Intrinsic value of ENI ADR - E

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$30.87

  Intrinsic Value

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  Value-price divergence*

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

We calculate the intrinsic value of E 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 56.6

 

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, %
  -22.86
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  58,852
  69,095
  70,684
  72,501
  74,540
  76,800
  79,279
  81,979
  84,902
  88,051
  91,430
  95,045
  98,902
  103,010
  107,374
  112,006
  116,915
  122,111
  127,605
  133,411
  139,541
  146,009
  152,830
  160,020
  167,595
  175,574
  183,975
  192,817
  202,121
  211,910
  222,206
Variable operating expenses, $m
 
  40,832
  41,769
  42,839
  44,040
  45,371
  46,832
  48,422
  50,144
  51,999
  53,989
  55,987
  58,259
  60,679
  63,250
  65,978
  68,870
  71,930
  75,167
  78,587
  82,198
  86,008
  90,026
  94,261
  98,724
  103,424
  108,372
  113,581
  119,062
  124,828
  130,893
Fixed operating expenses, $m
 
  31,919
  32,716
  33,534
  34,373
  35,232
  36,113
  37,016
  37,941
  38,890
  39,862
  40,858
  41,880
  42,927
  44,000
  45,100
  46,228
  47,383
  48,568
  49,782
  51,027
  52,302
  53,610
  54,950
  56,324
  57,732
  59,175
  60,654
  62,171
  63,725
  65,318
Total operating expenses, $m
  56,762
  72,751
  74,485
  76,373
  78,413
  80,603
  82,945
  85,438
  88,085
  90,889
  93,851
  96,845
  100,139
  103,606
  107,250
  111,078
  115,098
  119,313
  123,735
  128,369
  133,225
  138,310
  143,636
  149,211
  155,048
  161,156
  167,547
  174,235
  181,233
  188,553
  196,211
Operating income, $m
  2,091
  -3,656
  -3,801
  -3,872
  -3,873
  -3,803
  -3,665
  -3,459
  -3,183
  -2,837
  -2,421
  -1,801
  -1,237
  -596
  124
  928
  1,817
  2,797
  3,870
  5,042
  6,316
  7,699
  9,194
  10,809
  12,548
  14,419
  16,427
  18,582
  20,889
  23,357
  25,995
EBITDA, $m
  10,069
  4,034
  4,063
  4,191
  4,413
  4,730
  5,139
  5,641
  6,237
  6,927
  7,713
  8,597
  9,583
  10,673
  11,871
  13,181
  14,608
  16,156
  17,830
  19,637
  21,582
  23,672
  25,914
  28,315
  30,883
  33,626
  36,554
  39,676
  43,001
  46,540
  50,304
Interest expense (income), $m
  823
  679
  734
  796
  867
  946
  1,034
  1,130
  1,235
  1,349
  1,471
  1,602
  1,743
  1,893
  2,052
  2,222
  2,402
  2,592
  2,794
  3,008
  3,233
  3,471
  3,723
  3,988
  4,267
  4,561
  4,871
  5,198
  5,541
  5,903
  6,283
Earnings before tax, $m
  941
  -4,335
  -4,535
  -4,669
  -4,739
  -4,749
  -4,699
  -4,589
  -4,418
  -4,186
  -3,892
  -3,403
  -2,980
  -2,489
  -1,928
  -1,294
  -584
  205
  1,076
  2,034
  3,083
  4,227
  5,471
  6,821
  8,281
  9,857
  11,556
  13,384
  15,348
  17,454
  19,712
Tax expense, $m
  2,043
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  55
  291
  549
  832
  1,141
  1,477
  1,842
  2,236
  2,661
  3,120
  3,614
  4,144
  4,713
  5,322
Net income, $m
  -1,545
  -4,335
  -4,535
  -4,669
  -4,739
  -4,749
  -4,699
  -4,589
  -4,418
  -4,186
  -3,892
  -3,403
  -2,980
  -2,489
  -1,928
  -1,294
  -584
  149
  786
  1,485
  2,251
  3,086
  3,994
  4,979
  6,045
  7,196
  8,436
  9,770
  11,204
  12,742
  14,390

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,747
  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
  131,448
  131,110
  134,125
  137,572
  141,442
  145,730
  150,435
  155,559
  161,104
  167,079
  173,491
  180,351
  187,671
  195,464
  203,747
  212,536
  221,850
  231,709
  242,135
  253,151
  264,783
  277,057
  290,000
  303,643
  318,018
  333,158
  349,098
  365,876
  383,532
  402,106
  421,644
Adjusted assets (=assets-cash), $m
  118,701
  131,110
  134,125
  137,572
  141,442
  145,730
  150,435
  155,559
  161,104
  167,079
  173,491
  180,351
  187,671
  195,464
  203,747
  212,536
  221,850
  231,709
  242,135
  253,151
  264,783
  277,057
  290,000
  303,643
  318,018
  333,158
  349,098
  365,876
  383,532
  402,106
  421,644
Revenue / Adjusted assets
  0.496
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
  0.527
Average production assets, $m
  75,181
  37,795
  38,664
  39,658
  40,773
  42,010
  43,366
  44,843
  46,441
  48,164
  50,012
  51,990
  54,100
  56,346
  58,734
  61,267
  63,952
  66,794
  69,800
  72,976
  76,329
  79,867
  83,598
  87,531
  91,675
  96,039
  100,634
  105,471
  110,560
  115,915
  121,547
Working capital, $m
  10,844
  9,466
  9,684
  9,933
  10,212
  10,522
  10,861
  11,231
  11,632
  12,063
  12,526
  13,021
  13,550
  14,112
  14,710
  15,345
  16,017
  16,729
  17,482
  18,277
  19,117
  20,003
  20,938
  21,923
  22,961
  24,054
  25,205
  26,416
  27,691
  29,032
  30,442
Total debt, $m
  28,749
  20,984
  22,748
  24,765
  27,029
  29,537
  32,290
  35,287
  38,531
  42,026
  45,777
  49,790
  54,072
  58,631
  63,477
  68,618
  74,067
  79,835
  85,934
  92,379
  99,183
  106,363
  113,935
  121,916
  130,326
  139,182
  148,507
  158,323
  168,651
  179,517
  190,947
Total liabilities, $m
  75,471
  76,699
  78,463
  80,480
  82,744
  85,252
  88,005
  91,002
  94,246
  97,741
  101,492
  105,505
  109,787
  114,346
  119,192
  124,333
  129,782
  135,550
  141,649
  148,094
  154,898
  162,078
  169,650
  177,631
  186,041
  194,897
  204,222
  214,038
  224,366
  235,232
  246,662
Total equity, $m
  55,976
  54,411
  55,662
  57,092
  58,698
  60,478
  62,431
  64,557
  66,858
  69,338
  71,999
  74,846
  77,883
  81,118
  84,555
  88,202
  92,068
  96,159
  100,486
  105,058
  109,885
  114,978
  120,350
  126,012
  131,977
  138,261
  144,876
  151,839
  159,166
  166,874
  174,982
Total liabilities and equity, $m
  131,447
  131,110
  134,125
  137,572
  141,442
  145,730
  150,436
  155,559
  161,104
  167,079
  173,491
  180,351
  187,670
  195,464
  203,747
  212,535
  221,850
  231,709
  242,135
  253,152
  264,783
  277,056
  290,000
  303,643
  318,018
  333,158
  349,098
  365,877
  383,532
  402,106
  421,644
Debt-to-equity ratio
  0.514
  0.390
  0.410
  0.430
  0.460
  0.490
  0.520
  0.550
  0.580
  0.610
  0.640
  0.670
  0.690
  0.720
  0.750
  0.780
  0.800
  0.830
  0.860
  0.880
  0.900
  0.930
  0.950
  0.970
  0.990
  1.010
  1.030
  1.040
  1.060
  1.080
  1.090
Adjusted equity ratio
  0.394
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415
  0.415

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,545
  -4,335
  -4,535
  -4,669
  -4,739
  -4,749
  -4,699
  -4,589
  -4,418
  -4,186
  -3,892
  -3,403
  -2,980
  -2,489
  -1,928
  -1,294
  -584
  149
  786
  1,485
  2,251
  3,086
  3,994
  4,979
  6,045
  7,196
  8,436
  9,770
  11,204
  12,742
  14,390
Depreciation, amort., depletion, $m
  7,978
  7,690
  7,864
  8,063
  8,286
  8,533
  8,805
  9,100
  9,420
  9,764
  10,134
  10,398
  10,820
  11,269
  11,747
  12,253
  12,790
  13,359
  13,960
  14,595
  15,266
  15,973
  16,720
  17,506
  18,335
  19,208
  20,127
  21,094
  22,112
  23,183
  24,309
Funds from operations, $m
  8,844
  3,355
  3,329
  3,394
  3,547
  3,784
  4,106
  4,511
  5,002
  5,578
  6,242
  6,995
  7,840
  8,781
  9,819
  10,960
  12,206
  13,508
  14,746
  16,080
  17,516
  19,059
  20,714
  22,485
  24,380
  26,404
  28,563
  30,864
  33,316
  35,925
  38,699
Change in working capital, $m
  -187
  186
  218
  249
  279
  310
  340
  370
  400
  431
  463
  495
  528
  563
  598
  635
  672
  712
  753
  795
  840
  886
  934
  985
  1,038
  1,093
  1,151
  1,211
  1,275
  1,341
  1,411
Cash from operations, $m
  9,031
  35,822
  3,111
  3,145
  3,267
  3,474
  3,766
  4,141
  4,601
  5,147
  5,779
  6,500
  7,312
  8,218
  9,221
  10,325
  11,534
  12,796
  13,993
  15,285
  16,677
  18,173
  19,779
  21,500
  23,342
  25,310
  27,412
  29,653
  32,041
  34,584
  37,289
Maintenance CAPEX, $m
  0
  -7,415
  -7,559
  -7,733
  -7,932
  -8,155
  -8,402
  -8,673
  -8,969
  -9,288
  -9,633
  -10,002
  -10,398
  -10,820
  -11,269
  -11,747
  -12,253
  -12,790
  -13,359
  -13,960
  -14,595
  -15,266
  -15,973
  -16,720
  -17,506
  -18,335
  -19,208
  -20,127
  -21,094
  -22,112
  -23,183
New CAPEX, $m
  -9,689
  -722
  -869
  -994
  -1,116
  -1,236
  -1,356
  -1,477
  -1,599
  -1,722
  -1,848
  -1,977
  -2,110
  -2,247
  -2,388
  -2,534
  -2,685
  -2,842
  -3,006
  -3,176
  -3,353
  -3,538
  -3,731
  -3,933
  -4,144
  -4,364
  -4,595
  -4,837
  -5,090
  -5,354
  -5,632
Cash from investing activities, $m
  -4,689
  -8,137
  -8,428
  -8,727
  -9,048
  -9,391
  -9,758
  -10,150
  -10,568
  -11,010
  -11,481
  -11,979
  -12,508
  -13,067
  -13,657
  -14,281
  -14,938
  -15,632
  -16,365
  -17,136
  -17,948
  -18,804
  -19,704
  -20,653
  -21,650
  -22,699
  -23,803
  -24,964
  -26,184
  -27,466
  -28,815
Free cash flow, $m
  4,342
  27,685
  -5,317
  -5,581
  -5,780
  -5,916
  -5,992
  -6,009
  -5,966
  -5,864
  -5,702
  -5,480
  -5,196
  -4,849
  -4,436
  -3,955
  -3,405
  -2,836
  -2,372
  -1,851
  -1,272
  -631
  75
  848
  1,692
  2,611
  3,609
  4,690
  5,857
  7,117
  8,474
Issuance/(repayment) of debt, $m
  -808
  1,587
  1,764
  2,017
  2,264
  2,509
  2,752
  2,997
  3,244
  3,495
  3,751
  4,013
  4,282
  4,559
  4,845
  5,142
  5,449
  5,768
  6,099
  6,445
  6,805
  7,180
  7,572
  7,981
  8,409
  8,857
  9,325
  9,815
  10,328
  10,866
  11,429
Issuance/(repurchase) of shares, $m
  0
  0
  4,805
  4,995
  5,122
  5,187
  5,193
  5,138
  5,023
  4,848
  4,612
  4,314
  3,952
  3,524
  3,028
  2,461
  1,821
  1,160
  599
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -812
  1,587
  6,569
  7,012
  7,386
  7,696
  7,945
  8,135
  8,267
  8,343
  8,363
  8,327
  8,234
  8,083
  7,873
  7,603
  7,270
  6,928
  6,698
  6,445
  6,805
  7,180
  7,572
  7,981
  8,409
  8,857
  9,325
  9,815
  10,328
  10,866
  11,429
Total cash flow (excl. dividends), $m
  3,532
  29,273
  -3,553
  -3,565
  -3,516
  -3,408
  -3,240
  -3,012
  -2,722
  -2,369
  -1,951
  -1,467
  -914
  -289
  410
  1,186
  2,044
  2,931
  3,728
  4,594
  5,533
  6,549
  7,647
  8,829
  10,101
  11,468
  12,934
  14,505
  16,186
  17,983
  19,903
Retained Cash Flow (-), $m
  2,593
  -1,041
  -1,251
  -1,431
  -1,606
  -1,780
  -1,953
  -2,126
  -2,302
  -2,480
  -2,661
  -2,847
  -3,038
  -3,234
  -3,437
  -3,647
  -3,865
  -4,092
  -4,327
  -4,572
  -4,827
  -5,093
  -5,371
  -5,662
  -5,966
  -6,283
  -6,615
  -6,963
  -7,327
  -7,708
  -8,108
Prev. year cash balance distribution, $m
 
  2,123
  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
 
  30,355
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  22
  706
  1,456
  2,275
  3,167
  4,136
  5,185
  6,319
  7,542
  8,859
  10,275
  11,795
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
 
  29,104
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  3
  90
  151
  189
  208
  211
  202
  184
  162
  137
  112
  89
Current shareholders' claim on cash, %
  100
  100.0
  92.0
  84.6
  77.8
  71.6
  66.0
  61.1
  56.7
  53.0
  49.7
  47.0
  44.7
  42.8
  41.3
  40.1
  39.3
  38.8
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6
  38.6

Eni SpA engages in the oil and gas, electricity generation and sale, petrochemicals, oilfield services construction, and engineering industries. The company is involved in the oil and natural gas exploration, and field development and production activities, as well as liquefied natural gas (LNG) operations in 40 countries, including Italy, Libya, Egypt, Norway, the United Kingdom, Angola, Congo, Nigeria, the United States, Kazakhstan, Russia, Algeria, Australia, Venezuela, Iraq, Ghana, and Mozambique. It also supplies, trades, and markets gas and electricity; transports international gas; supplies crude oil; and refines and markets petroleum products at retail and wholesale markets primarily in Italy and rest of Europe. In addition, the company engages in the generation of electricity; commodity risk management and asset-backed trading activities; and production of various chemicals, including olefins and aromatics, basic intermediate products, polyethylene, polystyrenes, and elastomers in Italy and Western Europe. Further, it provides a range of engineering, drilling, and construction services to the oil and gas industry, and downstream refining and petrochemical sectors. Eni SpA was founded in 1953 and is headquartered in Rome, Italy.

FINANCIAL RATIOS  of  ENI ADR (E)

Valuation Ratios
P/E Ratio -72
Price to Sales 1.9
Price to Book 2
Price to Tangible Book
Price to Cash Flow 12.3
Price to Free Cash Flow -168.9
Growth Rates
Sales Growth Rate -22.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.8%
Cap. Spend. - 3 Yr. Gr. Rate -6.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 38.8%
Total Debt to Equity 51.4%
Interest Coverage 2
Management Effectiveness
Return On Assets -1.8%
Ret/ On Assets - 3 Yr. Avg. -2%
Return On Total Capital -1.8%
Ret/ On T. Cap. - 3 Yr. Avg. -3.5%
Return On Equity -2.7%
Return On Equity - 3 Yr. Avg. -5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 48.7%
Gross Margin - 3 Yr. Avg. 42.8%
EBITDA Margin 16.6%
EBITDA Margin - 3 Yr. Avg. 13.7%
Operating Margin 3.6%
Oper. Margin - 3 Yr. Avg. 2.9%
Pre-Tax Margin 1.6%
Pre-Tax Margin - 3 Yr. Avg. 1.4%
Net Profit Margin -2.6%
Net Profit Margin - 3 Yr. Avg. -4.5%
Effective Tax Rate 217.1%
Eff/ Tax Rate - 3 Yr. Avg. 74.1%
Payout Ratio -196.8%

E stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the E stock intrinsic value calculation we used $67740 million for the last fiscal year's total revenue generated by ENI ADR. The default revenue input number comes from 2016 income statement of ENI ADR. 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 E stock valuation model: a) initial revenue growth rate of 2% 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 E is calculated based on our internal credit rating of ENI ADR, 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 ENI ADR.
    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 E stock the variable cost ratio is equal to 59.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $31140 million in the base year in the intrinsic value calculation for E 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 ENI ADR.

Corporate tax rate of 27% is the nominal tax rate for ENI ADR. 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 E 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 E are equal to 54.7%.

Life of production assets of 3.9 years is the average useful life of capital assets used in ENI ADR 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 E is equal to 13.7%. 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 - $55493 million for ENI ADR - 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 1833.76 million for ENI ADR 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 ENI ADR at the current share price and the inputted number of shares is $56.6 billion.


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▶ OPEC Deal: 9-Month Extension Looking Increasingly Likely   [May-23-17 03:00PM  Oilprice.com]
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▶ [$$] US turns down Exxon request for Russia sanctions waiver   [Apr-21-17 04:39PM  Financial Times]
▶ Oil Majors See Huge Opportunity In Eastern Mediterranean   [Apr-20-17 04:00PM  Oilprice.com]
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▶ [$$] Week in Review, April 15   [11:31AM  Financial Times]
▶ Fracking could fuel Alaskas next oil boom   [09:54AM  MarketWatch]
▶ Why Eni (E) Could Be a Top Value Stock Pick   [Apr-12-17 08:43AM  Zacks]
▶ Are Mexicos Oil Reserves Almost Depleted?   [Apr-04-17 07:00PM  Oilprice.com]
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▶ Gauging BPs Implied Volatility   [Mar-30-17 07:36AM  Market Realist]
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Stock chart of E Financial statements of E Annual reports of E
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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