Intrinsic value of Enerplus - ERF

Previous Close

$8.95

  Intrinsic Value

$0.62

stock screener

  Rating & Target

str. sell

-93%

  Value-price divergence*

-139%

Previous close

$8.95

 
Intrinsic value

$0.62

 
Up/down potential

-93%

 
Rating

str. sell

 
Value-price divergence*

-139%

*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
  59.40
  53.96
  49.06
  44.66
  40.69
  37.12
  33.91
  31.02
  28.42
  26.08
  23.97
  22.07
  20.36
  18.83
  17.44
  16.20
  15.08
  14.07
  13.17
  12.35
  11.61
  10.95
  10.36
  9.82
  9.34
  8.91
  8.51
  8.16
  7.85
  7.56
Revenue, $m
  535
  853
  1,313
  1,957
  2,831
  3,983
  5,462
  7,314
  9,583
  12,306
  15,515
  19,233
  23,479
  28,260
  33,580
  39,438
  45,828
  52,739
  60,160
  68,081
  76,488
  85,371
  94,721
  104,531
  114,798
  125,519
  136,697
  148,336
  160,445
  173,036
  186,121
Variable operating expenses, $m
 
  2,357
  3,604
  5,348
  7,715
  10,834
  14,838
  19,854
  25,997
  33,372
  42,061
  52,082
  63,578
  76,525
  90,933
  106,796
  124,097
  142,812
  162,909
  184,356
  207,121
  231,176
  256,495
  283,060
  310,861
  339,893
  370,162
  401,681
  434,471
  468,564
  503,999
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
  2,357
  3,604
  5,348
  7,715
  10,834
  14,838
  19,854
  25,997
  33,372
  42,061
  52,082
  63,578
  76,525
  90,933
  106,796
  124,097
  142,812
  162,909
  184,356
  207,121
  231,176
  256,495
  283,060
  310,861
  339,893
  370,162
  401,681
  434,471
  468,564
  503,999
Operating income, $m
  144
  -1,505
  -2,291
  -3,391
  -4,884
  -6,851
  -9,377
  -12,540
  -16,415
  -21,066
  -26,546
  -32,849
  -40,099
  -48,265
  -57,352
  -67,357
  -78,269
  -90,073
  -102,748
  -116,275
  -130,634
  -145,805
  -161,774
  -178,529
  -196,063
  -214,374
  -233,465
  -253,344
  -274,026
  -295,529
  -317,877
EBITDA, $m
  387
  -1,343
  -2,068
  -3,082
  -4,459
  -6,273
  -8,601
  -11,518
  -15,091
  -19,380
  -24,433
  -30,289
  -36,974
  -44,504
  -52,883
  -62,108
  -72,170
  -83,053
  -94,741
  -107,214
  -120,453
  -134,442
  -149,167
  -164,616
  -180,784
  -197,668
  -215,271
  -233,601
  -252,671
  -272,498
  -293,105
Interest expense (income), $m
  36
  28
  53
  90
  141
  211
  303
  421
  569
  749
  967
  1,223
  1,519
  1,858
  2,239
  2,663
  3,131
  3,640
  4,192
  4,783
  5,415
  6,086
  6,794
  7,540
  8,322
  9,141
  9,996
  10,888
  11,816
  12,782
  13,786
Earnings before tax, $m
  119
  -1,533
  -2,344
  -3,481
  -5,025
  -7,062
  -9,679
  -12,961
  -16,983
  -21,815
  -27,513
  -34,072
  -41,618
  -50,123
  -59,591
  -70,021
  -81,400
  -93,713
  -106,940
  -121,059
  -136,049
  -151,891
  -168,568
  -186,069
  -204,386
  -223,516
  -243,462
  -264,232
  -285,842
  -308,311
  -331,664
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
  -1,533
  -2,344
  -3,481
  -5,025
  -7,062
  -9,679
  -12,961
  -16,983
  -21,815
  -27,513
  -34,072
  -41,618
  -50,123
  -59,591
  -70,021
  -81,400
  -93,713
  -106,940
  -121,059
  -136,049
  -151,891
  -168,568
  -186,069
  -204,386
  -223,516
  -243,462
  -264,232
  -285,842
  -308,311
  -331,664

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
  3,112
  4,792
  7,143
  10,333
  14,537
  19,934
  26,694
  34,974
  44,912
  56,623
  70,195
  85,688
  103,138
  122,556
  143,936
  167,254
  192,477
  219,563
  248,469
  279,152
  311,572
  345,696
  381,500
  418,969
  458,098
  498,893
  541,373
  585,567
  631,517
  679,274
Adjusted assets (=assets-cash), $m
  1,952
  3,112
  4,792
  7,143
  10,333
  14,537
  19,934
  26,694
  34,974
  44,912
  56,623
  70,195
  85,688
  103,138
  122,556
  143,936
  167,254
  192,477
  219,563
  248,469
  279,152
  311,572
  345,696
  381,500
  418,969
  458,098
  498,893
  541,373
  585,567
  631,517
  679,274
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
  1,135
  1,748
  2,605
  3,768
  5,302
  7,270
  9,735
  12,755
  16,379
  20,650
  25,600
  31,250
  37,614
  44,695
  52,493
  60,997
  70,195
  80,073
  90,615
  101,805
  113,628
  126,073
  139,131
  152,796
  167,066
  181,943
  197,436
  213,553
  230,310
  247,727
Working capital, $m
  200
  352
  542
  808
  1,169
  1,645
  2,256
  3,021
  3,958
  5,082
  6,408
  7,943
  9,697
  11,671
  13,869
  16,288
  18,927
  21,781
  24,846
  28,117
  31,589
  35,258
  39,120
  43,171
  47,411
  51,839
  56,456
  61,263
  66,264
  71,464
  76,868
Total debt, $m
  569
  1,085
  1,834
  2,883
  4,305
  6,181
  8,588
  11,602
  15,295
  19,728
  24,951
  31,004
  37,914
  45,696
  54,357
  63,892
  74,292
  85,542
  97,622
  110,514
  124,199
  138,658
  153,877
  169,846
  186,557
  204,009
  222,203
  241,149
  260,860
  281,354
  302,653
Total liabilities, $m
  872
  1,388
  2,137
  3,186
  4,608
  6,484
  8,891
  11,905
  15,598
  20,031
  25,254
  31,307
  38,217
  45,999
  54,660
  64,195
  74,595
  85,845
  97,925
  110,817
  124,502
  138,961
  154,180
  170,149
  186,860
  204,312
  222,506
  241,452
  261,163
  281,657
  302,956
Total equity, $m
  1,081
  1,724
  2,655
  3,957
  5,724
  8,054
  11,043
  14,788
  19,375
  24,881
  31,369
  38,888
  47,471
  57,138
  67,896
  79,741
  92,659
  106,632
  121,638
  137,652
  154,650
  172,611
  191,516
  211,351
  232,109
  253,786
  276,387
  299,921
  324,404
  349,860
  376,318
Total liabilities and equity, $m
  1,953
  3,112
  4,792
  7,143
  10,332
  14,538
  19,934
  26,693
  34,973
  44,912
  56,623
  70,195
  85,688
  103,137
  122,556
  143,936
  167,254
  192,477
  219,563
  248,469
  279,152
  311,572
  345,696
  381,500
  418,969
  458,098
  498,893
  541,373
  585,567
  631,517
  679,274
Debt-to-equity ratio
  0.526
  0.630
  0.690
  0.730
  0.750
  0.770
  0.780
  0.780
  0.790
  0.790
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  0.800
  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
  -1,533
  -2,344
  -3,481
  -5,025
  -7,062
  -9,679
  -12,961
  -16,983
  -21,815
  -27,513
  -34,072
  -41,618
  -50,123
  -59,591
  -70,021
  -81,400
  -93,713
  -106,940
  -121,059
  -136,049
  -151,891
  -168,568
  -186,069
  -204,386
  -223,516
  -243,462
  -264,232
  -285,842
  -308,311
  -331,664
Depreciation, amort., depletion, $m
  243
  162
  223
  309
  425
  578
  775
  1,022
  1,324
  1,686
  2,113
  2,560
  3,125
  3,761
  4,470
  5,249
  6,100
  7,020
  8,007
  9,062
  10,180
  11,363
  12,607
  13,913
  15,280
  16,707
  18,194
  19,744
  21,355
  23,031
  24,773
Funds from operations, $m
  236
  -1,371
  -2,121
  -3,172
  -4,600
  -6,484
  -8,904
  -11,939
  -15,660
  -20,129
  -25,400
  -31,512
  -38,493
  -46,361
  -55,122
  -64,771
  -75,300
  -86,694
  -98,932
  -111,997
  -125,868
  -140,528
  -155,961
  -172,156
  -189,106
  -206,809
  -225,267
  -244,489
  -264,487
  -285,280
  -306,891
Change in working capital, $m
  5
  131
  190
  266
  361
  476
  611
  765
  937
  1,125
  1,325
  1,536
  1,753
  1,975
  2,197
  2,419
  2,639
  2,854
  3,065
  3,271
  3,472
  3,669
  3,862
  4,052
  4,240
  4,428
  4,616
  4,807
  5,001
  5,200
  5,404
Cash from operations, $m
  231
  -1,502
  -2,311
  -3,438
  -4,961
  -6,960
  -9,515
  -12,704
  -16,597
  -21,254
  -26,725
  -33,047
  -40,247
  -48,336
  -57,319
  -67,191
  -77,939
  -89,548
  -101,998
  -115,268
  -129,340
  -144,197
  -159,823
  -176,208
  -193,346
  -211,237
  -229,884
  -249,296
  -269,488
  -290,479
  -312,295
Maintenance CAPEX, $m
  0
  -71
  -114
  -175
  -260
  -377
  -530
  -727
  -973
  -1,275
  -1,638
  -2,065
  -2,560
  -3,125
  -3,761
  -4,470
  -5,249
  -6,100
  -7,020
  -8,007
  -9,062
  -10,180
  -11,363
  -12,607
  -13,913
  -15,280
  -16,707
  -18,194
  -19,744
  -21,355
  -23,031
New CAPEX, $m
  -249
  -423
  -612
  -857
  -1,163
  -1,533
  -1,968
  -2,465
  -3,020
  -3,625
  -4,271
  -4,949
  -5,650
  -6,364
  -7,082
  -7,797
  -8,504
  -9,199
  -9,878
  -10,542
  -11,190
  -11,823
  -12,445
  -13,058
  -13,665
  -14,270
  -14,878
  -15,492
  -16,117
  -16,758
  -17,417
Cash from investing activities, $m
  -80
  -494
  -726
  -1,032
  -1,423
  -1,910
  -2,498
  -3,192
  -3,993
  -4,900
  -5,909
  -7,014
  -8,210
  -9,489
  -10,843
  -12,267
  -13,753
  -15,299
  -16,898
  -18,549
  -20,252
  -22,003
  -23,808
  -25,665
  -27,578
  -29,550
  -31,585
  -33,686
  -35,861
  -38,113
  -40,448
Free cash flow, $m
  151
  -1,996
  -3,037
  -4,470
  -6,385
  -8,870
  -12,013
  -15,896
  -20,590
  -26,154
  -32,634
  -40,062
  -48,457
  -57,825
  -68,162
  -79,458
  -91,693
  -104,846
  -118,895
  -133,817
  -149,592
  -166,201
  -183,630
  -201,873
  -220,924
  -240,787
  -261,468
  -282,982
  -305,349
  -328,592
  -352,743
Issuance/(repayment) of debt, $m
  -290
  517
  749
  1,049
  1,423
  1,875
  2,407
  3,015
  3,693
  4,433
  5,223
  6,053
  6,910
  7,783
  8,661
  9,535
  10,400
  11,249
  12,080
  12,892
  13,684
  14,459
  15,220
  15,969
  16,711
  17,451
  18,195
  18,946
  19,711
  20,493
  21,300
Issuance/(repurchase) of shares, $m
  163
  2,176
  3,274
  4,783
  6,792
  9,391
  12,669
  16,706
  21,570
  27,321
  34,001
  41,590
  50,201
  59,790
  70,349
  81,865
  94,319
  107,686
  121,945
  137,072
  153,047
  169,851
  187,473
  205,905
  225,144
  245,193
  266,062
  287,766
  310,326
  333,767
  358,121
Cash from financing (excl. dividends), $m  
  -130
  2,693
  4,023
  5,832
  8,215
  11,266
  15,076
  19,721
  25,263
  31,754
  39,224
  47,643
  57,111
  67,573
  79,010
  91,400
  104,719
  118,935
  134,025
  149,964
  166,731
  184,310
  202,693
  221,874
  241,855
  262,644
  284,257
  306,712
  330,037
  354,260
  379,421
Total cash flow (excl. dividends), $m
  21
  697
  986
  1,362
  1,830
  2,397
  3,063
  3,824
  4,674
  5,600
  6,590
  7,581
  8,655
  9,748
  10,847
  11,943
  13,026
  14,090
  15,131
  16,147
  17,140
  18,110
  19,062
  20,001
  20,931
  21,858
  22,789
  23,730
  24,687
  25,668
  26,678
Retained Cash Flow (-), $m
  -417
  -2,176
  -3,274
  -4,783
  -6,792
  -9,391
  -12,669
  -16,706
  -21,570
  -27,321
  -34,001
  -41,590
  -50,201
  -59,790
  -70,349
  -81,865
  -94,319
  -107,686
  -121,945
  -137,072
  -153,047
  -169,851
  -187,473
  -205,905
  -225,144
  -245,193
  -266,062
  -287,766
  -310,326
  -333,767
  -358,121
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
 
  -1,479
  -2,288
  -3,422
  -4,962
  -6,995
  -9,606
  -12,881
  -16,897
  -21,721
  -27,411
  -34,009
  -41,547
  -50,042
  -59,502
  -69,922
  -81,293
  -93,597
  -106,815
  -120,925
  -135,907
  -151,741
  -168,411
  -185,904
  -204,213
  -223,335
  -243,273
  -264,036
  -285,638
  -308,099
  -331,443
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
 
  -1,401
  -2,041
  -2,859
  -3,859
  -5,032
  -6,349
  -7,762
  -9,211
  -10,621
  -11,916
  -13,019
  -13,863
  -14,399
  -14,594
  -14,442
  -13,958
  -13,176
  -12,151
  -10,946
  -9,631
  -8,273
  -6,937
  -5,675
  -4,527
  -3,518
  -2,663
  -1,961
  -1,403
  -975
  -658
Current shareholders' claim on cash, %
  100
  49.9
  25.6
  13.5
  7.3
  4.0
  2.2
  1.3
  0.7
  0.4
  0.3
  0.2
  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
  0.0
  0.0
  0.0

Enerplus Corporation, together with subsidiaries, engages in the exploration and development of crude oil and natural gas in the United States and Canada. The company primarily has interests in approximately 110,000 net acres of lands comprising approximately 70,000 net acres targeting the Stacked Mannville zones and 66,000 net acres in the Willesden Green region of Alberta. As of December 31, 2015, it had proved plus probable gross reserves of 17.2 million barrels (MMbbls) of light and medium crude oil; 41.5 MMbbls of heavy crude oil; 131.3 MMbbls of tight oil; 15.7 MMbbls of natural gas liquids; 237.4 billion cubic feet (Bcf) of conventional natural gas; and 963.4 Bcf of shale gas. The company was founded in 1986 and is headquartered in Calgary, Canada.

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 -119.6
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 59.4% 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 10 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 242.094 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
ENB Enbridge 39.17 237.94  str.buy
EOG EOG Resources 84.98 6.12  str.sell
WPX WPX Energy 9.56 2.20  str.sell

COMPANY NEWS

▶ 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]
▶ Enerplus Announces Cash Dividend for October 2016   [Sep-19-16 06:00AM  CNW Group]
▶ Is the Worst Over for Oil Stocks?   [Sep-08-16 03:30PM  at Motley Fool]
▶ Enerplus Announces Cash Dividend for September 2016   [Aug-19-16 06:00AM  CNW Group]
▶ Enerplus to Present at EnerCom's Oil & Gas Conference   [Aug-10-16 05:30PM  PR Newswire]
Stock chart of ERF 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.

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.