Intrinsic value of Ecopetrol ADR - EC

Previous Close

$8.88

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$8.88

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of EC 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 18.0

 

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, %
  -8.36
  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
  15,931
  53,132,746
  54,354,799
  55,751,717
  57,320,013
  59,057,784
  60,964,482
  63,040,735
  65,288,206
  67,709,484
  70,307,997
  73,087,950
  76,054,274
  79,212,589
  82,569,175
  86,130,958
  89,905,498
  93,900,983
  98,126,231
  102,590,696
  107,304,476
  112,278,329
  117,523,684
  123,052,666
  128,878,117
  135,013,618
  141,473,521
  148,272,976
  155,427,963
  162,955,333
  170,872,837
Variable operating expenses, $m
 
  8,286,869
  8,475,353
  8,690,806
  8,932,692
  9,200,717
  9,494,797
  9,815,027
  10,161,666
  10,535,112
  10,935,893
  11,272,714
  11,730,225
  12,217,348
  12,735,050
  13,284,402
  13,866,568
  14,482,811
  15,134,492
  15,823,068
  16,550,098
  17,317,239
  18,126,256
  18,979,018
  19,877,506
  20,823,815
  21,820,158
  22,868,871
  23,972,420
  25,133,403
  26,354,559
Fixed operating expenses, $m
 
  43,304,965
  44,387,589
  45,497,278
  46,634,710
  47,800,578
  48,995,593
  50,220,482
  51,475,995
  52,762,894
  54,081,967
  55,434,016
  56,819,866
  58,240,363
  59,696,372
  61,188,781
  62,718,501
  64,286,463
  65,893,625
  67,540,966
  69,229,490
  70,960,227
  72,734,233
  74,552,589
  76,416,403
  78,326,813
  80,284,984
  82,292,108
  84,349,411
  86,458,146
  88,619,600
Total operating expenses, $m
  13,176
  51,591,834
  52,862,942
  54,188,084
  55,567,402
  57,001,295
  58,490,390
  60,035,509
  61,637,661
  63,298,006
  65,017,860
  66,706,730
  68,550,091
  70,457,711
  72,431,422
  74,473,183
  76,585,069
  78,769,274
  81,028,117
  83,364,034
  85,779,588
  88,277,466
  90,860,489
  93,531,607
  96,293,909
  99,150,628
  102,105,142
  105,160,979
  108,321,831
  111,591,549
  114,974,159
Operating income, $m
  2,754
  1,540,911
  1,491,857
  1,563,632
  1,752,610
  2,056,488
  2,474,093
  3,005,225
  3,650,546
  4,411,478
  5,290,137
  6,381,220
  7,504,183
  8,754,878
  10,137,753
  11,657,775
  13,320,430
  15,131,709
  17,098,114
  19,226,662
  21,524,889
  24,000,862
  26,663,195
  29,521,059
  32,584,207
  35,862,990
  39,368,380
  43,111,996
  47,106,132
  51,363,784
  55,898,679
EBITDA, $m
  5,288
  8,439,705
  8,547,208
  8,797,942
  9,187,835
  9,714,339
  10,376,211
  11,173,333
  12,106,578
  13,177,700
  14,389,256
  15,744,534
  17,247,514
  18,902,822
  20,715,709
  22,692,033
  24,838,244
  27,161,386
  29,669,089
  32,369,581
  35,271,691
  38,384,865
  41,719,181
  45,285,365
  49,094,813
  53,159,616
  57,492,586
  62,107,282
  67,018,046
  72,240,030
  77,789,238
Interest expense (income), $m
  833
  2,189,237
  2,255,550
  2,334,769
  2,425,322
  2,526,985
  2,639,634
  2,763,233
  2,897,824
  3,043,513
  3,200,470
  3,368,915
  3,549,122
  3,741,411
  3,946,145
  4,163,731
  4,394,620
  4,639,300
  4,898,302
  5,172,199
  5,461,602
  5,767,167
  6,089,591
  6,429,615
  6,788,025
  7,165,652
  7,563,379
  7,982,134
  8,422,901
  8,886,714
  9,374,667
Earnings before tax, $m
  2,356
  -648,326
  -763,693
  -771,136
  -672,712
  -470,497
  -165,541
  241,992
  752,722
  1,367,964
  2,089,667
  3,012,304
  3,955,060
  5,013,468
  6,191,608
  7,494,044
  8,925,810
  10,492,409
  12,199,812
  14,054,464
  16,063,287
  18,233,695
  20,573,603
  23,091,444
  25,796,183
  28,697,338
  31,805,001
  35,129,862
  38,683,232
  42,477,070
  46,524,012
Tax expense, $m
  1,554
  0
  0
  0
  0
  0
  0
  65,338
  203,235
  369,350
  564,210
  813,322
  1,067,866
  1,353,636
  1,671,734
  2,023,392
  2,409,969
  2,832,950
  3,293,949
  3,794,705
  4,337,087
  4,923,098
  5,554,873
  6,234,690
  6,964,969
  7,748,281
  8,587,350
  9,485,063
  10,444,473
  11,468,809
  12,561,483
Net income, $m
  522
  -648,326
  -763,693
  -771,136
  -672,712
  -470,497
  -165,541
  176,654
  549,487
  998,614
  1,525,457
  2,198,982
  2,887,194
  3,659,831
  4,519,874
  5,470,652
  6,515,841
  7,659,459
  8,905,863
  10,259,758
  11,726,199
  13,310,597
  15,018,730
  16,856,754
  18,831,213
  20,949,056
  23,217,651
  25,644,799
  28,238,759
  31,008,261
  33,962,529

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,598
  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
  40,486
  117,032,479
  119,724,226
  122,801,139
  126,255,535
  130,083,224
  134,283,000
  138,856,245
  143,806,622
  149,139,832
  154,863,429
  160,986,674
  167,520,428
  174,477,068
  181,870,429
  189,715,767
  198,029,732
  206,830,359
  216,137,073
  225,970,696
  236,353,472
  247,309,094
  258,862,739
  271,041,115
  283,872,504
  297,386,824
  311,615,685
  326,592,457
  342,352,342
  358,932,451
  376,371,889
Adjusted assets (=assets-cash), $m
  35,888
  117,032,479
  119,724,226
  122,801,139
  126,255,535
  130,083,224
  134,283,000
  138,856,245
  143,806,622
  149,139,832
  154,863,429
  160,986,674
  167,520,428
  174,477,068
  181,870,429
  189,715,767
  198,029,732
  206,830,359
  216,137,073
  225,970,696
  236,353,472
  247,309,094
  258,862,739
  271,041,115
  283,872,504
  297,386,824
  311,615,685
  326,592,457
  342,352,342
  358,932,451
  376,371,889
Revenue / Adjusted assets
  0.444
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
  0.454
Average production assets, $m
  29,094
  86,446,977
  88,435,257
  90,708,044
  93,259,661
  96,087,014
  99,189,212
  102,567,276
  106,223,912
  110,163,330
  114,391,111
  118,914,095
  123,740,304
  128,878,882
  134,340,048
  140,135,069
  146,276,246
  152,776,899
  159,651,378
  166,915,062
  174,584,383
  182,676,841
  191,211,033
  200,206,688
  209,684,696
  219,667,157
  230,177,419
  241,240,131
  252,881,296
  265,128,327
  278,010,107
Working capital, $m
  2,584
  -1,009,522
  -1,032,741
  -1,059,283
  -1,089,080
  -1,122,098
  -1,158,325
  -1,197,774
  -1,240,476
  -1,286,480
  -1,335,852
  -1,388,671
  -1,445,031
  -1,505,039
  -1,568,814
  -1,636,488
  -1,708,204
  -1,784,119
  -1,864,398
  -1,949,223
  -2,038,785
  -2,133,288
  -2,232,950
  -2,338,001
  -2,448,684
  -2,565,259
  -2,687,997
  -2,817,187
  -2,953,131
  -3,096,151
  -3,246,584
Total debt, $m
  17,429
  50,123,342
  51,883,745
  53,896,046
  56,155,221
  58,658,529
  61,405,183
  64,396,085
  67,633,632
  71,121,551
  74,864,783
  78,869,386
  83,142,461
  87,692,103
  92,527,362
  97,658,213
  103,095,546
  108,851,156
  114,937,747
  121,368,936
  128,159,272
  135,324,248
  142,880,332
  150,844,990
  159,236,719
  168,075,084
  177,380,759
  187,175,568
  197,482,533
  208,325,924
  219,731,316
Total liabilities, $m
  25,910
  76,539,241
  78,299,644
  80,311,945
  82,571,120
  85,074,428
  87,821,082
  90,811,984
  94,049,531
  97,537,450
  101,280,682
  105,285,285
  109,558,360
  114,108,002
  118,943,261
  124,074,112
  129,511,445
  135,267,055
  141,353,646
  147,784,835
  154,575,171
  161,740,147
  169,296,231
  177,260,889
  185,652,618
  194,490,983
  203,796,658
  213,591,467
  223,898,432
  234,741,823
  246,147,215
Total equity, $m
  14,576
  40,493,238
  41,424,582
  42,489,194
  43,684,415
  45,008,795
  46,461,918
  48,044,261
  49,757,091
  51,602,382
  53,582,746
  55,701,389
  57,962,068
  60,369,065
  62,927,169
  65,641,655
  68,518,287
  71,563,304
  74,783,427
  78,185,861
  81,778,301
  85,568,946
  89,566,508
  93,780,226
  98,219,886
  102,895,841
  107,819,027
  113,000,990
  118,453,910
  124,190,628
  130,224,673
Total liabilities and equity, $m
  40,486
  117,032,479
  119,724,226
  122,801,139
  126,255,535
  130,083,223
  134,283,000
  138,856,245
  143,806,622
  149,139,832
  154,863,428
  160,986,674
  167,520,428
  174,477,067
  181,870,430
  189,715,767
  198,029,732
  206,830,359
  216,137,073
  225,970,696
  236,353,472
  247,309,093
  258,862,739
  271,041,115
  283,872,504
  297,386,824
  311,615,685
  326,592,457
  342,352,342
  358,932,451
  376,371,888
Debt-to-equity ratio
  1.196
  1.240
  1.250
  1.270
  1.290
  1.300
  1.320
  1.340
  1.360
  1.380
  1.400
  1.420
  1.430
  1.450
  1.470
  1.490
  1.500
  1.520
  1.540
  1.550
  1.570
  1.580
  1.600
  1.610
  1.620
  1.630
  1.650
  1.660
  1.670
  1.680
  1.690
Adjusted equity ratio
  0.278
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346
  0.346

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  522
  -648,326
  -763,693
  -771,136
  -672,712
  -470,497
  -165,541
  176,654
  549,487
  998,614
  1,525,457
  2,198,982
  2,887,194
  3,659,831
  4,519,874
  5,470,652
  6,515,841
  7,659,459
  8,905,863
  10,259,758
  11,726,199
  13,310,597
  15,018,730
  16,856,754
  18,831,213
  20,949,056
  23,217,651
  25,644,799
  28,238,759
  31,008,261
  33,962,529
Depreciation, amort., depletion, $m
  2,534
  6,898,793
  7,055,351
  7,234,310
  7,435,225
  7,657,851
  7,902,119
  8,168,108
  8,456,032
  8,766,222
  9,099,119
  9,363,315
  9,743,331
  10,147,943
  10,577,957
  11,034,257
  11,517,815
  12,029,677
  12,570,975
  13,142,918
  13,746,802
  14,384,003
  15,055,987
  15,764,306
  16,510,606
  17,296,627
  18,124,206
  18,995,286
  19,911,913
  20,876,246
  21,890,560
Funds from operations, $m
  3,300
  6,250,467
  6,291,657
  6,463,174
  6,762,513
  7,187,354
  7,736,577
  8,344,762
  9,005,519
  9,764,836
  10,624,576
  11,562,297
  12,630,525
  13,807,775
  15,097,830
  16,504,910
  18,033,656
  19,689,136
  21,476,838
  23,402,677
  25,473,001
  27,694,601
  30,074,717
  32,621,060
  35,341,819
  38,245,683
  41,341,857
  44,640,085
  48,150,672
  51,884,507
  55,853,088
Change in working capital, $m
  -1,519
  -19,795
  -23,219
  -26,541
  -29,798
  -33,018
  -36,227
  -39,449
  -42,702
  -46,004
  -49,372
  -52,819
  -56,360
  -60,008
  -63,775
  -67,674
  -71,716
  -75,914
  -80,280
  -84,825
  -89,562
  -94,503
  -99,662
  -105,051
  -110,684
  -116,575
  -122,738
  -129,190
  -135,945
  -143,020
  -150,433
Cash from operations, $m
  4,819
  10,985,931
  6,314,876
  6,489,715
  6,792,311
  7,220,372
  7,772,805
  8,384,211
  9,048,221
  9,810,841
  10,673,947
  11,615,116
  12,686,885
  13,867,783
  15,161,605
  16,572,583
  18,105,372
  19,765,050
  21,557,117
  23,487,502
  25,562,563
  27,789,104
  30,174,379
  32,726,111
  35,452,503
  38,362,258
  41,464,595
  44,769,275
  48,286,617
  52,027,527
  56,003,521
Maintenance CAPEX, $m
  0
  -6,672,952
  -6,806,849
  -6,963,406
  -7,142,366
  -7,343,280
  -7,565,907
  -7,810,174
  -8,076,163
  -8,364,088
  -8,674,278
  -9,007,174
  -9,363,315
  -9,743,331
  -10,147,943
  -10,577,957
  -11,034,257
  -11,517,815
  -12,029,677
  -12,570,975
  -13,142,918
  -13,746,802
  -14,384,003
  -15,055,987
  -15,764,306
  -16,510,606
  -17,296,627
  -18,124,206
  -18,995,286
  -19,911,913
  -20,876,246
New CAPEX, $m
  -1,948
  -1,700,484
  -1,988,280
  -2,272,786
  -2,551,617
  -2,827,353
  -3,102,198
  -3,378,064
  -3,656,636
  -3,939,418
  -4,227,781
  -4,522,984
  -4,826,210
  -5,138,578
  -5,461,166
  -5,795,022
  -6,141,176
  -6,500,654
  -6,874,479
  -7,263,684
  -7,669,321
  -8,092,458
  -8,534,193
  -8,995,654
  -9,478,009
  -9,982,461
  -10,510,262
  -11,062,712
  -11,641,165
  -12,247,030
  -12,881,780
Cash from investing activities, $m
  -3,200
  -8,373,436
  -8,795,129
  -9,236,192
  -9,693,983
  -10,170,633
  -10,668,105
  -11,188,238
  -11,732,799
  -12,303,506
  -12,902,059
  -13,530,158
  -14,189,525
  -14,881,909
  -15,609,109
  -16,372,979
  -17,175,433
  -18,018,469
  -18,904,156
  -19,834,659
  -20,812,239
  -21,839,260
  -22,918,196
  -24,051,641
  -25,242,315
  -26,493,067
  -27,806,889
  -29,186,918
  -30,636,451
  -32,158,943
  -33,758,026
Free cash flow, $m
  1,619
  2,612,495
  -2,480,253
  -2,746,477
  -2,901,672
  -2,950,261
  -2,895,300
  -2,804,027
  -2,684,578
  -2,492,665
  -2,228,111
  -1,915,042
  -1,502,639
  -1,014,126
  -447,504
  199,605
  929,938
  1,746,582
  2,652,962
  3,652,843
  4,750,324
  5,949,844
  7,256,183
  8,674,470
  10,210,188
  11,869,191
  13,657,707
  15,582,356
  17,650,166
  19,868,584
  22,245,495
Issuance/(repayment) of debt, $m
  1,533
  1,473,624
  1,760,403
  2,012,301
  2,259,175
  2,503,309
  2,746,653
  2,990,902
  3,237,546
  3,487,919
  3,743,232
  4,004,602
  4,273,075
  4,549,642
  4,835,258
  5,130,851
  5,437,333
  5,755,610
  6,086,591
  6,431,190
  6,790,336
  7,164,977
  7,556,084
  7,964,658
  8,391,729
  8,838,365
  9,305,675
  9,794,809
  10,306,965
  10,843,391
  11,405,392
Issuance/(repurchase) of shares, $m
  -1,051
  0
  1,651,195
  1,798,788
  1,837,718
  1,771,333
  1,601,769
  1,395,468
  1,159,862
  850,036
  465,243
  29,083
  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  
  -351
  1,473,624
  3,411,598
  3,811,089
  4,096,893
  4,274,642
  4,348,422
  4,386,370
  4,397,408
  4,337,955
  4,208,475
  4,033,685
  4,273,075
  4,549,642
  4,835,258
  5,130,851
  5,437,333
  5,755,610
  6,086,591
  6,431,190
  6,790,336
  7,164,977
  7,556,084
  7,964,658
  8,391,729
  8,838,365
  9,305,675
  9,794,809
  10,306,965
  10,843,391
  11,405,392
Total cash flow (excl. dividends), $m
  1,192
  4,086,119
  -719,850
  -734,176
  -642,497
  -446,953
  -148,647
  186,875
  552,969
  995,254
  1,515,121
  2,089,560
  2,770,436
  3,535,516
  4,387,755
  5,330,456
  6,367,271
  7,502,192
  8,739,552
  10,084,032
  11,540,660
  13,114,821
  14,812,267
  16,639,127
  18,601,917
  20,707,556
  22,963,382
  25,377,165
  27,957,131
  30,711,975
  33,650,887
Retained Cash Flow (-), $m
  -106
  -787,593
  -931,344
  -1,064,612
  -1,195,221
  -1,324,380
  -1,453,122
  -1,582,343
  -1,712,830
  -1,845,291
  -1,980,364
  -2,118,643
  -2,260,679
  -2,406,997
  -2,558,103
  -2,714,487
  -2,876,632
  -3,045,017
  -3,220,123
  -3,402,434
  -3,592,441
  -3,790,645
  -3,997,561
  -4,213,718
  -4,439,661
  -4,675,955
  -4,923,186
  -5,181,963
  -5,452,920
  -5,736,718
  -6,034,045
Prev. year cash balance distribution, $m
 
  3,651,068
  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
 
  6,949,594
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  509,757
  1,128,519
  1,829,652
  2,615,969
  3,490,640
  4,457,175
  5,519,430
  6,681,598
  7,948,219
  9,324,176
  10,814,706
  12,425,409
  14,162,256
  16,031,601
  18,040,196
  20,195,202
  22,504,211
  24,975,257
  27,616,842
Discount rate, %
 
  6.40
  6.72
  7.06
  7.41
  7.78
  8.17
  8.58
  9.01
  9.46
  9.93
  10.42
  10.95
  11.49
  12.07
  12.67
  13.31
  13.97
  14.67
  15.40
  16.17
  16.98
  17.83
  18.72
  19.66
  20.64
  21.67
  22.76
  23.89
  25.09
  26.34
PV of cash for distribution, $m
 
  6,531,574
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  146,560
  274,325
  371,208
  436,936
  473,055
  482,608
  469,755
  439,340
  396,465
  346,083
  292,666
  239,950
  190,789
  147,108
  109,957
  79,628
  55,827
  37,859
  24,809
Current shareholders' claim on cash, %
  100
  100.0
  94.5
  89.0
  83.8
  79.2
  75.4
  72.3
  69.9
  68.2
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3
  67.3

Ecopetrol S.A., an integrated oil company, engages in the exploration, development, and production of crude oil and natural gas in Colombia, Peru, Brazil, Angola, and the United States Gulf Coast. It operates through the Exploration and Production; Transportation and Logistics; Refining, Petrochemicals, and Biofuels segments. It also owns and operates refineries that produce various refined products, including unleaded gasoline, diesel fuel, kerosene, jet fuel, aviation fuel, liquefied petroleum gas, sulfur, heavy fuel oils, and others; and petrochemicals and industrial products comprising paraffin waxes, lube base oils, low-density polyethylene, aromatics, asphalts, alkylates, cyclohexane, and aliphatic solvents, as well as refinery grade propylene. In addition, the company is involved in the transportation of crude oil, motor fuels, and fuel oils, as well as other refined products, such as bio fuels. As of December 31, 2015, it had a network of approximately 8,986 kilometers in length of crude oil and multipurpose pipelines. The company was formerly known as Empresa Colombiana de Petróleos and changed its name to Ecopetrol S.A. in June 2003. Ecopetrol S.A. was founded in 1948 and is based in Bogotá, Colombia.

FINANCIAL RATIOS  of  Ecopetrol ADR (EC)

Valuation Ratios
P/E Ratio 699.5
Price to Sales 22.9
Price to Book 25
Price to Tangible Book
Price to Cash Flow 75.8
Price to Free Cash Flow 127.2
Growth Rates
Sales Growth Rate -8.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -59%
Cap. Spend. - 3 Yr. Gr. Rate -6%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 110.1%
Total Debt to Equity 119.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 2%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 1.6%
Ret/ On T. Cap. - 3 Yr. Avg. 1.2%
Return On Equity 3.6%
Return On Equity - 3 Yr. Avg. 1.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 28.3%
Gross Margin - 3 Yr. Avg. 30.7%
EBITDA Margin 35.9%
EBITDA Margin - 3 Yr. Avg. 31.2%
Operating Margin 17.3%
Oper. Margin - 3 Yr. Avg. 14%
Pre-Tax Margin 14.8%
Pre-Tax Margin - 3 Yr. Avg. 9%
Net Profit Margin 3.3%
Net Profit Margin - 3 Yr. Avg. 1.4%
Effective Tax Rate 66%
Eff/ Tax Rate - 3 Yr. Avg. 28.1%
Payout Ratio 109.4%

EC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EC stock intrinsic value calculation we used $52090927 million for the last fiscal year's total revenue generated by Ecopetrol ADR. The default revenue input number comes from 2016 income statement of Ecopetrol 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 EC 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 6.4%, whose default value for EC is calculated based on our internal credit rating of Ecopetrol 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 Ecopetrol 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 EC stock the variable cost ratio is equal to 15.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $42248746 million in the base year in the intrinsic value calculation for EC 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 4.5% for Ecopetrol ADR.

Corporate tax rate of 27% is the nominal tax rate for Ecopetrol 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 EC 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 EC are equal to 162.7%.

Life of production assets of 12.7 years is the average useful life of capital assets used in Ecopetrol 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 EC is equal to -1.9%. 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 - $43356713 million for Ecopetrol 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 2024.69 million for Ecopetrol 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 Ecopetrol ADR at the current share price and the inputted number of shares is $18.0 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
CVX Chevron 104.28 prem.  prem.
XOM Exxon Mobil 81.53 prem.  prem.
PBR Petroleo Brasi 7.87 prem.  prem.
STO Statoil ADR 16.69 prem.  prem.
BP BP ADR 35.27 prem.  prem.
MUR Murphy Oil 24.78 prem.  prem.
PTR PetroChina ADR 62.32 prem.  prem.

COMPANY NEWS

▶ Colombia's Ecopetrol Rubiales Oil Output Hit By Protests   [Jun-26-17 08:00PM  Rigzone.com]
▶ ETFs with exposure to Ecopetrol SA : May 31, 2017   [May-31-17 12:30PM  Capital Cube]
▶ ETFs with exposure to Ecopetrol SA : April 7, 2017   [Apr-07-17 04:23PM  Capital Cube]
▶ Distribution of profits for 2016 fiscal year   [Mar-31-17 10:02PM  PR Newswire]
▶ Ecopetrol announces oil discovery at Santander   [Mar-30-17 09:59AM  PR Newswire]
▶ Barrow Continues to Buy ExxonMobil, Ecopetrol   [Mar-27-17 04:22PM  GuruFocus.com]
▶ 2016 Earnings Distribution Proposal   [Mar-06-17 05:46AM  PR Newswire]
▶ Annual General Shareholders' Meeting of ECOPETROL S.A.   [Feb-27-17 08:13PM  PR Newswire]
▶ Fitch reaffirms Ecopetrol S.A. investment grade   [Dec-12-16 09:49PM  PR Newswire]
▶ Why Argentina Energy Play YPF Has 40% Upside   [Dec-07-16 12:15PM  at Barrons.com]
▶ Should You Buy Cerner Corporation (CERN)?   [Nov-30-16 09:52AM  at Insider Monkey]
▶ Is Baker Hughes Incorporated (BHI) A Good Stock To Buy?   [Nov-29-16 03:00PM  at Insider Monkey]
▶ Should You Invest in Marathon Petroleum Corp (MPC)?   [Nov-24-16 12:39PM  at Insider Monkey]
▶ Ecopetrol announces its investment plan for 2017   [Nov-21-16 10:32PM  PR Newswire]
▶ Libya: Could Oil Surge Derail OPEC & Prices?   [Oct-19-16 01:39PM  at Barrons.com]
▶ Ecopetrol S.A. Announces Prepayment of Local Bank Loan   [Oct-14-16 05:08PM  PR Newswire]
▶ Ecopetrol updates its 2020 business plan   [Sep-30-16 12:26AM  PR Newswire]
▶ Ecopetrol Discloses Minority Shareholders' Agreement   [Aug-04-16 06:01PM  PR Newswire]
Stock chart of EC Financial statements of EC Annual reports of EC
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

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

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