Intrinsic value of Exelon - EXC

Previous Close

$38.23

  Intrinsic Value

$120.76

stock screener

  Rating & Target

str. buy

+216%

  Value-price divergence*

+116%

Previous close

$38.23

 
Intrinsic value

$120.76

 
Up/down potential

+216%

 
Rating

str. buy

 
Value-price divergence*

+116%

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

We calculate the intrinsic value of EXC 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 35.4

 

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, %
  6.50
  15.60
  14.54
  13.59
  12.73
  11.95
  11.26
  10.63
  10.07
  9.56
  9.11
  8.70
  8.33
  7.99
  7.69
  7.42
  7.18
  6.96
  6.77
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.85
  5.76
  5.68
  5.62
  5.55
  5.50
Revenue, $m
  31,360
  36,252
  41,523
  47,165
  53,167
  59,523
  66,225
  73,267
  80,645
  88,357
  96,404
  104,787
  113,512
  122,586
  132,018
  141,820
  152,006
  162,592
  173,596
  185,038
  196,939
  209,324
  222,218
  235,649
  249,645
  264,238
  279,461
  295,348
  311,936
  329,263
  347,370
Variable operating expenses, $m
 
  30,710
  35,078
  39,753
  44,728
  49,995
  55,549
  61,385
  67,499
  73,890
  80,558
  86,838
  94,068
  101,588
  109,404
  117,527
  125,969
  134,742
  143,861
  153,342
  163,205
  173,469
  184,154
  195,284
  206,883
  218,976
  231,592
  244,757
  258,504
  272,863
  287,868
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
  28,248
  30,710
  35,078
  39,753
  44,728
  49,995
  55,549
  61,385
  67,499
  73,890
  80,558
  86,838
  94,068
  101,588
  109,404
  117,527
  125,969
  134,742
  143,861
  153,342
  163,205
  173,469
  184,154
  195,284
  206,883
  218,976
  231,592
  244,757
  258,504
  272,863
  287,868
Operating income, $m
  3,112
  5,542
  6,445
  7,411
  8,439
  9,528
  10,676
  11,882
  13,146
  14,467
  15,845
  17,949
  19,444
  20,998
  22,614
  24,293
  26,037
  27,851
  29,736
  31,695
  33,734
  35,855
  38,064
  40,365
  42,762
  45,262
  47,869
  50,591
  53,432
  56,400
  59,502
EBITDA, $m
  6,641
  6,819
  7,810
  8,871
  10,000
  11,196
  12,456
  13,781
  15,169
  16,619
  18,133
  19,709
  21,351
  23,057
  24,831
  26,675
  28,591
  30,582
  32,652
  34,804
  37,043
  39,372
  41,797
  44,324
  46,956
  49,701
  52,564
  55,552
  58,672
  61,932
  65,337
Interest expense (income), $m
  1,340
  1,463
  2,053
  2,684
  3,359
  4,078
  4,838
  5,641
  6,483
  7,366
  8,289
  9,253
  10,256
  11,300
  12,386
  13,515
  14,688
  15,907
  17,174
  18,491
  19,861
  21,285
  22,768
  24,311
  25,918
  27,593
  29,340
  31,162
  33,063
  35,049
  37,123
Earnings before tax, $m
  1,989
  4,079
  4,392
  4,727
  5,080
  5,450
  5,838
  6,242
  6,663
  7,101
  7,556
  8,697
  9,188
  9,698
  10,227
  10,778
  11,349
  11,943
  12,561
  13,204
  13,873
  14,570
  15,297
  16,054
  16,844
  17,668
  18,529
  19,429
  20,369
  21,351
  22,379
Tax expense, $m
  761
  1,101
  1,186
  1,276
  1,372
  1,472
  1,576
  1,685
  1,799
  1,917
  2,040
  2,348
  2,481
  2,618
  2,761
  2,910
  3,064
  3,225
  3,392
  3,565
  3,746
  3,934
  4,130
  4,335
  4,548
  4,770
  5,003
  5,246
  5,500
  5,765
  6,042
Net income, $m
  1,134
  2,978
  3,206
  3,451
  3,708
  3,979
  4,261
  4,556
  4,864
  5,183
  5,516
  6,348
  6,707
  7,079
  7,466
  7,868
  8,285
  8,719
  9,170
  9,639
  10,127
  10,636
  11,166
  11,719
  12,296
  12,898
  13,526
  14,183
  14,869
  15,586
  16,337

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,885
  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
  114,904
  130,874
  149,903
  170,269
  191,940
  214,886
  239,080
  264,502
  291,138
  318,979
  348,027
  378,292
  409,790
  442,547
  476,598
  511,986
  548,759
  586,975
  626,701
  668,006
  710,972
  755,683
  802,232
  850,718
  901,246
  953,928
  1,008,884
  1,066,238
  1,126,122
  1,188,675
  1,254,043
Adjusted assets (=assets-cash), $m
  113,019
  130,874
  149,903
  170,269
  191,940
  214,886
  239,080
  264,502
  291,138
  318,979
  348,027
  378,292
  409,790
  442,547
  476,598
  511,986
  548,759
  586,975
  626,701
  668,006
  710,972
  755,683
  802,232
  850,718
  901,246
  953,928
  1,008,884
  1,066,238
  1,126,122
  1,188,675
  1,254,043
Revenue / Adjusted assets
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
Average production assets, $m
  5,260
  6,090
  6,976
  7,924
  8,932
  10,000
  11,126
  12,309
  13,548
  14,844
  16,196
  17,604
  19,070
  20,594
  22,179
  23,826
  25,537
  27,315
  29,164
  31,086
  33,086
  35,166
  37,333
  39,589
  41,940
  44,392
  46,949
  49,618
  52,405
  55,316
  58,358
Working capital, $m
  -1,045
  870
  997
  1,132
  1,276
  1,429
  1,589
  1,758
  1,935
  2,121
  2,314
  2,515
  2,724
  2,942
  3,168
  3,404
  3,648
  3,902
  4,166
  4,441
  4,727
  5,024
  5,333
  5,656
  5,991
  6,342
  6,707
  7,088
  7,486
  7,902
  8,337
Total debt, $m
  35,913
  47,750
  62,421
  78,124
  94,832
  112,523
  131,177
  150,777
  171,313
  192,779
  215,175
  238,509
  262,794
  288,050
  314,303
  341,587
  369,939
  399,404
  430,032
  461,879
  495,005
  529,478
  565,367
  602,749
  641,706
  682,325
  724,695
  768,915
  815,086
  863,314
  913,713
Total liabilities, $m
  89,067
  100,904
  115,575
  131,278
  147,986
  165,677
  184,331
  203,931
  224,467
  245,933
  268,329
  291,663
  315,948
  341,204
  367,457
  394,741
  423,093
  452,558
  483,186
  515,033
  548,159
  582,632
  618,521
  655,903
  694,860
  735,479
  777,849
  822,069
  868,240
  916,468
  966,867
Total equity, $m
  25,837
  29,970
  34,328
  38,992
  43,954
  49,209
  54,749
  60,571
  66,670
  73,046
  79,698
  86,629
  93,842
  101,343
  109,141
  117,245
  125,666
  134,417
  143,514
  152,973
  162,813
  173,051
  183,711
  194,814
  206,385
  218,450
  231,034
  244,168
  257,882
  272,207
  287,176
Total liabilities and equity, $m
  114,904
  130,874
  149,903
  170,270
  191,940
  214,886
  239,080
  264,502
  291,137
  318,979
  348,027
  378,292
  409,790
  442,547
  476,598
  511,986
  548,759
  586,975
  626,700
  668,006
  710,972
  755,683
  802,232
  850,717
  901,245
  953,929
  1,008,883
  1,066,237
  1,126,122
  1,188,675
  1,254,043
Debt-to-equity ratio
  1.390
  1.590
  1.820
  2.000
  2.160
  2.290
  2.400
  2.490
  2.570
  2.640
  2.700
  2.750
  2.800
  2.840
  2.880
  2.910
  2.940
  2.970
  3.000
  3.020
  3.040
  3.060
  3.080
  3.090
  3.110
  3.120
  3.140
  3.150
  3.160
  3.170
  3.180
Adjusted equity ratio
  0.223
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,134
  2,978
  3,206
  3,451
  3,708
  3,979
  4,261
  4,556
  4,864
  5,183
  5,516
  6,348
  6,707
  7,079
  7,466
  7,868
  8,285
  8,719
  9,170
  9,639
  10,127
  10,636
  11,166
  11,719
  12,296
  12,898
  13,526
  14,183
  14,869
  15,586
  16,337
Depreciation, amort., depletion, $m
  3,529
  1,277
  1,365
  1,460
  1,561
  1,668
  1,780
  1,899
  2,023
  2,152
  2,287
  1,760
  1,907
  2,059
  2,218
  2,383
  2,554
  2,732
  2,916
  3,109
  3,309
  3,517
  3,733
  3,959
  4,194
  4,439
  4,695
  4,962
  5,241
  5,532
  5,836
Funds from operations, $m
  9,214
  4,254
  4,571
  4,911
  5,269
  5,646
  6,042
  6,455
  6,886
  7,336
  7,803
  8,109
  8,614
  9,139
  9,684
  10,250
  10,839
  11,450
  12,086
  12,748
  13,436
  14,153
  14,900
  15,678
  16,490
  17,337
  18,221
  19,145
  20,110
  21,118
  22,172
Change in working capital, $m
  769
  117
  127
  135
  144
  153
  161
  169
  177
  185
  193
  201
  209
  218
  226
  235
  244
  254
  264
  275
  286
  297
  309
  322
  336
  350
  365
  381
  398
  416
  435
Cash from operations, $m
  8,445
  4,137
  4,445
  4,775
  5,125
  5,494
  5,881
  6,286
  6,709
  7,150
  7,610
  7,908
  8,405
  8,921
  9,458
  10,015
  10,594
  11,196
  11,822
  12,473
  13,150
  13,856
  14,590
  15,356
  16,154
  16,987
  17,856
  18,763
  19,711
  20,702
  21,738
Maintenance CAPEX, $m
  0
  -526
  -609
  -698
  -792
  -893
  -1,000
  -1,113
  -1,231
  -1,355
  -1,484
  -1,620
  -1,760
  -1,907
  -2,059
  -2,218
  -2,383
  -2,554
  -2,732
  -2,916
  -3,109
  -3,309
  -3,517
  -3,733
  -3,959
  -4,194
  -4,439
  -4,695
  -4,962
  -5,241
  -5,532
New CAPEX, $m
  -8,553
  -830
  -886
  -948
  -1,008
  -1,068
  -1,126
  -1,183
  -1,239
  -1,296
  -1,352
  -1,408
  -1,466
  -1,524
  -1,585
  -1,647
  -1,711
  -1,778
  -1,849
  -1,922
  -1,999
  -2,081
  -2,166
  -2,256
  -2,351
  -2,452
  -2,557
  -2,669
  -2,787
  -2,911
  -3,042
Cash from investing activities, $m
  -15,503
  -1,356
  -1,495
  -1,646
  -1,800
  -1,961
  -2,126
  -2,296
  -2,470
  -2,651
  -2,836
  -3,028
  -3,226
  -3,431
  -3,644
  -3,865
  -4,094
  -4,332
  -4,581
  -4,838
  -5,108
  -5,390
  -5,683
  -5,989
  -6,310
  -6,646
  -6,996
  -7,364
  -7,749
  -8,152
  -8,574
Free cash flow, $m
  -7,058
  2,780
  2,950
  3,130
  3,324
  3,533
  3,755
  3,990
  4,239
  4,500
  4,774
  4,880
  5,178
  5,490
  5,813
  6,150
  6,500
  6,864
  7,242
  7,634
  8,042
  8,466
  8,907
  9,366
  9,844
  10,341
  10,859
  11,400
  11,963
  12,551
  13,164
Issuance/(repayment) of debt, $m
  2,205
  13,722
  14,671
  15,702
  16,708
  17,691
  18,654
  19,600
  20,536
  21,466
  22,396
  23,334
  24,285
  25,256
  26,254
  27,283
  28,352
  29,465
  30,628
  31,847
  33,126
  34,472
  35,889
  37,383
  38,957
  40,618
  42,371
  44,220
  46,171
  48,229
  50,399
Issuance/(repurchase) of shares, $m
  -135
  1,156
  1,152
  1,213
  1,254
  1,276
  1,279
  1,265
  1,236
  1,192
  1,136
  582
  506
  422
  332
  236
  136
  33
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,357
  14,878
  15,823
  16,915
  17,962
  18,967
  19,933
  20,865
  21,772
  22,658
  23,532
  23,916
  24,791
  25,678
  26,586
  27,519
  28,488
  29,498
  30,628
  31,847
  33,126
  34,472
  35,889
  37,383
  38,957
  40,618
  42,371
  44,220
  46,171
  48,229
  50,399
Total cash flow (excl. dividends), $m
  -4,701
  17,658
  18,773
  20,045
  21,287
  22,500
  23,688
  24,856
  26,010
  27,158
  28,306
  28,796
  29,969
  31,168
  32,399
  33,670
  34,988
  36,362
  37,870
  39,481
  41,169
  42,939
  44,797
  46,749
  48,801
  50,959
  53,230
  55,619
  58,133
  60,779
  63,563
Retained Cash Flow (-), $m
  149
  -4,133
  -4,358
  -4,664
  -4,963
  -5,255
  -5,541
  -5,822
  -6,099
  -6,376
  -6,652
  -6,931
  -7,213
  -7,501
  -7,798
  -8,104
  -8,421
  -8,752
  -9,097
  -9,459
  -9,839
  -10,239
  -10,660
  -11,103
  -11,571
  -12,064
  -12,585
  -13,134
  -13,713
  -14,325
  -14,969
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
 
  13,525
  14,416
  15,381
  16,324
  17,245
  18,147
  19,034
  19,911
  20,782
  21,654
  21,865
  22,756
  23,666
  24,601
  25,566
  26,567
  27,610
  28,773
  30,022
  31,330
  32,700
  34,137
  35,646
  37,230
  38,895
  40,645
  42,485
  44,420
  46,455
  48,594
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  12,500
  12,221
  11,864
  11,358
  10,724
  9,987
  9,175
  8,312
  7,425
  6,539
  5,506
  4,711
  3,968
  3,287
  2,677
  2,141
  1,680
  1,296
  980
  725
  524
  369
  254
  170
  110
  70
  42
  25
  14
  8
Current shareholders' claim on cash, %
  100
  96.8
  94.2
  91.8
  89.7
  87.9
  86.2
  84.8
  83.6
  82.5
  81.6
  81.1
  80.8
  80.5
  80.3
  80.2
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1
  80.1

Exelon Corporation, a utility services holding company, engages in the energy generation and delivery businesses in the United States and Canada. It owns electric generating facilities, such as nuclear, fossil, wind, hydroelectric, and solar generating facilities. The company also sells renewable energy and other energy-related products and services; and sells electricity and natural gas to wholesale and retail customers. In addition, it is involved in the purchase and regulated retail sale of electricity, and the provision of electricity transmission and distribution services to retail customers in Northern Illinois, Southeastern Pennsylvania, Delaware, and Central Maryland. Further, the company engages in the purchase and regulated retail sale of natural gas, and the provision of natural gas distribution services to retail customers in northern Delaware, southern New Jersey, and Central Maryland, as well as in the Pennsylvania counties surrounding the City of Philadelphia. Additionally, it offers support services, including legal, human resources, financial, information technology, and supply management services, as well as accounting, engineering, distribution and transmission planning, asset management, system operations, and power procurement services. The company serves distribution utilities, municipalities, cooperatives, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was founded in 1887 and is headquartered in Chicago, Illinois.

FINANCIAL RATIOS  of  Exelon (EXC)

Valuation Ratios
P/E Ratio 31.2
Price to Sales 1.1
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 4.2
Price to Free Cash Flow -327.1
Growth Rates
Sales Growth Rate 6.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 12.2%
Cap. Spend. - 3 Yr. Gr. Rate 9.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 124.7%
Total Debt to Equity 139%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 2.6%
Return On Total Capital 2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 4.4%
Return On Equity - 3 Yr. Avg. 6.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 21.9%
EBITDA Margin - 3 Yr. Avg. 21.4%
Operating Margin 9.9%
Oper. Margin - 3 Yr. Avg. 12.1%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 38.3%
Eff/ Tax Rate - 3 Yr. Avg. 32.4%
Payout Ratio 102.8%

EXC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EXC stock intrinsic value calculation we used $31360 million for the last fiscal year's total revenue generated by Exelon. The default revenue input number comes from 2016 income statement of Exelon. 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 EXC stock valuation model: a) initial revenue growth rate of 15.6% 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 8.2%, whose default value for EXC is calculated based on our internal credit rating of Exelon, 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 Exelon.
    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 EXC stock the variable cost ratio is equal to 85%.

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 EXC 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 4.3% for Exelon.

Corporate tax rate of 27% is the nominal tax rate for Exelon. 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 EXC 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 EXC are equal to 16.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Exelon 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 EXC is equal to 2.4%. 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 - $25837 million for Exelon - 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 926.809 million for Exelon 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 Exelon at the current share price and the inputted number of shares is $35.4 billion.

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COMPANY NEWS

▶ 5 Energy Stats That Will Blow You Away   [Aug-05-17 10:32AM  Motley Fool]
▶ Exelon tops Street 2Q forecasts   [Aug-02-17 11:04PM  Associated Press]
▶ Exelon Reports Second Quarter 2017 Results   [08:00AM  Business Wire]
▶ Exelon Corporation Declares Dividend   [10:00AM  Business Wire]
▶ ETFs with exposure to Exelon Corp. : July 24, 2017   [Jul-24-17 03:48PM  Capital Cube]
▶ How Exelon Stock Has Performed Recently   [11:06AM  Market Realist]
▶ What Dominion Energys Chart Indicators Imply   [Jul-18-17 07:37AM  Market Realist]
▶ PECO Celebrates National Lineworker Appreciation Day   [Jul-10-17 04:08PM  Business Wire]
▶ Exelon Corp. Value Analysis (NYSE:EXC) : July 7, 2017   [Jul-07-17 03:57PM  Capital Cube]
▶ Customer Focus Earns ComEd Most Trusted Brand Recognition   [Jul-06-17 02:50PM  Business Wire]
▶ Where Exelon Stock Could Go in the Near Future   [Jun-29-17 09:06AM  Market Realist]
▶ Exelons Valuation and Dividend in Context   [07:36AM  Market Realist]
▶ Arena Stage Elects Maggie Fitzpatrick to Board of Trustees   [Jun-28-17 04:02PM  Business Wire]
▶ Analysts Expect a Decent Upside in Exelon   [10:36AM  Market Realist]
▶ EXC, FE, and PEG: Analysts Seem to Be Positive on Exelon   [Jun-27-17 10:35AM  Market Realist]
▶ A Look at Top Competitive Utilities and Their Dividends   [Jun-26-17 10:36AM  Market Realist]
▶ Top 3 Nuclear Stocks for 2017   [Jun-22-17 06:42PM  Investopedia]
▶ Will NextEra Energy Stock Reverse from Its Current Level?   [Jun-07-17 01:26PM  Market Realist]
▶ Future Energy Jobs Act Goes into Effect   [Jun-06-17 05:39PM  Business Wire]
▶ Nuclear Subsidies Distort Competition And Increase Power Prices   [May-31-17 05:50PM  Investor's Business Daily]
▶ PECO Ready to Beat the Heat   [03:28PM  Business Wire]
▶ [$$] Plans to Close Three Mile Island Highlight Struggles of Nuclear Power   [May-30-17 04:00PM  The Wall Street Journal]
Financial statements of EXC
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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