Intrinsic value of Enerplus - ERF

Previous Close

$8.90

  Intrinsic Value

$0.62

stock screener

  Rating & Target

str. sell

-93%

  Value-price divergence*

-110%

Previous close

$8.90

 
Intrinsic value

$0.62

 
Up/down potential

-93%

 
Rating

str. sell

 
Value-price divergence*

-110%

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

We calculate the intrinsic value of ERF 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 2.2

 

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, %
  -18.32
  29.50
  27.05
  24.85
  22.86
  21.07
  19.47
  18.02
  16.72
  15.55
  14.49
  13.54
  12.69
  11.92
  11.23
  10.60
  10.04
  9.54
  9.09
  8.68
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
Revenue, $m
  535
  693
  880
  1,099
  1,350
  1,635
  1,953
  2,305
  2,690
  3,108
  3,559
  4,041
  4,554
  5,096
  5,668
  6,270
  6,899
  7,558
  8,244
  8,960
  9,704
  10,478
  11,283
  12,120
  12,989
  13,892
  14,831
  15,807
  16,823
  17,880
  18,980
Variable operating expenses, $m
 
  1,924
  2,432
  3,024
  3,704
  4,475
  5,336
  6,289
  7,333
  8,465
  9,685
  10,942
  12,330
  13,800
  15,350
  16,977
  18,683
  20,465
  22,324
  24,262
  26,278
  28,374
  30,554
  32,818
  35,172
  37,618
  40,161
  42,804
  45,554
  48,416
  51,396
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
  391
  1,924
  2,432
  3,024
  3,704
  4,475
  5,336
  6,289
  7,333
  8,465
  9,685
  10,942
  12,330
  13,800
  15,350
  16,977
  18,683
  20,465
  22,324
  24,262
  26,278
  28,374
  30,554
  32,818
  35,172
  37,618
  40,161
  42,804
  45,554
  48,416
  51,396
Operating income, $m
  144
  -1,231
  -1,552
  -1,925
  -2,354
  -2,840
  -3,384
  -3,985
  -4,643
  -5,357
  -6,126
  -6,901
  -7,777
  -8,704
  -9,681
  -10,708
  -11,783
  -12,908
  -14,080
  -15,302
  -16,574
  -17,896
  -19,271
  -20,699
  -22,183
  -23,726
  -25,330
  -26,997
  -28,732
  -30,537
  -32,416
EBITDA, $m
  387
  -999
  -1,269
  -1,584
  -1,947
  -2,357
  -2,816
  -3,323
  -3,878
  -4,481
  -5,131
  -5,826
  -6,565
  -7,347
  -8,172
  -9,039
  -9,947
  -10,896
  -11,886
  -12,917
  -13,990
  -15,107
  -16,267
  -17,473
  -18,726
  -20,028
  -21,382
  -22,789
  -24,253
  -25,777
  -27,363
Interest expense (income), $m
  36
  28
  40
  55
  73
  93
  116
  141
  169
  200
  233
  269
  307
  348
  392
  437
  485
  535
  588
  643
  700
  759
  821
  885
  952
  1,021
  1,093
  1,168
  1,246
  1,327
  1,411
Earnings before tax, $m
  119
  -1,259
  -1,592
  -1,980
  -2,427
  -2,933
  -3,499
  -4,126
  -4,812
  -5,557
  -6,359
  -7,170
  -8,084
  -9,052
  -10,073
  -11,145
  -12,269
  -13,443
  -14,668
  -15,945
  -17,273
  -18,655
  -20,091
  -21,584
  -23,135
  -24,747
  -26,423
  -28,165
  -29,978
  -31,864
  -33,827
Tax expense, $m
  -175
  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
  294
  -1,259
  -1,592
  -1,980
  -2,427
  -2,933
  -3,499
  -4,126
  -4,812
  -5,557
  -6,359
  -7,170
  -8,084
  -9,052
  -10,073
  -11,145
  -12,269
  -13,443
  -14,668
  -15,945
  -17,273
  -18,655
  -20,091
  -21,584
  -23,135
  -24,747
  -26,423
  -28,165
  -29,978
  -31,864
  -33,827

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  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
Total assets, $m
  1,953
  2,529
  3,213
  4,011
  4,928
  5,966
  7,127
  8,412
  9,818
  11,344
  12,988
  14,747
  16,619
  18,600
  20,688
  22,882
  25,180
  27,582
  30,088
  32,699
  35,416
  38,242
  41,179
  44,232
  47,404
  50,700
  54,127
  57,690
  61,397
  65,254
  69,270
Adjusted assets (=assets-cash), $m
  1,952
  2,529
  3,213
  4,011
  4,928
  5,966
  7,127
  8,412
  9,818
  11,344
  12,988
  14,747
  16,619
  18,600
  20,688
  22,882
  25,180
  27,582
  30,088
  32,699
  35,416
  38,242
  41,179
  44,232
  47,404
  50,700
  54,127
  57,690
  61,397
  65,254
  69,270
Revenue / Adjusted assets
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
  0.274
Average production assets, $m
  712
  922
  1,172
  1,463
  1,797
  2,176
  2,599
  3,068
  3,581
  4,137
  4,737
  5,378
  6,061
  6,783
  7,545
  8,345
  9,183
  10,059
  10,973
  11,925
  12,916
  13,947
  15,018
  16,131
  17,288
  18,490
  19,740
  21,039
  22,391
  23,798
  25,262
Working capital, $m
  200
  286
  364
  454
  558
  675
  807
  952
  1,111
  1,284
  1,470
  1,669
  1,881
  2,105
  2,341
  2,589
  2,849
  3,121
  3,405
  3,700
  4,008
  4,328
  4,660
  5,005
  5,364
  5,737
  6,125
  6,528
  6,948
  7,384
  7,839
Total debt, $m
  569
  825
  1,130
  1,486
  1,895
  2,358
  2,876
  3,449
  4,076
  4,757
  5,490
  6,274
  7,109
  7,992
  8,924
  9,902
  10,927
  11,999
  13,116
  14,281
  15,493
  16,753
  18,063
  19,424
  20,839
  22,309
  23,838
  25,427
  27,080
  28,800
  30,591
Total liabilities, $m
  872
  1,128
  1,433
  1,789
  2,198
  2,661
  3,179
  3,752
  4,379
  5,060
  5,793
  6,577
  7,412
  8,295
  9,227
  10,205
  11,230
  12,302
  13,419
  14,584
  15,796
  17,056
  18,366
  19,727
  21,142
  22,612
  24,141
  25,730
  27,383
  29,103
  30,894
Total equity, $m
  1,081
  1,401
  1,780
  2,222
  2,730
  3,305
  3,949
  4,660
  5,439
  6,285
  7,196
  8,170
  9,207
  10,304
  11,461
  12,676
  13,950
  15,281
  16,669
  18,115
  19,621
  21,186
  22,813
  24,504
  26,262
  28,088
  29,986
  31,960
  34,014
  36,151
  38,375
Total liabilities and equity, $m
  1,953
  2,529
  3,213
  4,011
  4,928
  5,966
  7,128
  8,412
  9,818
  11,345
  12,989
  14,747
  16,619
  18,599
  20,688
  22,881
  25,180
  27,583
  30,088
  32,699
  35,417
  38,242
  41,179
  44,231
  47,404
  50,700
  54,127
  57,690
  61,397
  65,254
  69,269
Debt-to-equity ratio
  0.526
  0.590
  0.630
  0.670
  0.690
  0.710
  0.730
  0.740
  0.750
  0.760
  0.760
  0.770
  0.770
  0.780
  0.780
  0.780
  0.780
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.790
  0.800
  0.800
  0.800
  0.800
Adjusted equity ratio
  0.553
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554
  0.554

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  294
  -1,259
  -1,592
  -1,980
  -2,427
  -2,933
  -3,499
  -4,126
  -4,812
  -5,557
  -6,359
  -7,170
  -8,084
  -9,052
  -10,073
  -11,145
  -12,269
  -13,443
  -14,668
  -15,945
  -17,273
  -18,655
  -20,091
  -21,584
  -23,135
  -24,747
  -26,423
  -28,165
  -29,978
  -31,864
  -33,827
Depreciation, amort., depletion, $m
  243
  233
  283
  341
  408
  483
  568
  662
  764
  876
  996
  1,076
  1,212
  1,357
  1,509
  1,669
  1,837
  2,012
  2,195
  2,385
  2,583
  2,789
  3,004
  3,226
  3,458
  3,698
  3,948
  4,208
  4,478
  4,760
  5,052
Funds from operations, $m
  236
  -1,027
  -1,309
  -1,640
  -2,019
  -2,450
  -2,931
  -3,464
  -4,047
  -4,681
  -5,364
  -6,095
  -6,872
  -7,696
  -8,564
  -9,476
  -10,432
  -11,431
  -12,474
  -13,560
  -14,690
  -15,866
  -17,088
  -18,358
  -19,678
  -21,049
  -22,475
  -23,957
  -25,499
  -27,104
  -28,775
Change in working capital, $m
  5
  65
  77
  90
  104
  118
  131
  145
  159
  173
  186
  199
  212
  224
  236
  248
  260
  272
  284
  295
  307
  320
  332
  345
  359
  373
  388
  403
  419
  436
  454
Cash from operations, $m
  231
  -1,092
  -1,387
  -1,730
  -2,123
  -2,567
  -3,062
  -3,609
  -4,207
  -4,854
  -5,550
  -6,294
  -7,084
  -7,920
  -8,800
  -9,724
  -10,692
  -11,703
  -12,757
  -13,855
  -14,998
  -16,186
  -17,420
  -18,703
  -20,037
  -21,422
  -22,863
  -24,361
  -25,919
  -27,540
  -29,229
Maintenance CAPEX, $m
  0
  -142
  -184
  -234
  -293
  -359
  -435
  -520
  -614
  -716
  -827
  -947
  -1,076
  -1,212
  -1,357
  -1,509
  -1,669
  -1,837
  -2,012
  -2,195
  -2,385
  -2,583
  -2,789
  -3,004
  -3,226
  -3,458
  -3,698
  -3,948
  -4,208
  -4,478
  -4,760
New CAPEX, $m
  -249
  -210
  -249
  -291
  -334
  -379
  -424
  -468
  -513
  -557
  -600
  -641
  -682
  -722
  -762
  -800
  -838
  -876
  -914
  -952
  -991
  -1,031
  -1,071
  -1,113
  -1,157
  -1,202
  -1,250
  -1,299
  -1,352
  -1,407
  -1,465
Cash from investing activities, $m
  -80
  -352
  -433
  -525
  -627
  -738
  -859
  -988
  -1,127
  -1,273
  -1,427
  -1,588
  -1,758
  -1,934
  -2,119
  -2,309
  -2,507
  -2,713
  -2,926
  -3,147
  -3,376
  -3,614
  -3,860
  -4,117
  -4,383
  -4,660
  -4,948
  -5,247
  -5,560
  -5,885
  -6,225
Free cash flow, $m
  151
  -1,444
  -1,821
  -2,255
  -2,750
  -3,305
  -3,921
  -4,597
  -5,333
  -6,127
  -6,977
  -7,883
  -8,842
  -9,854
  -10,918
  -12,033
  -13,199
  -14,416
  -15,683
  -17,002
  -18,374
  -19,799
  -21,281
  -22,820
  -24,420
  -26,082
  -27,810
  -29,608
  -31,478
  -33,425
  -35,453
Issuance/(repayment) of debt, $m
  -290
  257
  305
  356
  409
  463
  518
  573
  627
  681
  733
  785
  835
  883
  931
  978
  1,025
  1,071
  1,118
  1,164
  1,212
  1,260
  1,310
  1,361
  1,415
  1,470
  1,528
  1,589
  1,653
  1,720
  1,791
Issuance/(repurchase) of shares, $m
  163
  1,579
  1,971
  2,423
  2,935
  3,508
  4,143
  4,837
  5,591
  6,402
  7,270
  8,145
  9,121
  10,150
  11,230
  12,361
  13,542
  14,774
  16,057
  17,391
  18,779
  20,221
  21,719
  23,275
  24,893
  26,574
  28,321
  30,139
  32,031
  34,000
  36,052
Cash from financing (excl. dividends), $m  
  -130
  1,836
  2,276
  2,779
  3,344
  3,971
  4,661
  5,410
  6,218
  7,083
  8,003
  8,930
  9,956
  11,033
  12,161
  13,339
  14,567
  15,845
  17,175
  18,555
  19,991
  21,481
  23,029
  24,636
  26,308
  28,044
  29,849
  31,728
  33,684
  35,720
  37,843
Total cash flow (excl. dividends), $m
  21
  391
  455
  523
  594
  666
  739
  813
  885
  957
  1,027
  1,047
  1,114
  1,179
  1,243
  1,306
  1,368
  1,429
  1,491
  1,554
  1,617
  1,682
  1,748
  1,816
  1,888
  1,962
  2,039
  2,120
  2,206
  2,295
  2,390
Retained Cash Flow (-), $m
  -417
  -1,579
  -1,971
  -2,423
  -2,935
  -3,508
  -4,143
  -4,837
  -5,591
  -6,402
  -7,270
  -8,145
  -9,121
  -10,150
  -11,230
  -12,361
  -13,542
  -14,774
  -16,057
  -17,391
  -18,779
  -20,221
  -21,719
  -23,275
  -24,893
  -26,574
  -28,321
  -30,139
  -32,031
  -34,000
  -36,052
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
 
  -1,188
  -1,516
  -1,899
  -2,341
  -2,842
  -3,403
  -4,025
  -4,706
  -5,446
  -6,244
  -7,098
  -8,008
  -8,971
  -9,987
  -11,055
  -12,174
  -13,344
  -14,565
  -15,838
  -17,162
  -18,539
  -19,971
  -21,459
  -23,005
  -24,612
  -26,282
  -28,019
  -29,825
  -31,705
  -33,662
Discount rate, %
 
  5.60
  5.88
  6.17
  6.48
  6.81
  7.15
  7.50
  7.88
  8.27
  8.69
  9.12
  9.58
  10.06
  10.56
  11.09
  11.64
  12.22
  12.84
  13.48
  14.15
  14.86
  15.60
  16.38
  17.20
  18.06
  18.96
  19.91
  20.91
  21.95
  23.05
PV of cash for distribution, $m
 
  -1,125
  -1,352
  -1,587
  -1,821
  -2,045
  -2,249
  -2,425
  -2,565
  -2,663
  -2,714
  -2,717
  -2,672
  -2,581
  -2,450
  -2,283
  -2,090
  -1,879
  -1,657
  -1,434
  -1,216
  -1,011
  -823
  -655
  -510
  -388
  -288
  -208
  -147
  -100
  -67
Current shareholders' claim on cash, %
  100
  57.8
  33.9
  20.2
  12.2
  7.4
  4.5
  2.8
  1.8
  1.1
  0.7
  0.4
  0.3
  0.2
  0.1
  0.1
  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

Enerplus Corporation is an oil and natural gas company. The Company's oil and natural gas property interests are located in the United States, primarily in North Dakota, Montana, and Pennsylvania, as well as in western Canada in the provinces of Alberta, British Columbia and Saskatchewan. The Company's oil and natural gas property interests contains proved plus probable gross reserves of approximately 14.3 million barrels (MMbbls) of light and medium crude oil, 39.0 MMbbls of heavy crude oil, 123 MMbbls of tight oil, 18.1 MMbbls of natural gas liquids (NGLs), 126.3 billion cubic feet (Bcf) of conventional natural gas and 1,002.8 Bcf of shale gas, for a total of approximately 382.5 million barrels of oil equivalent (MMBOE). The Company's primary crude oil properties in the United States are located in the Fort Berthold region of North Dakota and in Richland County, Montana.

FINANCIAL RATIOS  of  Enerplus (ERF)

Valuation Ratios
P/E Ratio 7.3
Price to Sales 4
Price to Book 2
Price to Tangible Book
Price to Cash Flow 9.3
Price to Free Cash Flow -118.9
Growth Rates
Sales Growth Rate -18.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.8%
Cap. Spend. - 3 Yr. Gr. Rate -18.4%
Financial Strength
Quick Ratio 0
Current Ratio 1.6
LT Debt to Equity 50.6%
Total Debt to Equity 52.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 19.8%
Ret/ On Assets - 3 Yr. Avg. -5.6%
Return On Total Capital 18.3%
Ret/ On T. Cap. - 3 Yr. Avg. -9.3%
Return On Equity 33.7%
Return On Equity - 3 Yr. Avg. -16.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 74.4%
EBITDA Margin - 3 Yr. Avg. 4.1%
Operating Margin 26.9%
Oper. Margin - 3 Yr. Avg. -43.9%
Pre-Tax Margin 22.2%
Pre-Tax Margin - 3 Yr. Avg. -46.8%
Net Profit Margin 55%
Net Profit Margin - 3 Yr. Avg. -32.6%
Effective Tax Rate -147.1%
Eff/ Tax Rate - 3 Yr. Avg. -35.2%
Payout Ratio 8.8%

ERF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ERF stock intrinsic value calculation we used $535 million for the last fiscal year's total revenue generated by Enerplus. The default revenue input number comes from 2016 income statement of Enerplus. 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 ERF stock valuation model: a) initial revenue growth rate of 29.5% 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 5.6%, whose default value for ERF is calculated based on our internal credit rating of Enerplus, 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 Enerplus.
    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 ERF stock the variable cost ratio is equal to 279.8%.

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 ERF 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 4.9% for Enerplus.

Corporate tax rate of 27% is the nominal tax rate for Enerplus. 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 ERF 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 ERF are equal to 133.1%.

Life of production assets of 4.9 years is the average useful life of capital assets used in Enerplus 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 ERF is equal to 41.3%. 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 - $1081 million for Enerplus - 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 242.906 million for Enerplus 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 Enerplus at the current share price and the inputted number of shares is $2.2 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ ETFs with exposure to Enerplus Corp. : October 9, 2017   [Oct-09-17 11:29AM  Capital Cube]
▶ ETFs with exposure to Enerplus Corp. : September 25, 2017   [Sep-25-17 10:37AM  Capital Cube]
▶ Enerplus Announces Cash Dividend for October 2017   [Sep-18-17 06:00AM  CNW Group]
▶ ETFs with exposure to Enerplus Corp. : September 13, 2017   [Sep-13-17 06:06PM  Capital Cube]
▶ Enerplus posts 2Q profit   [Aug-11-17 11:44PM  Associated Press]
▶ Enerplus Announces Cash Dividend for August 2017   [Jul-20-17 06:00AM  CNW Group]
▶ Enerplus Corp. Value Analysis (NYSE:ERF) : July 10, 2017   [Jul-10-17 03:57PM  Capital Cube]
▶ Enerplus Announces Cash Dividend for July 2017   [Jun-19-17 06:00AM  CNW Group]
▶ ETFs with exposure to Enerplus Corp. : June 8, 2017   [Jun-08-17 01:34PM  Capital Cube]
▶ ETFs with exposure to Enerplus Corp. : May 29, 2017   [May-29-17 12:46PM  Capital Cube]
▶ ETFs with exposure to Enerplus Corp. : May 18, 2017   [May-18-17 01:42PM  Capital Cube]
▶ Enerplus Announces Cash Dividend for June 2017   [May-16-17 06:00AM  CNW Group]
▶ Oil and Gas Stock Roundup: Crude Oil Mounts a Comeback   [May-13-17 10:00AM  Motley Fool]
▶ Enerplus Corp. Value Analysis (NYSE:ERF) : May 12, 2017   [May-12-17 05:04PM  Capital Cube]
▶ Enerplus posts 1Q profit   [08:54AM  Associated Press]
▶ ETFs with exposure to Enerplus Corp. : April 19, 2017   [Apr-19-17 02:19PM  Capital Cube]
▶ Enerplus Announces Cash Dividend for May 2017   [Apr-18-17 06:00AM  CNW Group]
▶ New Strong Buy Stocks for April 4th   [Apr-04-17 10:12AM  Zacks]
▶ Enerplus Announces Cash Dividend for April 2017   [Mar-17-17 06:00AM  CNW Group]
▶ Enerplus posts 4Q profit   [Feb-24-17 01:02PM  Associated Press]
▶ Enerplus Announces Cash Dividend for March 2017   [Feb-16-17 06:00AM  CNW Group]
▶ Enerplus Announces Cash Dividend for January 2017   [Dec-19-16 06:00AM  CNW Group]
▶ Hedge Funds Are Buying NIC Inc. (EGOV)   [Dec-09-16 04:10AM  at Insider Monkey]
▶ 2 Stocks That Cut You a Check Each Month   [Dec-06-16 09:48AM  at Motley Fool]
▶ Enerplus Announces Cash Dividend for December 2016   [Nov-18-16 06:00AM  CNW Group]
▶ Enerplus Announces Cash Dividend for November 2016   [Oct-20-16 06:00AM  CNW Group]
▶ 5 Must-Know Stocks With Monthly Dividends   [Oct-15-16 09:04AM  at Motley Fool]
Financial statements of ERF
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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