Intrinsic value of CVR Energy - CVI

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$20.24

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of CVI 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 1.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -11.98
  33.80
  30.92
  28.33
  26.00
  23.90
  22.01
  20.31
  18.77
  17.40
  16.16
  15.04
  14.04
  13.13
  12.32
  11.59
  10.93
  10.34
  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
Revenue, $m
  4,782
  6,398
  8,377
  10,750
  13,544
  16,780
  20,473
  24,630
  29,255
  34,344
  39,893
  45,894
  52,337
  59,211
  66,506
  74,213
  82,324
  90,834
  99,738
  109,036
  118,730
  128,824
  139,325
  150,242
  161,589
  173,381
  185,635
  198,371
  211,611
  225,382
  239,708
Variable operating expenses, $m
 
  3,095
  4,051
  5,198
  6,548
  8,111
  9,896
  11,904
  14,138
  16,597
  19,278
  22,173
  25,286
  28,607
  32,132
  35,855
  39,774
  43,886
  48,188
  52,680
  57,364
  62,240
  67,314
  72,588
  78,071
  83,768
  89,688
  95,841
  102,239
  108,891
  115,813
Fixed operating expenses, $m
 
  2,503
  2,566
  2,630
  2,696
  2,763
  2,832
  2,903
  2,975
  3,050
  3,126
  3,204
  3,284
  3,366
  3,450
  3,537
  3,625
  3,716
  3,809
  3,904
  4,002
  4,102
  4,204
  4,309
  4,417
  4,527
  4,641
  4,757
  4,875
  4,997
  5,122
Total operating expenses, $m
  4,696
  5,598
  6,617
  7,828
  9,244
  10,874
  12,728
  14,807
  17,113
  19,647
  22,404
  25,377
  28,570
  31,973
  35,582
  39,392
  43,399
  47,602
  51,997
  56,584
  61,366
  66,342
  71,518
  76,897
  82,488
  88,295
  94,329
  100,598
  107,114
  113,888
  120,935
Operating income, $m
  86
  800
  1,760
  2,922
  4,301
  5,906
  7,746
  9,824
  12,141
  14,697
  17,489
  20,517
  23,766
  27,237
  30,923
  34,821
  38,925
  43,232
  47,742
  52,452
  57,365
  62,482
  67,807
  73,345
  79,102
  85,086
  91,306
  97,773
  104,498
  111,493
  118,773
EBITDA, $m
  279
  1,058
  2,097
  3,354
  4,843
  6,577
  8,564
  10,807
  13,308
  16,067
  19,079
  22,341
  25,847
  29,591
  33,567
  37,771
  42,197
  46,843
  51,707
  56,787
  62,085
  67,603
  73,346
  79,317
  85,526
  91,979
  98,686
  105,659
  112,910
  120,453
  128,302
Interest expense (income), $m
  77
  98
  165
  269
  393
  539
  709
  902
  1,120
  1,362
  1,629
  1,920
  2,234
  2,572
  2,932
  3,314
  3,718
  4,143
  4,589
  5,055
  5,542
  6,050
  6,579
  7,129
  7,701
  8,296
  8,913
  9,555
  10,223
  10,916
  11,638
Earnings before tax, $m
  -11
  702
  1,595
  2,654
  3,908
  5,367
  7,037
  8,921
  11,021
  13,335
  15,860
  18,597
  21,532
  24,665
  27,992
  31,507
  35,207
  39,089
  43,153
  47,397
  51,823
  56,432
  61,228
  66,216
  71,401
  76,790
  82,393
  88,218
  94,275
  100,577
  107,135
Tax expense, $m
  -20
  190
  431
  716
  1,055
  1,449
  1,900
  2,409
  2,976
  3,600
  4,282
  5,021
  5,814
  6,660
  7,558
  8,507
  9,506
  10,554
  11,651
  12,797
  13,992
  15,237
  16,532
  17,878
  19,278
  20,733
  22,246
  23,819
  25,454
  27,156
  28,926
Net income, $m
  25
  513
  1,164
  1,937
  2,853
  3,918
  5,137
  6,512
  8,045
  9,734
  11,578
  13,576
  15,719
  18,006
  20,434
  23,000
  25,701
  28,535
  31,502
  34,600
  37,831
  41,195
  44,696
  48,337
  52,123
  56,057
  60,147
  64,399
  68,821
  73,421
  78,208

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  736
  0
  0
  0
  0
  0
  0
  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
  4,050
  4,434
  5,805
  7,449
  9,386
  11,629
  14,188
  17,069
  20,274
  23,801
  27,646
  31,805
  36,269
  41,033
  46,089
  51,429
  57,051
  62,948
  69,118
  75,562
  82,280
  89,275
  96,552
  104,118
  111,982
  120,153
  128,645
  137,471
  146,647
  156,190
  166,118
Adjusted assets (=assets-cash), $m
  3,314
  4,434
  5,805
  7,449
  9,386
  11,629
  14,188
  17,069
  20,274
  23,801
  27,646
  31,805
  36,269
  41,033
  46,089
  51,429
  57,051
  62,948
  69,118
  75,562
  82,280
  89,275
  96,552
  104,118
  111,982
  120,153
  128,645
  137,471
  146,647
  156,190
  166,118
Revenue / Adjusted assets
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
  1.443
Average production assets, $m
  2,320
  3,103
  4,063
  5,214
  6,569
  8,139
  9,929
  11,946
  14,189
  16,657
  19,348
  22,259
  25,383
  28,717
  32,255
  35,993
  39,927
  44,054
  48,373
  52,883
  57,584
  62,480
  67,572
  72,868
  78,371
  84,090
  90,033
  96,210
  102,632
  109,310
  116,258
Working capital, $m
  750
  19
  25
  32
  41
  50
  61
  74
  88
  103
  120
  138
  157
  178
  200
  223
  247
  273
  299
  327
  356
  386
  418
  451
  485
  520
  557
  595
  635
  676
  719
Total debt, $m
  1,165
  1,964
  3,198
  4,678
  6,420
  8,439
  10,742
  13,335
  16,219
  19,394
  22,855
  26,597
  30,615
  34,903
  39,453
  44,260
  49,319
  54,626
  60,180
  65,979
  72,025
  78,321
  84,870
  91,679
  98,756
  106,111
  113,754
  121,697
  129,955
  138,544
  147,479
Total liabilities, $m
  3,192
  3,991
  5,225
  6,705
  8,447
  10,466
  12,769
  15,362
  18,246
  21,421
  24,882
  28,624
  32,642
  36,930
  41,480
  46,287
  51,346
  56,653
  62,207
  68,006
  74,052
  80,348
  86,897
  93,706
  100,783
  108,138
  115,781
  123,724
  131,982
  140,571
  149,506
Total equity, $m
  858
  443
  581
  745
  939
  1,163
  1,419
  1,707
  2,027
  2,380
  2,765
  3,180
  3,627
  4,103
  4,609
  5,143
  5,705
  6,295
  6,912
  7,556
  8,228
  8,928
  9,655
  10,412
  11,198
  12,015
  12,865
  13,747
  14,665
  15,619
  16,612
Total liabilities and equity, $m
  4,050
  4,434
  5,806
  7,450
  9,386
  11,629
  14,188
  17,069
  20,273
  23,801
  27,647
  31,804
  36,269
  41,033
  46,089
  51,430
  57,051
  62,948
  69,119
  75,562
  82,280
  89,276
  96,552
  104,118
  111,981
  120,153
  128,646
  137,471
  146,647
  156,190
  166,118
Debt-to-equity ratio
  1.358
  4.430
  5.510
  6.280
  6.840
  7.260
  7.570
  7.810
  8.000
  8.150
  8.270
  8.360
  8.440
  8.510
  8.560
  8.610
  8.640
  8.680
  8.710
  8.730
  8.750
  8.770
  8.790
  8.810
  8.820
  8.830
  8.840
  8.850
  8.860
  8.870
  8.880
Adjusted equity ratio
  0.037
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  513
  1,164
  1,937
  2,853
  3,918
  5,137
  6,512
  8,045
  9,734
  11,578
  13,576
  15,719
  18,006
  20,434
  23,000
  25,701
  28,535
  31,502
  34,600
  37,831
  41,195
  44,696
  48,337
  52,123
  56,057
  60,147
  64,399
  68,821
  73,421
  78,208
Depreciation, amort., depletion, $m
  193
  258
  337
  431
  543
  671
  818
  983
  1,167
  1,369
  1,590
  1,824
  2,081
  2,354
  2,644
  2,950
  3,273
  3,611
  3,965
  4,335
  4,720
  5,121
  5,539
  5,973
  6,424
  6,893
  7,380
  7,886
  8,412
  8,960
  9,529
Funds from operations, $m
  348
  771
  1,501
  2,369
  3,395
  4,589
  5,955
  7,496
  9,212
  11,104
  13,168
  15,400
  17,799
  20,360
  23,078
  25,950
  28,974
  32,146
  35,467
  38,935
  42,551
  46,317
  50,235
  54,310
  58,546
  62,950
  67,527
  72,285
  77,233
  82,381
  87,738
Change in working capital, $m
  80
  5
  6
  7
  8
  10
  11
  12
  14
  15
  17
  18
  19
  21
  22
  23
  24
  26
  27
  28
  29
  30
  32
  33
  34
  35
  37
  38
  40
  41
  43
Cash from operations, $m
  268
  1,119
  1,495
  2,361
  3,387
  4,579
  5,944
  7,483
  9,198
  11,089
  13,151
  15,382
  17,780
  20,339
  23,056
  25,927
  28,949
  32,121
  35,440
  38,907
  42,522
  46,286
  50,204
  54,277
  58,512
  62,914
  67,490
  72,247
  77,193
  82,339
  87,695
Maintenance CAPEX, $m
  0
  -190
  -254
  -333
  -427
  -538
  -667
  -814
  -979
  -1,163
  -1,365
  -1,586
  -1,824
  -2,081
  -2,354
  -2,644
  -2,950
  -3,273
  -3,611
  -3,965
  -4,335
  -4,720
  -5,121
  -5,539
  -5,973
  -6,424
  -6,893
  -7,380
  -7,886
  -8,412
  -8,960
New CAPEX, $m
  -133
  -784
  -960
  -1,151
  -1,355
  -1,570
  -1,791
  -2,016
  -2,243
  -2,468
  -2,691
  -2,910
  -3,125
  -3,334
  -3,538
  -3,738
  -3,934
  -4,127
  -4,319
  -4,510
  -4,702
  -4,895
  -5,093
  -5,295
  -5,503
  -5,719
  -5,943
  -6,177
  -6,422
  -6,678
  -6,948
Cash from investing activities, $m
  -201
  -974
  -1,214
  -1,484
  -1,782
  -2,108
  -2,458
  -2,830
  -3,222
  -3,631
  -4,056
  -4,496
  -4,949
  -5,415
  -5,892
  -6,382
  -6,884
  -7,400
  -7,930
  -8,475
  -9,037
  -9,615
  -10,214
  -10,834
  -11,476
  -12,143
  -12,836
  -13,557
  -14,308
  -15,090
  -15,908
Free cash flow, $m
  67
  145
  282
  878
  1,604
  2,471
  3,486
  4,653
  5,977
  7,457
  9,095
  10,886
  12,831
  14,925
  17,164
  19,545
  22,065
  24,721
  27,510
  30,432
  33,485
  36,671
  39,989
  43,444
  47,036
  50,771
  54,654
  58,690
  62,886
  67,248
  71,787
Issuance/(repayment) of debt, $m
  131
  801
  1,234
  1,480
  1,743
  2,019
  2,303
  2,593
  2,884
  3,174
  3,461
  3,743
  4,018
  4,287
  4,550
  4,807
  5,059
  5,307
  5,554
  5,799
  6,046
  6,295
  6,549
  6,809
  7,077
  7,354
  7,643
  7,943
  8,258
  8,588
  8,935
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  79
  801
  1,234
  1,480
  1,743
  2,019
  2,303
  2,593
  2,884
  3,174
  3,461
  3,743
  4,018
  4,287
  4,550
  4,807
  5,059
  5,307
  5,554
  5,799
  6,046
  6,295
  6,549
  6,809
  7,077
  7,354
  7,643
  7,943
  8,258
  8,588
  8,935
Total cash flow (excl. dividends), $m
  145
  946
  1,515
  2,358
  3,347
  4,490
  5,789
  7,246
  8,861
  10,632
  12,556
  14,629
  16,849
  19,212
  21,714
  24,352
  27,124
  30,028
  33,064
  36,231
  39,531
  42,966
  46,539
  50,253
  54,113
  58,126
  62,297
  66,633
  71,144
  75,837
  80,722
Retained Cash Flow (-), $m
  126
  -319
  -137
  -164
  -194
  -224
  -256
  -288
  -320
  -353
  -385
  -416
  -446
  -476
  -506
  -534
  -562
  -590
  -617
  -644
  -672
  -699
  -728
  -757
  -786
  -817
  -849
  -883
  -918
  -954
  -993
Prev. year cash balance distribution, $m
 
  734
  0
  0
  0
  0
  0
  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
 
  1,360
  1,378
  2,193
  3,153
  4,265
  5,533
  6,958
  8,540
  10,279
  12,171
  14,213
  16,402
  18,735
  21,208
  23,818
  26,562
  29,439
  32,447
  35,587
  38,860
  42,267
  45,811
  49,496
  53,327
  57,309
  61,448
  65,751
  70,226
  74,883
  79,729
Discount rate, %
 
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
 
  1,298
  1,249
  1,879
  2,540
  3,212
  3,873
  4,497
  5,063
  5,548
  5,935
  6,209
  6,364
  6,395
  6,305
  6,102
  5,798
  5,411
  4,957
  4,459
  3,937
  3,410
  2,896
  2,411
  1,966
  1,569
  1,224
  934
  695
  505
  357
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

CVR Energy, Inc., through its subsidiaries, engages in petroleum refining and nitrogen fertilizer manufacturing activities in the United States. The company operates in two segments, Petroleum and Nitrogen Fertilizer. The Petroleum segment refines and markets transportation fuels, such as gasoline, diesel fuel, pet coke, natural gas liquids, slurry, sulfur, gas oil, asphalt, jet fuel, and other products. This segment owns and operates a coking medium-sour crude oil refinery in Coffeyville, Kansas; a crude oil refinery in Wynnewood, Oklahoma; and a crude oil gathering system serving Kansas, Nebraska, Oklahoma, Missouri, Colorado, and Texas. It also owns a proprietary pipeline system that transports crude oil from Caney, Kansas to its refinery; and supplies products through tanker trucks directly to customers located in Coffeyville, Kansas, and Wynnewood, Oklahoma, as well as to customers at throughput terminals on Magellan Midstream Partners, L.P. and NuStar Energy, LP’s refined products distribution systems. This segment primarily serves retailers, railroads, farm co-operatives, and other refiners/marketers. The Nitrogen Fertilizer segment operates a nitrogen fertilizer plant in North America that utilizes a pet coke gasification process to produce nitrogen fertilizer products. It markets UAN, an aqueous solution of urea and ammonium nitrate to agricultural customers; and ammonia products to agricultural and industrial customers. CVR Energy, Inc. was founded in 1906 and is headquartered in Sugar Land, Texas.

FINANCIAL RATIOS  of  CVR Energy (CVI)

Valuation Ratios
P/E Ratio 70.3
Price to Sales 0.4
Price to Book 2
Price to Tangible Book
Price to Cash Flow 6.6
Price to Free Cash Flow 13
Growth Rates
Sales Growth Rate -12%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -39.3%
Cap. Spend. - 3 Yr. Gr. Rate -12.3%
Financial Strength
Quick Ratio 368
Current Ratio 0
LT Debt to Equity 135.5%
Total Debt to Equity 135.8%
Interest Coverage 1
Management Effectiveness
Return On Assets -1%
Ret/ On Assets - 3 Yr. Avg. 3.6%
Return On Total Capital 1.4%
Ret/ On T. Cap. - 3 Yr. Avg. 7.2%
Return On Equity 2.7%
Return On Equity - 3 Yr. Avg. 12%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 8.2%
Gross Margin - 3 Yr. Avg. 8.7%
EBITDA Margin 5.4%
EBITDA Margin - 3 Yr. Avg. 7.6%
Operating Margin 1.8%
Oper. Margin - 3 Yr. Avg. 4.2%
Pre-Tax Margin -0.2%
Pre-Tax Margin - 3 Yr. Avg. 3.8%
Net Profit Margin 0.5%
Net Profit Margin - 3 Yr. Avg. 1.9%
Effective Tax Rate 181.8%
Eff/ Tax Rate - 3 Yr. Avg. 76%
Payout Ratio 696%

CVI stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CVI stock intrinsic value calculation we used $4782 million for the last fiscal year's total revenue generated by CVR Energy. The default revenue input number comes from 2016 income statement of CVR Energy. 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 CVI stock valuation model: a) initial revenue growth rate of 33.8% 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 4.8%, whose default value for CVI is calculated based on our internal credit rating of CVR Energy, 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 CVR Energy.
    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 CVI stock the variable cost ratio is equal to 48.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2442 million in the base year in the intrinsic value calculation for CVI 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 8.4% for CVR Energy.

Corporate tax rate of 27% is the nominal tax rate for CVR Energy. 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 CVI 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 CVI are equal to 48.5%.

Life of production assets of 12.2 years is the average useful life of capital assets used in CVR Energy 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 CVI is equal to 0.3%. 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 - $858 million for CVR Energy - 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 89.945 million for CVR Energy 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 CVR Energy at the current share price and the inputted number of shares is $1.8 billion.


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COMPANY NEWS

▶ ETFs with exposure to CVR Energy, Inc. : June 15, 2017   [Jun-15-17 01:39PM  Capital Cube]
▶ Why Shares of CVR Energy Declined 12% in May   [Jun-09-17 11:47AM  Motley Fool]
▶ How Icahn Reaped a $60M Windfall as Special Trump Adviser   [May-24-17 03:41PM  Bloomberg Video]
▶ Warren furthers fight against Carl Icahn, alleging insider trading   [May-10-17 02:25PM  American City Business Journals]
▶ ETFs with exposure to CVR Energy, Inc. : May 4, 2017   [May-04-17 03:51PM  Capital Cube]
▶ CVR Energy Trades Ex-Dividend Thursday   [May-02-17 10:20AM  Investopedia]
▶ Oil and Gas Stock Roundup: Refining Comes Roaring Back   [Apr-29-17 04:29PM  Motley Fool]
▶ CVR posts 1Q profit   [Apr-27-17 09:12AM  Associated Press]
▶ CVR Energy Announces 2017 First Quarter Earnings Call   [Apr-13-17 09:00AM  PR Newswire]
▶ [$$] Icahnt Believe Its an Ethics Conflict   [Apr-01-17 12:07AM  The Wall Street Journal]
▶ [$$] Icahnt Believe Its an Ethics Conflict   [12:07AM  at The Wall Street Journal]
▶ [$$] Icahn't Believe It's an Ethics Conflict   [Mar-31-17 07:06PM  at The Wall Street Journal]
▶ Mortgage Relief and Fear Gauges   [Mar-17-17 09:33AM  Bloomberg]
▶ Watchdog group wants Icahn investigated for his role with Trump   [Mar-08-17 02:00PM  at bizjournals.com]
▶ Watchdog group wants Icahn investigated for his role with Trump   [02:00PM  American City Business Journals]
▶ CVR Energy's Earnings Keep Pointing Toward a Dividend Cut   [Feb-22-17 11:48AM  at Motley Fool]
▶ Merger Goofs and Disgruntled Quants   [09:06AM  at Bloomberg]
▶ Trump could lead to a surge in shareholder activism   [Feb-13-17 03:47PM  at MarketWatch]
▶ CVR Energy Announces 2016 Fourth Quarter Earnings Call   [Feb-02-17 09:00AM  PR Newswire]
▶ 3 Tempting Stocks to Avoid   [Dec-13-16 11:38AM  at Motley Fool]
Stock chart of CVI Financial statements of CVI Annual reports of CVI
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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