Intrinsic value of CVR Refining - CVRR

Previous Close

$9.15

  Intrinsic Value

$2,451

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+1534%

Previous close

$9.15

 
Intrinsic value

$2,451

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+1534%

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

We calculate the intrinsic value of CVRR 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 1.4

 

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, %
  -14.16
  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
  4,431
  7,090
  10,953
  16,381
  23,768
  33,533
  46,100
  61,880
  81,252
  104,552
  132,057
  163,985
  200,487
  241,655
  287,521
  338,074
  393,261
  453,004
  517,206
  585,763
  658,571
  735,537
  816,578
  901,635
  990,668
  1,083,664
  1,180,635
  1,281,621
  1,386,692
  1,495,941
  1,609,491
Variable operating expenses, $m
 
  4,325
  6,682
  9,992
  14,498
  20,455
  28,121
  37,747
  49,564
  63,776
  80,555
  100,031
  122,297
  147,409
  175,388
  206,225
  239,890
  276,333
  315,496
  357,315
  401,728
  448,677
  498,113
  549,997
  604,308
  661,035
  720,187
  781,789
  845,882
  912,524
  981,790
Fixed operating expenses, $m
 
  1,734
  1,778
  1,822
  1,868
  1,914
  1,962
  2,011
  2,062
  2,113
  2,166
  2,220
  2,276
  2,332
  2,391
  2,451
  2,512
  2,575
  2,639
  2,705
  2,773
  2,842
  2,913
  2,986
  3,060
  3,137
  3,215
  3,296
  3,378
  3,463
  3,549
Total operating expenses, $m
  4,354
  6,059
  8,460
  11,814
  16,366
  22,369
  30,083
  39,758
  51,626
  65,889
  82,721
  102,251
  124,573
  149,741
  177,779
  208,676
  242,402
  278,908
  318,135
  360,020
  404,501
  451,519
  501,026
  552,983
  607,368
  664,172
  723,402
  785,085
  849,260
  915,987
  985,339
Operating income, $m
  78
  1,031
  2,494
  4,566
  7,402
  11,163
  16,017
  22,122
  29,627
  38,662
  49,336
  61,734
  75,915
  91,913
  109,743
  129,398
  150,860
  174,097
  199,071
  225,743
  254,070
  284,017
  315,553
  348,652
  383,300
  419,492
  457,232
  496,537
  537,432
  579,954
  624,153
EBITDA, $m
  207
  1,237
  2,813
  5,043
  8,093
  12,138
  17,357
  23,921
  31,989
  41,702
  53,176
  66,502
  81,744
  98,939
  118,103
  139,228
  162,295
  187,268
  214,110
  242,774
  273,219
  305,404
  339,295
  374,868
  412,104
  451,000
  491,560
  533,801
  577,751
  623,450
  670,950
Interest expense (income), $m
  42
  41
  87
  155
  249
  379
  549
  769
  1,045
  1,384
  1,791
  2,272
  2,831
  3,469
  4,189
  4,991
  5,875
  6,840
  7,884
  9,007
  10,206
  11,479
  12,825
  14,242
  15,729
  17,286
  18,912
  20,608
  22,374
  24,211
  26,122
Earnings before tax, $m
  15
  990
  2,407
  4,412
  7,152
  10,785
  15,467
  21,353
  28,582
  37,278
  47,545
  59,462
  73,084
  88,444
  105,554
  124,408
  144,985
  167,257
  191,187
  216,735
  243,864
  272,538
  302,728
  334,410
  367,571
  402,206
  438,320
  475,929
  515,058
  555,743
  598,031
Tax expense, $m
  0
  267
  650
  1,191
  1,931
  2,912
  4,176
  5,765
  7,717
  10,065
  12,837
  16,055
  19,733
  23,880
  28,500
  33,590
  39,146
  45,159
  51,620
  58,519
  65,843
  73,585
  81,736
  90,291
  99,244
  108,596
  118,346
  128,501
  139,066
  150,051
  161,468
Net income, $m
  15
  723
  1,757
  3,221
  5,221
  7,873
  11,291
  15,587
  20,865
  27,213
  34,708
  43,407
  53,351
  64,564
  77,054
  90,818
  105,839
  122,098
  139,567
  158,217
  178,021
  198,953
  220,991
  244,119
  268,327
  293,610
  319,973
  347,428
  375,992
  405,693
  436,563

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  314
  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
  2,332
  3,228
  4,988
  7,459
  10,823
  15,270
  20,993
  28,178
  37,000
  47,610
  60,135
  74,674
  91,297
  110,043
  130,930
  153,950
  179,081
  206,286
  235,522
  266,741
  299,896
  334,944
  371,848
  410,581
  451,124
  493,472
  537,630
  583,616
  631,462
  681,212
  732,920
Adjusted assets (=assets-cash), $m
  2,018
  3,228
  4,988
  7,459
  10,823
  15,270
  20,993
  28,178
  37,000
  47,610
  60,135
  74,674
  91,297
  110,043
  130,930
  153,950
  179,081
  206,286
  235,522
  266,741
  299,896
  334,944
  371,848
  410,581
  451,124
  493,472
  537,630
  583,616
  631,462
  681,212
  732,920
Revenue / Adjusted assets
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
  2.196
Average production assets, $m
  1,532
  2,453
  3,790
  5,668
  8,224
  11,602
  15,951
  21,410
  28,113
  36,175
  45,692
  56,739
  69,369
  83,613
  99,482
  116,974
  136,068
  156,739
  178,953
  202,674
  227,866
  254,496
  282,536
  311,966
  342,771
  374,948
  408,500
  443,441
  479,795
  517,596
  556,884
Working capital, $m
  314
  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 debt, $m
  542
  1,160
  2,061
  3,326
  5,048
  7,325
  10,255
  13,934
  18,451
  23,883
  30,296
  37,740
  46,251
  55,849
  66,543
  78,329
  91,196
  105,125
  120,094
  136,078
  153,054
  170,998
  189,893
  209,724
  230,482
  252,164
  274,773
  298,319
  322,816
  348,287
  374,762
Total liabilities, $m
  1,035
  1,653
  2,554
  3,819
  5,541
  7,818
  10,748
  14,427
  18,944
  24,376
  30,789
  38,233
  46,744
  56,342
  67,036
  78,822
  91,689
  105,618
  120,587
  136,571
  153,547
  171,491
  190,386
  210,217
  230,975
  252,657
  275,266
  298,812
  323,309
  348,780
  375,255
Total equity, $m
  1,297
  1,575
  2,434
  3,640
  5,282
  7,452
  10,244
  13,751
  18,056
  23,234
  29,346
  36,441
  44,553
  53,701
  63,894
  75,128
  87,391
  100,668
  114,935
  130,170
  146,349
  163,453
  181,462
  200,363
  220,148
  240,814
  262,363
  284,805
  308,154
  332,431
  357,665
Total liabilities and equity, $m
  2,332
  3,228
  4,988
  7,459
  10,823
  15,270
  20,992
  28,178
  37,000
  47,610
  60,135
  74,674
  91,297
  110,043
  130,930
  153,950
  179,080
  206,286
  235,522
  266,741
  299,896
  334,944
  371,848
  410,580
  451,123
  493,471
  537,629
  583,617
  631,463
  681,211
  732,920
Debt-to-equity ratio
  0.418
  0.740
  0.850
  0.910
  0.960
  0.980
  1.000
  1.010
  1.020
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
Adjusted equity ratio
  0.487
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  15
  723
  1,757
  3,221
  5,221
  7,873
  11,291
  15,587
  20,865
  27,213
  34,708
  43,407
  53,351
  64,564
  77,054
  90,818
  105,839
  122,098
  139,567
  158,217
  178,021
  198,953
  220,991
  244,119
  268,327
  293,610
  319,973
  347,428
  375,992
  405,693
  436,563
Depreciation, amort., depletion, $m
  129
  206
  318
  476
  691
  975
  1,340
  1,799
  2,362
  3,040
  3,840
  4,768
  5,829
  7,026
  8,360
  9,830
  11,434
  13,171
  15,038
  17,031
  19,148
  21,386
  23,743
  26,216
  28,804
  31,508
  34,328
  37,264
  40,319
  43,495
  46,797
Funds from operations, $m
  328
  929
  2,076
  3,697
  5,912
  8,848
  12,632
  17,387
  23,227
  30,253
  38,548
  48,175
  59,181
  71,590
  85,414
  100,647
  117,274
  135,269
  154,605
  175,248
  197,169
  220,339
  244,734
  270,335
  297,131
  325,118
  354,301
  384,692
  416,311
  449,188
  483,360
Change in working capital, $m
  60
  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 operations, $m
  268
  929
  2,076
  3,697
  5,912
  8,848
  12,632
  17,387
  23,227
  30,253
  38,548
  48,175
  59,181
  71,590
  85,414
  100,647
  117,274
  135,269
  154,605
  175,248
  197,169
  220,339
  244,734
  270,335
  297,131
  325,118
  354,301
  384,692
  416,311
  449,188
  483,360
Maintenance CAPEX, $m
  0
  -129
  -206
  -318
  -476
  -691
  -975
  -1,340
  -1,799
  -2,362
  -3,040
  -3,840
  -4,768
  -5,829
  -7,026
  -8,360
  -9,830
  -11,434
  -13,171
  -15,038
  -17,031
  -19,148
  -21,386
  -23,743
  -26,216
  -28,804
  -31,508
  -34,328
  -37,264
  -40,319
  -43,495
New CAPEX, $m
  -102
  -921
  -1,337
  -1,878
  -2,556
  -3,379
  -4,348
  -5,460
  -6,703
  -8,062
  -9,517
  -11,047
  -12,630
  -14,244
  -15,870
  -17,491
  -19,095
  -20,671
  -22,214
  -23,721
  -25,192
  -26,630
  -28,040
  -29,430
  -30,805
  -32,176
  -33,552
  -34,941
  -36,354
  -37,800
  -39,288
Cash from investing activities, $m
  -108
  -1,050
  -1,543
  -2,196
  -3,032
  -4,070
  -5,323
  -6,800
  -8,502
  -10,424
  -12,557
  -14,887
  -17,398
  -20,073
  -22,896
  -25,851
  -28,925
  -32,105
  -35,385
  -38,759
  -42,223
  -45,778
  -49,426
  -53,173
  -57,021
  -60,980
  -65,060
  -69,269
  -73,618
  -78,119
  -82,783
Free cash flow, $m
  160
  -121
  533
  1,501
  2,880
  4,778
  7,308
  10,586
  14,725
  19,829
  25,991
  33,288
  41,783
  51,517
  62,518
  74,796
  88,349
  103,164
  119,219
  136,490
  154,946
  174,561
  195,307
  217,163
  240,110
  264,138
  289,241
  315,423
  342,693
  371,069
  400,576
Issuance/(repayment) of debt, $m
  -33
  620
  901
  1,265
  1,722
  2,277
  2,930
  3,679
  4,517
  5,432
  6,413
  7,444
  8,511
  9,598
  10,694
  11,786
  12,867
  13,929
  14,969
  15,984
  16,975
  17,945
  18,895
  19,831
  20,758
  21,682
  22,609
  23,545
  24,497
  25,472
  26,474
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  
  -33
  620
  901
  1,265
  1,722
  2,277
  2,930
  3,679
  4,517
  5,432
  6,413
  7,444
  8,511
  9,598
  10,694
  11,786
  12,867
  13,929
  14,969
  15,984
  16,975
  17,945
  18,895
  19,831
  20,758
  21,682
  22,609
  23,545
  24,497
  25,472
  26,474
Total cash flow (excl. dividends), $m
  127
  499
  1,434
  2,766
  4,602
  7,055
  10,238
  14,266
  19,242
  25,261
  32,404
  40,732
  50,293
  61,115
  73,212
  86,583
  101,216
  117,093
  134,188
  152,474
  171,922
  192,505
  214,202
  236,994
  260,868
  285,820
  311,850
  338,968
  367,190
  396,540
  427,050
Retained Cash Flow (-), $m
  -16
  -590
  -859
  -1,206
  -1,642
  -2,170
  -2,793
  -3,507
  -4,305
  -5,178
  -6,112
  -7,095
  -8,112
  -9,148
  -10,193
  -11,234
  -12,264
  -13,276
  -14,267
  -15,235
  -16,180
  -17,103
  -18,009
  -18,902
  -19,785
  -20,666
  -21,549
  -22,441
  -23,349
  -24,278
  -25,233
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
 
  221
  575
  1,560
  2,961
  4,885
  7,446
  10,759
  14,937
  20,084
  26,291
  33,637
  42,182
  51,967
  63,019
  75,349
  88,952
  103,817
  119,921
  137,239
  155,742
  175,402
  196,193
  218,092
  241,083
  265,154
  290,301
  316,526
  343,841
  372,263
  401,817
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  212
  526
  1,358
  2,438
  3,786
  5,404
  7,269
  9,336
  11,537
  13,784
  15,974
  18,000
  19,759
  21,157
  22,121
  22,605
  22,589
  22,085
  21,131
  19,790
  18,142
  16,279
  14,294
  12,279
  10,315
  8,470
  6,794
  5,320
  4,064
  3,026
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 Refining, LP operates as an independent petroleum refiner and marketer of transportation fuels in the United States. It owns and operates a complex full coking medium-sour crude oil refinery in Coffeyville, Kansas. The company also controls and operates logistics assets, including approximately 340 miles of owned and leased pipelines; approximately 150 owned crude oil transports; a network of crude oil gathering tank farms; and approximately 6.4 million barrels of owned and leased crude oil storage capacity, as well as approximately 4.5 million barrels of combined refined products and feedstocks storage capacity. In addition, it owns 170,000 barrels per day pipeline system that transports crude oil from its Broome Station facility to its Coffeyville refinery; approximately 1.5 million barrels of crude oil storage capacity, which supports the gathering system and its Coffeyville refinery; approximately 0.9 million barrels of crude oil storage capacity at its Wynnewood refinery; and approximately 1.5 million barrels of crude oil storage capacity in Cushing, Oklahoma, as well as leases crude oil storage capacity of approximately 2.2 million barrels in Cushing and approximately 0.2 million barrels in Duncan, and approximately 0.1 million barrels at its Wynnewood refinery. CVR Refining GP, LLC operates as the general partner of CVR Refining, LP. The company was founded in 2012 and is based in Sugar Land, Texas. CVR Refining, LP is a subsidiary of CVR Energy, Inc.

FINANCIAL RATIOS  of  CVR Refining (CVRR)

Valuation Ratios
P/E Ratio 90
Price to Sales 0.3
Price to Book 1
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow 8.1
Growth Rates
Sales Growth Rate -14.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -47.7%
Cap. Spend. - 3 Yr. Gr. Rate -13%
Financial Strength
Quick Ratio 157
Current Ratio 0
LT Debt to Equity 41.6%
Total Debt to Equity 41.8%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 0.8%
Ret/ On T. Cap. - 3 Yr. Avg. 11%
Return On Equity 1.2%
Return On Equity - 3 Yr. Avg. 15.5%
Asset Turnover 2
Profitability Ratios
Gross Margin 3.4%
Gross Margin - 3 Yr. Avg. 6.1%
EBITDA Margin 4.2%
EBITDA Margin - 3 Yr. Avg. 6.3%
Operating Margin 1.7%
Oper. Margin - 3 Yr. Avg. 3.7%
Pre-Tax Margin 0.3%
Pre-Tax Margin - 3 Yr. Avg. 3.3%
Net Profit Margin 0.3%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

CVRR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CVRR stock intrinsic value calculation we used $4431 million for the last fiscal year's total revenue generated by CVR Refining. The default revenue input number comes from 2016 income statement of CVR Refining. 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 CVRR 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 4.3%, whose default value for CVRR is calculated based on our internal credit rating of CVR Refining, 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 Refining.
    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 CVRR stock the variable cost ratio is equal to 61%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1692 million in the base year in the intrinsic value calculation for CVRR 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 7.5% for CVR Refining.

Corporate tax rate of 27% is the nominal tax rate for CVR Refining. 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 CVRR 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 CVRR are equal to 34.6%.

Life of production assets of 11.9 years is the average useful life of capital assets used in CVR Refining 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 CVRR is equal to 0%. 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 - $1297 million for CVR Refining - 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 149.541 million for CVR Refining 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 Refining at the current share price and the inputted number of shares is $1.4 billion.

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ALJ Alon USA Energ 13.32 978.00  str.buy
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COMPANY NEWS

▶ ALDW, CVRR, CLMT: Could Refining Margins Improve In 2Q17?   [Jul-21-17 04:36PM  Market Realist]
▶ Which Energy Stocks Diverged from Oils Gains Last Week?   [Jul-17-17 11:16AM  Market Realist]
▶ CVR Refining 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 Stocks Billionaires Own   [Jun-16-17 10:05AM  Motley Fool]
▶ Why Shares of CVR Energy Declined 12% in May   [Jun-09-17 11:47AM  Motley Fool]
▶ ETFs with exposure to CVR Refining LP : June 6, 2017   [Jun-06-17 11:40AM  Capital Cube]
▶ ETFs with exposure to CVR Refining LP : May 23, 2017   [May-23-17 12:36PM  Capital Cube]
▶ CVR Refining LP Value Analysis (NYSE:CVRR) : May 2, 2017   [May-02-17 05:12PM  Capital Cube]
▶ Oil and Gas Stock Roundup: Refining Comes Roaring Back   [Apr-29-17 04:29PM  Motley Fool]
▶ How CVR Refinings Refining Margin Improved in 1Q17   [Apr-28-17 01:06PM  Market Realist]
▶ CVR Refining Reports 2017 First Quarter Results   [Apr-27-17 08:30AM  PR Newswire]
▶ CVR Refining Announces 2017 First Quarter Earnings Call   [Apr-13-17 09:00AM  PR Newswire]
▶ Integrated Energy and Refiners: Options for Option Traders   [Apr-04-17 11:05AM  Market Realist]
▶ Integrated Energy and Refiner Stocks Implied Volatilities   [Mar-17-17 11:10AM  Market Realist]
▶ Nearly 75% of Analysts Rate Alon USA Partners a Hold   [Feb-23-17 05:06PM  Market Realist]
▶ CVR Refining Announces 2016 Fourth Quarter Earnings Call   [Feb-02-17 09:00AM  PR Newswire]
▶ The Worst Energy Stocks of 2016   [Jan-08-17 06:27AM  at Motley Fool]
▶ 3 Tempting Stocks to Avoid   [Dec-13-16 11:38AM  at Motley Fool]
▶ [$$] RINs, Refiners and Rational Energy Policies   [Dec-07-16 02:31PM  at The Wall Street Journal]
Stock chart of CVRR Financial statements of CVRR Annual reports of CVRR
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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