Intrinsic value of CGG ADR - CGG

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$4.59

  Intrinsic Value

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  Value-price divergence*

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$4.59

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

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
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,197
  2,144
  2,193
  2,250
  2,313
  2,383
  2,460
  2,544
  2,635
  2,732
  2,837
  2,949
  3,069
  3,196
  3,332
  3,476
  3,628
  3,789
  3,960
  4,140
  4,330
  4,531
  4,742
  4,965
  5,201
  5,448
  5,709
  5,983
  6,272
  6,576
  6,895
Variable operating expenses, $m
 
  1,149
  1,172
  1,199
  1,230
  1,263
  1,300
  1,340
  1,384
  1,430
  1,481
  1,411
  1,469
  1,530
  1,594
  1,663
  1,736
  1,813
  1,895
  1,981
  2,072
  2,168
  2,269
  2,376
  2,489
  2,607
  2,732
  2,863
  3,001
  3,147
  3,300
Fixed operating expenses, $m
 
  2,240
  2,296
  2,353
  2,412
  2,472
  2,534
  2,597
  2,662
  2,729
  2,797
  2,867
  2,939
  3,012
  3,087
  3,165
  3,244
  3,325
  3,408
  3,493
  3,580
  3,670
  3,762
  3,856
  3,952
  4,051
  4,152
  4,256
  4,362
  4,471
  4,583
Total operating expenses, $m
  1,593
  3,389
  3,468
  3,552
  3,642
  3,735
  3,834
  3,937
  4,046
  4,159
  4,278
  4,278
  4,408
  4,542
  4,681
  4,828
  4,980
  5,138
  5,303
  5,474
  5,652
  5,838
  6,031
  6,232
  6,441
  6,658
  6,884
  7,119
  7,363
  7,618
  7,883
Operating income, $m
  -397
  -1,244
  -1,275
  -1,303
  -1,329
  -1,352
  -1,374
  -1,394
  -1,411
  -1,427
  -1,440
  -1,329
  -1,338
  -1,345
  -1,350
  -1,352
  -1,352
  -1,349
  -1,343
  -1,334
  -1,322
  -1,307
  -1,289
  -1,266
  -1,240
  -1,210
  -1,175
  -1,136
  -1,092
  -1,042
  -988
EBITDA, $m
  -104
  -634
  -653
  -668
  -679
  -687
  -691
  -692
  -689
  -682
  -672
  -658
  -640
  -618
  -592
  -561
  -526
  -486
  -442
  -392
  -337
  -276
  -209
  -136
  -56
  30
  124
  226
  336
  454
  582
Interest expense (income), $m
  142
  153
  158
  163
  169
  176
  184
  192
  201
  211
  221
  233
  245
  258
  271
  286
  302
  318
  335
  354
  373
  394
  416
  438
  462
  488
  515
  543
  572
  604
  636
Earnings before tax, $m
  -582
  -1,398
  -1,433
  -1,466
  -1,498
  -1,528
  -1,558
  -1,586
  -1,612
  -1,638
  -1,662
  -1,562
  -1,583
  -1,603
  -1,621
  -1,638
  -1,653
  -1,667
  -1,678
  -1,688
  -1,696
  -1,701
  -1,704
  -1,705
  -1,703
  -1,698
  -1,690
  -1,679
  -1,664
  -1,646
  -1,624
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
  -1,398
  -1,433
  -1,466
  -1,498
  -1,528
  -1,558
  -1,586
  -1,612
  -1,638
  -1,662
  -1,562
  -1,583
  -1,603
  -1,621
  -1,638
  -1,653
  -1,667
  -1,678
  -1,688
  -1,696
  -1,701
  -1,704
  -1,705
  -1,703
  -1,698
  -1,690
  -1,679
  -1,664
  -1,646
  -1,624

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
  5,229
  5,350
  5,487
  5,641
  5,813
  6,000
  6,205
  6,426
  6,664
  6,920
  7,193
  7,485
  7,796
  8,127
  8,477
  8,849
  9,242
  9,658
  10,097
  10,561
  11,051
  11,567
  12,111
  12,684
  13,288
  13,924
  14,593
  15,297
  16,038
  16,817
Adjusted assets (=assets-cash), $m
  4,323
  5,229
  5,350
  5,487
  5,641
  5,813
  6,000
  6,205
  6,426
  6,664
  6,920
  7,193
  7,485
  7,796
  8,127
  8,477
  8,849
  9,242
  9,658
  10,097
  10,561
  11,051
  11,567
  12,111
  12,684
  13,288
  13,924
  14,593
  15,297
  16,038
  16,817
Revenue / Adjusted assets
  0.277
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
  0.410
Average production assets, $m
  2,033
  2,440
  2,496
  2,560
  2,632
  2,712
  2,800
  2,895
  2,998
  3,109
  3,229
  3,356
  3,493
  3,638
  3,792
  3,955
  4,129
  4,312
  4,506
  4,711
  4,928
  5,156
  5,397
  5,651
  5,918
  6,200
  6,497
  6,809
  7,137
  7,483
  7,847
Working capital, $m
  -1,910
  414
  423
  434
  446
  460
  475
  491
  508
  527
  548
  569
  592
  617
  643
  671
  700
  731
  764
  799
  836
  874
  915
  958
  1,004
  1,051
  1,102
  1,155
  1,210
  1,269
  1,331
Total debt, $m
  3,149
  2,869
  2,965
  3,076
  3,200
  3,338
  3,489
  3,654
  3,832
  4,024
  4,229
  4,450
  4,685
  4,935
  5,201
  5,483
  5,782
  6,099
  6,433
  6,787
  7,161
  7,555
  7,970
  8,408
  8,870
  9,356
  9,868
  10,406
  10,973
  11,570
  12,197
Total liabilities, $m
  3,741
  4,210
  4,306
  4,417
  4,541
  4,679
  4,830
  4,995
  5,173
  5,365
  5,570
  5,791
  6,026
  6,276
  6,542
  6,824
  7,123
  7,440
  7,774
  8,128
  8,502
  8,896
  9,311
  9,749
  10,211
  10,697
  11,209
  11,747
  12,314
  12,911
  13,538
Total equity, $m
  1,121
  1,020
  1,043
  1,070
  1,100
  1,133
  1,170
  1,210
  1,253
  1,299
  1,349
  1,403
  1,460
  1,520
  1,585
  1,653
  1,725
  1,802
  1,883
  1,969
  2,059
  2,155
  2,256
  2,362
  2,473
  2,591
  2,715
  2,846
  2,983
  3,127
  3,279
Total liabilities and equity, $m
  4,862
  5,230
  5,349
  5,487
  5,641
  5,812
  6,000
  6,205
  6,426
  6,664
  6,919
  7,194
  7,486
  7,796
  8,127
  8,477
  8,848
  9,242
  9,657
  10,097
  10,561
  11,051
  11,567
  12,111
  12,684
  13,288
  13,924
  14,593
  15,297
  16,038
  16,817
Debt-to-equity ratio
  2.809
  2.810
  2.840
  2.870
  2.910
  2.950
  2.980
  3.020
  3.060
  3.100
  3.130
  3.170
  3.210
  3.250
  3.280
  3.320
  3.350
  3.380
  3.420
  3.450
  3.480
  3.510
  3.530
  3.560
  3.590
  3.610
  3.630
  3.660
  3.680
  3.700
  3.720
Adjusted equity ratio
  0.135
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195
  0.195

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -573
  -1,398
  -1,433
  -1,466
  -1,498
  -1,528
  -1,558
  -1,586
  -1,612
  -1,638
  -1,662
  -1,562
  -1,583
  -1,603
  -1,621
  -1,638
  -1,653
  -1,667
  -1,678
  -1,688
  -1,696
  -1,701
  -1,704
  -1,705
  -1,703
  -1,698
  -1,690
  -1,679
  -1,664
  -1,646
  -1,624
Depreciation, amort., depletion, $m
  293
  611
  622
  635
  649
  665
  683
  702
  723
  745
  769
  671
  699
  728
  758
  791
  826
  862
  901
  942
  986
  1,031
  1,079
  1,130
  1,184
  1,240
  1,299
  1,362
  1,427
  1,497
  1,569
Funds from operations, $m
  553
  -787
  -810
  -831
  -848
  -863
  -875
  -884
  -890
  -893
  -893
  -890
  -884
  -875
  -863
  -847
  -828
  -804
  -777
  -746
  -710
  -670
  -625
  -575
  -519
  -458
  -390
  -317
  -237
  -149
  -55
Change in working capital, $m
  198
  8
  10
  11
  12
  14
  15
  16
  18
  19
  20
  22
  23
  25
  26
  28
  29
  31
  33
  35
  37
  39
  41
  43
  45
  48
  50
  53
  56
  59
  62
Cash from operations, $m
  355
  -1,015
  -820
  -842
  -861
  -877
  -890
  -900
  -907
  -912
  -913
  -912
  -908
  -900
  -889
  -875
  -857
  -836
  -810
  -781
  -747
  -709
  -666
  -618
  -564
  -505
  -441
  -370
  -292
  -208
  -116
Maintenance CAPEX, $m
  0
  -478
  -488
  -499
  -512
  -526
  -542
  -560
  -579
  -600
  -622
  -646
  -671
  -699
  -728
  -758
  -791
  -826
  -862
  -901
  -942
  -986
  -1,031
  -1,079
  -1,130
  -1,184
  -1,240
  -1,299
  -1,362
  -1,427
  -1,497
New CAPEX, $m
  -105
  -48
  -56
  -64
  -72
  -80
  -88
  -95
  -103
  -111
  -119
  -128
  -136
  -145
  -154
  -164
  -173
  -183
  -194
  -205
  -216
  -228
  -241
  -254
  -268
  -282
  -297
  -312
  -329
  -346
  -364
Cash from investing activities, $m
  -381
  -526
  -544
  -563
  -584
  -606
  -630
  -655
  -682
  -711
  -741
  -774
  -807
  -844
  -882
  -922
  -964
  -1,009
  -1,056
  -1,106
  -1,158
  -1,214
  -1,272
  -1,333
  -1,398
  -1,466
  -1,537
  -1,611
  -1,691
  -1,773
  -1,861
Free cash flow, $m
  -26
  -1,541
  -1,364
  -1,405
  -1,445
  -1,483
  -1,520
  -1,555
  -1,589
  -1,623
  -1,655
  -1,685
  -1,715
  -1,743
  -1,771
  -1,797
  -1,821
  -1,845
  -1,867
  -1,887
  -1,906
  -1,923
  -1,938
  -1,951
  -1,962
  -1,971
  -1,977
  -1,981
  -1,983
  -1,981
  -1,976
Issuance/(repayment) of debt, $m
  -37
  82
  97
  111
  124
  138
  151
  164
  178
  192
  206
  220
  235
  250
  266
  282
  299
  317
  335
  354
  373
  394
  416
  438
  462
  486
  512
  539
  567
  596
  627
Issuance/(repurchase) of shares, $m
  368
  1,167
  1,291
  1,321
  1,351
  1,378
  1,405
  1,430
  1,454
  1,477
  1,499
  1,518
  1,537
  1,554
  1,569
  1,583
  1,595
  1,605
  1,613
  1,619
  1,623
  1,624
  1,623
  1,619
  1,612
  1,603
  1,590
  1,573
  1,553
  1,529
  1,501
Cash from financing (excl. dividends), $m  
  176
  1,249
  1,388
  1,432
  1,475
  1,516
  1,556
  1,594
  1,632
  1,669
  1,705
  1,738
  1,772
  1,804
  1,835
  1,865
  1,894
  1,922
  1,948
  1,973
  1,996
  2,018
  2,039
  2,057
  2,074
  2,089
  2,102
  2,112
  2,120
  2,125
  2,128
Total cash flow (excl. dividends), $m
  154
  -1,460
  -1,267
  -1,294
  -1,320
  -1,345
  -1,369
  -1,391
  -1,411
  -1,431
  -1,449
  -1,465
  -1,480
  -1,493
  -1,505
  -1,515
  -1,522
  -1,528
  -1,532
  -1,533
  -1,532
  -1,528
  -1,522
  -1,513
  -1,500
  -1,485
  -1,466
  -1,443
  -1,416
  -1,385
  -1,349
Retained Cash Flow (-), $m
  191
  -20
  -23
  -27
  -30
  -33
  -37
  -40
  -43
  -46
  -50
  -53
  -57
  -61
  -64
  -68
  -72
  -77
  -81
  -86
  -90
  -95
  -101
  -106
  -112
  -118
  -124
  -130
  -137
  -144
  -152
Prev. year cash balance distribution, $m
 
  312
  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, %
 
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
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
  37.5
  13.3
  4.8
  1.7
  0.6
  0.2
  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
  0.0
  0.0

CGG, a geoscience company, provides data imaging, seismic data characterization, geoscience, and petroleum engineering consulting services to the oil and gas exploration and production industry in North America, the Central and South Americas, Europe, Africa, the Middle East, and the Asia Pacific. The company’s Contractual Data Acquisition segment offers geophysical acquisition services, including land, marine, airborne, and seabed. It provides marine seismic 2D and 3D, and marine seismic contract data acquisition and multi-client surveys services. As of December 31, 2015, this segment had a fleet of eight 3D high capacity vessels, one source vessel, and one 3D/2D vessel of lower capacity. It is also involved in the acquisition and onsite processing of seismic data acquired on land areas; acquisition, processing, and interpretation of airborne geophysical data on land or offshore; collection, processing, and interpretation of data related to the earth’s surface and the soils; and in-house acquisition and data processing of marine gravity and bathymetry. Its Geology, Geophysics & Reservoir segment develops and licenses multi-client seismic surveys; processes seismic data; sells seismic data processing and reservoir characterization software under geovation, Hampson-Russell, Jason, Insight Earth, and Velpro brands; offers geoscience and petroleum engineering consulting services; collects, develops, and licenses geological data; and provides data management services and software. The company’s Equipment segment develops and produces seismic equipment in the land and marine seismic markets, and offers customer support services. This segment offers geophysical equipment for seismic data acquisition, including seismic recording equipment, software, and seismic sources for land or marine. The company was formerly known as Compagnie Générale de Géophysique — Veritas SA and changed its name to CGG in 2013. CGG was founded in 1931 and is headquartered in Paris, France.

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 $2102 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 2% 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 8.9%, 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 53.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2185 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 5.5% 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 113.8%.

Life of production assets of 3.1 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 19.3%. 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 - $1312 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 22.119 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.


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COMPANY NEWS

▶ 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]
▶ CGG: Trading and Financial Strategy update   [Jan-05-17 01:35AM  GlobeNewswire]
▶ CGG: Trading and Financial Strategy update   [01:31AM  GlobeNewswire]
▶ CGG: Sercel Sells 10,000 UNITE Nodes to NIS   [01:34AM  GlobeNewswire]
▶ CGG: Awarded Multi-Client Projects Offshore Mozambique   [Oct-13-16 01:35AM  GlobeNewswire]
Stock chart of CGG Financial statements of CGG Annual reports 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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