Intrinsic value of ENI ADR - E

Previous Close

$37.73

  Intrinsic Value

$3.61

stock screener

  Rating & Target

str. sell

-90%

Previous close

$37.73

 
Intrinsic value

$3.61

 
Up/down potential

-90%

 
Rating

str. sell

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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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
  60,871
  62,271
  63,871
  65,668
  67,658
  69,843
  72,221
  74,796
  77,570
  80,547
  83,732
  87,130
  90,748
  94,594
  98,674
  102,999
  107,576
  112,416
  117,531
  122,931
  128,630
  134,639
  140,973
  147,647
  154,676
  162,077
  169,866
  178,063
  186,687
  195,757
Variable operating expenses, $m
 
  63,420
  64,871
  66,529
  68,391
  70,454
  72,718
  75,182
  77,850
  80,725
  83,810
  86,766
  90,287
  94,037
  98,021
  102,250
  106,731
  111,474
  116,490
  121,790
  127,386
  133,290
  139,517
  146,081
  152,997
  160,280
  167,949
  176,021
  184,515
  193,451
  202,850
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
  56,762
  63,420
  64,871
  66,529
  68,391
  70,454
  72,718
  75,182
  77,850
  80,725
  83,810
  86,766
  90,287
  94,037
  98,021
  102,250
  106,731
  111,474
  116,490
  121,790
  127,386
  133,290
  139,517
  146,081
  152,997
  160,280
  167,949
  176,021
  184,515
  193,451
  202,850
Operating income, $m
  2,091
  -2,550
  -2,600
  -2,658
  -2,723
  -2,796
  -2,875
  -2,961
  -3,054
  -3,155
  -3,263
  -3,034
  -3,157
  -3,288
  -3,428
  -3,575
  -3,732
  -3,898
  -4,073
  -4,259
  -4,454
  -4,661
  -4,878
  -5,108
  -5,350
  -5,605
  -5,873
  -6,155
  -6,452
  -6,764
  -7,093
EBITDA, $m
  10,069
  5,702
  5,833
  5,983
  6,151
  6,337
  6,542
  6,765
  7,006
  7,266
  7,545
  7,843
  8,161
  8,500
  8,860
  9,242
  9,647
  10,076
  10,530
  11,009
  11,514
  12,048
  12,611
  13,204
  13,829
  14,488
  15,181
  15,911
  16,678
  17,486
  18,336
Interest expense (income), $m
  823
  6,394
  6,744
  7,138
  7,588
  8,094
  8,654
  9,268
  9,937
  10,662
  11,442
  12,280
  13,176
  14,132
  15,150
  16,231
  17,379
  18,596
  19,884
  21,245
  22,684
  24,203
  25,806
  27,497
  29,279
  31,156
  33,134
  35,216
  37,407
  39,713
  42,139
Earnings before tax, $m
  941
  -8,944
  -9,345
  -9,796
  -10,312
  -10,889
  -11,529
  -12,229
  -12,992
  -13,817
  -14,705
  -15,314
  -16,333
  -17,420
  -18,577
  -19,807
  -21,111
  -22,494
  -23,957
  -25,504
  -27,138
  -28,864
  -30,685
  -32,605
  -34,629
  -36,761
  -39,006
  -41,371
  -43,859
  -46,478
  -49,232
Tax expense, $m
  2,043
  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
Net income, $m
  -1,545
  -8,944
  -9,345
  -9,796
  -10,312
  -10,889
  -11,529
  -12,229
  -12,992
  -13,817
  -14,705
  -15,314
  -16,333
  -17,420
  -18,577
  -19,807
  -21,111
  -22,494
  -23,957
  -25,504
  -27,138
  -28,864
  -30,685
  -32,605
  -34,629
  -36,761
  -39,006
  -41,371
  -43,859
  -46,478
  -49,232

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
  133,781
  136,858
  140,376
  144,324
  148,700
  153,501
  158,728
  164,387
  170,484
  177,026
  184,026
  191,495
  199,447
  207,899
  216,867
  226,370
  236,431
  247,069
  258,310
  270,179
  282,702
  295,909
  309,831
  324,498
  339,947
  356,212
  373,332
  391,348
  410,301
  430,236
Adjusted assets (=assets-cash), $m
  118,701
  133,781
  136,858
  140,376
  144,324
  148,700
  153,501
  158,728
  164,387
  170,484
  177,026
  184,026
  191,495
  199,447
  207,899
  216,867
  226,370
  236,431
  247,069
  258,310
  270,179
  282,702
  295,909
  309,831
  324,498
  339,947
  356,212
  373,332
  391,348
  410,301
  430,236
Revenue / Adjusted assets
  0.496
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
Average production assets, $m
  75,181
  79,071
  80,889
  82,968
  85,302
  87,888
  90,726
  93,816
  97,160
  100,764
  104,631
  108,768
  113,182
  117,882
  122,877
  128,178
  133,795
  139,741
  146,029
  152,673
  159,688
  167,090
  174,896
  183,124
  191,793
  200,924
  210,537
  220,656
  231,304
  242,506
  254,289
Working capital, $m
  10,844
  -11,687
  -11,956
  -12,263
  -12,608
  -12,990
  -13,410
  -13,867
  -14,361
  -14,893
  -15,465
  -16,077
  -16,729
  -17,424
  -18,162
  -18,945
  -19,776
  -20,655
  -21,584
  -22,566
  -23,603
  -24,697
  -25,851
  -27,067
  -28,348
  -29,698
  -31,119
  -32,614
  -34,188
  -35,844
  -37,585
Total debt, $m
  28,749
  30,243
  32,009
  34,028
  36,295
  38,806
  41,562
  44,563
  47,811
  51,310
  55,066
  59,084
  63,371
  67,935
  72,786
  77,934
  83,389
  89,164
  95,270
  101,723
  108,535
  115,724
  123,305
  131,295
  139,715
  148,582
  157,918
  167,745
  178,086
  188,965
  200,408
Total liabilities, $m
  75,471
  76,791
  78,557
  80,576
  82,842
  85,354
  88,109
  91,110
  94,358
  97,858
  101,613
  105,631
  109,918
  114,483
  119,334
  124,481
  129,937
  135,711
  141,818
  148,270
  155,083
  162,271
  169,852
  177,843
  186,262
  195,130
  204,466
  214,293
  224,634
  235,513
  246,955
Total equity, $m
  55,976
  56,991
  58,302
  59,800
  61,482
  63,346
  65,391
  67,618
  70,029
  72,626
  75,413
  78,395
  81,577
  84,964
  88,565
  92,385
  96,434
  100,719
  105,251
  110,040
  115,096
  120,431
  126,057
  131,988
  138,236
  144,817
  151,746
  159,040
  166,714
  174,788
  183,280
Total liabilities and equity, $m
  131,447
  133,782
  136,859
  140,376
  144,324
  148,700
  153,500
  158,728
  164,387
  170,484
  177,026
  184,026
  191,495
  199,447
  207,899
  216,866
  226,371
  236,430
  247,069
  258,310
  270,179
  282,702
  295,909
  309,831
  324,498
  339,947
  356,212
  373,333
  391,348
  410,301
  430,235
Debt-to-equity ratio
  0.514
  0.530
  0.550
  0.570
  0.590
  0.610
  0.640
  0.660
  0.680
  0.710
  0.730
  0.750
  0.780
  0.800
  0.820
  0.840
  0.860
  0.890
  0.910
  0.920
  0.940
  0.960
  0.980
  0.990
  1.010
  1.030
  1.040
  1.050
  1.070
  1.080
  1.090
Adjusted equity ratio
  0.394
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426
  0.426

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,545
  -8,944
  -9,345
  -9,796
  -10,312
  -10,889
  -11,529
  -12,229
  -12,992
  -13,817
  -14,705
  -15,314
  -16,333
  -17,420
  -18,577
  -19,807
  -21,111
  -22,494
  -23,957
  -25,504
  -27,138
  -28,864
  -30,685
  -32,605
  -34,629
  -36,761
  -39,006
  -41,371
  -43,859
  -46,478
  -49,232
Depreciation, amort., depletion, $m
  7,978
  8,251
  8,433
  8,641
  8,874
  9,133
  9,417
  9,726
  10,060
  10,420
  10,807
  10,877
  11,318
  11,788
  12,288
  12,818
  13,380
  13,974
  14,603
  15,267
  15,969
  16,709
  17,490
  18,312
  19,179
  20,092
  21,054
  22,066
  23,130
  24,251
  25,429
Funds from operations, $m
  8,844
  -692
  -912
  -1,156
  -1,437
  -1,756
  -2,112
  -2,504
  -2,932
  -3,396
  -3,898
  -4,437
  -5,015
  -5,632
  -6,289
  -6,989
  -7,732
  -8,520
  -9,354
  -10,237
  -11,170
  -12,155
  -13,195
  -14,293
  -15,449
  -16,669
  -17,953
  -19,305
  -20,729
  -22,227
  -23,803
Change in working capital, $m
  -187
  -229
  -269
  -307
  -345
  -382
  -419
  -457
  -494
  -533
  -572
  -611
  -652
  -695
  -738
  -783
  -830
  -879
  -929
  -982
  -1,037
  -1,094
  -1,154
  -1,216
  -1,281
  -1,350
  -1,421
  -1,496
  -1,574
  -1,656
  -1,742
Cash from operations, $m
  9,031
  -463
  -643
  -848
  -1,093
  -1,374
  -1,693
  -2,047
  -2,437
  -2,864
  -3,326
  -3,825
  -4,362
  -4,937
  -5,551
  -6,205
  -6,902
  -7,641
  -8,425
  -9,255
  -10,133
  -11,061
  -12,042
  -13,076
  -14,168
  -15,319
  -16,532
  -17,809
  -19,155
  -20,571
  -22,062
Maintenance CAPEX, $m
  0
  -7,755
  -7,907
  -8,089
  -8,297
  -8,530
  -8,789
  -9,073
  -9,382
  -9,716
  -10,076
  -10,463
  -10,877
  -11,318
  -11,788
  -12,288
  -12,818
  -13,380
  -13,974
  -14,603
  -15,267
  -15,969
  -16,709
  -17,490
  -18,312
  -19,179
  -20,092
  -21,054
  -22,066
  -23,130
  -24,251
New CAPEX, $m
  -9,689
  -1,525
  -1,819
  -2,079
  -2,334
  -2,586
  -2,838
  -3,090
  -3,345
  -3,603
  -3,867
  -4,137
  -4,414
  -4,700
  -4,995
  -5,301
  -5,617
  -5,946
  -6,288
  -6,644
  -7,015
  -7,402
  -7,806
  -8,228
  -8,669
  -9,131
  -9,613
  -10,119
  -10,648
  -11,202
  -11,783
Cash from investing activities, $m
  -4,689
  -9,280
  -9,726
  -10,168
  -10,631
  -11,116
  -11,627
  -12,163
  -12,727
  -13,319
  -13,943
  -14,600
  -15,291
  -16,018
  -16,783
  -17,589
  -18,435
  -19,326
  -20,262
  -21,247
  -22,282
  -23,371
  -24,515
  -25,718
  -26,981
  -28,310
  -29,705
  -31,173
  -32,714
  -34,332
  -36,034
Free cash flow, $m
  4,342
  -9,743
  -10,368
  -11,016
  -11,723
  -12,491
  -13,319
  -14,209
  -15,163
  -16,183
  -17,270
  -18,425
  -19,653
  -20,955
  -22,334
  -23,794
  -25,337
  -26,966
  -28,687
  -30,501
  -32,415
  -34,432
  -36,557
  -38,794
  -41,150
  -43,629
  -46,238
  -48,982
  -51,868
  -54,904
  -58,095
Issuance/(repayment) of debt, $m
  -808
  1,571
  1,766
  2,019
  2,267
  2,512
  2,756
  3,001
  3,248
  3,499
  3,756
  4,018
  4,287
  4,565
  4,851
  5,148
  5,455
  5,775
  6,107
  6,452
  6,813
  7,188
  7,581
  7,991
  8,419
  8,867
  9,336
  9,827
  10,341
  10,879
  11,443
Issuance/(repurchase) of shares, $m
  0
  10,055
  10,655
  11,295
  11,994
  12,753
  13,574
  14,456
  15,402
  16,414
  17,492
  18,295
  19,514
  20,807
  22,177
  23,627
  25,160
  26,779
  28,489
  30,293
  32,195
  34,199
  36,311
  38,535
  40,877
  43,342
  45,935
  48,664
  51,534
  54,552
  57,725
Cash from financing (excl. dividends), $m  
  -812
  11,626
  12,421
  13,314
  14,261
  15,265
  16,330
  17,457
  18,650
  19,913
  21,248
  22,313
  23,801
  25,372
  27,028
  28,775
  30,615
  32,554
  34,596
  36,745
  39,008
  41,387
  43,892
  46,526
  49,296
  52,209
  55,271
  58,491
  61,875
  65,431
  69,168
Total cash flow (excl. dividends), $m
  3,532
  1,883
  2,053
  2,298
  2,537
  2,774
  3,011
  3,248
  3,487
  3,730
  3,978
  3,888
  4,148
  4,417
  4,694
  4,981
  5,279
  5,588
  5,909
  6,243
  6,592
  6,956
  7,335
  7,732
  8,147
  8,580
  9,034
  9,509
  10,006
  10,527
  11,072
Retained Cash Flow (-), $m
  2,593
  -10,055
  -10,655
  -11,295
  -11,994
  -12,753
  -13,574
  -14,456
  -15,402
  -16,414
  -17,492
  -18,295
  -19,514
  -20,807
  -22,177
  -23,627
  -25,160
  -26,779
  -28,489
  -30,293
  -32,195
  -34,199
  -36,311
  -38,535
  -40,877
  -43,342
  -45,935
  -48,664
  -51,534
  -54,552
  -57,725
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
 
  -8,172
  -8,602
  -8,997
  -9,457
  -9,979
  -10,563
  -11,209
  -11,915
  -12,684
  -13,514
  -14,408
  -15,366
  -16,391
  -17,483
  -18,646
  -19,881
  -21,192
  -22,580
  -24,049
  -25,602
  -27,243
  -28,976
  -30,803
  -32,730
  -34,762
  -36,901
  -39,155
  -41,528
  -44,025
  -46,652
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
 
  -7,835
  -7,875
  -7,830
  -7,787
  -7,735
  -7,666
  -7,572
  -7,447
  -7,286
  -7,085
  -6,842
  -6,557
  -6,232
  -5,869
  -5,474
  -5,052
  -4,611
  -4,158
  -3,703
  -3,253
  -2,818
  -2,404
  -2,019
  -1,667
  -1,352
  -1,077
  -840
  -642
  -481
  -351
Current shareholders' claim on cash, %
  100
  93.2
  86.6
  80.2
  74.2
  68.4
  62.9
  57.7
  52.8
  48.2
  43.9
  39.9
  36.3
  32.8
  29.7
  26.8
  24.1
  21.7
  19.4
  17.4
  15.5
  13.8
  12.3
  11.0
  9.7
  8.6
  7.6
  6.8
  6.0
  5.3
  4.6

Eni SpA (Eni) is an Italy-based company engaged in the exploration, development and production of hydrocarbons, in the supply and marketing of gas, liquefied natural gas (LNG) and power, in the refining and marketing of petroleum products, in the production and marketing of basic petrochemicals, plastics and elastomers and in commodity trading. The Company's segments include Exploration & Production, Gas & Power, and Refining & Marketing. Its Exploration & Production segment engages in oil and natural gas exploration and field development and production, as well as LNG operations in over 40 countries, including Italy, Libya, Egypt, Norway, the United Kingdom, Angola, Congo, Nigeria, the United States, Kazakhstan, Algeria, Australia, Venezuela, Iraq, Ghana and Mozambique. Its Gas & Power segment engages in supply, trading and marketing of gas, LNG and electricity, international gas transport activities and commodity trading and derivatives.

FINANCIAL RATIOS  of  ENI ADR (E)

Valuation Ratios
P/E Ratio -87.9
Price to Sales 2.3
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 15
Price to Free Cash Flow -206.5
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 $59677 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 104.2%.

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 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 22.3% 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 129.9%.

Life of production assets of 10 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 -19.2%. 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 - $55880 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 3634 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 $137.1 billion.

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COMPANY NEWS

▶ [$$] Libya State Oil Company Resumes Production   [09:49AM  The Wall Street Journal]
▶ Stock Market News For Jul 10, 2018   [Jul-10-18 10:11AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for July 9th   [Jul-09-18 09:57AM  Zacks]
▶ Mexico Likely To Keep Making The Worlds Biggest Oil Hedge   [Jul-08-18 05:00PM  Oilprice.com]
▶ Top Ranked Growth Stocks to Buy for July 6th   [Jul-06-18 09:37AM  Zacks]
▶ Stock Market News For Jul 3, 2018   [Jul-03-18 09:59AM  Zacks]
▶ Mexicos New President Has The Energy Sector On Edge   [Jul-02-18 07:00PM  Oilprice.com]
▶ How Important Are Egypts Gas Discoveries?   [Jun-28-18 01:00PM  Oilprice.com]
▶ This Russian Oil Major Is Ready To Open The Taps   [Jun-23-18 01:00PM  Oilprice.com]
▶ Who Wins the 2018 World Cup of ETFs?   [Jun-14-18 11:59AM  Zacks]
▶ Is Eni Sp.A. (BIT:ENI) An Industry Laggard Or Leader?   [Jun-11-18 02:28AM  Simply Wall St.]
▶ The Battle For Energy Dominance In The Mediterranean   [May-27-18 11:00AM  Oilprice.com]
▶ PRESS DIGEST- British Business - May 14   [May-13-18 08:12PM  Reuters]
▶ Eni Ramping Up Production at Zohr   [May-09-18 08:00PM  Rigzone.com]
▶ Eni Completes Angola Deep Offshore Field Ramp-up   [May-08-18 08:00PM  Rigzone.com]
▶ Eni Makes Oil Discovery in Egyptian Desert   [May-02-18 08:00PM  Rigzone.com]
▶ Egypt Could Become Europes Next Big Energy Hub   [Apr-26-18 01:30PM  Oilprice.com]
▶ [$$] Euro strength crimps growth at European companies   [Apr-22-18 12:02AM  Financial Times]
▶ Should You Buy Eni Sp.A. (BIT:ENI)?   [08:56AM  Simply Wall St.]
▶ Eni, Qatar Hold Talks for Deal on Giant Mexico Field   [Apr-05-18 02:03PM  Bloomberg]
Financial statements 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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