Intrinsic value of Eldorado Gold - EGO

Previous Close

$1.26

  Intrinsic Value

$1.10

stock screener

  Rating & Target

hold

-13%

Previous close

$1.26

 
Intrinsic value

$1.10

 
Up/down potential

-13%

 
Rating

hold

We calculate the intrinsic value of EGO 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 1.0

 

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, %
  -9.60
  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
  433
  442
  452
  463
  476
  491
  507
  524
  543
  563
  584
  608
  632
  658
  686
  716
  747
  781
  816
  853
  892
  933
  977
  1,023
  1,071
  1,122
  1,176
  1,233
  1,292
  1,355
  1,420
Variable operating expenses, $m
 
  2,131
  2,180
  2,236
  2,298
  2,368
  2,445
  2,528
  2,618
  2,715
  2,819
  2,931
  3,050
  3,176
  3,311
  3,454
  3,605
  3,765
  3,935
  4,114
  4,303
  4,502
  4,713
  4,934
  5,168
  5,414
  5,673
  5,946
  6,232
  6,534
  6,852
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
  366
  2,131
  2,180
  2,236
  2,298
  2,368
  2,445
  2,528
  2,618
  2,715
  2,819
  2,931
  3,050
  3,176
  3,311
  3,454
  3,605
  3,765
  3,935
  4,114
  4,303
  4,502
  4,713
  4,934
  5,168
  5,414
  5,673
  5,946
  6,232
  6,534
  6,852
Operating income, $m
  67
  -1,689
  -1,728
  -1,772
  -1,822
  -1,877
  -1,938
  -2,004
  -2,075
  -2,152
  -2,235
  -2,323
  -2,418
  -2,518
  -2,625
  -2,738
  -2,858
  -2,985
  -3,119
  -3,261
  -3,411
  -3,569
  -3,736
  -3,911
  -4,097
  -4,292
  -4,497
  -4,713
  -4,941
  -5,180
  -5,431
EBITDA, $m
  142
  -1,546
  -1,582
  -1,623
  -1,668
  -1,719
  -1,774
  -1,835
  -1,900
  -1,971
  -2,046
  -2,127
  -2,213
  -2,305
  -2,403
  -2,507
  -2,616
  -2,733
  -2,856
  -2,986
  -3,123
  -3,268
  -3,420
  -3,581
  -3,751
  -3,929
  -4,117
  -4,315
  -4,523
  -4,742
  -4,973
Interest expense (income), $m
  34
  34
  36
  37
  39
  42
  44
  47
  50
  53
  57
  61
  65
  69
  74
  79
  84
  89
  95
  101
  108
  115
  122
  130
  138
  146
  155
  165
  174
  185
  196
Earnings before tax, $m
  49
  -1,723
  -1,763
  -1,810
  -1,861
  -1,919
  -1,982
  -2,051
  -2,125
  -2,206
  -2,292
  -2,384
  -2,482
  -2,587
  -2,698
  -2,816
  -2,942
  -3,074
  -3,214
  -3,362
  -3,519
  -3,684
  -3,858
  -4,041
  -4,234
  -4,438
  -4,652
  -4,878
  -5,115
  -5,365
  -5,627
Tax expense, $m
  57
  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
  -344
  -1,723
  -1,763
  -1,810
  -1,861
  -1,919
  -1,982
  -2,051
  -2,125
  -2,206
  -2,292
  -2,384
  -2,482
  -2,587
  -2,698
  -2,816
  -2,942
  -3,074
  -3,214
  -3,362
  -3,519
  -3,684
  -3,858
  -4,041
  -4,234
  -4,438
  -4,652
  -4,878
  -5,115
  -5,365
  -5,627

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  917
  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
  4,798
  3,943
  4,034
  4,138
  4,254
  4,383
  4,525
  4,679
  4,846
  5,025
  5,218
  5,424
  5,645
  5,879
  6,128
  6,392
  6,673
  6,969
  7,283
  7,614
  7,964
  8,333
  8,722
  9,133
  9,565
  10,020
  10,500
  11,004
  11,536
  12,094
  12,682
Adjusted assets (=assets-cash), $m
  3,881
  3,943
  4,034
  4,138
  4,254
  4,383
  4,525
  4,679
  4,846
  5,025
  5,218
  5,424
  5,645
  5,879
  6,128
  6,392
  6,673
  6,969
  7,283
  7,614
  7,964
  8,333
  8,722
  9,133
  9,565
  10,020
  10,500
  11,004
  11,536
  12,094
  12,682
Revenue / Adjusted assets
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
  0.112
Average production assets, $m
  4,195
  4,278
  4,377
  4,489
  4,616
  4,755
  4,909
  5,076
  5,257
  5,452
  5,661
  5,885
  6,124
  6,378
  6,649
  6,935
  7,239
  7,561
  7,901
  8,261
  8,640
  9,041
  9,463
  9,908
  10,378
  10,872
  11,392
  11,939
  12,515
  13,122
  13,759
Working capital, $m
  1,001
  86
  88
  90
  92
  95
  98
  102
  105
  109
  113
  118
  123
  128
  133
  139
  145
  151
  158
  165
  173
  181
  190
  198
  208
  218
  228
  239
  251
  263
  276
Total debt, $m
  592
  614
  645
  680
  719
  763
  811
  863
  920
  981
  1,046
  1,116
  1,191
  1,270
  1,354
  1,444
  1,539
  1,640
  1,746
  1,858
  1,977
  2,102
  2,234
  2,373
  2,520
  2,674
  2,836
  3,008
  3,188
  3,377
  3,576
Total liabilities, $m
  1,315
  1,337
  1,368
  1,403
  1,442
  1,486
  1,534
  1,586
  1,643
  1,704
  1,769
  1,839
  1,914
  1,993
  2,077
  2,167
  2,262
  2,363
  2,469
  2,581
  2,700
  2,825
  2,957
  3,096
  3,243
  3,397
  3,559
  3,731
  3,911
  4,100
  4,299
Total equity, $m
  3,483
  2,607
  2,667
  2,735
  2,812
  2,897
  2,991
  3,093
  3,203
  3,322
  3,449
  3,586
  3,731
  3,886
  4,051
  4,225
  4,411
  4,607
  4,814
  5,033
  5,264
  5,508
  5,765
  6,037
  6,322
  6,623
  6,940
  7,274
  7,625
  7,994
  8,383
Total liabilities and equity, $m
  4,798
  3,944
  4,035
  4,138
  4,254
  4,383
  4,525
  4,679
  4,846
  5,026
  5,218
  5,425
  5,645
  5,879
  6,128
  6,392
  6,673
  6,970
  7,283
  7,614
  7,964
  8,333
  8,722
  9,133
  9,565
  10,020
  10,499
  11,005
  11,536
  12,094
  12,682
Debt-to-equity ratio
  0.170
  0.240
  0.240
  0.250
  0.260
  0.260
  0.270
  0.280
  0.290
  0.300
  0.300
  0.310
  0.320
  0.330
  0.330
  0.340
  0.350
  0.360
  0.360
  0.370
  0.380
  0.380
  0.390
  0.390
  0.400
  0.400
  0.410
  0.410
  0.420
  0.420
  0.430
Adjusted equity ratio
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -344
  -1,723
  -1,763
  -1,810
  -1,861
  -1,919
  -1,982
  -2,051
  -2,125
  -2,206
  -2,292
  -2,384
  -2,482
  -2,587
  -2,698
  -2,816
  -2,942
  -3,074
  -3,214
  -3,362
  -3,519
  -3,684
  -3,858
  -4,041
  -4,234
  -4,438
  -4,652
  -4,878
  -5,115
  -5,365
  -5,627
Depreciation, amort., depletion, $m
  75
  143
  146
  150
  154
  159
  164
  169
  175
  182
  189
  196
  204
  213
  222
  231
  241
  252
  263
  275
  288
  301
  315
  330
  346
  362
  380
  398
  417
  437
  459
Funds from operations, $m
  144
  -1,581
  -1,617
  -1,660
  -1,708
  -1,760
  -1,818
  -1,882
  -1,950
  -2,024
  -2,103
  -2,188
  -2,278
  -2,374
  -2,477
  -2,585
  -2,700
  -2,822
  -2,951
  -3,087
  -3,231
  -3,382
  -3,542
  -3,711
  -3,888
  -4,075
  -4,272
  -4,480
  -4,698
  -4,927
  -5,169
Change in working capital, $m
  30
  2
  2
  2
  3
  3
  3
  3
  4
  4
  4
  4
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  12
  12
  13
Cash from operations, $m
  114
  -1,582
  -1,619
  -1,662
  -1,710
  -1,763
  -1,822
  -1,885
  -1,954
  -2,028
  -2,107
  -2,192
  -2,283
  -2,379
  -2,482
  -2,591
  -2,706
  -2,828
  -2,958
  -3,094
  -3,238
  -3,390
  -3,551
  -3,720
  -3,898
  -4,085
  -4,283
  -4,491
  -4,709
  -4,939
  -5,181
Maintenance CAPEX, $m
  0
  -140
  -143
  -146
  -150
  -154
  -159
  -164
  -169
  -175
  -182
  -189
  -196
  -204
  -213
  -222
  -231
  -241
  -252
  -263
  -275
  -288
  -301
  -315
  -330
  -346
  -362
  -380
  -398
  -417
  -437
New CAPEX, $m
  -298
  -84
  -98
  -112
  -126
  -140
  -154
  -167
  -181
  -195
  -209
  -224
  -239
  -254
  -270
  -287
  -304
  -322
  -340
  -359
  -380
  -401
  -422
  -445
  -469
  -494
  -520
  -548
  -576
  -606
  -638
Cash from investing activities, $m
  481
  -224
  -241
  -258
  -276
  -294
  -313
  -331
  -350
  -370
  -391
  -413
  -435
  -458
  -483
  -509
  -535
  -563
  -592
  -622
  -655
  -689
  -723
  -760
  -799
  -840
  -882
  -928
  -974
  -1,023
  -1,075
Free cash flow, $m
  595
  -1,806
  -1,860
  -1,921
  -1,986
  -2,057
  -2,134
  -2,216
  -2,304
  -2,398
  -2,498
  -2,605
  -2,718
  -2,838
  -2,965
  -3,099
  -3,241
  -3,391
  -3,550
  -3,717
  -3,893
  -4,079
  -4,274
  -4,480
  -4,697
  -4,925
  -5,165
  -5,418
  -5,683
  -5,963
  -6,256
Issuance/(repayment) of debt, $m
  0
  22
  31
  35
  39
  44
  48
  52
  57
  61
  65
  70
  75
  79
  84
  90
  95
  101
  106
  112
  119
  125
  132
  139
  147
  154
  163
  171
  180
  189
  199
Issuance/(repurchase) of shares, $m
  0
  1,764
  1,823
  1,878
  1,938
  2,004
  2,076
  2,153
  2,236
  2,324
  2,419
  2,520
  2,628
  2,742
  2,863
  2,991
  3,127
  3,270
  3,421
  3,581
  3,750
  3,928
  4,115
  4,312
  4,520
  4,739
  4,969
  5,211
  5,466
  5,734
  6,016
Cash from financing (excl. dividends), $m  
  0
  1,786
  1,854
  1,913
  1,977
  2,048
  2,124
  2,205
  2,293
  2,385
  2,484
  2,590
  2,703
  2,821
  2,947
  3,081
  3,222
  3,371
  3,527
  3,693
  3,869
  4,053
  4,247
  4,451
  4,667
  4,893
  5,132
  5,382
  5,646
  5,923
  6,215
Total cash flow (excl. dividends), $m
  595
  -20
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -36
  -37
  -39
  -41
Retained Cash Flow (-), $m
  269
  -1,764
  -1,823
  -1,878
  -1,938
  -2,004
  -2,076
  -2,153
  -2,236
  -2,324
  -2,419
  -2,520
  -2,628
  -2,742
  -2,863
  -2,991
  -3,127
  -3,270
  -3,421
  -3,581
  -3,750
  -3,928
  -4,115
  -4,312
  -4,520
  -4,739
  -4,969
  -5,211
  -5,466
  -5,734
  -6,016
Prev. year cash balance distribution, $m
 
  917
  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
 
  -867
  -1,823
  -1,878
  -1,938
  -2,004
  -2,076
  -2,153
  -2,236
  -2,324
  -2,419
  -2,520
  -2,628
  -2,742
  -2,863
  -2,991
  -3,127
  -3,270
  -3,421
  -3,581
  -3,750
  -3,928
  -4,115
  -4,312
  -4,520
  -4,739
  -4,969
  -5,211
  -5,466
  -5,734
  -6,016
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
 
  -831
  -1,669
  -1,634
  -1,596
  -1,554
  -1,506
  -1,454
  -1,397
  -1,335
  -1,268
  -1,197
  -1,121
  -1,043
  -961
  -878
  -795
  -712
  -630
  -551
  -476
  -406
  -341
  -283
  -230
  -184
  -145
  -112
  -85
  -63
  -45
Current shareholders' claim on cash, %
  100
  50.5
  25.2
  12.6
  6.3
  3.1
  1.5
  0.8
  0.4
  0.2
  0.1
  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
  0.0
  0.0
  0.0
  0.0
  0.0

Eldorado Gold Corporation (Eldorado) is a gold exploration, development and mining company. The Company's geographical segments include Turkey, Brazil, Greece, Romania and Other. The Turkey segment includes the Kisladag and the Efemcukuru mines and exploration activities in Turkey. The Brazil segment includes the Vila Nova mine, Tocantinzinho project and exploration activities in Brazil. The Greece segment includes the Stratoni mine, the Olympias, Skouries, Perama Hill and Sapes projects, and exploration activities in Greece. The Romania segment includes the Certej project and exploration activities in Romania. Other segment includes operations of the Company's corporate office and exploration activities in other countries. The Company has operations and ongoing exploration and development projects in Turkey, Greece, Brazil and Romania. Its Operating gold mines include Kisladag in Turkey, and Efemcukuru in Turkey.

FINANCIAL RATIOS  of  Eldorado Gold (EGO)

Valuation Ratios
P/E Ratio -2.6
Price to Sales 2.1
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 7.9
Price to Free Cash Flow -4.9
Growth Rates
Sales Growth Rate -9.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.1%
Cap. Spend. - 3 Yr. Gr. Rate -9.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 17%
Total Debt to Equity 17%
Interest Coverage 2
Management Effectiveness
Return On Assets -6.8%
Ret/ On Assets - 3 Yr. Avg. -9.6%
Return On Total Capital -8.2%
Ret/ On T. Cap. - 3 Yr. Avg. -12.2%
Return On Equity -9.5%
Return On Equity - 3 Yr. Avg. -13.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 37.6%
Gross Margin - 3 Yr. Avg. 32.8%
EBITDA Margin 36.5%
EBITDA Margin - 3 Yr. Avg. -93.9%
Operating Margin 15.5%
Oper. Margin - 3 Yr. Avg. -114.4%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. -117.4%
Net Profit Margin -79.4%
Net Profit Margin - 3 Yr. Avg. -130.5%
Effective Tax Rate 116.3%
Eff/ Tax Rate - 3 Yr. Avg. 60.5%
Payout Ratio 0%

EGO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EGO stock intrinsic value calculation we used $433 million for the last fiscal year's total revenue generated by Eldorado Gold. The default revenue input number comes from 2016 income statement of Eldorado Gold. 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 EGO 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 EGO is calculated based on our internal credit rating of Eldorado Gold, 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 Eldorado Gold.
    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 EGO stock the variable cost ratio is equal to 482.4%.

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 EGO 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 5.8% for Eldorado Gold.

Corporate tax rate of 27% is the nominal tax rate for Eldorado Gold. 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 EGO 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 EGO are equal to 968.7%.

Life of production assets of 56.3 years is the average useful life of capital assets used in Eldorado Gold 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 EGO is equal to 19.4%. 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 - $3483 million for Eldorado Gold - 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 792.627 million for Eldorado Gold 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 Eldorado Gold at the current share price and the inputted number of shares is $1.0 billion.

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Financial statements of EGO
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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