Intrinsic value of CGG ADR - CGG

Previous Close

$4.50

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$4.50

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of CGG 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 0.1

 

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, %
  -43.05
  20.30
  18.77
  17.39
  16.15
  15.04
  14.03
  13.13
  12.32
  11.59
  10.93
  10.33
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
Revenue, $m
  1,197
  1,440
  1,710
  2,008
  2,332
  2,683
  3,059
  3,461
  3,887
  4,338
  4,812
  5,309
  5,829
  6,373
  6,939
  7,529
  8,143
  8,781
  9,444
  10,133
  10,849
  11,593
  12,367
  13,172
  14,009
  14,880
  15,788
  16,733
  17,719
  18,746
  19,819
Variable operating expenses, $m
 
  2,209
  2,600
  3,031
  3,501
  4,009
  4,555
  5,137
  5,754
  6,407
  7,094
  7,692
  8,446
  9,233
  10,054
  10,908
  11,797
  12,722
  13,682
  14,681
  15,718
  16,796
  17,917
  19,083
  20,296
  21,559
  22,873
  24,243
  25,671
  27,160
  28,714
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
  1,593
  2,209
  2,600
  3,031
  3,501
  4,009
  4,555
  5,137
  5,754
  6,407
  7,094
  7,692
  8,446
  9,233
  10,054
  10,908
  11,797
  12,722
  13,682
  14,681
  15,718
  16,796
  17,917
  19,083
  20,296
  21,559
  22,873
  24,243
  25,671
  27,160
  28,714
Operating income, $m
  -397
  -769
  -890
  -1,023
  -1,169
  -1,326
  -1,495
  -1,676
  -1,867
  -2,069
  -2,282
  -2,383
  -2,616
  -2,860
  -3,115
  -3,379
  -3,655
  -3,941
  -4,239
  -4,548
  -4,869
  -5,203
  -5,551
  -5,912
  -6,287
  -6,679
  -7,086
  -7,510
  -7,953
  -8,414
  -8,895
EBITDA, $m
  -104
  -426
  -506
  -594
  -690
  -794
  -905
  -1,024
  -1,150
  -1,283
  -1,424
  -1,571
  -1,725
  -1,885
  -2,053
  -2,228
  -2,409
  -2,598
  -2,794
  -2,998
  -3,210
  -3,430
  -3,659
  -3,897
  -4,145
  -4,402
  -4,671
  -4,951
  -5,242
  -5,546
  -5,863
Interest expense (income), $m
  142
  123
  153
  187
  225
  265
  309
  357
  407
  461
  518
  577
  640
  705
  773
  845
  919
  996
  1,076
  1,160
  1,246
  1,336
  1,430
  1,527
  1,628
  1,733
  1,843
  1,957
  2,076
  2,200
  2,329
Earnings before tax, $m
  -582
  -891
  -1,043
  -1,211
  -1,394
  -1,592
  -1,805
  -2,033
  -2,274
  -2,530
  -2,799
  -2,960
  -3,256
  -3,565
  -3,888
  -4,224
  -4,573
  -4,937
  -5,315
  -5,707
  -6,115
  -6,540
  -6,980
  -7,439
  -7,916
  -8,412
  -8,929
  -9,467
  -10,029
  -10,614
  -11,224
Tax expense, $m
  -14
  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
  -573
  -891
  -1,043
  -1,211
  -1,394
  -1,592
  -1,805
  -2,033
  -2,274
  -2,530
  -2,799
  -2,960
  -3,256
  -3,565
  -3,888
  -4,224
  -4,573
  -4,937
  -5,315
  -5,707
  -6,115
  -6,540
  -6,980
  -7,439
  -7,916
  -8,412
  -8,929
  -9,467
  -10,029
  -10,614
  -11,224

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  539
  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
  4,862
  5,199
  6,174
  7,248
  8,419
  9,685
  11,044
  12,495
  14,034
  15,660
  17,371
  19,166
  21,045
  23,006
  25,051
  27,181
  29,396
  31,699
  34,093
  36,581
  39,166
  41,852
  44,646
  47,551
  50,573
  53,719
  56,995
  60,408
  63,966
  67,676
  71,548
Adjusted assets (=assets-cash), $m
  4,323
  5,199
  6,174
  7,248
  8,419
  9,685
  11,044
  12,495
  14,034
  15,660
  17,371
  19,166
  21,045
  23,006
  25,051
  27,181
  29,396
  31,699
  34,093
  36,581
  39,166
  41,852
  44,646
  47,551
  50,573
  53,719
  56,995
  60,408
  63,966
  67,676
  71,548
Revenue / Adjusted assets
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
Average production assets, $m
  2,033
  2,445
  2,904
  3,409
  3,960
  4,555
  5,195
  5,877
  6,601
  7,365
  8,170
  9,015
  9,898
  10,821
  11,783
  12,784
  13,826
  14,910
  16,035
  17,205
  18,421
  19,685
  20,999
  22,365
  23,787
  25,266
  26,807
  28,413
  30,086
  31,831
  33,652
Working capital, $m
  -1,910
  361
  429
  504
  585
  673
  768
  869
  976
  1,089
  1,208
  1,333
  1,463
  1,600
  1,742
  1,890
  2,044
  2,204
  2,370
  2,543
  2,723
  2,910
  3,104
  3,306
  3,516
  3,735
  3,963
  4,200
  4,447
  4,705
  4,975
Total debt, $m
  3,149
  3,260
  3,983
  4,779
  5,647
  6,585
  7,592
  8,667
  9,807
  11,012
  12,280
  13,610
  15,002
  16,456
  17,971
  19,549
  21,190
  22,897
  24,671
  26,514
  28,430
  30,421
  32,490
  34,643
  36,883
  39,214
  41,641
  44,170
  46,807
  49,556
  52,425
Total liabilities, $m
  3,741
  3,852
  4,575
  5,371
  6,239
  7,177
  8,184
  9,259
  10,399
  11,604
  12,872
  14,202
  15,594
  17,048
  18,563
  20,141
  21,782
  23,489
  25,263
  27,106
  29,022
  31,013
  33,082
  35,235
  37,475
  39,806
  42,233
  44,762
  47,399
  50,148
  53,017
Total equity, $m
  1,121
  1,346
  1,599
  1,877
  2,181
  2,508
  2,860
  3,236
  3,635
  4,056
  4,499
  4,964
  5,451
  5,959
  6,488
  7,040
  7,614
  8,210
  8,830
  9,474
  10,144
  10,840
  11,563
  12,316
  13,098
  13,913
  14,762
  15,646
  16,567
  17,528
  18,531
Total liabilities and equity, $m
  4,862
  5,198
  6,174
  7,248
  8,420
  9,685
  11,044
  12,495
  14,034
  15,660
  17,371
  19,166
  21,045
  23,007
  25,051
  27,181
  29,396
  31,699
  34,093
  36,580
  39,166
  41,853
  44,645
  47,551
  50,573
  53,719
  56,995
  60,408
  63,966
  67,676
  71,548
Debt-to-equity ratio
  2.809
  2.420
  2.490
  2.550
  2.590
  2.630
  2.650
  2.680
  2.700
  2.720
  2.730
  2.740
  2.750
  2.760
  2.770
  2.780
  2.780
  2.790
  2.790
  2.800
  2.800
  2.810
  2.810
  2.810
  2.820
  2.820
  2.820
  2.820
  2.830
  2.830
  2.830
Adjusted equity ratio
  0.135
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259
  0.259

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -573
  -891
  -1,043
  -1,211
  -1,394
  -1,592
  -1,805
  -2,033
  -2,274
  -2,530
  -2,799
  -2,960
  -3,256
  -3,565
  -3,888
  -4,224
  -4,573
  -4,937
  -5,315
  -5,707
  -6,115
  -6,540
  -6,980
  -7,439
  -7,916
  -8,412
  -8,929
  -9,467
  -10,029
  -10,614
  -11,224
Depreciation, amort., depletion, $m
  293
  343
  384
  429
  479
  533
  590
  652
  717
  786
  858
  812
  892
  975
  1,062
  1,152
  1,246
  1,343
  1,445
  1,550
  1,660
  1,773
  1,892
  2,015
  2,143
  2,276
  2,415
  2,560
  2,710
  2,868
  3,032
Funds from operations, $m
  553
  -549
  -659
  -781
  -915
  -1,059
  -1,215
  -1,381
  -1,557
  -1,744
  -1,941
  -2,148
  -2,364
  -2,591
  -2,826
  -3,072
  -3,328
  -3,594
  -3,870
  -4,157
  -4,456
  -4,766
  -5,089
  -5,424
  -5,773
  -6,136
  -6,514
  -6,908
  -7,318
  -7,746
  -8,193
Change in working capital, $m
  198
  61
  68
  75
  81
  88
  95
  101
  107
  113
  119
  125
  131
  136
  142
  148
  154
  160
  166
  173
  180
  187
  194
  202
  210
  219
  228
  237
  247
  258
  269
Cash from operations, $m
  355
  -610
  -727
  -856
  -996
  -1,147
  -1,309
  -1,482
  -1,664
  -1,857
  -2,060
  -2,273
  -2,495
  -2,727
  -2,969
  -3,220
  -3,482
  -3,754
  -4,037
  -4,330
  -4,636
  -4,953
  -5,283
  -5,626
  -5,983
  -6,355
  -6,742
  -7,145
  -7,565
  -8,004
  -8,462
Maintenance CAPEX, $m
  0
  -183
  -220
  -262
  -307
  -357
  -410
  -468
  -529
  -595
  -664
  -736
  -812
  -892
  -975
  -1,062
  -1,152
  -1,246
  -1,343
  -1,445
  -1,550
  -1,660
  -1,773
  -1,892
  -2,015
  -2,143
  -2,276
  -2,415
  -2,560
  -2,710
  -2,868
New CAPEX, $m
  -105
  -412
  -459
  -505
  -551
  -595
  -639
  -682
  -724
  -765
  -805
  -844
  -884
  -923
  -962
  -1,002
  -1,042
  -1,083
  -1,126
  -1,170
  -1,216
  -1,264
  -1,314
  -1,366
  -1,422
  -1,480
  -1,541
  -1,605
  -1,673
  -1,745
  -1,821
Cash from investing activities, $m
  -381
  -595
  -679
  -767
  -858
  -952
  -1,049
  -1,150
  -1,253
  -1,360
  -1,469
  -1,580
  -1,696
  -1,815
  -1,937
  -2,064
  -2,194
  -2,329
  -2,469
  -2,615
  -2,766
  -2,924
  -3,087
  -3,258
  -3,437
  -3,623
  -3,817
  -4,020
  -4,233
  -4,455
  -4,689
Free cash flow, $m
  -26
  -1,205
  -1,406
  -1,623
  -1,854
  -2,099
  -2,359
  -2,632
  -2,918
  -3,217
  -3,529
  -3,853
  -4,191
  -4,541
  -4,905
  -5,283
  -5,676
  -6,083
  -6,506
  -6,945
  -7,402
  -7,876
  -8,370
  -8,884
  -9,419
  -9,977
  -10,559
  -11,165
  -11,799
  -12,460
  -13,150
Issuance/(repayment) of debt, $m
  -37
  650
  723
  796
  868
  938
  1,007
  1,075
  1,140
  1,205
  1,268
  1,330
  1,392
  1,454
  1,515
  1,578
  1,642
  1,707
  1,774
  1,843
  1,916
  1,991
  2,070
  2,153
  2,240
  2,331
  2,428
  2,529
  2,636
  2,749
  2,869
Issuance/(repurchase) of shares, $m
  368
  1,117
  1,296
  1,489
  1,697
  1,920
  2,157
  2,408
  2,673
  2,951
  3,243
  3,425
  3,743
  4,073
  4,418
  4,775
  5,147
  5,533
  5,935
  6,352
  6,785
  7,235
  7,704
  8,191
  8,699
  9,227
  9,777
  10,351
  10,950
  11,575
  12,227
Cash from financing (excl. dividends), $m  
  176
  1,767
  2,019
  2,285
  2,565
  2,858
  3,164
  3,483
  3,813
  4,156
  4,511
  4,755
  5,135
  5,527
  5,933
  6,353
  6,789
  7,240
  7,709
  8,195
  8,701
  9,226
  9,774
  10,344
  10,939
  11,558
  12,205
  12,880
  13,586
  14,324
  15,096
Total cash flow (excl. dividends), $m
  154
  562
  613
  662
  711
  759
  805
  851
  896
  939
  982
  902
  944
  986
  1,028
  1,070
  1,113
  1,157
  1,203
  1,250
  1,299
  1,350
  1,404
  1,460
  1,519
  1,581
  1,646
  1,715
  1,788
  1,865
  1,945
Retained Cash Flow (-), $m
  191
  -1,117
  -1,296
  -1,489
  -1,697
  -1,920
  -2,157
  -2,408
  -2,673
  -2,951
  -3,243
  -3,425
  -3,743
  -4,073
  -4,418
  -4,775
  -5,147
  -5,533
  -5,935
  -6,352
  -6,785
  -7,235
  -7,704
  -8,191
  -8,699
  -9,227
  -9,777
  -10,351
  -10,950
  -11,575
  -12,227
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
 
  -555
  -683
  -827
  -986
  -1,161
  -1,352
  -1,557
  -1,777
  -2,012
  -2,261
  -2,523
  -2,799
  -3,088
  -3,390
  -3,705
  -4,034
  -4,376
  -4,732
  -5,102
  -5,486
  -5,885
  -6,300
  -6,731
  -7,180
  -7,646
  -8,131
  -8,636
  -9,162
  -9,710
  -10,282
Discount rate, %
 
  10.40
  10.92
  11.47
  12.04
  12.64
  13.27
  13.94
  14.63
  15.37
  16.13
  16.94
  17.79
  18.68
  19.61
  20.59
  21.62
  22.70
  23.84
  25.03
  26.28
  27.59
  28.97
  30.42
  31.94
  33.54
  35.22
  36.98
  38.83
  40.77
  42.81
PV of cash for distribution, $m
 
  -503
  -555
  -597
  -626
  -640
  -640
  -625
  -596
  -556
  -507
  -451
  -392
  -333
  -276
  -223
  -176
  -135
  -101
  -73
  -52
  -35
  -23
  -15
  -9
  -6
  -3
  -2
  -1
  0
  0
Current shareholders' claim on cash, %
  100
  41.3
  17.4
  7.5
  3.3
  1.4
  0.6
  0.3
  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
  0.0
  0.0

CGG SA (CGG) is a manufacturer of geophysical equipment. The Company provides marine, land and airborne data acquisition services, as well as a range of other geoscience services, including data imaging, geoscience and petroleum engineering consulting services, and collecting, developing and licensing geological data. Its segments include Contractual Data Acquisition; Geology, Geophysics & Reservoir (GGR); Equipment, and Non-Operated Resources. The Contractual Data Acquisition includes marine, and land and multi-physics. Its GGR segment includes the Multi-client business line and the Subsurface Imaging and Reservoir business lines (processing and imaging of geophysical data, reservoir characterization, geophysical consulting and software services, geological data library and data management solutions). The Equipment segment consists of its manufacturing and sales activities for seismic equipment. It operates through Saturno, a multi-client survey over Santos Basin Offshore Brazil.

FINANCIAL RATIOS  of  CGG ADR (CGG)

Valuation Ratios
P/E Ratio -0.2
Price to Sales 0.1
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow 0.3
Price to Free Cash Flow 0.4
Growth Rates
Sales Growth Rate -43.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28.1%
Cap. Spend. - 3 Yr. Gr. Rate -21.3%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 35.6%
Total Debt to Equity 280.9%
Interest Coverage -3
Management Effectiveness
Return On Assets -8.4%
Ret/ On Assets - 3 Yr. Avg. -13.9%
Return On Total Capital -13.6%
Ret/ On T. Cap. - 3 Yr. Avg. -21%
Return On Equity -47.1%
Return On Equity - 3 Yr. Avg. -51.7%
Asset Turnover 0.2
Profitability Ratios
Gross Margin -4.5%
Gross Margin - 3 Yr. Avg. 9.3%
EBITDA Margin -12.3%
EBITDA Margin - 3 Yr. Avg. 5.7%
Operating Margin -33.1%
Oper. Margin - 3 Yr. Avg. -36.9%
Pre-Tax Margin -48.6%
Pre-Tax Margin - 3 Yr. Avg. -48.4%
Net Profit Margin -47.9%
Net Profit Margin - 3 Yr. Avg. -51.4%
Effective Tax Rate 2.4%
Eff/ Tax Rate - 3 Yr. Avg. -5.4%
Payout Ratio 0%

CGG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CGG stock intrinsic value calculation we used $1197 million for the last fiscal year's total revenue generated by CGG ADR. The default revenue input number comes from 2016 income statement of CGG ADR. 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 CGG stock valuation model: a) initial revenue growth rate of 20.3% 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 10.4%, whose default value for CGG is calculated based on our internal credit rating of CGG ADR, 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 CGG ADR.
    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 CGG stock the variable cost ratio is equal to 155.1%.

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 CGG 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 4.7% for CGG ADR.

Corporate tax rate of 27% is the nominal tax rate for CGG ADR. 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 CGG 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 CGG are equal to 169.8%.

Life of production assets of 11.1 years is the average useful life of capital assets used in CGG ADR 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 CGG is equal to 25.1%. 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 - $1121 million for CGG ADR - 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 22.343 million for CGG ADR 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 CGG ADR at the current share price and the inputted number of shares is $0.1 billion.

RELATED COMPANIES Price Int.Val. Rating
IO ION Geophysica 13.25 49.79  str.buy
DWSN Dawson Geophys 4.73 1.97  str.sell
SLB Schlumberger 63.30 91.05  buy

COMPANY NEWS

▶ CGG: announces the launch of CEO succession plan   [Dec-05-17 01:00AM  GlobeNewswire]
▶ CGG: announces the launch of CEO succession plan   [Dec-04-17 04:31PM  GlobeNewswire]
▶ CGG: Trading halt request for December 1, 2017 starting 2pm   [Nov-30-17 01:31AM  GlobeNewswire]
▶ CGG: Update of the voting form   [Nov-07-17 03:55PM  Marketwired]
▶ CGG: Update of the voting form   [02:32PM  GlobeNewswire]
▶ CGG: Notification of share ownership threshold crossed   [Nov-03-17 12:31PM  GlobeNewswire]
▶ CGG : Notification of share ownership threshold crossed   [Oct-27-17 01:04PM  GlobeNewswire]
▶ CGG: Starts New CWAz Survey in Gulf of Mexico   [Sep-25-17 01:31AM  GlobeNewswire]
▶ ETFs with exposure to CGG : August 29, 2017   [Aug-29-17 06:33PM  Capital Cube]
▶ ETFs with exposure to CGG : August 15, 2017   [Aug-15-17 03:40PM  Capital Cube]
▶ ETFs with exposure to CGG : June 16, 2017   [Jun-16-17 03:33PM  Capital Cube]
▶ [$$] France's CGG Group Files for Bankruptcy Protection   [Jun-14-17 06:56PM  The Wall Street Journal]
▶ CGG: Wins Extension until 2021 for Oman Dedicated Center   [May-23-17 01:31AM  GlobeNewswire]
▶ CGG reports 1Q loss   [May-12-17 05:54AM  Associated Press]
▶ CGG: Restructuring Update   [01:33AM  GlobeNewswire]
▶ ETFs with exposure to CGG : May 9, 2017   [May-09-17 04:24PM  Capital Cube]
▶ New Strong Sell Stocks for April 4th   [Apr-04-17 10:34AM  Zacks]
▶ New Strong Sell Stocks for March 8th   [Mar-08-17 10:14AM  Zacks]
▶ CGG Drops After Reporting 4Q Loss   [Mar-03-17 09:21AM  TheStreet.com]
Financial statements of CGG
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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