Intrinsic value of Dominion Energy - D

Previous Close

$80.00

  Intrinsic Value

$66.74

stock screener

  Rating & Target

hold

-17%

Previous close

$80.00

 
Intrinsic value

$66.74

 
Up/down potential

-17%

 
Rating

hold

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 51.4

 

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, %
  0.46
  8.30
  7.97
  7.67
  7.41
  7.17
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
Revenue, $m
  11,357
  12,711
  13,724
  14,777
  15,872
  17,009
  18,191
  19,419
  20,697
  22,026
  23,409
  24,848
  26,348
  27,911
  29,541
  31,241
  33,015
  34,868
  36,803
  38,825
  40,940
  43,151
  45,464
  47,885
  50,420
  53,073
  55,853
  58,764
  61,815
  65,013
  68,365
Variable operating expenses, $m
 
  8,807
  9,457
  10,134
  10,837
  11,568
  12,327
  13,116
  13,937
  14,791
  15,679
  15,965
  16,928
  17,932
  18,979
  20,072
  21,212
  22,402
  23,645
  24,945
  26,303
  27,724
  29,210
  30,765
  32,394
  34,099
  35,884
  37,755
  39,715
  41,770
  43,923
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
  8,807
  9,457
  10,134
  10,837
  11,568
  12,327
  13,116
  13,937
  14,791
  15,679
  15,965
  16,928
  17,932
  18,979
  20,072
  21,212
  22,402
  23,645
  24,945
  26,303
  27,724
  29,210
  30,765
  32,394
  34,099
  35,884
  37,755
  39,715
  41,770
  43,923
Operating income, $m
  3,627
  3,905
  4,267
  4,643
  5,035
  5,441
  5,864
  6,303
  6,760
  7,235
  7,729
  8,884
  9,420
  9,979
  10,561
  11,169
  11,804
  12,466
  13,158
  13,881
  14,637
  15,427
  16,254
  17,120
  18,026
  18,975
  19,968
  21,009
  22,100
  23,243
  24,442
EBITDA, $m
  5,476
  5,292
  5,714
  6,152
  6,608
  7,081
  7,573
  8,085
  8,617
  9,170
  9,745
  10,345
  10,969
  11,620
  12,298
  13,006
  13,745
  14,516
  15,322
  16,164
  17,044
  17,965
  18,928
  19,936
  20,991
  22,095
  23,253
  24,465
  25,735
  27,066
  28,462
Interest expense (income), $m
  905
  1,216
  1,377
  1,548
  1,725
  1,910
  2,101
  2,301
  2,508
  2,723
  2,947
  3,181
  3,423
  3,676
  3,940
  4,215
  4,501
  4,801
  5,113
  5,439
  5,781
  6,137
  6,510
  6,900
  7,308
  7,736
  8,183
  8,652
  9,143
  9,657
  10,197
Earnings before tax, $m
  2,867
  2,689
  2,890
  3,096
  3,309
  3,531
  3,762
  4,002
  4,252
  4,511
  4,782
  5,703
  5,996
  6,302
  6,621
  6,954
  7,302
  7,665
  8,045
  8,441
  8,856
  9,290
  9,744
  10,220
  10,718
  11,239
  11,785
  12,358
  12,957
  13,586
  14,245
Tax expense, $m
  655
  726
  780
  836
  894
  953
  1,016
  1,081
  1,148
  1,218
  1,291
  1,540
  1,619
  1,702
  1,788
  1,878
  1,972
  2,070
  2,172
  2,279
  2,391
  2,508
  2,631
  2,759
  2,894
  3,035
  3,182
  3,337
  3,498
  3,668
  3,846
Net income, $m
  2,123
  1,963
  2,110
  2,260
  2,416
  2,578
  2,746
  2,922
  3,104
  3,293
  3,491
  4,163
  4,377
  4,601
  4,834
  5,077
  5,331
  5,596
  5,873
  6,162
  6,465
  6,782
  7,113
  7,461
  7,824
  8,205
  8,603
  9,021
  9,459
  9,918
  10,399

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
  77,037
  83,177
  89,559
  96,192
  103,084
  110,247
  117,693
  125,435
  133,489
  141,870
  150,596
  159,685
  169,158
  179,035
  189,338
  200,091
  211,319
  223,048
  235,306
  248,120
  261,521
  275,542
  290,214
  305,574
  321,657
  338,502
  356,148
  374,639
  394,018
  414,332
Adjusted assets (=assets-cash), $m
  71,248
  77,037
  83,177
  89,559
  96,192
  103,084
  110,247
  117,693
  125,435
  133,489
  141,870
  150,596
  159,685
  169,158
  179,035
  189,338
  200,091
  211,319
  223,048
  235,306
  248,120
  261,521
  275,542
  290,214
  305,574
  321,657
  338,502
  356,148
  374,639
  394,018
  414,332
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
  3,737
  4,035
  4,345
  4,666
  5,001
  5,348
  5,709
  6,085
  6,476
  6,882
  7,305
  7,746
  8,206
  8,685
  9,185
  9,706
  10,251
  10,820
  11,415
  12,036
  12,686
  13,367
  14,078
  14,823
  15,604
  16,421
  17,277
  18,174
  19,114
  20,099
Working capital, $m
  -3,867
  686
  741
  798
  857
  918
  982
  1,049
  1,118
  1,189
  1,264
  1,342
  1,423
  1,507
  1,595
  1,687
  1,783
  1,883
  1,987
  2,097
  2,211
  2,330
  2,455
  2,586
  2,723
  2,866
  3,016
  3,173
  3,338
  3,511
  3,692
Total debt, $m
  35,095
  39,335
  44,216
  49,290
  54,563
  60,042
  65,737
  71,656
  77,811
  84,214
  90,877
  97,814
  105,040
  112,570
  120,423
  128,614
  137,163
  146,089
  155,413
  165,158
  175,345
  185,999
  197,146
  208,810
  221,021
  233,807
  247,199
  261,228
  275,928
  291,334
  307,484
Total liabilities, $m
  57,005
  61,245
  66,126
  71,200
  76,473
  81,952
  87,647
  93,566
  99,721
  106,124
  112,787
  119,724
  126,950
  134,480
  142,333
  150,524
  159,073
  167,999
  177,323
  187,068
  197,255
  207,909
  219,056
  230,720
  242,931
  255,717
  269,109
  283,138
  297,838
  313,244
  329,394
Total equity, $m
  14,605
  15,793
  17,051
  18,360
  19,719
  21,132
  22,601
  24,127
  25,714
  27,365
  29,083
  30,872
  32,735
  34,677
  36,702
  38,814
  41,019
  43,320
  45,725
  48,238
  50,865
  53,612
  56,486
  59,494
  62,643
  65,940
  69,393
  73,010
  76,801
  80,774
  84,938
Total liabilities and equity, $m
  71,610
  77,038
  83,177
  89,560
  96,192
  103,084
  110,248
  117,693
  125,435
  133,489
  141,870
  150,596
  159,685
  169,157
  179,035
  189,338
  200,092
  211,319
  223,048
  235,306
  248,120
  261,521
  275,542
  290,214
  305,574
  321,657
  338,502
  356,148
  374,639
  394,018
  414,332
Debt-to-equity ratio
  2.403
  2.490
  2.590
  2.680
  2.770
  2.840
  2.910
  2.970
  3.030
  3.080
  3.120
  3.170
  3.210
  3.250
  3.280
  3.310
  3.340
  3.370
  3.400
  3.420
  3.450
  3.470
  3.490
  3.510
  3.530
  3.550
  3.560
  3.580
  3.590
  3.610
  3.620
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
  1,963
  2,110
  2,260
  2,416
  2,578
  2,746
  2,922
  3,104
  3,293
  3,491
  4,163
  4,377
  4,601
  4,834
  5,077
  5,331
  5,596
  5,873
  6,162
  6,465
  6,782
  7,113
  7,461
  7,824
  8,205
  8,603
  9,021
  9,459
  9,918
  10,399
Depreciation, amort., depletion, $m
  1,849
  1,387
  1,447
  1,509
  1,573
  1,640
  1,710
  1,782
  1,857
  1,935
  2,016
  1,461
  1,549
  1,641
  1,737
  1,837
  1,941
  2,050
  2,164
  2,283
  2,407
  2,537
  2,673
  2,816
  2,965
  3,121
  3,284
  3,455
  3,635
  3,823
  4,020
Funds from operations, $m
  3,641
  3,350
  3,557
  3,769
  3,989
  4,218
  4,456
  4,703
  4,961
  5,228
  5,507
  5,624
  5,927
  6,242
  6,571
  6,914
  7,272
  7,646
  8,037
  8,445
  8,872
  9,319
  9,787
  10,276
  10,789
  11,325
  11,887
  12,476
  13,094
  13,741
  14,419
Change in working capital, $m
  -486
  53
  55
  57
  59
  61
  64
  66
  69
  72
  75
  78
  81
  84
  88
  92
  96
  100
  105
  109
  114
  119
  125
  131
  137
  143
  150
  157
  165
  173
  181
Cash from operations, $m
  4,127
  3,298
  3,502
  3,712
  3,930
  4,157
  4,392
  4,637
  4,892
  5,157
  5,432
  5,547
  5,846
  6,157
  6,483
  6,822
  7,176
  7,546
  7,932
  8,336
  8,758
  9,200
  9,662
  10,145
  10,652
  11,182
  11,737
  12,319
  12,929
  13,568
  14,238
Maintenance CAPEX, $m
  0
  -689
  -747
  -807
  -869
  -933
  -1,000
  -1,070
  -1,142
  -1,217
  -1,295
  -1,376
  -1,461
  -1,549
  -1,641
  -1,737
  -1,837
  -1,941
  -2,050
  -2,164
  -2,283
  -2,407
  -2,537
  -2,673
  -2,816
  -2,965
  -3,121
  -3,284
  -3,455
  -3,635
  -3,823
New CAPEX, $m
  -6,085
  -291
  -298
  -310
  -322
  -334
  -347
  -361
  -376
  -391
  -407
  -423
  -441
  -460
  -479
  -500
  -522
  -545
  -569
  -595
  -622
  -650
  -680
  -712
  -745
  -780
  -817
  -856
  -897
  -940
  -985
Cash from investing activities, $m
  -10,703
  -980
  -1,045
  -1,117
  -1,191
  -1,267
  -1,347
  -1,431
  -1,518
  -1,608
  -1,702
  -1,799
  -1,902
  -2,009
  -2,120
  -2,237
  -2,359
  -2,486
  -2,619
  -2,759
  -2,905
  -3,057
  -3,217
  -3,385
  -3,561
  -3,745
  -3,938
  -4,140
  -4,352
  -4,575
  -4,808
Free cash flow, $m
  -6,576
  2,317
  2,457
  2,595
  2,739
  2,889
  3,045
  3,206
  3,374
  3,549
  3,731
  3,747
  3,944
  4,149
  4,362
  4,585
  4,817
  5,060
  5,313
  5,577
  5,854
  6,142
  6,444
  6,760
  7,091
  7,437
  7,799
  8,179
  8,576
  8,993
  9,430
Issuance/(repayment) of debt, $m
  4,858
  4,602
  4,881
  5,074
  5,273
  5,479
  5,695
  5,919
  6,155
  6,403
  6,663
  6,937
  7,226
  7,531
  7,852
  8,191
  8,549
  8,926
  9,325
  9,744
  10,187
  10,654
  11,146
  11,665
  12,211
  12,786
  13,392
  14,029
  14,700
  15,406
  16,149
Issuance/(repurchase) of shares, $m
  2,642
  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  
  7,957
  4,602
  4,881
  5,074
  5,273
  5,479
  5,695
  5,919
  6,155
  6,403
  6,663
  6,937
  7,226
  7,531
  7,852
  8,191
  8,549
  8,926
  9,325
  9,744
  10,187
  10,654
  11,146
  11,665
  12,211
  12,786
  13,392
  14,029
  14,700
  15,406
  16,149
Total cash flow (excl. dividends), $m
  1,381
  6,919
  7,338
  7,669
  8,012
  8,368
  8,739
  9,126
  9,529
  9,952
  10,394
  10,684
  11,170
  11,679
  12,214
  12,776
  13,366
  13,986
  14,637
  15,322
  16,041
  16,797
  17,591
  18,425
  19,302
  20,223
  21,191
  22,208
  23,277
  24,399
  25,579
Retained Cash Flow (-), $m
  -1,941
  -1,188
  -1,259
  -1,308
  -1,360
  -1,413
  -1,468
  -1,526
  -1,587
  -1,651
  -1,718
  -1,789
  -1,863
  -1,942
  -2,025
  -2,112
  -2,204
  -2,302
  -2,404
  -2,513
  -2,627
  -2,747
  -2,874
  -3,008
  -3,149
  -3,297
  -3,453
  -3,618
  -3,791
  -3,973
  -4,164
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
 
  5,731
  6,079
  6,361
  6,652
  6,955
  7,271
  7,599
  7,942
  8,301
  8,675
  8,895
  9,306
  9,738
  10,190
  10,664
  11,162
  11,684
  12,233
  12,809
  13,414
  14,049
  14,716
  15,417
  16,153
  16,926
  17,738
  18,591
  19,486
  20,427
  21,414
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
 
  5,187
  4,932
  4,579
  4,204
  3,815
  3,419
  3,024
  2,637
  2,267
  1,918
  1,566
  1,282
  1,031
  812
  627
  474
  350
  252
  177
  121
  81
  52
  33
  20
  12
  7
  4
  2
  1
  0
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

Dominion Energy, Inc., formerly Dominion Resources, Inc., is a producer and transporter of energy. Dominion is focused on its investment in regulated electric generation, transmission and distribution and regulated natural gas transmission and distribution infrastructure. It operates through three segments: Dominion Virginia Power operating segment (DVP), Dominion Generation, Dominion Energy, and Corporate and Other. The DVP segment includes regulated electric distribution and regulated electric transmission. The Dominion Generation segment includes regulated electric fleet and merchant electric fleet. The Dominion Energy segment includes gas transmission and storage, gas gathering and processing, liquefied natural gas import and storage, and nonregulated retail energy marketing. As of December 31, 2016, Dominion served utility and retail energy customers, and operated an underground natural gas storage system with approximately one trillion cubic feet of storage capacity.

FINANCIAL RATIOS  of  Dominion Energy (D)

Valuation Ratios
P/E Ratio 23.7
Price to Sales 4.3
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow -25.7
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 Energy. The default revenue input number comes from 2016 income statement of Dominion 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 D stock valuation model: a) initial revenue growth rate of 8.3% 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 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 Dominion 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 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 Energy.

Corporate tax rate of 27% is the nominal tax rate for Dominion 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 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 4.5 years is the average useful life of capital assets used in Dominion 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 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 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 642.625 million for Dominion 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 Dominion Energy at the current share price and the inputted number of shares is $51.4 billion.

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COMPANY NEWS

▶ Feds approve pivotal permit for Atlantic Coast Pipeline   [07:45AM  American City Business Journals]
▶ [$$] Dominion Energy: Growth and a 4% Yield   [Oct-14-17 12:52AM  Barrons.com]
▶ Dominion Energy Declares Quarterly Dividend of 77 Cents   [Oct-12-17 06:28PM  PR Newswire]
▶ What Clean Power Plan Repeal Means for Utility Growth   [Oct-11-17 12:00PM  Morningstar]
▶ Roundtable: 1 Stock Retirees Should Consider   [Oct-08-17 10:48AM  Motley Fool]
▶ Texas Sees Increase In Oil And Gas Employment   [Sep-26-17 02:00PM  Oilprice.com]
▶ How High Could US Utility Stocks Go?   [07:38AM  Market Realist]
▶ Dominion Energy to Revise Dividend Policy   [Sep-07-17 09:10AM  PR Newswire]
▶ Your Weekly Utilities Wrap-Up: Last Weeks Performance   [Sep-05-17 04:47PM  Market Realist]
▶ Is Utility Sector Signaling a Potential Drop?   [07:37AM  Market Realist]
▶ XLU: Looking at Utilities Charts, Short Interest, and More   [Aug-28-17 04:07PM  Market Realist]
▶ How Dominion Energys Dividends Are Trending   [Aug-24-17 05:06PM  Market Realist]
▶ 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]
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.

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