Intrinsic value of Transportadora de Gas del Sur ADR - TGS

Previous Close

$20.00

  Intrinsic Value

$536.87

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

-256%

Previous close

$20.00

 
Intrinsic value

$536.87

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

-256%

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

We calculate the intrinsic value of TGS 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 1.6

 

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, %
  75.56
  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
  7.33
Revenue, $m
  474
  732
  1,095
  1,589
  2,242
  3,082
  4,137
  5,432
  6,990
  8,829
  10,964
  13,404
  16,157
  19,223
  22,603
  26,293
  30,287
  34,580
  39,163
  44,031
  49,177
  54,595
  60,282
  66,235
  72,452
  78,935
  85,687
  92,712
  100,016
  107,608
  115,497
Variable operating expenses, $m
 
  377
  564
  818
  1,155
  1,587
  2,131
  2,798
  3,600
  4,547
  5,646
  6,903
  8,321
  9,900
  11,641
  13,541
  15,598
  17,809
  20,169
  22,676
  25,326
  28,117
  31,045
  34,111
  37,313
  40,652
  44,129
  47,747
  51,508
  55,418
  59,481
Fixed operating expenses, $m
 
  91
  94
  96
  98
  101
  103
  106
  108
  111
  114
  117
  120
  123
  126
  129
  132
  135
  139
  142
  146
  149
  153
  157
  161
  165
  169
  173
  178
  182
  187
Total operating expenses, $m
  331
  468
  658
  914
  1,253
  1,688
  2,234
  2,904
  3,708
  4,658
  5,760
  7,020
  8,441
  10,023
  11,767
  13,670
  15,730
  17,944
  20,308
  22,818
  25,472
  28,266
  31,198
  34,268
  37,474
  40,817
  44,298
  47,920
  51,686
  55,600
  59,668
Operating income, $m
  143
  264
  438
  675
  989
  1,394
  1,903
  2,529
  3,282
  4,171
  5,204
  6,384
  7,716
  9,201
  10,837
  12,623
  14,557
  16,636
  18,855
  21,213
  23,705
  26,329
  29,084
  31,967
  34,978
  38,119
  41,389
  44,792
  48,330
  52,008
  55,830
EBITDA, $m
  161
  292
  479
  735
  1,074
  1,511
  2,061
  2,735
  3,547
  4,506
  5,620
  6,894
  8,330
  9,931
  11,696
  13,622
  15,708
  17,950
  20,344
  22,886
  25,574
  28,404
  31,374
  34,484
  37,731
  41,118
  44,645
  48,315
  52,131
  56,097
  60,218
Interest expense (income), $m
  21
  22
  42
  70
  108
  159
  224
  305
  406
  526
  668
  833
  1,022
  1,235
  1,472
  1,734
  2,019
  2,328
  2,660
  3,014
  3,391
  3,789
  4,208
  4,648
  5,108
  5,589
  6,091
  6,613
  7,156
  7,721
  8,308
Earnings before tax, $m
  91
  242
  396
  605
  881
  1,235
  1,680
  2,224
  2,876
  3,645
  4,535
  5,551
  6,694
  7,966
  9,365
  10,890
  12,538
  14,308
  16,195
  18,198
  20,314
  22,540
  24,875
  27,319
  29,870
  32,529
  35,299
  38,179
  41,174
  44,287
  47,521
Tax expense, $m
  31
  65
  107
  163
  238
  334
  453
  600
  777
  984
  1,225
  1,499
  1,807
  2,151
  2,528
  2,940
  3,385
  3,863
  4,373
  4,914
  5,485
  6,086
  6,716
  7,376
  8,065
  8,783
  9,531
  10,308
  11,117
  11,957
  12,831
Net income, $m
  60
  177
  289
  442
  643
  902
  1,226
  1,623
  2,100
  2,661
  3,311
  4,052
  4,887
  5,815
  6,836
  7,949
  9,153
  10,445
  11,823
  13,285
  14,829
  16,454
  18,159
  19,943
  21,805
  23,747
  25,768
  27,871
  30,057
  32,329
  34,691

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  104
  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
  572
  723
  1,081
  1,569
  2,213
  3,043
  4,084
  5,363
  6,900
  8,716
  10,823
  13,232
  15,949
  18,977
  22,313
  25,955
  29,899
  34,136
  38,661
  43,466
  48,546
  53,895
  59,508
  65,385
  71,522
  77,922
  84,588
  91,522
  98,733
  106,227
  114,015
Adjusted assets (=assets-cash), $m
  468
  723
  1,081
  1,569
  2,213
  3,043
  4,084
  5,363
  6,900
  8,716
  10,823
  13,232
  15,949
  18,977
  22,313
  25,955
  29,899
  34,136
  38,661
  43,466
  48,546
  53,895
  59,508
  65,385
  71,522
  77,922
  84,588
  91,522
  98,733
  106,227
  114,015
Revenue / Adjusted assets
  1.013
  1.012
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
  1.013
Average production assets, $m
  306
  473
  707
  1,027
  1,448
  1,991
  2,673
  3,509
  4,516
  5,704
  7,083
  8,659
  10,437
  12,418
  14,602
  16,985
  19,566
  22,338
  25,299
  28,444
  31,768
  35,268
  38,942
  42,788
  46,804
  50,992
  55,354
  59,892
  64,611
  69,515
  74,611
Working capital, $m
  92
  -8
  -12
  -17
  -25
  -34
  -46
  -60
  -77
  -97
  -121
  -147
  -178
  -211
  -249
  -289
  -333
  -380
  -431
  -484
  -541
  -601
  -663
  -729
  -797
  -868
  -943
  -1,020
  -1,100
  -1,184
  -1,270
Total debt, $m
  249
  461
  770
  1,190
  1,745
  2,459
  3,355
  4,456
  5,780
  7,343
  9,158
  11,232
  13,571
  16,178
  19,051
  22,187
  25,582
  29,230
  33,126
  37,263
  41,637
  46,242
  51,076
  56,135
  61,420
  66,930
  72,669
  78,640
  84,848
  91,301
  98,006
Total liabilities, $m
  410
  622
  931
  1,351
  1,906
  2,620
  3,516
  4,617
  5,941
  7,504
  9,319
  11,393
  13,732
  16,339
  19,212
  22,348
  25,743
  29,391
  33,287
  37,424
  41,798
  46,403
  51,237
  56,296
  61,581
  67,091
  72,830
  78,801
  85,009
  91,462
  98,167
Total equity, $m
  162
  100
  150
  218
  308
  423
  568
  745
  959
  1,212
  1,504
  1,839
  2,217
  2,638
  3,102
  3,608
  4,156
  4,745
  5,374
  6,042
  6,748
  7,491
  8,272
  9,088
  9,942
  10,831
  11,758
  12,722
  13,724
  14,766
  15,848
Total liabilities and equity, $m
  572
  722
  1,081
  1,569
  2,214
  3,043
  4,084
  5,362
  6,900
  8,716
  10,823
  13,232
  15,949
  18,977
  22,314
  25,956
  29,899
  34,136
  38,661
  43,466
  48,546
  53,894
  59,509
  65,384
  71,523
  77,922
  84,588
  91,523
  98,733
  106,228
  114,015
Debt-to-equity ratio
  1.537
  4.590
  5.120
  5.460
  5.670
  5.810
  5.910
  5.980
  6.030
  6.060
  6.090
  6.110
  6.120
  6.130
  6.140
  6.150
  6.160
  6.160
  6.160
  6.170
  6.170
  6.170
  6.170
  6.180
  6.180
  6.180
  6.180
  6.180
  6.180
  6.180
  6.180
Adjusted equity ratio
  0.124
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139
  0.139

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  60
  177
  289
  442
  643
  902
  1,226
  1,623
  2,100
  2,661
  3,311
  4,052
  4,887
  5,815
  6,836
  7,949
  9,153
  10,445
  11,823
  13,285
  14,829
  16,454
  18,159
  19,943
  21,805
  23,747
  25,768
  27,871
  30,057
  32,329
  34,691
Depreciation, amort., depletion, $m
  18
  28
  42
  60
  85
  117
  157
  206
  266
  336
  417
  509
  614
  730
  859
  999
  1,151
  1,314
  1,488
  1,673
  1,869
  2,075
  2,291
  2,517
  2,753
  3,000
  3,256
  3,523
  3,801
  4,089
  4,389
Funds from operations, $m
  93
  204
  330
  502
  728
  1,019
  1,383
  1,830
  2,365
  2,996
  3,727
  4,562
  5,501
  6,545
  7,695
  8,948
  10,304
  11,759
  13,311
  14,958
  16,698
  18,529
  20,450
  22,460
  24,558
  26,746
  29,024
  31,394
  33,858
  36,418
  39,079
Change in working capital, $m
  -44
  -3
  -4
  -5
  -7
  -9
  -12
  -14
  -17
  -20
  -23
  -27
  -30
  -34
  -37
  -41
  -44
  -47
  -50
  -54
  -57
  -60
  -63
  -65
  -68
  -71
  -74
  -77
  -80
  -84
  -87
Cash from operations, $m
  137
  207
  334
  507
  735
  1,028
  1,395
  1,844
  2,382
  3,017
  3,751
  4,588
  5,531
  6,579
  7,732
  8,989
  10,348
  11,806
  13,361
  15,012
  16,755
  18,589
  20,512
  22,525
  24,627
  26,817
  29,098
  31,471
  33,938
  36,502
  39,166
Maintenance CAPEX, $m
  0
  -18
  -28
  -42
  -60
  -85
  -117
  -157
  -206
  -266
  -336
  -417
  -509
  -614
  -730
  -859
  -999
  -1,151
  -1,314
  -1,488
  -1,673
  -1,869
  -2,075
  -2,291
  -2,517
  -2,753
  -3,000
  -3,256
  -3,523
  -3,801
  -4,089
New CAPEX, $m
  -38
  -167
  -234
  -319
  -422
  -543
  -682
  -837
  -1,006
  -1,188
  -1,379
  -1,577
  -1,778
  -1,981
  -2,183
  -2,384
  -2,580
  -2,773
  -2,961
  -3,145
  -3,324
  -3,500
  -3,674
  -3,845
  -4,017
  -4,188
  -4,362
  -4,538
  -4,719
  -4,904
  -5,096
Cash from investing activities, $m
  -34
  -185
  -262
  -361
  -482
  -628
  -799
  -994
  -1,212
  -1,454
  -1,715
  -1,994
  -2,287
  -2,595
  -2,913
  -3,243
  -3,579
  -3,924
  -4,275
  -4,633
  -4,997
  -5,369
  -5,749
  -6,136
  -6,534
  -6,941
  -7,362
  -7,794
  -8,242
  -8,705
  -9,185
Free cash flow, $m
  103
  22
  72
  147
  253
  400
  596
  850
  1,170
  1,563
  2,036
  2,595
  3,244
  3,984
  4,818
  5,747
  6,768
  7,882
  9,086
  10,379
  11,757
  13,220
  14,764
  16,389
  18,093
  19,876
  21,737
  23,677
  25,696
  27,797
  29,981
Issuance/(repayment) of debt, $m
  -59
  219
  308
  420
  555
  714
  897
  1,101
  1,324
  1,563
  1,814
  2,074
  2,339
  2,606
  2,873
  3,136
  3,395
  3,648
  3,896
  4,137
  4,374
  4,605
  4,833
  5,059
  5,285
  5,511
  5,739
  5,971
  6,208
  6,453
  6,706
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  -59
  219
  308
  420
  555
  714
  897
  1,101
  1,324
  1,563
  1,814
  2,074
  2,339
  2,606
  2,873
  3,136
  3,395
  3,648
  3,896
  4,137
  4,374
  4,605
  4,833
  5,059
  5,285
  5,511
  5,739
  5,971
  6,208
  6,453
  6,706
Total cash flow (excl. dividends), $m
  50
  242
  381
  566
  808
  1,114
  1,493
  1,951
  2,494
  3,126
  3,851
  4,670
  5,583
  6,591
  7,691
  8,883
  10,163
  11,530
  12,982
  14,516
  16,131
  17,825
  19,598
  21,448
  23,378
  25,386
  27,476
  29,648
  31,905
  34,250
  36,686
Retained Cash Flow (-), $m
  -53
  -35
  -50
  -68
  -90
  -115
  -145
  -178
  -214
  -252
  -293
  -335
  -378
  -421
  -464
  -506
  -548
  -589
  -629
  -668
  -706
  -743
  -780
  -817
  -853
  -890
  -926
  -964
  -1,002
  -1,042
  -1,083
Prev. year cash balance distribution, $m
 
  97
  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
 
  303
  331
  499
  719
  999
  1,348
  1,773
  2,280
  2,874
  3,558
  4,335
  5,205
  6,170
  7,227
  8,376
  9,615
  10,941
  12,353
  13,848
  15,425
  17,081
  18,817
  20,632
  22,525
  24,497
  26,549
  28,684
  30,902
  33,208
  35,604
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
 
  291
  303
  434
  592
  774
  978
  1,198
  1,425
  1,651
  1,865
  2,058
  2,221
  2,346
  2,426
  2,459
  2,443
  2,381
  2,275
  2,132
  1,960
  1,767
  1,561
  1,352
  1,147
  953
  775
  616
  478
  362
  268
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

Transportadora de Gas del Sur S.A. is engaged in the transportation of natural gas and production and commercialization of natural gas liquids (Liquids). The Company operates through four segments: Natural Gas Transportation Services, Liquids Production and Commercialization, Other Services and Telecommunications. The Company's pipeline system connects gas fields in southern and western Argentina with gas distributors and industries in those areas and in the greater Buenos Aires area. It also provides midstream services, which consist of gas treatment, removal of impurities from the natural gas stream, gas compression, wellhead gas gathering and pipeline construction, operation and maintenance services. The Company transports gas through approximately 5,675 miles of pipeline, of which it owns 4,745 miles. It operates the remaining 930 miles, which are owned by the Gas Trusts.

FINANCIAL RATIOS  of  Transportadora de Gas del Sur ADR (TGS)

Valuation Ratios
P/E Ratio 264.8
Price to Sales 33.5
Price to Book 98.1
Price to Tangible Book
Price to Cash Flow 116
Price to Free Cash Flow 160.5
Growth Rates
Sales Growth Rate 75.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 46.2%
Cap. Spend. - 3 Yr. Gr. Rate 20.4%
Financial Strength
Quick Ratio 15
Current Ratio 0
LT Debt to Equity 149.4%
Total Debt to Equity 153.7%
Interest Coverage 5
Management Effectiveness
Return On Assets 14.8%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital 16.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 44.3%
Return On Equity - 3 Yr. Avg. 13.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 40.1%
Gross Margin - 3 Yr. Avg. 38.4%
EBITDA Margin 27.4%
EBITDA Margin - 3 Yr. Avg. 15.7%
Operating Margin 30.2%
Oper. Margin - 3 Yr. Avg. 22.6%
Pre-Tax Margin 19.2%
Pre-Tax Margin - 3 Yr. Avg. 5.5%
Net Profit Margin 12.7%
Net Profit Margin - 3 Yr. Avg. 3.7%
Effective Tax Rate 34.1%
Eff/ Tax Rate - 3 Yr. Avg. 36.4%
Payout Ratio 10%

TGS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TGS stock intrinsic value calculation we used $474 million for the last fiscal year's total revenue generated by Transportadora de Gas del Sur ADR. The default revenue input number comes from 2016 income statement of Transportadora de Gas del Sur 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 TGS stock valuation model: a) initial revenue growth rate of 54.5% 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 4.3%, whose default value for TGS is calculated based on our internal credit rating of Transportadora de Gas del Sur 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 Transportadora de Gas del Sur 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 TGS stock the variable cost ratio is equal to 51.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $89 million in the base year in the intrinsic value calculation for TGS 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 9.1% for Transportadora de Gas del Sur ADR.

Corporate tax rate of 27% is the nominal tax rate for Transportadora de Gas del Sur 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 TGS 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 TGS are equal to 64.6%.

Life of production assets of 17 years is the average useful life of capital assets used in Transportadora de Gas del Sur 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 TGS is equal to -1.1%. 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 - $162 million for Transportadora de Gas del Sur 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 78.366 million for Transportadora de Gas del Sur 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 Transportadora de Gas del Sur ADR at the current share price and the inputted number of shares is $1.6 billion.

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▶ TGS Files 2016 Annual Report on Form 20-F   [Apr-25-17 05:00PM  PR Newswire]
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▶ Argentine stocks sink over 8% after default   [Jul-31  05:10PM  at MarketWatch]
▶ Transportadora De Gas Del Sur SA Stock Downgraded (TGS)   [Jun-11  11:11AM  at TheStreet]
▶ Transportadora De Gas Del Sur SA Stock Upgraded (TGS)   [May-20  11:11AM  at TheStreet]
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▶ Transportadora De Gas Del Sur S.A. - A High-Yielding Gem?   [Aug-26  02:59PM  at Seeking Alpha]
▶ Transportadora De Gas Del Sur SA Stock Upgraded (TGS)   [Jul-16  10:12AM  at TheStreet]
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▶ Transportadora De Gas Del Sur SA Stock Downgraded (TGS)   [May-16-12 05:01AM  at TheStreet]
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Financial statements of TGS
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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