Intrinsic value of Dominion Resources (Virginia) - D

Previous Close

$78.97

  Intrinsic Value

$117.92

stock screener

  Rating & Target

buy

+49%

  Value-price divergence*

+340%

Previous close

$78.97

 
Intrinsic value

$117.92

 
Up/down potential

+49%

 
Rating

buy

 
Value-price divergence*

+340%

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

We calculate the intrinsic value of D 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 50.0

 

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, %
  0.46
  15.90
  14.81
  13.83
  12.95
  12.15
  11.44
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
  5.97
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
Revenue, $m
  11,357
  13,603
  15,618
  17,778
  20,079
  22,519
  25,094
  27,803
  30,642
  33,612
  36,712
  39,943
  43,307
  46,805
  50,442
  54,222
  58,150
  62,232
  66,475
  70,886
  75,474
  80,248
  85,218
  90,393
  95,786
  101,408
  107,272
  113,391
  119,780
  126,452
  133,424
Variable operating expenses, $m
 
  9,380
  10,674
  12,062
  13,540
  15,108
  16,763
  18,503
  20,327
  22,235
  24,227
  25,663
  27,824
  30,071
  32,408
  34,837
  37,360
  39,983
  42,709
  45,543
  48,491
  51,558
  54,751
  58,076
  61,541
  65,153
  68,920
  72,852
  76,956
  81,243
  85,722
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,110
  9,380
  10,674
  12,062
  13,540
  15,108
  16,763
  18,503
  20,327
  22,235
  24,227
  25,663
  27,824
  30,071
  32,408
  34,837
  37,360
  39,983
  42,709
  45,543
  48,491
  51,558
  54,751
  58,076
  61,541
  65,153
  68,920
  72,852
  76,956
  81,243
  85,722
Operating income, $m
  3,627
  4,224
  4,944
  5,716
  6,539
  7,411
  8,332
  9,300
  10,315
  11,377
  12,485
  14,280
  15,483
  16,734
  18,034
  19,385
  20,790
  22,249
  23,766
  25,343
  26,984
  28,690
  30,467
  32,317
  34,245
  36,255
  38,352
  40,540
  42,824
  45,209
  47,702
EBITDA, $m
  5,476
  5,263
  6,043
  6,879
  7,769
  8,713
  9,710
  10,757
  11,856
  13,005
  14,205
  15,455
  16,756
  18,110
  19,517
  20,980
  22,499
  24,079
  25,720
  27,427
  29,202
  31,050
  32,972
  34,975
  37,062
  39,237
  41,506
  43,873
  46,345
  48,927
  51,624
Interest expense (income), $m
  905
  1,216
  1,527
  1,867
  2,231
  2,619
  3,031
  3,465
  3,922
  4,401
  4,901
  5,424
  5,969
  6,536
  7,126
  7,740
  8,377
  9,039
  9,728
  10,443
  11,187
  11,961
  12,766
  13,604
  14,477
  15,386
  16,334
  17,323
  18,355
  19,432
  20,558
Earnings before tax, $m
  2,867
  3,008
  3,417
  3,849
  4,308
  4,792
  5,301
  5,835
  6,394
  6,977
  7,584
  8,856
  9,514
  10,198
  10,908
  11,646
  12,413
  13,210
  14,038
  14,900
  15,796
  16,729
  17,701
  18,713
  19,769
  20,869
  22,018
  23,216
  24,469
  25,777
  27,144
Tax expense, $m
  655
  812
  922
  1,039
  1,163
  1,294
  1,431
  1,575
  1,726
  1,884
  2,048
  2,391
  2,569
  2,753
  2,945
  3,144
  3,351
  3,567
  3,790
  4,023
  4,265
  4,517
  4,779
  5,053
  5,338
  5,635
  5,945
  6,268
  6,607
  6,960
  7,329
Net income, $m
  2,123
  2,196
  2,494
  2,810
  3,145
  3,498
  3,870
  4,260
  4,667
  5,093
  5,536
  6,465
  6,945
  7,444
  7,963
  8,502
  9,061
  9,643
  10,248
  10,877
  11,531
  12,212
  12,922
  13,661
  14,431
  15,235
  16,073
  16,948
  17,862
  18,817
  19,815

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  362
  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
  71,610
  82,444
  94,653
  107,743
  121,692
  136,479
  152,087
  168,501
  185,711
  203,710
  222,498
  242,080
  262,464
  283,667
  305,710
  328,619
  352,424
  377,164
  402,878
  429,613
  457,420
  486,352
  516,470
  547,838
  580,522
  614,596
  650,135
  687,220
  725,937
  766,375
  808,628
Adjusted assets (=assets-cash), $m
  71,248
  82,444
  94,653
  107,743
  121,692
  136,479
  152,087
  168,501
  185,711
  203,710
  222,498
  242,080
  262,464
  283,667
  305,710
  328,619
  352,424
  377,164
  402,878
  429,613
  457,420
  486,352
  516,470
  547,838
  580,522
  614,596
  650,135
  687,220
  725,937
  766,375
  808,628
Revenue / Adjusted assets
  0.159
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
  0.165
Average production assets, $m
  3,446
  3,999
  4,592
  5,227
  5,903
  6,621
  7,378
  8,174
  9,009
  9,882
  10,793
  11,743
  12,732
  13,761
  14,830
  15,941
  17,096
  18,296
  19,544
  20,841
  22,189
  23,593
  25,054
  26,576
  28,161
  29,814
  31,538
  33,337
  35,215
  37,177
  39,227
Working capital, $m
  -3,867
  735
  843
  960
  1,084
  1,216
  1,355
  1,501
  1,655
  1,815
  1,982
  2,157
  2,339
  2,527
  2,724
  2,928
  3,140
  3,361
  3,590
  3,828
  4,076
  4,333
  4,602
  4,881
  5,172
  5,476
  5,793
  6,123
  6,468
  6,828
  7,205
Total debt, $m
  35,095
  43,633
  53,339
  63,746
  74,835
  86,591
  98,999
  112,049
  125,730
  140,040
  154,976
  170,543
  186,749
  203,605
  221,129
  239,342
  258,267
  277,935
  298,378
  319,633
  341,739
  364,740
  388,684
  413,621
  439,605
  466,693
  494,947
  524,430
  555,210
  587,358
  620,949
Total liabilities, $m
  57,005
  65,543
  75,249
  85,656
  96,745
  108,501
  120,909
  133,959
  147,640
  161,950
  176,886
  192,453
  208,659
  225,515
  243,039
  261,252
  280,177
  299,845
  320,288
  341,543
  363,649
  386,650
  410,594
  435,531
  461,515
  488,603
  516,857
  546,340
  577,120
  609,268
  642,859
Total equity, $m
  14,605
  16,901
  19,404
  22,087
  24,947
  27,978
  31,178
  34,543
  38,071
  41,761
  45,612
  49,626
  53,805
  58,152
  62,671
  67,367
  72,247
  77,319
  82,590
  88,071
  93,771
  99,702
  105,876
  112,307
  119,007
  125,992
  133,278
  140,880
  148,817
  157,107
  165,769
Total liabilities and equity, $m
  71,610
  82,444
  94,653
  107,743
  121,692
  136,479
  152,087
  168,502
  185,711
  203,711
  222,498
  242,079
  262,464
  283,667
  305,710
  328,619
  352,424
  377,164
  402,878
  429,614
  457,420
  486,352
  516,470
  547,838
  580,522
  614,595
  650,135
  687,220
  725,937
  766,375
  808,628
Debt-to-equity ratio
  2.403
  2.580
  2.750
  2.890
  3.000
  3.090
  3.180
  3.240
  3.300
  3.350
  3.400
  3.440
  3.470
  3.500
  3.530
  3.550
  3.570
  3.590
  3.610
  3.630
  3.640
  3.660
  3.670
  3.680
  3.690
  3.700
  3.710
  3.720
  3.730
  3.740
  3.750
Adjusted equity ratio
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,123
  2,196
  2,494
  2,810
  3,145
  3,498
  3,870
  4,260
  4,667
  5,093
  5,536
  6,465
  6,945
  7,444
  7,963
  8,502
  9,061
  9,643
  10,248
  10,877
  11,531
  12,212
  12,922
  13,661
  14,431
  15,235
  16,073
  16,948
  17,862
  18,817
  19,815
Depreciation, amort., depletion, $m
  1,849
  1,040
  1,099
  1,163
  1,230
  1,302
  1,378
  1,457
  1,541
  1,628
  1,719
  1,174
  1,273
  1,376
  1,483
  1,594
  1,710
  1,830
  1,954
  2,084
  2,219
  2,359
  2,505
  2,658
  2,816
  2,981
  3,154
  3,334
  3,522
  3,718
  3,923
Funds from operations, $m
  3,641
  3,236
  3,593
  3,972
  4,375
  4,800
  5,248
  5,717
  6,208
  6,721
  7,256
  7,639
  8,218
  8,820
  9,446
  10,096
  10,771
  11,473
  12,202
  12,961
  13,750
  14,572
  15,427
  16,318
  17,247
  18,216
  19,227
  20,282
  21,384
  22,535
  23,738
Change in working capital, $m
  -486
  101
  109
  117
  124
  132
  139
  146
  153
  160
  167
  174
  182
  189
  196
  204
  212
  220
  229
  238
  248
  258
  268
  279
  291
  304
  317
  330
  345
  360
  376
Cash from operations, $m
  4,127
  3,135
  3,484
  3,856
  4,251
  4,668
  5,108
  5,571
  6,055
  6,561
  7,088
  7,465
  8,037
  8,631
  9,249
  9,892
  10,559
  11,252
  11,973
  12,723
  13,503
  14,314
  15,159
  16,039
  16,956
  17,912
  18,910
  19,951
  21,039
  22,174
  23,361
Maintenance CAPEX, $m
  0
  -345
  -400
  -459
  -523
  -590
  -662
  -738
  -817
  -901
  -988
  -1,079
  -1,174
  -1,273
  -1,376
  -1,483
  -1,594
  -1,710
  -1,830
  -1,954
  -2,084
  -2,219
  -2,359
  -2,505
  -2,658
  -2,816
  -2,981
  -3,154
  -3,334
  -3,522
  -3,718
New CAPEX, $m
  -6,085
  -553
  -592
  -635
  -677
  -717
  -757
  -796
  -835
  -873
  -911
  -950
  -989
  -1,029
  -1,069
  -1,111
  -1,155
  -1,200
  -1,247
  -1,297
  -1,349
  -1,404
  -1,461
  -1,522
  -1,586
  -1,653
  -1,724
  -1,799
  -1,878
  -1,962
  -2,050
Cash from investing activities, $m
  -10,703
  -898
  -992
  -1,094
  -1,200
  -1,307
  -1,419
  -1,534
  -1,652
  -1,774
  -1,899
  -2,029
  -2,163
  -2,302
  -2,445
  -2,594
  -2,749
  -2,910
  -3,077
  -3,251
  -3,433
  -3,623
  -3,820
  -4,027
  -4,244
  -4,469
  -4,705
  -4,953
  -5,212
  -5,484
  -5,768
Free cash flow, $m
  -6,576
  2,237
  2,492
  2,762
  3,051
  3,361
  3,689
  4,037
  4,403
  4,787
  5,189
  5,436
  5,874
  6,330
  6,804
  7,297
  7,810
  8,343
  8,896
  9,472
  10,070
  10,692
  11,339
  12,012
  12,713
  13,443
  14,205
  14,999
  15,827
  16,691
  17,594
Issuance/(repayment) of debt, $m
  4,858
  8,900
  9,707
  10,406
  11,089
  11,756
  12,409
  13,049
  13,682
  14,309
  14,936
  15,567
  16,206
  16,856
  17,524
  18,212
  18,926
  19,668
  20,443
  21,254
  22,106
  23,001
  23,944
  24,937
  25,984
  27,088
  28,254
  29,483
  30,780
  32,148
  33,591
Issuance/(repurchase) of shares, $m
  2,642
  100
  9
  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  
  7,957
  9,000
  9,716
  10,406
  11,089
  11,756
  12,409
  13,049
  13,682
  14,309
  14,936
  15,567
  16,206
  16,856
  17,524
  18,212
  18,926
  19,668
  20,443
  21,254
  22,106
  23,001
  23,944
  24,937
  25,984
  27,088
  28,254
  29,483
  30,780
  32,148
  33,591
Total cash flow (excl. dividends), $m
  1,381
  11,237
  12,208
  13,168
  14,140
  15,117
  16,098
  17,086
  18,084
  19,096
  20,125
  21,003
  22,079
  23,186
  24,328
  25,510
  26,736
  28,011
  29,339
  30,726
  32,176
  33,693
  35,282
  36,949
  38,697
  40,532
  42,458
  44,481
  46,607
  48,839
  51,185
Retained Cash Flow (-), $m
  -1,941
  -2,296
  -2,503
  -2,683
  -2,859
  -3,031
  -3,200
  -3,365
  -3,528
  -3,690
  -3,852
  -4,014
  -4,179
  -4,347
  -4,519
  -4,696
  -4,880
  -5,072
  -5,271
  -5,481
  -5,700
  -5,931
  -6,174
  -6,430
  -6,700
  -6,985
  -7,286
  -7,602
  -7,937
  -8,290
  -8,662
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  8,941
  9,705
  10,484
  11,281
  12,085
  12,898
  13,721
  14,556
  15,406
  16,274
  16,989
  17,900
  18,839
  19,809
  20,813
  21,855
  22,939
  24,068
  25,245
  26,475
  27,762
  29,108
  30,519
  31,997
  33,547
  35,173
  36,879
  38,670
  40,550
  42,523
Discount rate, %
 
  10.50
  11.03
  11.58
  12.16
  12.76
  13.40
  14.07
  14.77
  15.51
  16.29
  17.10
  17.96
  18.86
  19.80
  20.79
  21.83
  22.92
  24.07
  25.27
  26.53
  27.86
  29.25
  30.72
  32.25
  33.86
  35.56
  37.33
  39.20
  41.16
  43.22
PV of cash for distribution, $m
 
  8,091
  7,873
  7,548
  7,130
  6,629
  6,065
  5,460
  4,834
  4,207
  3,598
  2,992
  2,467
  1,994
  1,579
  1,224
  928
  687
  496
  349
  239
  159
  103
  64
  39
  23
  13
  7
  4
  2
  1
Current shareholders' claim on cash, %
  100
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8
  99.8

Dominion Resources, Inc. produces and transports energy in the United States. The company operates through three segments: Dominion Virginia Power (DVP), Dominion Generation, and Dominion Energy. The DVP segment engages in regulated electric transmission and distribution operations that serve residential, commercial, industrial, and governmental customers in Virginia and North Carolina. The Dominion Generation segment is involved in electricity generation through coal, nuclear, gas, oil, hydro, and renewable sources; and related energy supply operations. It also comprises generation operations of the company’s merchant fleet and energy marketing, and price risk management activities for its assets. The Dominion Energy segment engages in regulated natural gas distribution operations, gas transmission pipeline and storage operations, natural gas gathering and processing activities, and liquefied natural gas operations. As of December 31, 2015, the company’s portfolio of assets included approximately 24,300 megawatts of generating capacity; 6,500 miles of electric transmission lines; 57,300 miles of electric distribution lines; 12,200 miles of natural gas transmission, gathering, and storage pipelines; and 22,000 miles of gas distribution pipelines. It served approximately 5 million utility and retail energy customers in 14 states; and operated underground natural gas storage systems with approximately 933 billion cubic feet of storage capacity. In addition, the company sells electricity at wholesale prices to rural electric cooperatives, municipalities, and into wholesale electricity markets. Dominion Resources, Inc. was founded in 1909 and is headquartered in Richmond, Virginia.

FINANCIAL RATIOS  of  Dominion Resources (Virginia) (D)

Valuation Ratios
P/E Ratio 23.4
Price to Sales 4.2
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 12
Price to Free Cash Flow -25.3
Growth Rates
Sales Growth Rate 0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 9.1%
Cap. Spend. - 3 Yr. Gr. Rate 8.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 207%
Total Debt to Equity 240.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity 15.6%
Return On Equity - 3 Yr. Avg. 14.2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 47.9%
EBITDA Margin - 3 Yr. Avg. 42.5%
Operating Margin 30.9%
Oper. Margin - 3 Yr. Avg. 27.7%
Pre-Tax Margin 24.4%
Pre-Tax Margin - 3 Yr. Avg. 21%
Net Profit Margin 18.1%
Net Profit Margin - 3 Yr. Avg. 15%
Effective Tax Rate 22.8%
Eff/ Tax Rate - 3 Yr. Avg. 26.8%
Payout Ratio 81.3%

D stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the D stock intrinsic value calculation we used $11737 million for the last fiscal year's total revenue generated by Dominion Resources (Virginia). The default revenue input number comes from 2016 income statement of Dominion Resources (Virginia). 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 D stock valuation model: a) initial revenue growth rate of 15.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.5%, whose default value for D is calculated based on our internal credit rating of Dominion Resources (Virginia), 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 Dominion Resources (Virginia).
    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 D stock the variable cost ratio is equal to 69.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for D 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 3.5% for Dominion Resources (Virginia).

Corporate tax rate of 27% is the nominal tax rate for Dominion Resources (Virginia). 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 D 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 D are equal to 29.4%.

Life of production assets of 10 years is the average useful life of capital assets used in Dominion Resources (Virginia) 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 D is equal to 5.4%. 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 - $14605 million for Dominion Resources (Virginia) - 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 633.049 million for Dominion Resources (Virginia) 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 Dominion Resources (Virginia) at the current share price and the inputted number of shares is $50.0 billion.

RELATED COMPANIES Price Int.Val. Rating
SO Southern 47.95 307.49  str.buy
PCG PG&E 69.67 116.37  str.buy
DUK Duke Energy 86.55 100.67  buy
SCG Scana 60.36 54.11  hold
NEE NextEra Energy 150.84 71.18  sell
EGAS Gas Natural 13.10 4.46  str.sell

COMPANY NEWS

▶ What Analysts Think over Top Utility Stocks?   [Aug-09-17 10:38AM  Market Realist]
▶ Analysts Views on Southern Company after Its 2Q17 Earnings   [Aug-07-17 09:08AM  Market Realist]
▶ Analyzing Dominion Energys Valuation and Dividends   [Aug-04-17 09:11AM  Market Realist]
▶ Behind the Top Utility Stocks: Reading the Price Targets   [Aug-03-17 10:36AM  Market Realist]
▶ Dominion Energy Midstream posts 2Q profit   [Aug-02-17 10:58PM  Associated Press]
▶ Comparing PPLs Dividend Yield to Its Peers   [07:39AM  Market Realist]
▶ Emera Maine Chooses DVI for Voltage Optimization Project   [Jul-27-17 03:32PM  PR Newswire]
▶ Duke Energy Stocks Current Valuation   [Jul-26-17 09:11AM  Market Realist]
▶ Saudi Arabia Regains Influence Over Oil Markets   [Jul-25-17 03:00PM  Oilprice.com]
▶ Looking at Xcel Energys Price Targets ahead of Q2 Earnings   [Jul-24-17 10:39AM  Market Realist]
▶ Why NextEra Energy Seems Attractive Right Now   [10:36AM  Market Realist]
▶ A Look at Utility Stocks Implied Volatilities   [09:06AM  Market Realist]
▶ EXC, FE, D, and ETR: A Look at Utilities Generation Mixes   [Jul-17-17 07:39AM  Market Realist]
▶ Southern Company: Analysts Recommendations and Target Prices   [Jul-11-17 01:05PM  Market Realist]
▶ 5 Utilities That Should Buy a Solar Yieldco   [Jul-07-17 09:04AM  Motley Fool]
▶ Top Utilities Offer a Decent Potential Gain   [07:38AM  Market Realist]
▶ What Does Southern Companys Implied Volatility Tell Us?   [Jul-03-17 07:38AM  Market Realist]
▶ How Are American Electric Powers Dividends?   [10:13AM  Market Realist]
▶ How PPL Stock Is Currently Valued Compared to Peers   [Jun-29-17 06:05PM  Market Realist]
▶ Exelons Valuation and Dividend in Context   [07:36AM  Market Realist]
▶ Analysts Recommendations for NextEra Energy   [Jun-28-17 11:05AM  Market Realist]
▶ Analysts Expect a Decent Upside in Exelon   [10:36AM  Market Realist]
▶ A Dividend Face-Off: NextEra Energy and Dominion Energy   [Jun-27-17 04:35PM  Market Realist]
▶ Utilities Total Returns: Your Key Update   [10:36AM  Market Realist]
▶ Inside Dominion Energys Chart Indicators   [Jun-09-17 05:35PM  Market Realist]
Financial statements of D
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.