action agencies; and delivers thermal output to wholesale customers in the Western United States. The company was formerly known as Iberdrola USA, Inc. Avangrid, Inc. was founded in 1852 and is headquartered in New Gloucester, Maine. Avangrid, Inc. operates as a subsidiary of Iberdrola, S.A.

FINANCIAL RATIOS  of  Avangrid (AGR)

Valuation Ratios
P/E Ratio 21.6
Price to Sales 2.3
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 8.7
Price to Free Cash Flow -93
Growth Rates
Sales Growth Rate 37.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 57.8%
Cap. Spend. - 3 Yr. Gr. Rate 12.6%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 29.8%
Total Debt to Equity 33.2%
Interest Coverage 5
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 2%
Return On Total Capital 3.1%
Ret/ On T. Cap. - 3 Yr. Avg. 2.5%
Return On Equity 4.2%
Return On Equity - 3 Yr. Avg. 3.2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 33.9%
EBITDA Margin - 3 Yr. Avg. 30.6%
Operating Margin 19.8%
Oper. Margin - 3 Yr. Avg. 17%
Pre-Tax Margin 16.8%
Pre-Tax Margin - 3 Yr. Avg. 13%
Net Profit Margin 10.5%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 37.6%
Eff/ Tax Rate - 3 Yr. Avg. 29.6%
Payout Ratio 63.7%

AGR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGR stock intrinsic value calculation we used $6018 million for the last fiscal year's total revenue generated by Avangrid. The default revenue input number comes from 2016 income statement of Avangrid. 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 AGR stock valuation model: a) initial revenue growth rate of 29.3% 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 5.1%, whose default value for AGR is calculated based on our internal credit rating of Avangrid, 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 Avangrid.
    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 AGR stock the variable cost ratio is equal to 58.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1320 million in the base year in the intrinsic value calculation for AGR 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 4.6% for Avangrid.

Corporate tax rate of 27% is the nominal tax rate for Avangrid. 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 AGR 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 AGR are equal to 0%.

Life of production assets of -2 years is the average useful life of capital assets used in Avangrid 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 AGR is equal to -0.8%. 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 - $15109 million for Avangrid - 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 309.546 million for Avangrid 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 Avangrid at the current share price and the inputted number of shares is $13.6 billion.

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COMPANY NEWS

▶ Avangrid CEO: Offshore in North Carolina coming 'well beyond 2020'   [Apr-25-17 12:55PM  American City Business Journals]
▶ Avangrid Renewables Leadership Change   [10:40AM  Business Wire]
▶ Avangrid beats 1Q profit forecasts   [07:10AM  Associated Press]
▶ Avangrid Declares Quarterly Dividend   [Apr-20-17 01:50PM  Business Wire]
▶ ETFs with exposure to Avangrid, Inc. : April 7, 2017   [Apr-07-17 03:43PM  Capital Cube]
▶ Details on Oregon-based energy company's 100-plus workers needed for NM wind farm   [Apr-05-17 04:55PM  American City Business Journals]
▶ Big wind development returning to Oregon with a mystery power buyer   [11:46AM  American City Business Journals]
▶ Avangrid Looks Vulnerable to Further Weakness   [Mar-09-17 03:15PM  TheStreet.com]
▶ Avangrid: Cramer's Top Takeaways   [06:22AM  TheStreet.com]
▶ AVANGRID Declares Quarterly Dividend   [Feb-16-17 01:38PM  Business Wire]
▶ AVANGRID Schedules 2017 Financial Update   [Feb-08-17 02:27PM  Business Wire]
▶ Hedge Funds Are Crazy About Avangrid Inc (AGR)   [Dec-14-16 02:19PM  at Insider Monkey]
▶ AVANGRID Declares Quarterly Dividend   [07:33AM  Business Wire]
▶ Billionaire David Einhorns Top Dividend Stocks   [Sep-15-16 12:31PM  at Insider Monkey]
▶ AVANGRID Declares Quarterly Dividend   [Jul-14-16 02:38PM  Business Wire]
Stock chart of AGR Financial statements of AGR
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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