Intrinsic value of Exelon - EXC

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$35.37

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$35.37

 
Intrinsic value

$149.59

 
Up/down potential

+323%

 
Rating

str. buy

 
Value-price divergence* premium content

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*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 33.0

 

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, %
  6.50
  17.50
  16.25
  15.13
  14.11
  13.20
  12.38
  11.64
  10.98
  10.38
  9.84
  9.36
  8.92
  8.53
  8.18
  7.86
  7.57
  7.32
  7.08
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
  5.90
  5.81
  5.73
  5.65
  5.59
Revenue, $m
  31,360
  36,848
  42,836
  49,315
  56,274
  63,703
  71,590
  79,926
  88,700
  97,908
  107,545
  117,610
  128,104
  139,031
  150,400
  162,221
  174,507
  187,275
  200,542
  214,332
  228,668
  243,576
  259,087
  275,230
  292,041
  309,555
  327,810
  346,848
  366,712
  387,447
  409,100
Variable operating expenses, $m
 
  31,204
  36,166
  41,535
  47,303
  53,459
  59,995
  66,903
  74,174
  81,805
  89,791
  97,464
  106,161
  115,216
  124,638
  134,434
  144,616
  155,196
  166,191
  177,619
  189,499
  201,854
  214,707
  228,086
  242,017
  256,531
  271,659
  287,436
  303,897
  321,080
  339,025
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
  31,204
  36,166
  41,535
  47,303
  53,459
  59,995
  66,903
  74,174
  81,805
  89,791
  97,464
  106,161
  115,216
  124,638
  134,434
  144,616
  155,196
  166,191
  177,619
  189,499
  201,854
  214,707
  228,086
  242,017
  256,531
  271,659
  287,436
  303,897
  321,080
  339,025
Operating income, $m
  3,112
  5,644
  6,670
  7,779
  8,972
  10,244
  11,595
  13,023
  14,526
  16,103
  17,754
  20,146
  21,943
  23,815
  25,762
  27,787
  29,892
  32,079
  34,351
  36,713
  39,169
  41,723
  44,379
  47,145
  50,024
  53,024
  56,151
  59,412
  62,815
  66,366
  70,075
EBITDA, $m
  6,641
  7,550
  8,777
  10,104
  11,530
  13,052
  14,668
  16,376
  18,174
  20,061
  22,035
  24,097
  26,247
  28,486
  30,816
  33,238
  35,755
  38,371
  41,089
  43,915
  46,852
  49,907
  53,085
  56,392
  59,837
  63,425
  67,166
  71,066
  75,136
  79,385
  83,821
Interest expense (income), $m
  1,340
  1,463
  2,125
  2,841
  3,617
  4,450
  5,339
  6,283
  7,280
  8,331
  9,433
  10,586
  11,791
  13,047
  14,354
  15,715
  17,130
  18,600
  20,129
  21,716
  23,367
  25,083
  26,867
  28,723
  30,656
  32,668
  34,764
  36,949
  39,227
  41,605
  44,086
Earnings before tax, $m
  1,989
  4,181
  4,545
  4,938
  5,355
  5,794
  6,256
  6,740
  7,246
  7,773
  8,321
  9,560
  10,152
  10,768
  11,408
  12,072
  12,762
  13,478
  14,223
  14,997
  15,802
  16,640
  17,512
  18,421
  19,369
  20,357
  21,387
  22,464
  23,587
  24,762
  25,989
Tax expense, $m
  761
  1,129
  1,227
  1,333
  1,446
  1,565
  1,689
  1,820
  1,956
  2,099
  2,247
  2,581
  2,741
  2,907
  3,080
  3,259
  3,446
  3,639
  3,840
  4,049
  4,267
  4,493
  4,728
  4,974
  5,230
  5,496
  5,775
  6,065
  6,369
  6,686
  7,017
Net income, $m
  1,134
  3,052
  3,318
  3,605
  3,909
  4,230
  4,567
  4,920
  5,289
  5,674
  6,075
  6,978
  7,411
  7,861
  8,328
  8,813
  9,316
  9,839
  10,383
  10,948
  11,535
  12,147
  12,784
  13,447
  14,139
  14,860
  15,613
  16,398
  17,219
  18,076
  18,972

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
  133,025
  154,642
  178,031
  203,156
  229,975
  258,449
  288,540
  320,218
  353,459
  388,250
  424,584
  462,468
  501,918
  542,962
  585,636
  629,990
  676,082
  723,980
  773,762
  825,516
  879,337
  935,331
  993,611
  1,054,299
  1,117,526
  1,183,431
  1,252,161
  1,323,870
  1,398,724
  1,476,896
Adjusted assets (=assets-cash), $m
  113,019
  133,025
  154,642
  178,031
  203,156
  229,975
  258,449
  288,540
  320,218
  353,459
  388,250
  424,584
  462,468
  501,918
  542,962
  585,636
  629,990
  676,082
  723,980
  773,762
  825,516
  879,337
  935,331
  993,611
  1,054,299
  1,117,526
  1,183,431
  1,252,161
  1,323,870
  1,398,724
  1,476,896
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
  6,190
  7,196
  8,285
  9,454
  10,702
  12,027
  13,428
  14,902
  16,449
  18,068
  19,758
  21,521
  23,357
  25,267
  27,253
  29,317
  31,462
  33,691
  36,008
  38,416
  40,921
  43,527
  46,239
  49,063
  52,005
  55,072
  58,271
  61,608
  65,091
  68,729
Working capital, $m
  -1,045
  884
  1,028
  1,184
  1,351
  1,529
  1,718
  1,918
  2,129
  2,350
  2,581
  2,823
  3,074
  3,337
  3,610
  3,893
  4,188
  4,495
  4,813
  5,144
  5,488
  5,846
  6,218
  6,606
  7,009
  7,429
  7,867
  8,324
  8,801
  9,299
  9,818
Total debt, $m
  35,913
  49,408
  66,075
  84,108
  103,479
  124,157
  146,110
  169,310
  193,734
  219,363
  246,186
  274,200
  303,409
  333,825
  365,469
  398,371
  432,568
  468,105
  505,035
  543,417
  583,319
  624,815
  667,986
  712,920
  759,711
  808,459
  859,271
  912,262
  967,550
  1,025,262
  1,085,533
Total liabilities, $m
  89,067
  102,562
  119,229
  137,262
  156,633
  177,311
  199,264
  222,464
  246,888
  272,517
  299,340
  327,354
  356,563
  386,979
  418,623
  451,525
  485,722
  521,259
  558,189
  596,571
  636,473
  677,969
  721,140
  766,074
  812,865
  861,613
  912,425
  965,416
  1,020,704
  1,078,416
  1,138,687
Total equity, $m
  25,837
  30,463
  35,413
  40,769
  46,523
  52,664
  59,185
  66,076
  73,330
  80,942
  88,909
  97,230
  105,905
  114,939
  124,338
  134,111
  144,268
  154,823
  165,791
  177,192
  189,043
  201,368
  214,191
  227,537
  241,435
  255,914
  271,006
  286,745
  303,166
  320,308
  338,209
Total liabilities and equity, $m
  114,904
  133,025
  154,642
  178,031
  203,156
  229,975
  258,449
  288,540
  320,218
  353,459
  388,249
  424,584
  462,468
  501,918
  542,961
  585,636
  629,990
  676,082
  723,980
  773,763
  825,516
  879,337
  935,331
  993,611
  1,054,300
  1,117,527
  1,183,431
  1,252,161
  1,323,870
  1,398,724
  1,476,896
Debt-to-equity ratio
  1.390
  1.620
  1.870
  2.060
  2.220
  2.360
  2.470
  2.560
  2.640
  2.710
  2.770
  2.820
  2.860
  2.900
  2.940
  2.970
  3.000
  3.020
  3.050
  3.070
  3.090
  3.100
  3.120
  3.130
  3.150
  3.160
  3.170
  3.180
  3.190
  3.200
  3.210
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
  3,052
  3,318
  3,605
  3,909
  4,230
  4,567
  4,920
  5,289
  5,674
  6,075
  6,978
  7,411
  7,861
  8,328
  8,813
  9,316
  9,839
  10,383
  10,948
  11,535
  12,147
  12,784
  13,447
  14,139
  14,860
  15,613
  16,398
  17,219
  18,076
  18,972
Depreciation, amort., depletion, $m
  3,529
  1,906
  2,107
  2,325
  2,559
  2,808
  3,073
  3,353
  3,648
  3,957
  4,281
  3,952
  4,304
  4,671
  5,053
  5,451
  5,863
  6,292
  6,738
  7,202
  7,683
  8,184
  8,705
  9,248
  9,813
  10,401
  11,014
  11,654
  12,322
  13,018
  13,746
Funds from operations, $m
  9,214
  4,958
  5,425
  5,930
  6,468
  7,038
  7,640
  8,274
  8,937
  9,631
  10,356
  10,930
  11,716
  12,532
  13,381
  14,263
  15,179
  16,131
  17,121
  18,149
  19,219
  20,331
  21,489
  22,695
  23,952
  25,261
  26,627
  28,052
  29,540
  31,094
  32,718
Change in working capital, $m
  769
  132
  144
  155
  167
  178
  189
  200
  211
  221
  231
  242
  252
  262
  273
  284
  295
  306
  318
  331
  344
  358
  372
  387
  403
  420
  438
  457
  477
  498
  520
Cash from operations, $m
  8,445
  5,346
  5,281
  5,774
  6,301
  6,860
  7,451
  8,073
  8,727
  9,410
  10,124
  10,689
  11,464
  12,270
  13,108
  13,979
  14,885
  15,825
  16,802
  17,818
  18,875
  19,973
  21,117
  22,308
  23,548
  24,841
  26,189
  27,596
  29,064
  30,597
  32,198
Maintenance CAPEX, $m
  0
  -1,052
  -1,238
  -1,439
  -1,657
  -1,891
  -2,140
  -2,405
  -2,686
  -2,980
  -3,290
  -3,614
  -3,952
  -4,304
  -4,671
  -5,053
  -5,451
  -5,863
  -6,292
  -6,738
  -7,202
  -7,683
  -8,184
  -8,705
  -9,248
  -9,813
  -10,401
  -11,014
  -11,654
  -12,322
  -13,018
New CAPEX, $m
  -8,553
  -930
  -1,006
  -1,088
  -1,169
  -1,248
  -1,325
  -1,400
  -1,474
  -1,547
  -1,619
  -1,691
  -1,763
  -1,836
  -1,910
  -1,986
  -2,064
  -2,145
  -2,229
  -2,317
  -2,408
  -2,505
  -2,606
  -2,712
  -2,824
  -2,942
  -3,067
  -3,198
  -3,337
  -3,483
  -3,638
Cash from investing activities, $m
  -15,503
  -1,982
  -2,244
  -2,527
  -2,826
  -3,139
  -3,465
  -3,805
  -4,160
  -4,527
  -4,909
  -5,305
  -5,715
  -6,140
  -6,581
  -7,039
  -7,515
  -8,008
  -8,521
  -9,055
  -9,610
  -10,188
  -10,790
  -11,417
  -12,072
  -12,755
  -13,468
  -14,212
  -14,991
  -15,805
  -16,656
Free cash flow, $m
  -7,058
  3,364
  3,037
  3,246
  3,474
  3,721
  3,986
  4,268
  4,567
  4,883
  5,216
  5,384
  5,749
  6,130
  6,527
  6,940
  7,370
  7,817
  8,281
  8,763
  9,265
  9,786
  10,327
  10,890
  11,476
  12,086
  12,721
  13,383
  14,072
  14,792
  15,542
Issuance/(repayment) of debt, $m
  2,205
  15,380
  16,666
  18,033
  19,371
  20,678
  21,953
  23,200
  24,424
  25,629
  26,823
  28,014
  29,209
  30,416
  31,645
  32,902
  34,197
  35,537
  36,929
  38,382
  39,902
  41,496
  43,171
  44,934
  46,791
  48,748
  50,813
  52,990
  55,288
  57,712
  60,270
Issuance/(repurchase) of shares, $m
  -135
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,357
  15,380
  16,666
  18,033
  19,371
  20,678
  21,953
  23,200
  24,424
  25,629
  26,823
  28,014
  29,209
  30,416
  31,645
  32,902
  34,197
  35,537
  36,929
  38,382
  39,902
  41,496
  43,171
  44,934
  46,791
  48,748
  50,813
  52,990
  55,288
  57,712
  60,270
Total cash flow (excl. dividends), $m
  -4,701
  18,744
  19,704
  21,280
  22,846
  24,399
  25,939
  27,468
  28,991
  30,512
  32,039
  33,398
  34,958
  36,546
  38,171
  39,842
  41,567
  43,353
  45,210
  47,145
  49,167
  51,282
  53,498
  55,824
  58,267
  60,834
  63,534
  66,373
  69,361
  72,504
  75,812
Retained Cash Flow (-), $m
  149
  -4,626
  -4,950
  -5,356
  -5,754
  -6,142
  -6,520
  -6,891
  -7,254
  -7,612
  -7,967
  -8,321
  -8,675
  -9,034
  -9,399
  -9,772
  -10,157
  -10,555
  -10,969
  -11,400
  -11,852
  -12,325
  -12,823
  -13,346
  -13,898
  -14,479
  -15,092
  -15,739
  -16,422
  -17,142
  -17,901
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
 
  14,118
  14,753
  15,924
  17,092
  18,257
  19,418
  20,577
  21,737
  22,900
  24,072
  25,077
  26,282
  27,512
  28,772
  30,070
  31,410
  32,798
  34,242
  35,745
  37,315
  38,957
  40,676
  42,478
  44,369
  46,355
  48,441
  50,634
  52,939
  55,363
  57,911
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
 
  13,048
  12,507
  12,282
  11,892
  11,353
  10,687
  9,918
  9,074
  8,182
  7,269
  6,315
  5,441
  4,612
  3,844
  3,148
  2,531
  1,996
  1,542
  1,167
  863
  624
  440
  302
  202
  131
  83
  51
  30
  17
  9
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

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 28.8
Price to Sales 1
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow -302.6
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 17.5% 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 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 2.8 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 933.018 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 $33.0 billion.


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COMPANY NEWS

▶ Exelon Announces Outcome of 2020-2021 PJM Capacity Auction   [May-24-17 08:30AM  Business Wire]
▶ Forbes Names PECO Best Philadelphia Midsize Employer   [May-17-17 10:00AM  Business Wire]
▶ Exelon Foundation Supports Important Work of We Are Family   [May-16-17 09:00AM  Business Wire]
▶ ETFs with exposure to Exelon Corp. : May 8, 2017   [May-08-17 04:30PM  Capital Cube]
▶ Exelon beats Street 1Q forecasts   [08:16AM  Associated Press]
▶ Exelon Announces First Quarter 2017 Results   [08:00AM  Business Wire]
▶ Week of April 2428: Utility Stocks in Focus   [May-01-17 12:35PM  Market Realist]
▶ Exelon Corporation Declares Dividend   [10:16AM  Business Wire]
▶ Chicago Symphony Orchestra taps Exelon exec Stacie Frank as CFO   [Apr-12-17 04:05PM  American City Business Journals]
▶ BGE Spends $257 Million With Diverse Suppliers in 2016   [Apr-11-17 04:42PM  Business Wire]
▶ Exelon Is a Great Income Buy - Here's Why   [Apr-04-17 04:54PM  TheStreet.com]
▶ PECO Prepared for Major Winter Storm   [01:30PM  Business Wire]
▶ $178 billion in profits, no taxes paid   [Mar-09-17 02:55PM  at bizjournals.com]
▶ A Strong Case for Buying Exelon Corporation   [12:57PM  at Motley Fool]
Stock chart of EXC Financial statements of EXC Annual reports 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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