Intrinsic value of Duke Energy - DUK

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$84.30

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$84.30

 
Intrinsic value

$177.95

 
Up/down potential

+111%

 
Rating

str. buy

 
Value-price divergence* premium content

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

We calculate the intrinsic value of DUK 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 59.0

 

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, %
  1.66
  13.70
  12.83
  12.05
  11.34
  10.71
  10.14
  9.62
  9.16
  8.75
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
  6.45
  6.31
  6.18
  6.06
  5.95
  5.86
  5.77
  5.69
  5.62
  5.56
  5.51
  5.46
  5.41
Revenue, $m
  22,743
  25,859
  29,176
  32,691
  36,399
  40,297
  44,382
  48,653
  53,110
  57,755
  62,589
  67,617
  72,844
  78,276
  83,921
  89,788
  95,885
  102,225
  108,820
  115,682
  122,825
  130,266
  138,019
  146,103
  154,534
  163,333
  172,520
  182,116
  192,143
  202,625
  213,587
Variable operating expenses, $m
 
  7,311
  7,999
  8,729
  9,499
  10,308
  11,156
  12,042
  12,968
  13,932
  14,935
  14,037
  15,122
  16,249
  17,421
  18,639
  19,905
  21,221
  22,590
  24,014
  25,497
  27,042
  28,651
  30,329
  32,080
  33,906
  35,813
  37,805
  39,887
  42,063
  44,338
Fixed operating expenses, $m
 
  11,281
  11,563
  11,852
  12,149
  12,452
  12,764
  13,083
  13,410
  13,745
  14,089
  14,441
  14,802
  15,172
  15,551
  15,940
  16,338
  16,747
  17,166
  17,595
  18,035
  18,485
  18,948
  19,421
  19,907
  20,405
  20,915
  21,437
  21,973
  22,523
  23,086
Total operating expenses, $m
  17,402
  18,592
  19,562
  20,581
  21,648
  22,760
  23,920
  25,125
  26,378
  27,677
  29,024
  28,478
  29,924
  31,421
  32,972
  34,579
  36,243
  37,968
  39,756
  41,609
  43,532
  45,527
  47,599
  49,750
  51,987
  54,311
  56,728
  59,242
  61,860
  64,586
  67,424
Operating income, $m
  5,341
  7,267
  9,614
  12,110
  14,752
  17,537
  20,463
  23,528
  26,733
  30,078
  33,565
  39,140
  42,921
  46,855
  50,949
  55,209
  59,642
  64,258
  69,064
  74,073
  79,294
  84,739
  90,420
  96,352
  102,548
  109,023
  115,792
  122,873
  130,283
  138,040
  146,163
EBITDA, $m
  9,221
  9,210
  11,557
  14,053
  16,695
  19,479
  22,405
  25,471
  28,675
  32,021
  35,508
  39,140
  42,921
  46,855
  50,949
  55,209
  59,642
  64,258
  69,064
  74,073
  79,294
  84,739
  90,420
  96,352
  102,548
  109,023
  115,792
  122,873
  130,283
  138,040
  146,163
Interest expense (income), $m
  1,794
  1,945
  2,433
  2,952
  3,502
  4,082
  4,692
  5,331
  5,999
  6,697
  7,423
  8,180
  8,966
  9,784
  10,634
  11,517
  12,435
  13,389
  14,381
  15,413
  16,486
  17,604
  18,768
  19,981
  21,246
  22,565
  23,942
  25,379
  26,880
  28,449
  30,089
Earnings before tax, $m
  3,734
  5,322
  7,181
  9,158
  11,250
  13,455
  15,771
  18,197
  20,733
  23,381
  26,142
  30,960
  33,954
  37,071
  40,315
  43,691
  47,207
  50,868
  54,683
  58,660
  62,807
  67,135
  71,652
  76,371
  81,302
  86,458
  91,851
  97,494
  103,403
  109,591
  116,074
Tax expense, $m
  1,156
  1,437
  1,939
  2,473
  3,037
  3,633
  4,258
  4,913
  5,598
  6,313
  7,058
  8,359
  9,168
  10,009
  10,885
  11,797
  12,746
  13,734
  14,765
  15,838
  16,958
  18,126
  19,346
  20,620
  21,952
  23,344
  24,800
  26,323
  27,919
  29,589
  31,340
Net income, $m
  2,152
  3,885
  5,242
  6,685
  8,212
  9,822
  11,513
  13,284
  15,135
  17,068
  19,084
  22,601
  24,787
  27,062
  29,430
  31,895
  34,461
  37,134
  39,919
  42,822
  45,849
  49,008
  52,306
  55,751
  59,350
  63,114
  67,051
  71,171
  75,484
  80,001
  84,734

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  503
  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
  132,761
  150,342
  169,631
  190,066
  211,624
  234,285
  258,035
  282,867
  308,781
  335,784
  363,891
  393,124
  423,513
  455,095
  487,914
  522,021
  557,472
  594,333
  632,673
  672,568
  714,101
  757,359
  802,437
  849,434
  898,455
  949,613
  1,003,024
  1,058,814
  1,117,111
  1,178,053
  1,241,783
Adjusted assets (=assets-cash), $m
  132,258
  150,342
  169,631
  190,066
  211,624
  234,285
  258,035
  282,867
  308,781
  335,784
  363,891
  393,124
  423,513
  455,095
  487,914
  522,021
  557,472
  594,333
  632,673
  672,568
  714,101
  757,359
  802,437
  849,434
  898,455
  949,613
  1,003,024
  1,058,814
  1,117,111
  1,178,053
  1,241,783
Revenue / Adjusted assets
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
  0.172
Average production assets, $m
  -25,355
  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
Working capital, $m
  -3,512
  905
  1,021
  1,144
  1,274
  1,410
  1,553
  1,703
  1,859
  2,021
  2,191
  2,367
  2,550
  2,740
  2,937
  3,143
  3,356
  3,578
  3,809
  4,049
  4,299
  4,559
  4,831
  5,114
  5,409
  5,717
  6,038
  6,374
  6,725
  7,092
  7,476
Total debt, $m
  50,382
  62,390
  75,699
  89,800
  104,675
  120,310
  136,698
  153,832
  171,713
  190,345
  209,739
  229,910
  250,878
  272,670
  295,315
  318,848
  343,310
  368,744
  395,198
  422,726
  451,384
  481,232
  512,335
  544,763
  578,588
  613,887
  650,741
  689,235
  729,461
  771,510
  815,484
Total liabilities, $m
  91,728
  103,736
  117,045
  131,146
  146,021
  161,656
  178,044
  195,178
  213,059
  231,691
  251,085
  271,256
  292,224
  314,016
  336,661
  360,194
  384,656
  410,090
  436,544
  464,072
  492,730
  522,578
  553,681
  586,109
  619,934
  655,233
  692,087
  730,581
  770,807
  812,856
  856,830
Total equity, $m
  41,033
  46,606
  52,586
  58,920
  65,603
  72,628
  79,991
  87,689
  95,722
  104,093
  112,806
  121,868
  131,289
  141,080
  151,253
  161,826
  172,816
  184,243
  196,129
  208,496
  221,371
  234,781
  248,755
  263,324
  278,521
  294,380
  310,938
  328,232
  346,304
  365,196
  384,953
Total liabilities and equity, $m
  132,761
  150,342
  169,631
  190,066
  211,624
  234,284
  258,035
  282,867
  308,781
  335,784
  363,891
  393,124
  423,513
  455,096
  487,914
  522,020
  557,472
  594,333
  632,673
  672,568
  714,101
  757,359
  802,436
  849,433
  898,455
  949,613
  1,003,025
  1,058,813
  1,117,111
  1,178,052
  1,241,783
Debt-to-equity ratio
  1.228
  1.340
  1.440
  1.520
  1.600
  1.660
  1.710
  1.750
  1.790
  1.830
  1.860
  1.890
  1.910
  1.930
  1.950
  1.970
  1.990
  2.000
  2.010
  2.030
  2.040
  2.050
  2.060
  2.070
  2.080
  2.090
  2.090
  2.100
  2.110
  2.110
  2.120
Adjusted equity ratio
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,152
  3,885
  5,242
  6,685
  8,212
  9,822
  11,513
  13,284
  15,135
  17,068
  19,084
  22,601
  24,787
  27,062
  29,430
  31,895
  34,461
  37,134
  39,919
  42,822
  45,849
  49,008
  52,306
  55,751
  59,350
  63,114
  67,051
  71,171
  75,484
  80,001
  84,734
Depreciation, amort., depletion, $m
  3,880
  1,943
  1,943
  1,943
  1,943
  1,943
  1,943
  1,943
  1,943
  1,943
  1,943
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Funds from operations, $m
  7,358
  5,827
  7,185
  8,628
  10,155
  11,764
  13,455
  15,226
  17,078
  19,011
  21,026
  22,601
  24,787
  27,062
  29,430
  31,895
  34,461
  37,134
  39,919
  42,822
  45,849
  49,008
  52,306
  55,751
  59,350
  63,114
  67,051
  71,171
  75,484
  80,001
  84,734
Change in working capital, $m
  86
  109
  116
  123
  130
  136
  143
  149
  156
  163
  169
  176
  183
  190
  198
  205
  213
  222
  231
  240
  250
  260
  271
  283
  295
  308
  322
  336
  351
  367
  384
Cash from operations, $m
  7,272
  5,479
  7,068
  8,505
  10,025
  11,628
  13,312
  15,077
  16,922
  18,848
  20,857
  22,425
  24,604
  26,872
  29,232
  31,689
  34,248
  36,912
  39,688
  42,582
  45,599
  48,748
  52,035
  55,468
  59,055
  62,806
  66,729
  70,835
  75,133
  79,634
  84,350
Maintenance CAPEX, $m
  0
  5,071
  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
New CAPEX, $m
  -7,901
  -25,355
  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 investing activities, $m
  -11,533
  -20,284
  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
Free cash flow, $m
  -4,261
  -14,805
  7,068
  8,505
  10,025
  11,628
  13,312
  15,077
  16,922
  18,848
  20,857
  22,425
  24,604
  26,872
  29,232
  31,689
  34,248
  36,912
  39,688
  42,582
  45,599
  48,748
  52,035
  55,468
  59,055
  62,806
  66,729
  70,835
  75,133
  79,634
  84,350
Issuance/(repayment) of debt, $m
  5,868
  12,511
  13,309
  14,100
  14,875
  15,636
  16,388
  17,134
  17,881
  18,632
  19,394
  20,171
  20,968
  21,792
  22,645
  23,534
  24,462
  25,434
  26,455
  27,528
  28,658
  29,848
  31,104
  32,428
  33,825
  35,299
  36,854
  38,495
  40,225
  42,050
  43,974
Issuance/(repurchase) of shares, $m
  731
  7,867
  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  
  6,602
  20,378
  13,309
  14,100
  14,875
  15,636
  16,388
  17,134
  17,881
  18,632
  19,394
  20,171
  20,968
  21,792
  22,645
  23,534
  24,462
  25,434
  26,455
  27,528
  28,658
  29,848
  31,104
  32,428
  33,825
  35,299
  36,854
  38,495
  40,225
  42,050
  43,974
Total cash flow (excl. dividends), $m
  2,341
  -2,294
  20,378
  22,605
  24,900
  27,264
  29,700
  32,211
  34,803
  37,480
  40,251
  42,596
  45,572
  48,663
  51,877
  55,223
  58,709
  62,346
  66,143
  70,109
  74,257
  78,596
  83,138
  87,896
  92,880
  98,105
  103,583
  109,330
  115,358
  121,684
  128,324
Retained Cash Flow (-), $m
  -1,306
  -5,573
  -5,980
  -6,335
  -6,683
  -7,025
  -7,363
  -7,698
  -8,033
  -8,371
  -8,713
  -9,062
  -9,421
  -9,790
  -10,174
  -10,573
  -10,990
  -11,427
  -11,885
  -12,368
  -12,875
  -13,410
  -13,974
  -14,569
  -15,197
  -15,859
  -16,558
  -17,295
  -18,072
  -18,892
  -19,756
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
 
  0
  14,398
  16,270
  18,217
  20,239
  22,337
  24,513
  26,769
  29,109
  31,537
  33,533
  36,152
  38,873
  41,703
  44,650
  47,719
  50,919
  54,257
  57,742
  61,382
  65,186
  69,164
  73,327
  77,684
  82,246
  87,026
  92,035
  97,286
  102,792
  108,568
Discount rate, %
 
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
 
  0
  12,042
  12,287
  12,306
  12,110
  11,713
  11,139
  10,416
  9,576
  8,653
  7,564
  6,602
  5,656
  4,752
  3,913
  3,155
  2,489
  1,920
  1,446
  1,062
  760
  529
  358
  235
  150
  92
  55
  32
  17
  9
Current shareholders' claim on cash, %
  100
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2
  88.2

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States. It operates through three segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables. The Electric Utilities and Infrastructure segment generates, transmits, distributes, and sells electricity in the Carolinas, Florida, and the Midwest; uses coal, hydroelectric, natural gas, oil, renewable generation, and nuclear fuel to generate electricity; and engages in the wholesale of electricity to municipalities, electric cooperative utilities, and other load-serving entities. This segment serves approximately 7.5 million retail electric customers in 6 states in the Southeast and Midwest regions of the United States covering a service territory of approximately 95,000 square miles; and owns approximately 49,300 megawatts (MW) of generation capacity. The Gas Utilities and Infrastructure segment distributes natural gas to residential, commercial, industrial, and power generation natural gas customers; and owns, operates, and invests in various pipeline transmission and natural gas storage facilities. It has approximately 1.5 million customers, including 1 million customers located in North Carolina, South Carolina, and Tennessee, and as well as 529,000 customers located in southwestern Ohio and northern Kentucky. The Commercial Renewables segment acquires, builds, develops, and operates wind and solar renewable generation projects, including nonregulated renewable energy and energy storage services to utilities, electric cooperatives, municipalities, and commercial and industrial customers. This segment has 21 wind farms and 63 commercial solar farms with a capacity of 2,900 MW across 14 states. The company was formerly known as Duke Energy Holding Corp. and changed its name to Duke Energy Corporation in April 2005. Duke Energy Corporation was incorporated in 2005 and is headquartered in Charlotte, North Carolina.

FINANCIAL RATIOS  of  Duke Energy (DUK)

Valuation Ratios
P/E Ratio 27.4
Price to Sales 2.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 8.1
Price to Free Cash Flow -93.8
Growth Rates
Sales Growth Rate 1.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.8%
Cap. Spend. - 3 Yr. Gr. Rate 7.4%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 111.1%
Total Debt to Equity 122.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 2.7%
Ret/ On Assets - 3 Yr. Avg. 2.8%
Return On Total Capital 2.5%
Ret/ On T. Cap. - 3 Yr. Avg. 2.7%
Return On Equity 5.3%
Return On Equity - 3 Yr. Avg. 5.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 41.4%
EBITDA Margin - 3 Yr. Avg. 40.6%
Operating Margin 23.5%
Oper. Margin - 3 Yr. Avg. 22.6%
Pre-Tax Margin 16.4%
Pre-Tax Margin - 3 Yr. Avg. 16.9%
Net Profit Margin 9.5%
Net Profit Margin - 3 Yr. Avg. 10.1%
Effective Tax Rate 31%
Eff/ Tax Rate - 3 Yr. Avg. 31.9%
Payout Ratio 108.4%

DUK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DUK stock intrinsic value calculation we used $22743 million for the last fiscal year's total revenue generated by Duke Energy. The default revenue input number comes from 2016 income statement of Duke 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 DUK stock valuation model: a) initial revenue growth rate of 13.7% 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 8.9%, whose default value for DUK is calculated based on our internal credit rating of Duke 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 Duke 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 DUK stock the variable cost ratio is equal to 29.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11006 million in the base year in the intrinsic value calculation for DUK 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 3.9% for Duke Energy.

Corporate tax rate of 27% is the nominal tax rate for Duke 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 DUK 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 DUK are equal to 0%.

Life of production assets of -2 years is the average useful life of capital assets used in Duke 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 DUK is equal to 3.5%. 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 - $41033 million for Duke 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 699.305 million for Duke 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 Duke Energy at the current share price and the inputted number of shares is $59.0 billion.


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COMPANY NEWS

▶ 10 highest-paid female CEOs   [May-24-17 07:48AM  Associated Press]
▶ 10 highest-paid female CEOs   [06:31AM  Associated Press]
▶ Weekly Top Insider Buys Highlight for the Week of May 19   [May-21-17 05:07PM  GuruFocus.com]
▶ Duke posts full Q&A from controversial online-only shareholder meeting   [07:52AM  American City Business Journals]
▶ [$$] Duke Energy Told to Detail Costs for North Carolina Nuclear Plant   [May-17-17 04:49PM  The Wall Street Journal]
▶ Duke Energy doles out $1.1M in water resources grants   [May-16-17 07:00PM  American City Business Journals]
▶ Duke counsel elected to Ohio National board of directors   [01:20PM  American City Business Journals]
▶ ETFs with exposure to Duke Energy Corp. : May 15, 2017   [May-15-17 03:36PM  Capital Cube]
▶ Inside Duke Energys Dividend Outlook   [07:37AM  Market Realist]
▶ Which Utility Will Pay Higher Dividends in 2017?   [May-11-17 05:05PM  Market Realist]
▶ What Analysts Recommend for Duke Energy   [10:36AM  Market Realist]
▶ How Did Duke Energys Earnings Trend in 1Q17?   [09:36AM  Market Realist]
▶ Duke Energy reports solid earnings despite mild first-quarter weather   [09:55AM  American City Business Journals]
▶ What Analysts Recommend for Southern Company   [09:07AM  Market Realist]
▶ Duke Energy misses 1Q profit forecasts   [07:20AM  Associated Press]
▶ Whats Southern Companys Valuation after Its 1Q17 Earnings?   [May-08-17 05:35PM  Market Realist]
▶ Dominion Resources 1Q17 Revenues Rise 15.8% YoY   [May-05-17 05:52PM  Market Realist]
▶ SO, DUK, and NEE: How Top Utilities Paid Their Shareholders   [May-03-17 04:35PM  Market Realist]
▶ Will Duke Energy Stock Continue to Soar?   [07:37AM  Market Realist]
▶ Indiana governor signs bill aimed at dimming solar incentive   [May-02-17 07:07PM  Associated Press]
▶ Duke Energy to seek N.C. rate hike that will include coal-ash costs   [06:00PM  American City Business Journals]
▶ Clemson chooses new site for Duke Energy plant, mollifying neighbors   [06:37AM  American City Business Journals]
▶ Southern Company: Why Analysts Views Changed   [Apr-28-17 07:39AM  Market Realist]
▶ Duke Energy sets new carbon-reduction goal 40% reduction from 2005 emission by 2030   [Apr-27-17 01:39PM  American City Business Journals]
▶ Triad college partners with Duke Energy to launch outdoor recreation program   [Apr-26-17 02:40PM  American City Business Journals]
▶ Is Dominion Resources Stock Pricey?   [Apr-25-17 02:05PM  Market Realist]
▶ Clemson agrees to move Duke Energy plant away from irate neighbors   [11:08AM  American City Business Journals]
▶ What Does PPLs Current Valuation Indicate?   [07:36AM  Market Realist]
▶ Duke Energy CEO doubts coal industry revival despite current political winds   [Apr-20-17 11:15AM  American City Business Journals]
▶ Duke Energy: Opponents to coal-ash accounting put cart before horse   [Apr-19-17 07:03PM  American City Business Journals]
▶ Solar industry disputes Duke Energy's $1B overpayment claim   [03:46PM  American City Business Journals]
▶ Solar industry disputes Duke Energy's $1B overpayment claim   [Apr-18-17 09:35PM  American City Business Journals]
▶ Duke Energy wants to cut prices paid to solar power producers by 36%   [07:05PM  American City Business Journals]
▶ SO, NEE, and DUK: Analyzing Current Valuations   [Apr-17-17 05:35PM  Market Realist]
Stock chart of DUK Financial statements of DUK Annual reports of DUK
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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