Intrinsic value of Empresa Distribuidora y Comercializadora - EDN

Previous Close

$38.27

  Intrinsic Value

$3,697

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

-176%

Previous close

$38.27

 
Intrinsic value

$3,697

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

-176%

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

We calculate the intrinsic value of EDN 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 0.8

 

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, %
  244.44
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  829
  1,339
  2,069
  3,094
  4,490
  6,334
  8,708
  11,689
  15,348
  19,749
  24,945
  30,976
  37,871
  45,648
  54,312
  63,861
  74,286
  85,571
  97,698
  110,648
  124,402
  138,940
  154,249
  170,316
  187,134
  204,700
  223,018
  242,094
  261,941
  282,578
  304,027
Variable operating expenses, $m
 
  550
  850
  1,272
  1,845
  2,603
  3,579
  4,804
  6,308
  8,117
  10,252
  12,731
  15,565
  18,761
  22,322
  26,247
  30,531
  35,170
  40,154
  45,477
  51,129
  57,104
  63,396
  70,000
  76,912
  84,132
  91,660
  99,500
  107,658
  116,140
  124,955
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
  879
  550
  850
  1,272
  1,845
  2,603
  3,579
  4,804
  6,308
  8,117
  10,252
  12,731
  15,565
  18,761
  22,322
  26,247
  30,531
  35,170
  40,154
  45,477
  51,129
  57,104
  63,396
  70,000
  76,912
  84,132
  91,660
  99,500
  107,658
  116,140
  124,955
Operating income, $m
  -42
  789
  1,219
  1,823
  2,644
  3,731
  5,129
  6,885
  9,040
  11,632
  14,693
  18,245
  22,306
  26,887
  31,990
  37,614
  43,754
  50,401
  57,544
  65,172
  73,273
  81,836
  90,852
  100,316
  110,222
  120,568
  131,357
  142,593
  154,283
  166,438
  179,072
EBITDA, $m
  -19
  826
  1,275
  1,907
  2,768
  3,905
  5,368
  7,206
  9,461
  12,175
  15,378
  19,095
  23,346
  28,140
  33,481
  39,367
  45,794
  52,751
  60,227
  68,210
  76,688
  85,650
  95,087
  104,992
  115,359
  126,188
  137,480
  149,240
  161,475
  174,196
  187,419
Interest expense (income), $m
  17
  18
  52
  135
  252
  410
  620
  890
  1,229
  1,645
  2,145
  2,735
  3,421
  4,204
  5,088
  6,073
  7,158
  8,343
  9,625
  11,003
  12,475
  14,038
  15,690
  17,430
  19,256
  21,168
  23,164
  25,246
  27,414
  29,669
  32,015
Earnings before tax, $m
  -124
  771
  1,166
  1,687
  2,393
  3,320
  4,509
  5,995
  7,811
  9,988
  12,548
  15,510
  18,886
  22,682
  26,902
  31,542
  36,596
  42,059
  47,919
  54,169
  60,797
  67,798
  75,162
  82,886
  90,965
  99,401
  108,193
  117,347
  126,870
  136,769
  147,057
Tax expense, $m
  -48
  208
  315
  456
  646
  897
  1,217
  1,619
  2,109
  2,697
  3,388
  4,188
  5,099
  6,124
  7,263
  8,516
  9,881
  11,356
  12,938
  14,626
  16,415
  18,305
  20,294
  22,379
  24,561
  26,838
  29,212
  31,684
  34,255
  36,928
  39,705
Net income, $m
  -76
  563
  851
  1,232
  1,747
  2,424
  3,292
  4,376
  5,702
  7,291
  9,160
  11,322
  13,787
  16,558
  19,638
  23,025
  26,715
  30,703
  34,981
  39,543
  44,382
  49,492
  54,868
  60,507
  66,405
  72,563
  78,981
  85,664
  92,615
  99,841
  107,352

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  144
  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
  1,212
  1,708
  2,639
  3,947
  5,727
  8,079
  11,107
  14,909
  19,577
  25,191
  31,818
  39,510
  48,305
  58,224
  69,275
  81,455
  94,752
  109,147
  124,615
  141,133
  158,676
  177,220
  196,746
  217,239
  238,691
  261,097
  284,461
  308,793
  334,109
  360,431
  387,790
Adjusted assets (=assets-cash), $m
  1,068
  1,708
  2,639
  3,947
  5,727
  8,079
  11,107
  14,909
  19,577
  25,191
  31,818
  39,510
  48,305
  58,224
  69,275
  81,455
  94,752
  109,147
  124,615
  141,133
  158,676
  177,220
  196,746
  217,239
  238,691
  261,097
  284,461
  308,793
  334,109
  360,431
  387,790
Revenue / Adjusted assets
  0.776
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
  0.784
Average production assets, $m
  253
  404
  625
  934
  1,356
  1,913
  2,630
  3,530
  4,635
  5,964
  7,533
  9,355
  11,437
  13,786
  16,402
  19,286
  22,434
  25,842
  29,505
  33,416
  37,569
  41,960
  46,583
  51,435
  56,514
  61,819
  67,351
  73,112
  79,106
  85,339
  91,816
Working capital, $m
  -188
  -526
  -813
  -1,216
  -1,764
  -2,489
  -3,422
  -4,594
  -6,032
  -7,762
  -9,803
  -12,174
  -14,883
  -17,940
  -21,345
  -25,097
  -29,194
  -33,629
  -38,395
  -43,485
  -48,890
  -54,604
  -60,620
  -66,934
  -73,544
  -80,447
  -87,646
  -95,143
  -102,943
  -111,053
  -119,483
Total debt, $m
  181
  529
  1,367
  2,544
  4,146
  6,263
  8,989
  12,410
  16,611
  21,664
  27,628
  34,551
  42,467
  51,394
  61,340
  72,302
  84,269
  97,224
  111,146
  126,012
  141,800
  158,490
  176,063
  194,507
  213,814
  233,979
  255,007
  276,906
  299,690
  323,380
  348,003
Total liabilities, $m
  1,189
  1,537
  2,375
  3,552
  5,154
  7,271
  9,997
  13,418
  17,619
  22,672
  28,636
  35,559
  43,475
  52,402
  62,348
  73,310
  85,277
  98,232
  112,154
  127,020
  142,808
  159,498
  177,071
  195,515
  214,822
  234,987
  256,015
  277,914
  300,698
  324,388
  349,011
Total equity, $m
  23
  171
  264
  395
  573
  808
  1,111
  1,491
  1,958
  2,519
  3,182
  3,951
  4,831
  5,822
  6,928
  8,146
  9,475
  10,915
  12,462
  14,113
  15,868
  17,722
  19,675
  21,724
  23,869
  26,110
  28,446
  30,879
  33,411
  36,043
  38,779
Total liabilities and equity, $m
  1,212
  1,708
  2,639
  3,947
  5,727
  8,079
  11,108
  14,909
  19,577
  25,191
  31,818
  39,510
  48,306
  58,224
  69,276
  81,456
  94,752
  109,147
  124,616
  141,133
  158,676
  177,220
  196,746
  217,239
  238,691
  261,097
  284,461
  308,793
  334,109
  360,431
  387,790
Debt-to-equity ratio
  7.870
  3.100
  5.180
  6.450
  7.240
  7.750
  8.090
  8.320
  8.490
  8.600
  8.680
  8.740
  8.790
  8.830
  8.850
  8.880
  8.890
  8.910
  8.920
  8.930
  8.940
  8.940
  8.950
  8.950
  8.960
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
Adjusted equity ratio
  -0.113
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -76
  563
  851
  1,232
  1,747
  2,424
  3,292
  4,376
  5,702
  7,291
  9,160
  11,322
  13,787
  16,558
  19,638
  23,025
  26,715
  30,703
  34,981
  39,543
  44,382
  49,492
  54,868
  60,507
  66,405
  72,563
  78,981
  85,664
  92,615
  99,841
  107,352
Depreciation, amort., depletion, $m
  23
  37
  57
  85
  123
  174
  239
  321
  421
  542
  685
  850
  1,040
  1,253
  1,491
  1,753
  2,039
  2,349
  2,682
  3,038
  3,415
  3,815
  4,235
  4,676
  5,138
  5,620
  6,123
  6,647
  7,191
  7,758
  8,347
Funds from operations, $m
  465
  600
  908
  1,317
  1,870
  2,598
  3,531
  4,697
  6,124
  7,833
  9,845
  12,173
  14,826
  17,811
  21,129
  24,779
  28,755
  33,052
  37,663
  42,581
  47,798
  53,307
  59,103
  65,182
  71,542
  78,183
  85,104
  92,310
  99,806
  107,599
  115,699
Change in working capital, $m
  277
  -197
  -287
  -403
  -548
  -725
  -933
  -1,171
  -1,438
  -1,730
  -2,042
  -2,370
  -2,710
  -3,056
  -3,405
  -3,753
  -4,097
  -4,435
  -4,766
  -5,089
  -5,405
  -5,714
  -6,016
  -6,314
  -6,609
  -6,904
  -7,199
  -7,497
  -7,800
  -8,110
  -8,430
Cash from operations, $m
  188
  797
  1,195
  1,720
  2,418
  3,323
  4,464
  5,869
  7,562
  9,563
  11,887
  14,543
  17,536
  20,867
  24,534
  28,531
  32,852
  37,487
  42,429
  47,670
  53,203
  59,020
  65,119
  71,497
  78,152
  85,086
  92,303
  99,807
  107,606
  115,710
  124,128
Maintenance CAPEX, $m
  0
  -23
  -37
  -57
  -85
  -123
  -174
  -239
  -321
  -421
  -542
  -685
  -850
  -1,040
  -1,253
  -1,491
  -1,753
  -2,039
  -2,349
  -2,682
  -3,038
  -3,415
  -3,815
  -4,235
  -4,676
  -5,138
  -5,620
  -6,123
  -6,647
  -7,191
  -7,758
New CAPEX, $m
  -158
  -152
  -220
  -310
  -421
  -557
  -717
  -900
  -1,105
  -1,329
  -1,569
  -1,821
  -2,082
  -2,348
  -2,617
  -2,884
  -3,148
  -3,408
  -3,663
  -3,911
  -4,153
  -4,391
  -4,623
  -4,852
  -5,079
  -5,305
  -5,532
  -5,761
  -5,994
  -6,232
  -6,478
Cash from investing activities, $m
  -152
  -175
  -257
  -367
  -506
  -680
  -891
  -1,139
  -1,426
  -1,750
  -2,111
  -2,506
  -2,932
  -3,388
  -3,870
  -4,375
  -4,901
  -5,447
  -6,012
  -6,593
  -7,191
  -7,806
  -8,438
  -9,087
  -9,755
  -10,443
  -11,152
  -11,884
  -12,641
  -13,423
  -14,236
Free cash flow, $m
  36
  622
  938
  1,353
  1,912
  2,642
  3,573
  4,729
  6,136
  7,813
  9,775
  12,037
  14,603
  17,479
  20,665
  24,156
  27,950
  32,040
  36,418
  41,077
  46,011
  51,214
  56,682
  62,410
  68,397
  74,643
  81,151
  87,923
  94,966
  102,286
  109,893
Issuance/(repayment) of debt, $m
  -14
  351
  838
  1,177
  1,602
  2,118
  2,725
  3,422
  4,201
  5,052
  5,964
  6,923
  7,915
  8,927
  9,946
  10,962
  11,967
  12,955
  13,922
  14,866
  15,788
  16,690
  17,574
  18,444
  19,306
  20,166
  21,028
  21,898
  22,784
  23,690
  24,623
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  -32
  351
  838
  1,177
  1,602
  2,118
  2,725
  3,422
  4,201
  5,052
  5,964
  6,923
  7,915
  8,927
  9,946
  10,962
  11,967
  12,955
  13,922
  14,866
  15,788
  16,690
  17,574
  18,444
  19,306
  20,166
  21,028
  21,898
  22,784
  23,690
  24,623
Total cash flow (excl. dividends), $m
  8
  974
  1,776
  2,530
  3,514
  4,760
  6,298
  8,151
  10,337
  12,865
  15,740
  18,960
  22,519
  26,406
  30,610
  35,119
  39,917
  44,995
  50,339
  55,943
  61,799
  67,904
  74,255
  80,854
  87,703
  94,809
  102,179
  109,822
  117,750
  125,976
  134,516
Retained Cash Flow (-), $m
  75
  -289
  -93
  -131
  -178
  -235
  -303
  -380
  -467
  -561
  -663
  -769
  -879
  -992
  -1,105
  -1,218
  -1,330
  -1,439
  -1,547
  -1,652
  -1,754
  -1,854
  -1,953
  -2,049
  -2,145
  -2,241
  -2,336
  -2,433
  -2,532
  -2,632
  -2,736
Prev. year cash balance distribution, $m
 
  141
  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
 
  826
  1,683
  2,399
  3,336
  4,525
  5,995
  7,771
  9,870
  12,304
  15,077
  18,191
  21,639
  25,414
  29,505
  33,901
  38,588
  43,555
  48,793
  54,291
  60,045
  66,050
  72,303
  78,805
  85,558
  92,568
  99,842
  107,389
  115,218
  123,344
  131,780
Discount rate, %
 
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.51
  9.99
  10.49
  11.01
  11.57
  12.14
  12.75
  13.39
  14.06
  14.76
  15.50
  16.27
  17.09
  17.94
  18.84
  19.78
  20.77
  21.81
  22.90
  24.04
  25.25
  26.51
  27.83
  29.22
PV of cash for distribution, $m
 
  771
  1,457
  1,914
  2,432
  2,991
  3,563
  4,113
  4,608
  5,013
  5,303
  5,458
  5,470
  5,340
  5,081
  4,714
  4,264
  3,761
  3,234
  2,711
  2,214
  1,761
  1,364
  1,027
  752
  534
  368
  246
  159
  100
  60
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Empresa Distribuidora y Comercializadora Norte S.A. is a public service company. The Company is engaged in electricity distribution in Argentina. It holds a concession to distribute electricity to the northwestern part of the greater Buenos Aires metropolitan area and in the northern part of the City of Buenos Aires. The Company's concession area of approximately 4,637 square kilometers is divided into three operating territories: Region I, which consists of over 251 square kilometers; Region II, which consists of approximately 1,761 square kilometers, and Region III, which consists of over 2,625 square kilometers. Region I includes Ciudad de Buenos Aires, San Isidro, Vicente Lopez, San Martin and Tres de Febrero districts. Region II includes La Matanza, Moron, Hurlingham, Ituzaingo, Merlo, Marcos Paz and Gral. Las Heras districts. Region III includes Pilar, Escobar, Tigre, San Fernando, San Miguel, Malvinas Argentinas, Jose C. Paz, Moreno and Gral. Rodriguez districts.

FINANCIAL RATIOS  of  Empresa Distribuidora y Comercializadora (EDN)

Valuation Ratios
P/E Ratio -451.7
Price to Sales 41
Price to Book 1492.6
Price to Tangible Book
Price to Cash Flow 182.6
Price to Free Cash Flow 1144.3
Growth Rates
Sales Growth Rate 244.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.9%
Cap. Spend. - 3 Yr. Gr. Rate 22.6%
Financial Strength
Quick Ratio 48
Current Ratio 0
LT Debt to Equity 773.9%
Total Debt to Equity 787%
Interest Coverage -6
Management Effectiveness
Return On Assets -6.4%
Ret/ On Assets - 3 Yr. Avg. -0.9%
Return On Total Capital -32.8%
Ret/ On T. Cap. - 3 Yr. Avg. -9.9%
Return On Equity -125.6%
Return On Equity - 3 Yr. Avg. -35.6%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -10%
EBITDA Margin - 3 Yr. Avg. 7.2%
Operating Margin -5%
Oper. Margin - 3 Yr. Avg. 15.6%
Pre-Tax Margin -14.8%
Pre-Tax Margin - 3 Yr. Avg. -2%
Net Profit Margin -9.1%
Net Profit Margin - 3 Yr. Avg. -0.3%
Effective Tax Rate 38.7%
Eff/ Tax Rate - 3 Yr. Avg. 23.2%
Payout Ratio 0%

EDN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EDN stock intrinsic value calculation we used $837 million for the last fiscal year's total revenue generated by Empresa Distribuidora y Comercializadora. The default revenue input number comes from 2016 income statement of Empresa Distribuidora y Comercializadora. 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 EDN stock valuation model: a) initial revenue growth rate of 60% 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 7.1%, whose default value for EDN is calculated based on our internal credit rating of Empresa Distribuidora y Comercializadora, 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 Empresa Distribuidora y Comercializadora.
    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 EDN stock the variable cost ratio is equal to 41.1%.

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 EDN 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 9.9% for Empresa Distribuidora y Comercializadora.

Corporate tax rate of 27% is the nominal tax rate for Empresa Distribuidora y Comercializadora. 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 EDN 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 EDN are equal to 30.2%.

Life of production assets of 11 years is the average useful life of capital assets used in Empresa Distribuidora y Comercializadora 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 EDN is equal to -39.3%. 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 - $23 million for Empresa Distribuidora y Comercializadora - 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 21.87 million for Empresa Distribuidora y Comercializadora 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 Empresa Distribuidora y Comercializadora at the current share price and the inputted number of shares is $0.8 billion.

RELATED COMPANIES Price Int.Val. Rating
PAM Pampa Energia 62.36 1,560.27  str.buy
CIG Companhia Ener 2.74 9.42  str.buy
ENIA Enel Americas 10.21 55.22  str.buy
CPL CPFL Energia A 17.35 42.90  str.buy

COMPANY NEWS

▶ [$$] Argentina Makes Progress on Economic Reforms   [Sep-15-17 11:35PM  Barrons.com]
▶ Argentina: Tax Amnesty For $400B In Hidden Assets?   [Aug-18-16 05:21PM  at Barrons.com]
▶ EDENOR Financials   [May-04-16 01:04PM  EDGAR Online Financials]
▶ Argentina To Sell State Stake In Stocks?   [03:56PM  at Barrons.com]
▶ Fourth Q.14 - Earnings Release   [Mar-18  08:18AM  at noodls]
▶ Emerging Market Week in Review   [Sep-05  06:01PM  at Barrons.com]
▶ Argentina Stocks Drop On Bond Default Vote   [Sep-04  05:42PM  at Barrons.com]
▶ [video] Argentina disputing debt default   [Jul-31  10:09AM  at CNBC]
▶ Today's Top Performers In Utilities   [Jul-09  01:03PM  at TheStreet]
▶ 4 Emerging Markets Stocks On Winning Streaks   [Jul-01  05:46PM  at Seeking Alpha]
▶ What Will Happen to These ADRs if Argentina Defaults?   [Jun-26  02:10PM  at Motley Fool]
▶ Stock Downgrades: Travelers Going Nowhere Fast   [Jun-17  09:26AM  at Minyanville]
▶ Argentina refuses to submit to 'extortion' on debt   [05:49AM  at Financial Times]
▶ 4 Stocks Under $10 Making Big Moves   [Mar-17  07:46AM  at TheStreet]
▶ Edenor: Trading At A Bargain Price   [Feb-08  10:18AM  at Seeking Alpha]
▶ Avoid Argentina Stocks This Year   [Jan-26  08:23AM  at Seeking Alpha]
▶ 4 Stocks Under $10 to Trade for Breakouts   [Dec-13  09:34AM  Optionetics]
▶ 4 Stocks Under $10 to Trade for Breakouts   [Nov-15  08:13AM  Optionetics]
▶ Argentina's Errant Energy Policy   [Feb-26  10:34AM  at Motley Fool]
▶ Should You Invest In Argentina Stocks Now?   [Nov-26-12 04:13AM  at Seeking Alpha]
▶ Utilities Sector Wrap   [Aug-24-12 04:41PM  at Fox Business]
▶ Utilities Sector Wrap   [Jul-25-12 05:40PM  at Fox Business]
▶ Utilities Sector Wrap   [Jul-05-12 05:39PM  at Fox Business]
▶ Utilities Sector Wrap   [Jun-04-12 05:12PM  at Fox Business]
▶ Utilities Sector Wrap   [May-31-12 04:56PM  at Fox Business]
▶ Utilities Sector Wrap   [May-21-12 04:56PM  at Fox Business]
▶ Utilities Sector Wrap   [May-09-12 04:56PM  at Fox Business]
▶ Utilities Sector Wrap   [May-08-12 04:56PM  at Fox Business]
▶ Are Argentinean Companies at Risk of Being Expropriated?   [Apr-27-12 11:20AM  at Motley Fool]
▶ Utilities Sector Wrap   [Apr-26-12 04:56PM  at Fox Business]
▶ Argentina's Wasted Chances   [Apr-23-12 09:06AM  at Seeking Alpha]
▶ Polaris, Calpine hit new highs; Seagate active   [Apr-18-12 10:26AM  at MarketWatch]
▶ YPF slumps to three-year low on takeover move   [Apr-17-12 07:34PM  at MarketWatch]
▶ 2 Utilities To Add Utility To Your Portfolio   [Dec-20-11 03:30AM  at Seeking Alpha]
▶ 10 Foreign Utility Stocks To Consider   [Nov-03-11 03:39AM  at Seeking Alpha]
▶ The AES Corp Third Quarter Earnings Sneak Peek   [Nov-01-11 10:58AM  Wall St. Cheat Sheet]
▶ The Fastest-Growing Electric Utility Stocks   [Oct-11-11 02:44PM  at Motley Fool]
▶ The AES Earnings Cheat Sheet: Revenue, Net Income Climbs   [Aug-05-11 08:30AM  Wall St. Cheat Sheet]
▶ The AES Corp Second Quarter Earnings Sneak Peek   [Jul-28-11 07:07PM  Wall St. Cheat Sheet]
▶ Italian Stocks - Factors to watch on July 22   [Jul-22-11 12:00AM  at Reuters]
▶ Vectren Corp Passes Through 5% Yield Mark   [Jul-15-11 03:25PM  at Forbes]
▶ UPDATE 1-Lactalis wins Parmalat control battle   [Jun-28-11 02:10PM  at Reuters]
▶ Utes And Auto Parts Thrive On Friday   [Jun-24-11 03:36PM  at Forbes]
▶ Italian Stocks - Factors to watch on June 22   [Jun-22-11 12:00AM  at Reuters]
▶ UPDATE 1-Italy seeking to keep Edison in Italian hands   [Jun-21-11 07:11AM  at Reuters]
Financial statements of EDN
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.