Intrinsic value of Pampa Energia ADR - PAM

Previous Close

$59.99

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$59.99

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of PAM 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 4.4

 

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, %
  337.34
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  2,003
  11,458
  17,702
  26,473
  38,411
  54,193
  74,503
  100,005
  131,313
  168,967
  213,419
  265,019
  324,011
  390,542
  464,667
  546,366
  635,555
  732,106
  835,864
  946,659
  1,064,326
  1,188,711
  1,319,683
  1,457,145
  1,601,032
  1,751,324
  1,908,040
  2,071,246
  2,241,051
  2,417,611
  2,601,121
Variable operating expenses, $m
 
  9,830
  15,187
  22,712
  32,954
  46,494
  63,918
  85,796
  112,656
  144,960
  183,097
  227,364
  277,974
  335,052
  398,646
  468,737
  545,253
  628,086
  717,101
  812,154
  913,103
  1,019,814
  1,132,178
  1,250,108
  1,373,552
  1,502,489
  1,636,938
  1,776,955
  1,922,634
  2,074,107
  2,231,544
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
  1,861
  9,830
  15,187
  22,712
  32,954
  46,494
  63,918
  85,796
  112,656
  144,960
  183,097
  227,364
  277,974
  335,052
  398,646
  468,737
  545,253
  628,086
  717,101
  812,154
  913,103
  1,019,814
  1,132,178
  1,250,108
  1,373,552
  1,502,489
  1,636,938
  1,776,955
  1,922,634
  2,074,107
  2,231,544
Operating income, $m
  142
  1,627
  2,515
  3,761
  5,457
  7,699
  10,585
  14,208
  18,657
  24,007
  30,323
  37,655
  46,037
  55,490
  66,022
  77,630
  90,302
  104,020
  118,763
  134,505
  151,223
  168,897
  187,506
  207,037
  227,481
  248,835
  271,102
  294,290
  318,417
  343,503
  369,577
EBITDA, $m
  335
  2,779
  4,293
  6,421
  9,316
  13,144
  18,070
  24,255
  31,848
  40,981
  51,762
  64,277
  78,585
  94,721
  112,700
  132,515
  154,147
  177,564
  202,729
  229,601
  258,140
  288,308
  320,074
  353,413
  388,312
  424,763
  462,773
  502,356
  543,541
  586,363
  630,872
Interest expense (income), $m
  97
  782
  2,240
  4,364
  7,348
  11,409
  16,778
  23,687
  32,362
  43,013
  55,822
  70,944
  88,497
  108,565
  131,197
  156,414
  184,206
  214,547
  247,392
  282,688
  320,378
  360,406
  402,720
  447,274
  494,036
  542,984
  594,110
  647,422
  702,942
  760,707
  820,769
Earnings before tax, $m
  -86
  845
  274
  -604
  -1,891
  -3,710
  -6,193
  -9,479
  -13,705
  -19,006
  -25,499
  -33,289
  -42,460
  -53,075
  -65,176
  -78,784
  -93,904
  -110,526
  -128,629
  -148,183
  -169,155
  -191,510
  -215,214
  -240,238
  -266,555
  -294,149
  -323,009
  -353,132
  -384,525
  -417,203
  -451,192
Tax expense, $m
  -70
  228
  74
  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
  -1
  617
  200
  -604
  -1,891
  -3,710
  -6,193
  -9,479
  -13,705
  -19,006
  -25,499
  -33,289
  -42,460
  -53,075
  -65,176
  -78,784
  -93,904
  -110,526
  -128,629
  -148,183
  -169,155
  -191,510
  -215,214
  -240,238
  -266,555
  -294,149
  -323,009
  -353,132
  -384,525
  -417,203
  -451,192

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  360
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  4,946
  39,238
  60,623
  90,662
  131,546
  185,593
  255,147
  342,482
  449,700
  578,655
  730,888
  907,598
  1,109,625
  1,337,471
  1,591,327
  1,871,118
  2,176,559
  2,507,214
  2,862,547
  3,241,984
  3,644,952
  4,070,927
  4,519,464
  4,990,222
  5,482,987
  5,997,684
  6,534,383
  7,093,307
  7,674,833
  8,279,488
  8,907,949
Adjusted assets (=assets-cash), $m
  4,586
  39,238
  60,623
  90,662
  131,546
  185,593
  255,147
  342,482
  449,700
  578,655
  730,888
  907,598
  1,109,625
  1,337,471
  1,591,327
  1,871,118
  2,176,559
  2,507,214
  2,862,547
  3,241,984
  3,644,952
  4,070,927
  4,519,464
  4,990,222
  5,482,987
  5,997,684
  6,534,383
  7,093,307
  7,674,833
  8,279,488
  8,907,949
Revenue / Adjusted assets
  0.437
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
  0.292
Average production assets, $m
  1,836
  20,257
  31,297
  46,805
  67,911
  95,813
  131,721
  176,808
  232,161
  298,734
  377,326
  468,553
  572,851
  690,478
  821,532
  965,976
  1,123,662
  1,294,364
  1,477,807
  1,673,694
  1,881,728
  2,101,641
  2,333,200
  2,576,232
  2,830,625
  3,096,340
  3,373,414
  3,661,963
  3,962,179
  4,274,336
  4,598,782
Working capital, $m
  -442
  -5,076
  -7,842
  -11,728
  -17,016
  -24,008
  -33,005
  -44,302
  -58,171
  -74,853
  -94,545
  -117,403
  -143,537
  -173,010
  -205,848
  -242,040
  -281,551
  -324,323
  -370,288
  -419,370
  -471,496
  -526,599
  -584,620
  -645,515
  -709,257
  -775,836
  -845,262
  -917,562
  -992,786
  -1,071,002
  -1,152,297
Total debt, $m
  1,662
  19,146
  37,302
  62,805
  97,516
  143,401
  202,453
  276,600
  367,629
  477,111
  606,357
  756,383
  927,905
  1,121,346
  1,336,870
  1,574,412
  1,833,732
  2,114,457
  2,416,136
  2,738,277
  3,080,397
  3,442,050
  3,822,858
  4,222,531
  4,640,889
  5,077,866
  5,533,524
  6,008,051
  6,501,767
  7,015,119
  7,548,682
Total liabilities, $m
  4,238
  33,313
  51,469
  76,972
  111,683
  157,568
  216,620
  290,767
  381,796
  491,278
  620,524
  770,550
  942,072
  1,135,513
  1,351,037
  1,588,579
  1,847,899
  2,128,624
  2,430,303
  2,752,444
  3,094,564
  3,456,217
  3,837,025
  4,236,698
  4,655,056
  5,092,033
  5,547,691
  6,022,218
  6,515,934
  7,029,286
  7,562,849
Total equity, $m
  707
  5,925
  9,154
  13,690
  19,863
  28,024
  38,527
  51,715
  67,905
  87,377
  110,364
  137,047
  167,553
  201,958
  240,290
  282,539
  328,660
  378,589
  432,245
  489,540
  550,388
  614,710
  682,439
  753,524
  827,931
  905,650
  986,692
  1,071,089
  1,158,900
  1,250,203
  1,345,100
Total liabilities and equity, $m
  4,945
  39,238
  60,623
  90,662
  131,546
  185,592
  255,147
  342,482
  449,701
  578,655
  730,888
  907,597
  1,109,625
  1,337,471
  1,591,327
  1,871,118
  2,176,559
  2,507,213
  2,862,548
  3,241,984
  3,644,952
  4,070,927
  4,519,464
  4,990,222
  5,482,987
  5,997,683
  6,534,383
  7,093,307
  7,674,834
  8,279,489
  8,907,949
Debt-to-equity ratio
  2.351
  3.230
  4.070
  4.590
  4.910
  5.120
  5.250
  5.350
  5.410
  5.460
  5.490
  5.520
  5.540
  5.550
  5.560
  5.570
  5.580
  5.590
  5.590
  5.590
  5.600
  5.600
  5.600
  5.600
  5.610
  5.610
  5.610
  5.610
  5.610
  5.610
  5.610
Adjusted equity ratio
  0.087
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151
  0.151

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1
  617
  200
  -604
  -1,891
  -3,710
  -6,193
  -9,479
  -13,705
  -19,006
  -25,499
  -33,289
  -42,460
  -53,075
  -65,176
  -78,784
  -93,904
  -110,526
  -128,629
  -148,183
  -169,155
  -191,510
  -215,214
  -240,238
  -266,555
  -294,149
  -323,009
  -353,132
  -384,525
  -417,203
  -451,192
Depreciation, amort., depletion, $m
  193
  1,152
  1,779
  2,660
  3,859
  5,445
  7,485
  10,047
  13,192
  16,974
  21,440
  26,622
  32,548
  39,232
  46,678
  54,885
  63,844
  73,543
  83,966
  95,096
  106,916
  119,411
  132,568
  146,377
  160,831
  175,928
  191,671
  208,066
  225,124
  242,860
  261,294
Funds from operations, $m
  484
  1,769
  1,979
  2,056
  1,968
  1,735
  1,292
  568
  -514
  -2,032
  -4,060
  -6,667
  -9,912
  -13,844
  -18,498
  -23,899
  -30,060
  -36,983
  -44,663
  -53,087
  -62,239
  -72,099
  -82,646
  -93,861
  -105,724
  -118,221
  -131,338
  -145,066
  -159,401
  -174,343
  -189,897
Change in working capital, $m
  101
  -1,903
  -2,766
  -3,886
  -5,289
  -6,991
  -8,997
  -11,297
  -13,869
  -16,681
  -19,692
  -22,858
  -26,133
  -29,473
  -32,838
  -36,193
  -39,511
  -42,772
  -45,965
  -49,082
  -52,126
  -55,102
  -58,021
  -60,895
  -63,742
  -66,579
  -69,425
  -72,300
  -75,224
  -78,216
  -81,295
Cash from operations, $m
  383
  6,248
  4,745
  5,942
  7,257
  8,726
  10,289
  11,865
  13,355
  14,650
  15,633
  16,192
  16,222
  15,630
  14,340
  12,294
  9,451
  5,789
  1,302
  -4,004
  -10,112
  -16,996
  -24,625
  -32,965
  -41,982
  -51,642
  -61,912
  -72,766
  -84,177
  -96,128
  -108,602
Maintenance CAPEX, $m
  0
  -719
  -1,151
  -1,778
  -2,659
  -3,859
  -5,444
  -7,484
  -10,046
  -13,191
  -16,974
  -21,439
  -26,622
  -32,548
  -39,232
  -46,678
  -54,885
  -63,844
  -73,543
  -83,966
  -95,096
  -106,916
  -119,411
  -132,568
  -146,377
  -160,831
  -175,928
  -191,671
  -208,066
  -225,124
  -242,860
New CAPEX, $m
  -460
  -7,596
  -11,040
  -15,508
  -21,107
  -27,902
  -35,908
  -45,087
  -55,352
  -66,574
  -78,591
  -91,227
  -104,298
  -117,627
  -131,054
  -144,444
  -157,686
  -170,702
  -183,443
  -195,886
  -208,035
  -219,912
  -231,560
  -243,032
  -254,393
  -265,715
  -277,074
  -288,548
  -300,216
  -312,157
  -324,446
Cash from investing activities, $m
  -719
  -8,315
  -12,191
  -17,286
  -23,766
  -31,761
  -41,352
  -52,571
  -65,398
  -79,765
  -95,565
  -112,666
  -130,920
  -150,175
  -170,286
  -191,122
  -212,571
  -234,546
  -256,986
  -279,852
  -303,131
  -326,828
  -350,971
  -375,600
  -400,770
  -426,546
  -453,002
  -480,219
  -508,282
  -537,281
  -567,306
Free cash flow, $m
  -336
  -2,066
  -7,446
  -11,344
  -16,509
  -23,035
  -31,063
  -40,706
  -52,043
  -65,115
  -79,932
  -96,474
  -114,699
  -134,546
  -155,946
  -178,828
  -203,120
  -228,757
  -255,684
  -283,857
  -313,243
  -343,825
  -375,596
  -408,565
  -442,752
  -478,188
  -514,915
  -552,985
  -592,460
  -633,408
  -675,909
Issuance/(repayment) of debt, $m
  682
  12,461
  18,156
  25,503
  34,711
  45,885
  59,052
  74,147
  91,029
  109,483
  129,246
  150,026
  171,521
  193,441
  215,523
  237,542
  259,320
  280,726
  301,678
  322,142
  342,120
  361,653
  380,808
  399,674
  418,358
  436,977
  455,658
  474,527
  493,716
  513,352
  533,563
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  7,662
  19,010
  31,971
  46,494
  62,518
  79,976
  98,802
  118,930
  140,299
  162,856
  186,554
  211,359
  237,243
Cash from financing (excl. dividends), $m  
  378
  12,461
  18,156
  25,503
  34,711
  45,885
  59,052
  74,147
  91,029
  109,483
  129,246
  150,026
  171,521
  193,441
  215,523
  237,542
  259,320
  280,726
  309,340
  341,152
  374,091
  408,147
  443,326
  479,650
  517,160
  555,907
  595,957
  637,383
  680,270
  724,711
  770,806
Total cash flow (excl. dividends), $m
  63
  10,395
  10,710
  14,159
  18,201
  22,851
  27,989
  33,441
  38,986
  44,368
  49,314
  53,552
  56,823
  58,896
  59,577
  58,714
  56,200
  51,968
  45,994
  38,285
  28,877
  17,828
  5,211
  -8,892
  -24,394
  -41,211
  -59,257
  -78,458
  -98,744
  -120,056
  -142,346
Retained Cash Flow (-), $m
  -260
  -2,225
  -3,229
  -4,536
  -6,173
  -8,161
  -10,503
  -13,188
  -16,190
  -19,472
  -22,987
  -26,683
  -30,506
  -34,405
  -38,332
  -42,248
  -46,122
  -49,929
  -53,655
  -57,295
  -60,848
  -64,322
  -67,729
  -71,084
  -74,408
  -77,719
  -81,042
  -84,398
  -87,810
  -91,303
  -94,898
Prev. year cash balance distribution, $m
 
  3,291
  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
 
  11,461
  7,481
  9,623
  12,028
  14,690
  17,486
  20,254
  22,796
  24,895
  26,327
  26,869
  26,317
  24,491
  21,245
  16,466
  10,078
  2,039
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  10,988
  6,849
  8,375
  9,904
  11,386
  12,691
  13,683
  14,248
  14,301
  13,802
  12,760
  11,230
  9,312
  7,132
  4,834
  2,561
  444
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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
  97.2
  91.4
  83.6
  74.6
  65.2
  55.8
  47.0
  39.0
  31.9
  25.8
  20.7
  16.4
  12.9

Pampa Energía S.A., an integrated electricity company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity in Argentina. The company operates hydroelectric and thermal generation facilities. It has an installed generating capacity of 2,217 MW. The company operates and maintains high-tension transmission network of 12,365 km of lines of its own in Argentina, as well as 6,158 km of Transba high voltage lines in the Province of Buenos Aires; and distributes electricity to approximately 2.8 million customers. It is also involved in the exploration and exploitation of oil and gas; operation of financial investment, as well as investing in other companies with complementary businesses; and authorization in acting as an agent and clearing member of ROFEX. The company was formerly known as Pampa Holding S.A. and changed its name to Pampa Energía S.A. in September 2008. Pampa Energía S.A. was founded in 1945 and is based in Buenos Aires, Argentina.

FINANCIAL RATIOS  of  Pampa Energia ADR (PAM)

Valuation Ratios
P/E Ratio -101734.6
Price to Sales 50.8
Price to Book 143.9
Price to Tangible Book
Price to Cash Flow 265.6
Price to Free Cash Flow -1321.2
Growth Rates
Sales Growth Rate 337.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 49.8%
Cap. Spend. - 3 Yr. Gr. Rate 43%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 138.3%
Total Debt to Equity 235.1%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.5%
Ret/ On Assets - 3 Yr. Avg. 8.3%
Return On Total Capital -0.1%
Ret/ On T. Cap. - 3 Yr. Avg. 12.8%
Return On Equity -0.2%
Return On Equity - 3 Yr. Avg. 30.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 37.1%
Gross Margin - 3 Yr. Avg. 14.8%
EBITDA Margin 10.2%
EBITDA Margin - 3 Yr. Avg. 39.7%
Operating Margin 7.1%
Oper. Margin - 3 Yr. Avg. 24%
Pre-Tax Margin -4.3%
Pre-Tax Margin - 3 Yr. Avg. 22.6%
Net Profit Margin -0%
Net Profit Margin - 3 Yr. Avg. 18.3%
Effective Tax Rate 81.4%
Eff/ Tax Rate - 3 Yr. Avg. 36.6%
Payout Ratio -500%

PAM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PAM stock intrinsic value calculation we used $7161 million for the last fiscal year's total revenue generated by Pampa Energia ADR. The default revenue input number comes from 2016 income statement of Pampa Energia ADR. 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 PAM stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for PAM is calculated based on our internal credit rating of Pampa Energia ADR, 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 Pampa Energia ADR.
    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 PAM stock the variable cost ratio is equal to 85.8%.

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 PAM 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 11.7% for Pampa Energia ADR.

Corporate tax rate of 27% is the nominal tax rate for Pampa Energia ADR. 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 PAM 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 PAM are equal to 176.8%.

Life of production assets of 17.6 years is the average useful life of capital assets used in Pampa Energia ADR 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 PAM is equal to -44.3%. 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 - $6991 million for Pampa Energia ADR - 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 73.884 million for Pampa Energia ADR 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 Pampa Energia ADR at the current share price and the inputted number of shares is $4.4 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
PZE Petrobras Arge 12.34 prem.  prem.
ENIA Enel Americas 9.24 prem.  prem.
AES AES 11.57 prem.  prem.
YPF YPF ADR 22.12 prem.  prem.
EDN Empresa Distri 30.99 prem.  prem.
EOCC Enel Generacio 23.00 prem.  prem.

COMPANY NEWS

▶ Oil Down, Everything Else Up on the Day   [May-25-17 06:50PM  Zacks]
▶ Pampa posts 1Q profit   [May-12-17 05:01AM  Associated Press]
▶ Top Ranked Momentum Stocks to Buy for May 3rd   [May-03-17 11:00AM  Zacks]
▶ ETFs with exposure to Pampa Energía SA : April 13, 2017   [Apr-13-17 12:37PM  Capital Cube]
▶ New Strong Buy Stocks for April 12th   [Apr-12-17 10:09AM  Zacks]
▶ Pampa Energias Mindlin Says Vaca Muerta Will Boom   [Apr-07-17 12:34PM  Bloomberg]
▶ Pampa posts 4Q profit   [Mar-14-17 05:16PM  Associated Press]
▶ Pampas Mindlin: Current Bond Sale is Testing Market   [Jan-10-17 02:45PM  Bloomberg]
▶ LATAM CLOSE-No LatAm deals in first week of 2017   [Jan-06-17 01:40PM  Reuters]
▶ Hedge Funds Are Dumping Norbord Inc. (OSB)   [Dec-12-16 08:18AM  Insider Monkey]
▶ Hedge Funds Are Dumping Norbord Inc. (OSB)   [08:18AM  at Insider Monkey]
▶ Hedge Funds Are Betting On Rowan Companies PLC (RDC)   [Dec-05-16 02:28PM  at Insider Monkey]
▶ Hedge Funds Are Gaining Confidence in Cavium Inc (CAVM)   [Nov-27-16 06:15PM  at Insider Monkey]
▶ Argentinas Pampa to Spend More on Tight Sands Gas   [Sep-20-16 11:18AM  at Bloomberg]
▶ LATAM CLOSE-No deals price in LatAm primary market   [Aug-01-16 05:05PM  Reuters]
▶ PAMPA ENERGY INC. Financials   [May-06-16 01:04PM  EDGAR Online Financials]
▶ Petrobras Jumps: More Oil Asset Sales, Says Blog Leak   [May-04-16 12:17PM  at Barrons.com]
▶ Pampa Energia debt shelf sparks M&A talk   [Jan-26-16 12:28PM  Reuters]
▶ Argentina's Market Dives Ahead Of Macri Inauguration   [04:59PM  at Investor's Business Daily]
▶ Interest In WSFS Financial Corporation (WSFS) Remains Tepid   [Nov-22  03:05PM  at Insider Monkey]
▶ Argentina Stocks Surge As Voters Support Opposition   [Oct-26  06:35PM  at Investor's Business Daily]
▶ [video]5 Breakout Stocks to Buy to Beat the Market   [Oct-20  06:37AM  at TheStreet]
▶ Argentina To Sell State Stake In Stocks?   [Aug-24  03:56PM  at Barrons.com]
Stock chart of PAM Financial statements of PAM Annual reports of PAM
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.