Intrinsic value of Total ADR - TOT

Previous Close

$49.88

  Intrinsic Value

$10.00

stock screener

  Rating & Target

str. sell

-80%

  Value-price divergence*

-97%

Previous close

$49.88

 
Intrinsic value

$10.00

 
Up/down potential

-80%

 
Rating

str. sell

 
Value-price divergence*

-97%

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

We calculate the intrinsic value of TOT 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 121.6

 

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, %
  -10.80
  31.10
  28.49
  26.14
  24.03
  22.12
  20.41
  18.87
  17.48
  16.24
  15.11
  14.10
  13.19
  12.37
  11.63
  10.97
  10.37
  9.84
  9.35
  8.92
  8.53
  8.17
  7.86
  7.57
  7.31
  7.08
  6.87
  6.69
  6.52
  6.37
  6.23
Revenue, $m
  127,925
  167,710
  215,490
  271,821
  337,132
  411,719
  495,759
  589,311
  692,344
  804,747
  926,358
  1,056,979
  1,196,400
  1,344,411
  1,500,824
  1,665,477
  1,838,249
  2,019,067
  2,207,905
  2,404,794
  2,609,820
  2,823,125
  3,044,905
  3,275,412
  3,514,950
  3,763,875
  4,022,593
  4,291,558
  4,571,269
  4,862,273
  5,165,161
Variable operating expenses, $m
 
  162,139
  208,300
  262,721
  325,817
  397,876
  479,066
  569,447
  668,986
  777,579
  895,066
  1,021,143
  1,155,837
  1,298,830
  1,449,939
  1,609,010
  1,775,925
  1,950,611
  2,133,047
  2,323,261
  2,521,336
  2,727,408
  2,941,669
  3,164,361
  3,395,777
  3,636,263
  3,886,209
  4,146,055
  4,416,282
  4,697,420
  4,990,039
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
  122,194
  162,139
  208,300
  262,721
  325,817
  397,876
  479,066
  569,447
  668,986
  777,579
  895,066
  1,021,143
  1,155,837
  1,298,830
  1,449,939
  1,609,010
  1,775,925
  1,950,611
  2,133,047
  2,323,261
  2,521,336
  2,727,408
  2,941,669
  3,164,361
  3,395,777
  3,636,263
  3,886,209
  4,146,055
  4,416,282
  4,697,420
  4,990,039
Operating income, $m
  5,731
  5,570
  7,190
  9,100
  11,315
  13,843
  16,693
  19,865
  23,358
  27,169
  31,292
  35,836
  40,563
  45,582
  50,885
  56,467
  62,325
  68,455
  74,858
  81,533
  88,484
  95,716
  103,236
  111,051
  119,172
  127,612
  136,384
  145,503
  154,986
  164,853
  175,122
EBITDA, $m
  20,154
  22,055
  28,338
  35,746
  44,334
  54,143
  65,194
  77,497
  91,046
  105,828
  121,820
  138,997
  157,332
  176,796
  197,365
  219,018
  241,738
  265,516
  290,349
  316,241
  343,203
  371,253
  400,418
  430,731
  462,231
  494,966
  528,989
  564,359
  601,142
  639,410
  679,242
Interest expense (income), $m
  1,028
  1,380
  2,666
  4,211
  6,034
  8,147
  10,560
  13,278
  16,305
  19,638
  23,274
  27,208
  31,434
  35,944
  40,732
  45,792
  51,119
  56,708
  62,557
  68,666
  75,036
  81,668
  88,569
  95,743
  103,200
  110,950
  119,002
  127,372
  136,073
  145,122
  154,536
Earnings before tax, $m
  7,176
  4,191
  4,525
  4,889
  5,281
  5,697
  6,133
  6,586
  7,053
  7,531
  8,018
  8,628
  9,129
  9,637
  10,152
  10,675
  11,206
  11,747
  12,300
  12,867
  13,449
  14,048
  14,667
  15,307
  15,972
  16,663
  17,381
  18,131
  18,913
  19,731
  20,586
Tax expense, $m
  970
  1,132
  1,222
  1,320
  1,426
  1,538
  1,656
  1,778
  1,904
  2,033
  2,165
  2,330
  2,465
  2,602
  2,741
  2,882
  3,026
  3,172
  3,321
  3,474
  3,631
  3,793
  3,960
  4,133
  4,312
  4,499
  4,693
  4,895
  5,107
  5,327
  5,558
Net income, $m
  6,196
  3,059
  3,303
  3,569
  3,855
  4,159
  4,477
  4,808
  5,149
  5,498
  5,853
  6,299
  6,665
  7,035
  7,411
  7,793
  8,180
  8,576
  8,979
  9,393
  9,818
  10,255
  10,707
  11,174
  11,660
  12,164
  12,688
  13,236
  13,807
  14,404
  15,028

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  29,104
  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
  230,978
  264,526
  339,890
  428,740
  531,753
  649,400
  781,954
  929,513
  1,092,025
  1,269,318
  1,461,133
  1,667,160
  1,887,066
  2,120,523
  2,367,230
  2,626,935
  2,899,447
  3,184,648
  3,482,500
  3,793,050
  4,116,435
  4,452,878
  4,802,689
  5,166,264
  5,544,085
  5,936,712
  6,344,784
  6,769,018
  7,210,203
  7,669,200
  8,146,941
Adjusted assets (=assets-cash), $m
  201,874
  264,526
  339,890
  428,740
  531,753
  649,400
  781,954
  929,513
  1,092,025
  1,269,318
  1,461,133
  1,667,160
  1,887,066
  2,120,523
  2,367,230
  2,626,935
  2,899,447
  3,184,648
  3,482,500
  3,793,050
  4,116,435
  4,452,878
  4,802,689
  5,166,264
  5,544,085
  5,936,712
  6,344,784
  6,769,018
  7,210,203
  7,669,200
  8,146,941
Revenue / Adjusted assets
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
  0.634
Average production assets, $m
  124,809
  163,685
  210,318
  265,298
  329,041
  401,838
  483,861
  575,168
  675,728
  785,433
  904,126
  1,031,612
  1,167,686
  1,312,145
  1,464,804
  1,625,505
  1,794,131
  1,970,609
  2,154,915
  2,347,079
  2,547,184
  2,755,370
  2,971,827
  3,196,802
  3,430,591
  3,673,542
  3,926,051
  4,188,560
  4,461,558
  4,745,578
  5,041,197
Working capital, $m
  17,832
  3,690
  4,741
  5,980
  7,417
  9,058
  10,907
  12,965
  15,232
  17,704
  20,380
  23,254
  26,321
  29,577
  33,018
  36,640
  40,441
  44,419
  48,574
  52,905
  57,416
  62,109
  66,988
  72,059
  77,329
  82,805
  88,497
  94,414
  100,568
  106,970
  113,634
Total debt, $m
  53,451
  76,165
  120,328
  172,395
  232,761
  301,701
  379,378
  465,848
  561,080
  664,973
  777,377
  898,109
  1,026,974
  1,163,779
  1,308,350
  1,460,537
  1,620,229
  1,787,357
  1,961,898
  2,143,881
  2,333,384
  2,530,539
  2,735,529
  2,948,584
  3,169,987
  3,400,066
  3,639,197
  3,887,798
  4,146,332
  4,415,304
  4,695,260
Total liabilities, $m
  132,298
  155,012
  199,175
  251,242
  311,608
  380,548
  458,225
  544,695
  639,927
  743,820
  856,224
  976,956
  1,105,821
  1,242,626
  1,387,197
  1,539,384
  1,699,076
  1,866,204
  2,040,745
  2,222,728
  2,412,231
  2,609,386
  2,814,376
  3,027,431
  3,248,834
  3,478,913
  3,718,044
  3,966,645
  4,225,179
  4,494,151
  4,774,107
Total equity, $m
  98,680
  109,514
  140,714
  177,499
  220,146
  268,851
  323,729
  384,819
  452,098
  525,498
  604,909
  690,204
  781,245
  877,896
  980,033
  1,087,551
  1,200,371
  1,318,444
  1,441,755
  1,570,323
  1,704,204
  1,843,491
  1,988,313
  2,138,833
  2,295,251
  2,457,799
  2,626,741
  2,802,374
  2,985,024
  3,175,049
  3,372,834
Total liabilities and equity, $m
  230,978
  264,526
  339,889
  428,741
  531,754
  649,399
  781,954
  929,514
  1,092,025
  1,269,318
  1,461,133
  1,667,160
  1,887,066
  2,120,522
  2,367,230
  2,626,935
  2,899,447
  3,184,648
  3,482,500
  3,793,051
  4,116,435
  4,452,877
  4,802,689
  5,166,264
  5,544,085
  5,936,712
  6,344,785
  6,769,019
  7,210,203
  7,669,200
  8,146,941
Debt-to-equity ratio
  0.542
  0.700
  0.860
  0.970
  1.060
  1.120
  1.170
  1.210
  1.240
  1.270
  1.290
  1.300
  1.310
  1.330
  1.340
  1.340
  1.350
  1.360
  1.360
  1.370
  1.370
  1.370
  1.380
  1.380
  1.380
  1.380
  1.390
  1.390
  1.390
  1.390
  1.390
Adjusted equity ratio
  0.392
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414
  0.414

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  6,196
  3,059
  3,303
  3,569
  3,855
  4,159
  4,477
  4,808
  5,149
  5,498
  5,853
  6,299
  6,665
  7,035
  7,411
  7,793
  8,180
  8,576
  8,979
  9,393
  9,818
  10,255
  10,707
  11,174
  11,660
  12,164
  12,688
  13,236
  13,807
  14,404
  15,028
Depreciation, amort., depletion, $m
  14,423
  16,484
  21,148
  26,645
  33,020
  40,300
  48,502
  57,632
  67,688
  78,659
  90,528
  103,161
  116,769
  131,215
  146,480
  162,551
  179,413
  197,061
  215,492
  234,708
  254,718
  275,537
  297,183
  319,680
  343,059
  367,354
  392,605
  418,856
  446,156
  474,558
  504,120
Funds from operations, $m
  15,402
  19,543
  24,450
  30,214
  36,875
  44,458
  52,979
  62,441
  72,837
  84,157
  96,381
  109,460
  123,433
  138,250
  153,892
  170,343
  187,594
  205,636
  224,471
  244,101
  264,536
  285,792
  307,890
  330,855
  354,719
  379,518
  405,294
  432,092
  459,963
  488,961
  519,148
Change in working capital, $m
  -1,119
  875
  1,051
  1,239
  1,437
  1,641
  1,849
  2,058
  2,267
  2,473
  2,675
  2,874
  3,067
  3,256
  3,441
  3,622
  3,801
  3,978
  4,154
  4,332
  4,511
  4,693
  4,879
  5,071
  5,270
  5,476
  5,692
  5,917
  6,154
  6,402
  6,664
Cash from operations, $m
  16,521
  18,668
  23,399
  28,975
  35,438
  42,817
  51,130
  60,382
  70,571
  81,684
  93,706
  106,586
  120,366
  134,994
  150,451
  166,721
  183,793
  201,658
  220,316
  239,769
  260,025
  281,099
  303,010
  325,783
  349,449
  374,042
  399,602
  426,174
  453,809
  482,559
  512,484
Maintenance CAPEX, $m
  0
  -12,481
  -16,368
  -21,032
  -26,530
  -32,904
  -40,184
  -48,386
  -57,517
  -67,573
  -78,543
  -90,413
  -103,161
  -116,769
  -131,215
  -146,480
  -162,551
  -179,413
  -197,061
  -215,492
  -234,708
  -254,718
  -275,537
  -297,183
  -319,680
  -343,059
  -367,354
  -392,605
  -418,856
  -446,156
  -474,558
New CAPEX, $m
  -18,106
  -38,876
  -46,634
  -54,979
  -63,743
  -72,798
  -82,022
  -91,307
  -100,560
  -109,706
  -118,692
  -127,486
  -136,074
  -144,459
  -152,659
  -160,701
  -168,626
  -176,478
  -184,306
  -192,164
  -200,105
  -208,185
  -216,457
  -224,975
  -233,789
  -242,951
  -252,509
  -262,509
  -272,998
  -284,020
  -295,618
Cash from investing activities, $m
  -17,653
  -51,357
  -63,002
  -76,011
  -90,273
  -105,702
  -122,206
  -139,693
  -158,077
  -177,279
  -197,235
  -217,899
  -239,235
  -261,228
  -283,874
  -307,181
  -331,177
  -355,891
  -381,367
  -407,656
  -434,813
  -462,903
  -491,994
  -522,158
  -553,469
  -586,010
  -619,863
  -655,114
  -691,854
  -730,176
  -770,176
Free cash flow, $m
  -1,132
  -32,689
  -39,603
  -47,036
  -54,835
  -62,884
  -71,076
  -79,311
  -87,506
  -95,595
  -103,530
  -111,313
  -118,870
  -126,234
  -133,423
  -140,461
  -147,384
  -154,232
  -161,051
  -167,886
  -174,788
  -181,804
  -188,984
  -196,374
  -204,021
  -211,969
  -220,261
  -228,940
  -238,045
  -247,616
  -257,692
Issuance/(repayment) of debt, $m
  4,894
  36,749
  44,163
  52,066
  60,366
  68,941
  77,677
  86,470
  95,232
  103,893
  112,404
  120,732
  128,865
  136,806
  144,570
  152,187
  159,692
  167,128
  174,541
  181,983
  189,504
  197,155
  204,989
  213,055
  221,403
  230,079
  239,131
  248,601
  258,534
  268,972
  279,956
Issuance/(repurchase) of shares, $m
  100
  22,844
  27,898
  33,215
  38,792
  44,547
  50,400
  56,282
  62,131
  67,901
  73,558
  78,997
  84,377
  89,616
  94,726
  99,725
  104,640
  109,498
  114,331
  119,175
  124,064
  129,032
  134,115
  139,346
  144,758
  150,384
  156,254
  162,397
  168,844
  175,621
  182,757
Cash from financing (excl. dividends), $m  
  6,193
  59,593
  72,061
  85,281
  99,158
  113,488
  128,077
  142,752
  157,363
  171,794
  185,962
  199,729
  213,242
  226,422
  239,296
  251,912
  264,332
  276,626
  288,872
  301,158
  313,568
  326,187
  339,104
  352,401
  366,161
  380,463
  395,385
  410,998
  427,378
  444,593
  462,713
Total cash flow (excl. dividends), $m
  3,989
  26,904
  32,458
  38,246
  44,323
  50,603
  57,001
  63,440
  69,857
  76,200
  82,432
  88,416
  94,372
  100,187
  105,874
  111,451
  116,947
  122,393
  127,822
  133,272
  138,779
  144,383
  150,120
  156,027
  162,140
  168,494
  175,123
  182,058
  189,333
  196,977
  205,021
Retained Cash Flow (-), $m
  -6,186
  -25,903
  -31,201
  -36,784
  -42,647
  -48,706
  -54,877
  -61,090
  -67,280
  -73,399
  -79,411
  -85,295
  -91,041
  -96,651
  -102,137
  -107,518
  -112,820
  -118,073
  -123,311
  -128,568
  -133,881
  -139,287
  -144,822
  -150,520
  -156,418
  -162,547
  -168,942
  -175,633
  -182,651
  -190,025
  -197,785
Prev. year cash balance distribution, $m
 
  15,069
  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
 
  16,070
  1,257
  1,461
  1,676
  1,898
  2,123
  2,351
  2,577
  2,801
  3,021
  3,121
  3,331
  3,536
  3,737
  3,934
  4,128
  4,320
  4,511
  4,704
  4,898
  5,096
  5,298
  5,507
  5,723
  5,947
  6,181
  6,426
  6,682
  6,952
  7,236
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
 
  15,408
  1,151
  1,272
  1,380
  1,471
  1,541
  1,588
  1,611
  1,609
  1,584
  1,482
  1,421
  1,344
  1,254
  1,155
  1,049
  940
  831
  724
  622
  527
  440
  361
  291
  231
  180
  138
  103
  76
  54
Current shareholders' claim on cash, %
  100
  81.9
  67.8
  56.9
  48.3
  41.5
  36.0
  31.6
  27.9
  24.9
  22.4
  20.2
  18.4
  16.8
  15.5
  14.3
  13.3
  12.3
  11.5
  10.8
  10.2
  9.6
  9.0
  8.5
  8.1
  7.7
  7.3
  7.0
  6.6
  6.3
  6.1

TOTAL S.A. operates as an integrated oil and gas company worldwide. The company operates through three segments: Upstream, Refining & Chemicals, and Marketing & Services. The Upstream segment engages in the exploration and production activities in approximately 50 countries, and produces oil or gas in approximately 30 countries; gas activities, including purchase, sale, and shipping of liquefied natural gas (LNG); and trading of liquefied petroleum gas (LPG) and pet coke. This segment is also involved in the storage and transportation of natural gas; and generation and trading of power. The Refining & Chemicals segment provides petrochemicals, including olefins and aromatics; polymer derivatives, such as polyethylene, polypropylene, polystyrene, and hydrocarbon resins; and specialty chemicals comprising elastomer processing and electroplating chemistry for automotive, construction, electronics, aerospace, and convenience goods markets. It is also involved in trading and shipping crude oil and petroleum products. The Marketing & Services segment supplies and markets petroleum products, including aviation fuel, special fluids, LPG, bitumen, heavy fuels, and marine bunkers. It operates approximately 16,000 service stations. TOTAL S.A. also develops renewable energies with a focus on solar and biomass. As of December 31, 2015, the company had 11,580 Mboe of combined proved reserves of oil and gas. TOTAL S.A. was founded in 1924 and is headquartered in Courbevoie, France.

FINANCIAL RATIOS  of  Total ADR (TOT)

Valuation Ratios
P/E Ratio 19.5
Price to Sales 0.9
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 7.3
Price to Free Cash Flow -76.2
Growth Rates
Sales Growth Rate -10.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -28%
Cap. Spend. - 3 Yr. Gr. Rate -9.5%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 39.9%
Total Debt to Equity 54.2%
Interest Coverage 8
Management Effectiveness
Return On Assets 3.1%
Ret/ On Assets - 3 Yr. Avg. 2.5%
Return On Total Capital 4.1%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 6.5%
Return On Equity - 3 Yr. Avg. 5.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 34.3%
Gross Margin - 3 Yr. Avg. 32.4%
EBITDA Margin 17.7%
EBITDA Margin - 3 Yr. Avg. 17.5%
Operating Margin 4.5%
Oper. Margin - 3 Yr. Avg. 4.3%
Pre-Tax Margin 5.6%
Pre-Tax Margin - 3 Yr. Avg. 5.4%
Net Profit Margin 4.8%
Net Profit Margin - 3 Yr. Avg. 3.5%
Effective Tax Rate 13.5%
Eff/ Tax Rate - 3 Yr. Avg. 35.4%
Payout Ratio 42.9%

TOT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TOT stock intrinsic value calculation we used $127925 million for the last fiscal year's total revenue generated by Total ADR. The default revenue input number comes from 2016 income statement of Total 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 TOT stock valuation model: a) initial revenue growth rate of 31.1% 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 TOT is calculated based on our internal credit rating of Total 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 Total 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 TOT stock the variable cost ratio is equal to 96.7%.

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 TOT 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 3.5% for Total ADR.

Corporate tax rate of 27% is the nominal tax rate for Total 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 TOT 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 TOT are equal to 97.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Total 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 TOT is equal to 2.2%. 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 - $98680 million for Total 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 2437.54 million for Total 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 Total ADR at the current share price and the inputted number of shares is $121.6 billion.

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Stock chart of TOT Financial statements of TOT
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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