Intrinsic value of CVR Energy - CVI

Previous Close

$22.41

  Intrinsic Value

$5,977

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+1465%

Previous close

$22.41

 
Intrinsic value

$5,977

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+1465%

*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 2.0

 

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
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  4,782
  7,651
  11,821
  17,678
  25,651
  36,189
  49,752
  66,782
  87,688
  112,834
  142,518
  176,975
  216,369
  260,797
  310,297
  364,855
  424,414
  488,889
  558,176
  632,164
  710,740
  793,802
  881,263
  973,058
  1,069,143
  1,169,506
  1,274,158
  1,383,144
  1,496,538
  1,614,441
  1,736,987
Variable operating expenses, $m
 
  3,701
  5,715
  8,545
  12,397
  17,489
  24,041
  32,269
  42,370
  54,519
  68,861
  85,504
  104,537
  126,002
  149,918
  176,277
  205,052
  236,203
  269,679
  305,425
  343,389
  383,519
  425,776
  470,126
  516,549
  565,038
  615,600
  668,256
  723,041
  780,005
  839,212
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
  6,204
  8,281
  11,175
  15,093
  20,252
  26,873
  35,172
  45,345
  57,569
  71,987
  88,708
  107,821
  129,368
  153,368
  179,814
  208,677
  239,919
  273,488
  309,329
  347,391
  387,621
  429,980
  474,435
  520,966
  569,565
  620,241
  673,013
  727,916
  785,002
  844,334
Operating income, $m
  86
  1,447
  3,540
  6,503
  10,558
  15,938
  22,879
  31,610
  42,343
  55,265
  70,531
  88,267
  108,548
  131,429
  156,929
  185,041
  215,736
  248,970
  284,689
  322,835
  363,350
  406,181
  451,283
  498,623
  548,178
  599,940
  653,918
  710,132
  768,621
  829,439
  892,652
EBITDA, $m
  279
  1,756
  4,014
  7,210
  11,582
  17,380
  24,860
  34,269
  45,833
  59,755
  76,201
  95,302
  117,149
  141,796
  169,265
  199,546
  232,608
  268,405
  306,879
  347,966
  391,604
  437,738
  486,317
  537,306
  590,681
  646,433
  704,571
  765,118
  828,115
  893,619
  961,704
Interest expense (income), $m
  77
  98
  251
  481
  803
  1,242
  1,822
  2,569
  3,507
  4,658
  6,043
  7,677
  9,574
  11,743
  14,190
  16,915
  19,919
  23,199
  26,749
  30,564
  34,638
  38,964
  43,538
  48,354
  53,408
  58,699
  64,225
  69,987
  75,988
  82,232
  88,724
Earnings before tax, $m
  -11
  1,350
  3,289
  6,023
  9,755
  14,696
  21,056
  29,040
  38,836
  50,607
  64,489
  80,590
  98,973
  119,685
  142,739
  168,126
  195,817
  225,771
  257,940
  292,271
  328,712
  367,216
  407,745
  450,269
  494,770
  541,241
  589,693
  640,145
  692,633
  747,207
  803,928
Tax expense, $m
  -20
  364
  888
  1,626
  2,634
  3,968
  5,685
  7,841
  10,486
  13,664
  17,412
  21,759
  26,723
  32,315
  38,540
  45,394
  52,871
  60,958
  69,644
  78,913
  88,752
  99,148
  110,091
  121,573
  133,588
  146,135
  159,217
  172,839
  187,011
  201,746
  217,061
Net income, $m
  25
  985
  2,401
  4,397
  7,121
  10,728
  15,371
  21,200
  28,350
  36,943
  47,077
  58,830
  72,251
  87,370
  104,200
  122,732
  142,946
  164,813
  188,296
  213,358
  239,960
  268,068
  297,654
  328,696
  361,182
  395,106
  430,476
  467,306
  505,622
  545,461
  586,868

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
  5,573
  8,610
  12,876
  18,682
  26,358
  36,236
  48,639
  63,866
  82,180
  103,800
  128,897
  157,588
  189,947
  226,000
  265,735
  309,114
  356,073
  406,538
  460,425
  517,655
  578,151
  641,852
  708,709
  778,692
  851,789
  928,010
  1,007,389
  1,089,977
  1,175,849
  1,265,103
Adjusted assets (=assets-cash), $m
  3,314
  5,573
  8,610
  12,876
  18,682
  26,358
  36,236
  48,639
  63,866
  82,180
  103,800
  128,897
  157,588
  189,947
  226,000
  265,735
  309,114
  356,073
  406,538
  460,425
  517,655
  578,151
  641,852
  708,709
  778,692
  851,789
  928,010
  1,007,389
  1,089,977
  1,175,849
  1,265,103
Revenue / Adjusted assets
  1.443
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
  1.373
Average production assets, $m
  2,320
  3,711
  5,733
  8,574
  12,441
  17,552
  24,130
  32,389
  42,529
  54,724
  69,121
  85,833
  104,939
  126,487
  150,494
  176,954
  205,841
  237,111
  270,716
  306,599
  344,709
  384,994
  427,413
  471,933
  518,535
  567,210
  617,967
  670,825
  725,821
  783,004
  842,439
Working capital, $m
  750
  23
  35
  53
  77
  109
  149
  200
  263
  339
  428
  531
  649
  782
  931
  1,095
  1,273
  1,467
  1,675
  1,896
  2,132
  2,381
  2,644
  2,919
  3,207
  3,509
  3,822
  4,149
  4,490
  4,843
  5,211
Total debt, $m
  1,165
  2,988
  5,722
  9,561
  14,787
  21,695
  30,585
  41,748
  55,453
  71,935
  91,393
  113,980
  139,803
  168,925
  201,373
  237,135
  276,176
  318,439
  363,857
  412,356
  463,862
  518,309
  575,640
  635,811
  698,795
  764,583
  833,182
  904,623
  978,952
  1,056,238
  1,136,566
Total liabilities, $m
  3,192
  5,015
  7,749
  11,588
  16,814
  23,722
  32,612
  43,775
  57,480
  73,962
  93,420
  116,007
  141,830
  170,952
  203,400
  239,162
  278,203
  320,466
  365,884
  414,383
  465,889
  520,336
  577,667
  637,838
  700,822
  766,610
  835,209
  906,650
  980,979
  1,058,265
  1,138,593
Total equity, $m
  858
  557
  861
  1,288
  1,868
  2,636
  3,624
  4,864
  6,387
  8,218
  10,380
  12,890
  15,759
  18,995
  22,600
  26,574
  30,911
  35,607
  40,654
  46,043
  51,765
  57,815
  64,185
  70,871
  77,869
  85,179
  92,801
  100,739
  108,998
  117,585
  126,510
Total liabilities and equity, $m
  4,050
  5,572
  8,610
  12,876
  18,682
  26,358
  36,236
  48,639
  63,867
  82,180
  103,800
  128,897
  157,589
  189,947
  226,000
  265,736
  309,114
  356,073
  406,538
  460,426
  517,654
  578,151
  641,852
  708,709
  778,691
  851,789
  928,010
  1,007,389
  1,089,977
  1,175,850
  1,265,103
Debt-to-equity ratio
  1.358
  5.360
  6.650
  7.430
  7.920
  8.230
  8.440
  8.580
  8.680
  8.750
  8.800
  8.840
  8.870
  8.890
  8.910
  8.920
  8.930
  8.940
  8.950
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
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
  985
  2,401
  4,397
  7,121
  10,728
  15,371
  21,200
  28,350
  36,943
  47,077
  58,830
  72,251
  87,370
  104,200
  122,732
  142,946
  164,813
  188,296
  213,358
  239,960
  268,068
  297,654
  328,696
  361,182
  395,106
  430,476
  467,306
  505,622
  545,461
  586,868
Depreciation, amort., depletion, $m
  193
  308
  474
  707
  1,024
  1,443
  1,982
  2,659
  3,490
  4,490
  5,670
  7,035
  8,602
  10,368
  12,336
  14,504
  16,872
  19,435
  22,190
  25,131
  28,255
  31,557
  35,034
  38,683
  42,503
  46,493
  50,653
  54,986
  59,494
  64,181
  69,052
Funds from operations, $m
  348
  1,294
  2,875
  5,103
  8,145
  12,171
  17,353
  23,858
  31,840
  41,433
  52,747
  65,866
  80,852
  97,738
  116,535
  137,236
  159,818
  184,248
  210,486
  238,489
  268,214
  299,625
  332,688
  367,380
  403,685
  441,599
  481,129
  522,291
  565,116
  609,641
  655,920
Change in working capital, $m
  80
  9
  13
  18
  24
  32
  41
  51
  63
  75
  89
  103
  118
  133
  149
  164
  179
  193
  208
  222
  236
  249
  262
  275
  288
  301
  314
  327
  340
  354
  368
Cash from operations, $m
  268
  1,285
  2,863
  5,086
  8,121
  12,139
  17,312
  23,807
  31,778
  41,357
  52,658
  65,763
  80,734
  97,605
  116,387
  137,073
  159,640
  184,055
  210,278
  238,267
  267,979
  299,376
  332,426
  367,104
  403,396
  441,298
  480,815
  521,964
  564,775
  609,288
  655,552
Maintenance CAPEX, $m
  0
  -190
  -304
  -470
  -703
  -1,020
  -1,439
  -1,978
  -2,655
  -3,486
  -4,486
  -5,666
  -7,035
  -8,602
  -10,368
  -12,336
  -14,504
  -16,872
  -19,435
  -22,190
  -25,131
  -28,255
  -31,557
  -35,034
  -38,683
  -42,503
  -46,493
  -50,653
  -54,986
  -59,494
  -64,181
New CAPEX, $m
  -133
  -1,391
  -2,022
  -2,841
  -3,866
  -5,111
  -6,578
  -8,259
  -10,140
  -12,195
  -14,397
  -16,712
  -19,106
  -21,548
  -24,008
  -26,460
  -28,886
  -31,270
  -33,604
  -35,884
  -38,109
  -40,285
  -42,419
  -44,520
  -46,602
  -48,676
  -50,756
  -52,858
  -54,996
  -57,183
  -59,434
Cash from investing activities, $m
  -201
  -1,581
  -2,326
  -3,311
  -4,569
  -6,131
  -8,017
  -10,237
  -12,795
  -15,681
  -18,883
  -22,378
  -26,141
  -30,150
  -34,376
  -38,796
  -43,390
  -48,142
  -53,039
  -58,074
  -63,240
  -68,540
  -73,976
  -79,554
  -85,285
  -91,179
  -97,249
  -103,511
  -109,982
  -116,677
  -123,615
Free cash flow, $m
  67
  -296
  536
  1,775
  3,552
  6,008
  9,296
  13,570
  18,983
  25,676
  33,775
  43,385
  54,592
  67,455
  82,011
  98,277
  116,249
  135,912
  157,238
  180,193
  204,738
  230,836
  258,450
  287,550
  318,112
  350,119
  383,566
  418,453
  454,794
  492,611
  531,937
Issuance/(repayment) of debt, $m
  131
  1,825
  2,733
  3,839
  5,226
  6,908
  8,890
  11,163
  13,704
  16,483
  19,458
  22,587
  25,823
  29,123
  32,447
  35,762
  39,041
  42,263
  45,418
  48,499
  51,506
  54,447
  57,331
  60,171
  62,984
  65,787
  68,600
  71,440
  74,329
  77,286
  80,328
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
  1,825
  2,733
  3,839
  5,226
  6,908
  8,890
  11,163
  13,704
  16,483
  19,458
  22,587
  25,823
  29,123
  32,447
  35,762
  39,041
  42,263
  45,418
  48,499
  51,506
  54,447
  57,331
  60,171
  62,984
  65,787
  68,600
  71,440
  74,329
  77,286
  80,328
Total cash flow (excl. dividends), $m
  145
  1,529
  3,269
  5,615
  8,777
  12,916
  18,186
  24,733
  32,687
  42,159
  53,233
  65,972
  80,415
  96,578
  114,459
  134,039
  155,290
  178,176
  202,656
  228,692
  256,245
  285,283
  315,781
  347,721
  381,096
  415,907
  452,165
  489,893
  529,123
  569,897
  612,265
Retained Cash Flow (-), $m
  126
  -264
  -304
  -427
  -581
  -768
  -988
  -1,240
  -1,523
  -1,831
  -2,162
  -2,510
  -2,869
  -3,236
  -3,605
  -3,974
  -4,338
  -4,696
  -5,046
  -5,389
  -5,723
  -6,050
  -6,370
  -6,686
  -6,998
  -7,310
  -7,622
  -7,938
  -8,259
  -8,587
  -8,925
Prev. year cash balance distribution, $m
 
  565
  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
 
  1,830
  2,966
  5,188
  8,197
  12,148
  17,198
  23,493
  31,165
  40,327
  51,071
  63,462
  77,546
  93,342
  110,853
  130,065
  150,952
  173,480
  197,610
  223,303
  250,522
  279,233
  309,411
  341,035
  374,098
  408,597
  444,543
  481,955
  520,864
  561,309
  603,340
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
 
  1,746
  2,688
  4,444
  6,602
  9,149
  12,038
  15,185
  18,475
  21,767
  24,903
  27,726
  30,086
  31,860
  32,955
  33,322
  32,953
  31,884
  30,191
  27,980
  25,378
  22,525
  19,559
  16,610
  13,789
  11,184
  8,856
  6,843
  5,155
  3,782
  2,701
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 77.8
Price to Sales 0.4
Price to Book 2.3
Price to Tangible Book
Price to Cash Flow 7.3
Price to Free Cash Flow 14.4
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 60% 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 $2.0 billion.

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COMPANY NEWS

▶ CVR Energy Announces 2017 Second Quarter Earnings Call   [Jul-13-17 08:30AM  PR Newswire]
▶ Refiners Tumble on Proposed Biofuel Quotas   [Jul-06-17 04:01PM  GuruFocus.com]
▶ 3 Embarrassingly Unsustainable Dividend Stocks   [Jun-25-17 01:24PM  Motley Fool]
▶ 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]
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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