Intrinsic value of Vivint Solar - VSLR

Previous Close

$4.70

  Intrinsic Value

$1.32

stock screener

  Rating & Target

str. sell

-72%

  Value-price divergence*

-37%

Previous close

$4.70

 
Intrinsic value

$1.32

 
Up/down potential

-72%

 
Rating

str. sell

 
Value-price divergence*

-37%

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

We calculate the intrinsic value of VSLR 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 0.5

 

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, %
  110.94
  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
  135
  216
  334
  499
  724
  1,022
  1,405
  1,885
  2,476
  3,185
  4,023
  4,996
  6,108
  7,363
  8,760
  10,300
  11,982
  13,802
  15,758
  17,847
  20,065
  22,410
  24,879
  27,470
  30,183
  33,016
  35,971
  39,047
  42,249
  45,577
  49,037
Variable operating expenses, $m
 
  199
  307
  459
  665
  939
  1,291
  1,733
  2,275
  2,927
  3,698
  4,591
  5,614
  6,766
  8,050
  9,466
  11,011
  12,684
  14,481
  16,401
  18,440
  20,595
  22,864
  25,245
  27,738
  30,342
  33,057
  35,885
  38,826
  41,885
  45,065
Fixed operating expenses, $m
 
  248
  254
  261
  267
  274
  281
  288
  295
  302
  310
  318
  325
  334
  342
  350
  359
  368
  377
  387
  397
  406
  417
  427
  438
  449
  460
  471
  483
  495
  508
Total operating expenses, $m
  338
  447
  561
  720
  932
  1,213
  1,572
  2,021
  2,570
  3,229
  4,008
  4,909
  5,939
  7,100
  8,392
  9,816
  11,370
  13,052
  14,858
  16,788
  18,837
  21,001
  23,281
  25,672
  28,176
  30,791
  33,517
  36,356
  39,309
  42,380
  45,573
Operating income, $m
  -203
  -231
  -227
  -220
  -208
  -191
  -167
  -135
  -94
  -44
  16
  87
  169
  263
  368
  484
  611
  750
  899
  1,059
  1,229
  1,409
  1,599
  1,798
  2,007
  2,226
  2,454
  2,691
  2,939
  3,197
  3,464
EBITDA, $m
  -155
  -155
  -110
  -45
  45
  167
  325
  525
  772
  1,071
  1,425
  1,836
  2,308
  2,840
  3,435
  4,090
  4,806
  5,582
  6,416
  7,307
  8,254
  9,255
  10,309
  11,416
  12,574
  13,785
  15,047
  16,362
  17,731
  19,153
  20,633
Interest expense (income), $m
  24
  30
  67
  121
  197
  300
  436
  612
  832
  1,103
  1,428
  1,813
  2,259
  2,769
  3,344
  3,984
  4,691
  5,462
  6,296
  7,193
  8,151
  9,168
  10,243
  11,375
  12,563
  13,807
  15,106
  16,461
  17,871
  19,339
  20,865
Earnings before tax, $m
  -235
  -261
  -294
  -341
  -405
  -491
  -603
  -747
  -927
  -1,147
  -1,412
  -1,726
  -2,089
  -2,506
  -2,976
  -3,501
  -4,079
  -4,712
  -5,397
  -6,134
  -6,922
  -7,759
  -8,644
  -9,577
  -10,556
  -11,581
  -12,652
  -13,769
  -14,932
  -16,143
  -17,401
Tax expense, $m
  8
  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
Net income, $m
  18
  -261
  -294
  -341
  -405
  -491
  -603
  -747
  -927
  -1,147
  -1,412
  -1,726
  -2,089
  -2,506
  -2,976
  -3,501
  -4,079
  -4,712
  -5,397
  -6,134
  -6,922
  -7,759
  -8,644
  -9,577
  -10,556
  -11,581
  -12,652
  -13,769
  -14,932
  -16,143
  -17,401

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  2,126
  3,224
  4,981
  7,449
  10,808
  15,249
  20,963
  28,139
  36,948
  47,543
  60,051
  74,570
  91,168
  109,889
  130,746
  153,734
  178,829
  205,996
  235,191
  266,366
  299,475
  334,473
  371,326
  410,004
  450,490
  492,778
  536,874
  582,796
  630,576
  680,255
  731,890
Adjusted assets (=assets-cash), $m
  2,029
  3,224
  4,981
  7,449
  10,808
  15,249
  20,963
  28,139
  36,948
  47,543
  60,051
  74,570
  91,168
  109,889
  130,746
  153,734
  178,829
  205,996
  235,191
  266,366
  299,475
  334,473
  371,326
  410,004
  450,490
  492,778
  536,874
  582,796
  630,576
  680,255
  731,890
Revenue / Adjusted assets
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
  0.067
Average production assets, $m
  1,305
  2,087
  3,225
  4,823
  6,997
  9,872
  13,572
  18,218
  23,921
  30,780
  38,878
  48,278
  59,024
  71,144
  84,648
  99,530
  115,778
  133,366
  152,268
  172,451
  193,886
  216,545
  240,404
  265,445
  291,657
  319,035
  347,584
  377,315
  408,248
  440,411
  473,841
Working capital, $m
  33
  -22
  -33
  -50
  -72
  -102
  -140
  -189
  -248
  -319
  -402
  -500
  -611
  -736
  -876
  -1,030
  -1,198
  -1,380
  -1,576
  -1,785
  -2,006
  -2,241
  -2,488
  -2,747
  -3,018
  -3,302
  -3,597
  -3,905
  -4,225
  -4,558
  -4,904
Total debt, $m
  768
  1,674
  3,023
  4,919
  7,499
  10,909
  15,298
  20,809
  27,574
  35,711
  45,317
  56,467
  69,215
  83,592
  99,611
  117,266
  136,539
  157,403
  179,825
  203,767
  229,194
  256,074
  284,376
  314,081
  345,174
  377,652
  411,518
  446,786
  483,480
  521,634
  561,290
Total liabilities, $m
  1,570
  2,476
  3,825
  5,721
  8,301
  11,711
  16,100
  21,611
  28,376
  36,513
  46,119
  57,269
  70,017
  84,394
  100,413
  118,068
  137,341
  158,205
  180,627
  204,569
  229,996
  256,876
  285,178
  314,883
  345,976
  378,454
  412,320
  447,588
  484,282
  522,436
  562,092
Total equity, $m
  556
  748
  1,156
  1,728
  2,507
  3,538
  4,863
  6,528
  8,572
  11,030
  13,932
  17,300
  21,151
  25,494
  30,333
  35,666
  41,488
  47,791
  54,564
  61,797
  69,478
  77,598
  86,148
  95,121
  104,514
  114,325
  124,555
  135,209
  146,294
  157,819
  169,798
Total liabilities and equity, $m
  2,126
  3,224
  4,981
  7,449
  10,808
  15,249
  20,963
  28,139
  36,948
  47,543
  60,051
  74,569
  91,168
  109,888
  130,746
  153,734
  178,829
  205,996
  235,191
  266,366
  299,474
  334,474
  371,326
  410,004
  450,490
  492,779
  536,875
  582,797
  630,576
  680,255
  731,890
Debt-to-equity ratio
  1.381
  2.240
  2.620
  2.850
  2.990
  3.080
  3.150
  3.190
  3.220
  3.240
  3.250
  3.260
  3.270
  3.280
  3.280
  3.290
  3.290
  3.290
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.300
  3.310
  3.310
Adjusted equity ratio
  0.226
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  18
  -261
  -294
  -341
  -405
  -491
  -603
  -747
  -927
  -1,147
  -1,412
  -1,726
  -2,089
  -2,506
  -2,976
  -3,501
  -4,079
  -4,712
  -5,397
  -6,134
  -6,922
  -7,759
  -8,644
  -9,577
  -10,556
  -11,581
  -12,652
  -13,769
  -14,932
  -16,143
  -17,401
Depreciation, amort., depletion, $m
  48
  76
  117
  175
  254
  358
  492
  660
  867
  1,115
  1,409
  1,749
  2,139
  2,578
  3,067
  3,606
  4,195
  4,832
  5,517
  6,248
  7,025
  7,846
  8,710
  9,618
  10,567
  11,559
  12,594
  13,671
  14,792
  15,957
  17,168
Funds from operations, $m
  -364
  -185
  -177
  -166
  -152
  -133
  -111
  -87
  -60
  -32
  -4
  24
  49
  72
  91
  106
  115
  120
  120
  114
  103
  87
  66
  41
  11
  -22
  -59
  -98
  -141
  -186
  -233
Change in working capital, $m
  -198
  -8
  -12
  -17
  -23
  -30
  -38
  -48
  -59
  -71
  -84
  -97
  -111
  -125
  -140
  -154
  -168
  -182
  -196
  -209
  -222
  -234
  -247
  -259
  -271
  -283
  -295
  -308
  -320
  -333
  -346
Cash from operations, $m
  -166
  -177
  -166
  -150
  -129
  -104
  -73
  -39
  -1
  39
  80
  121
  160
  197
  231
  260
  284
  302
  315
  323
  325
  321
  313
  300
  282
  261
  237
  209
  179
  147
  113
Maintenance CAPEX, $m
  0
  -47
  -76
  -117
  -175
  -254
  -358
  -492
  -660
  -867
  -1,115
  -1,409
  -1,749
  -2,139
  -2,578
  -3,067
  -3,606
  -4,195
  -4,832
  -5,517
  -6,248
  -7,025
  -7,846
  -8,710
  -9,618
  -10,567
  -11,559
  -12,594
  -13,671
  -14,792
  -15,957
New CAPEX, $m
  -3
  -783
  -1,138
  -1,598
  -2,175
  -2,875
  -3,700
  -4,646
  -5,703
  -6,859
  -8,098
  -9,400
  -10,746
  -12,120
  -13,503
  -14,883
  -16,247
  -17,589
  -18,901
  -20,183
  -21,435
  -22,659
  -23,859
  -25,041
  -26,212
  -27,378
  -28,549
  -29,731
  -30,933
  -32,163
  -33,430
Cash from investing activities, $m
  -414
  -830
  -1,214
  -1,715
  -2,350
  -3,129
  -4,058
  -5,138
  -6,363
  -7,726
  -9,213
  -10,809
  -12,495
  -14,259
  -16,081
  -17,950
  -19,853
  -21,784
  -23,733
  -25,700
  -27,683
  -29,684
  -31,705
  -33,751
  -35,830
  -37,945
  -40,108
  -42,325
  -44,604
  -46,955
  -49,387
Free cash flow, $m
  -580
  -1,007
  -1,379
  -1,865
  -2,479
  -3,232
  -4,131
  -5,176
  -6,364
  -7,687
  -9,133
  -10,687
  -12,335
  -14,061
  -15,850
  -17,690
  -19,570
  -21,481
  -23,418
  -25,378
  -27,359
  -29,363
  -31,392
  -33,452
  -35,547
  -37,684
  -39,871
  -42,115
  -44,425
  -46,808
  -49,274
Issuance/(repayment) of debt, $m
  631
  917
  1,349
  1,895
  2,580
  3,410
  4,389
  5,511
  6,765
  8,137
  9,606
  11,150
  12,748
  14,377
  16,018
  17,655
  19,273
  20,864
  22,422
  23,942
  25,427
  26,879
  28,303
  29,705
  31,093
  32,477
  33,866
  35,268
  36,694
  38,154
  39,656
Issuance/(repurchase) of shares, $m
  3
  539
  702
  914
  1,185
  1,521
  1,929
  2,412
  2,970
  3,605
  4,314
  5,094
  5,940
  6,849
  7,815
  8,834
  9,902
  11,015
  12,170
  13,367
  14,603
  15,879
  17,194
  18,550
  19,949
  21,392
  22,883
  24,423
  26,017
  27,668
  29,380
Cash from financing (excl. dividends), $m  
  585
  1,456
  2,051
  2,809
  3,765
  4,931
  6,318
  7,923
  9,735
  11,742
  13,920
  16,244
  18,688
  21,226
  23,833
  26,489
  29,175
  31,879
  34,592
  37,309
  40,030
  42,758
  45,497
  48,255
  51,042
  53,869
  56,749
  59,691
  62,711
  65,822
  69,036
Total cash flow (excl. dividends), $m
  4
  449
  672
  945
  1,286
  1,700
  2,187
  2,746
  3,372
  4,055
  4,787
  5,557
  6,353
  7,165
  7,983
  8,798
  9,605
  10,398
  11,174
  11,932
  12,672
  13,395
  14,105
  14,804
  15,496
  16,185
  16,877
  17,576
  18,287
  19,014
  19,763
Retained Cash Flow (-), $m
  -37
  -539
  -702
  -914
  -1,185
  -1,521
  -1,929
  -2,412
  -2,970
  -3,605
  -4,314
  -5,094
  -5,940
  -6,849
  -7,815
  -8,834
  -9,902
  -11,015
  -12,170
  -13,367
  -14,603
  -15,879
  -17,194
  -18,550
  -19,949
  -21,392
  -22,883
  -24,423
  -26,017
  -27,668
  -29,380
Prev. year cash balance distribution, $m
 
  86
  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
 
  -4
  -29
  31
  101
  178
  258
  335
  401
  450
  473
  463
  413
  316
  168
  -35
  -297
  -617
  -996
  -1,435
  -1,931
  -2,483
  -3,089
  -3,747
  -4,453
  -5,207
  -6,005
  -6,847
  -7,730
  -8,654
  -9,618
Discount rate, %
 
  9.40
  9.87
  10.36
  10.88
  11.43
  12.00
  12.60
  13.23
  13.89
  14.58
  15.31
  16.08
  16.88
  17.73
  18.61
  19.54
  20.52
  21.54
  22.62
  23.75
  24.94
  26.19
  27.50
  28.87
  30.32
  31.83
  33.42
  35.09
  36.85
  38.69
PV of cash for distribution, $m
 
  -4
  -24
  23
  67
  104
  131
  146
  149
  140
  121
  97
  69
  42
  17
  -3
  -17
  -26
  -30
  -30
  -27
  -23
  -19
  -14
  -10
  -7
  -5
  -3
  -2
  -1
  -1
Current shareholders' claim on cash, %
  100
  43.8
  21.3
  11.3
  6.4
  3.8
  2.4
  1.5
  1.0
  0.7
  0.5
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  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

Vivint Solar, Inc. provides distributed solar energy to residential, commercial, and industrial customers in the United States. It operates through two segments, Residential and C&I. The company installs and owns solar energy systems through long-term customer contracts, such as power purchase agreements and solar energy system leases. It also offers photovoltaic installation devices and software products. As of December 31, 2015, the company had an aggregate capacity of 458.9 megawatts covering 68,500 homes in 12 states. It has operations in Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina, and Utah. The company was formerly known as V Solar Holdings, Inc. and changed its name to Vivint Solar, Inc. in April 2014. Vivint Solar, Inc. was founded in 2011 and is headquartered in Lehi, Utah.

FINANCIAL RATIOS  of  Vivint Solar (VSLR)

Valuation Ratios
P/E Ratio 28.8
Price to Sales 3.8
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow -3.1
Price to Free Cash Flow -3.1
Growth Rates
Sales Growth Rate 110.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -62.5%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 9
Current Ratio 0
LT Debt to Equity 136.2%
Total Debt to Equity 138.1%
Interest Coverage -9
Management Effectiveness
Return On Assets 2.3%
Ret/ On Assets - 3 Yr. Avg. 0.1%
Return On Total Capital 1.6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.6%
Return On Equity 3.3%
Return On Equity - 3 Yr. Avg. -1.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin -28.9%
Gross Margin - 3 Yr. Avg. -105.6%
EBITDA Margin -120.7%
EBITDA Margin - 3 Yr. Avg. -336.7%
Operating Margin -150.4%
Oper. Margin - 3 Yr. Avg. -387.8%
Pre-Tax Margin -174.1%
Pre-Tax Margin - 3 Yr. Avg. -415.8%
Net Profit Margin 13.3%
Net Profit Margin - 3 Yr. Avg. -27.5%
Effective Tax Rate -3.4%
Eff/ Tax Rate - 3 Yr. Avg. -1%
Payout Ratio 0%

VSLR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VSLR stock intrinsic value calculation we used $135 million for the last fiscal year's total revenue generated by Vivint Solar. The default revenue input number comes from 2016 income statement of Vivint Solar. 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 VSLR 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 9.4%, whose default value for VSLR is calculated based on our internal credit rating of Vivint Solar, 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 Vivint Solar.
    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 VSLR stock the variable cost ratio is equal to 91.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $242 million in the base year in the intrinsic value calculation for VSLR 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% for Vivint Solar.

Corporate tax rate of 27% is the nominal tax rate for Vivint Solar. 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 VSLR 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 VSLR are equal to 966.3%.

Life of production assets of 27.6 years is the average useful life of capital assets used in Vivint Solar 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 VSLR is equal to -10%. 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 - $556 million for Vivint Solar - 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 105.534 million for Vivint Solar 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 Vivint Solar at the current share price and the inputted number of shares is $0.5 billion.

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COMPANY NEWS

▶ Vivint Solar Making Successful Transition to Solar Sales   [Aug-09-17 02:47PM  Motley Fool]
▶ Vivint Solar 2nd-qtr results top estimates   [Aug-08-17 05:10PM  Reuters]
▶ Vivint Solar beats 2Q profit forecasts   [04:57PM  Associated Press]
▶ ETFs with exposure to Vivint Solar, Inc. : August 1, 2017   [Aug-01-17 05:27PM  Capital Cube]
▶ Why Residential Solar Stocks May Have a Rough Quarter   [Jul-25-17 09:12AM  Motley Fool]
▶ This Week in Solar   [Jul-21-17 08:30PM  Motley Fool]
▶ Stocks In This Newly Resurgent Sector Are Shining Brighter   [Jul-18-17 04:31PM  Investor's Business Daily]
▶ Last Week in Solar   [Jul-17-17 10:37AM  Motley Fool]
▶ Sunny Times Ahead for the Solar Sector   [Jul-13-17 10:47AM  Investopedia]
▶ Why Vivint Solar Inc.'s Shares Popped 83% in June   [Jul-10-17 01:39AM  Motley Fool]
▶ 3 Top Solar Stocks to Buy Now   [Jul-08-17 11:14AM  Motley Fool]
▶ ETFs with exposure to Vivint Solar, Inc. : July 7, 2017   [Jul-07-17 03:41PM  Capital Cube]
▶ Residential Solar Installers Back on Growth Path   [Jul-02-17 11:32AM  Motley Fool]
▶ Utah's Vivint Solar expands into Colorado   [Jun-27-17 04:39PM  American City Business Journals]
▶ ETFs with exposure to Vivint Solar, Inc. : June 26, 2017   [Jun-26-17 05:12PM  Capital Cube]
▶ Solar Stocks Boom on Trumps Solar Wall   [Jun-23-17 12:44PM  Investopedia]
▶ Vivint Solar Brings Rooftop Solar to Vermont   [Jun-15-17 08:00AM  PR Newswire]
▶ This Week in Solar   [Jun-09-17 04:41PM  Motley Fool]
▶ Vivint Solar Expands Services to Colorado   [Jun-07-17 08:00AM  PR Newswire]
▶ Storage Wars: Mercedes-Benz Takes on Tesla's Powerwall   [May-20-17 07:58AM  Motley Fool]
▶ Mercedes and Vivint Solar team up to power homes   [May-18-17 04:52PM  CNBC Videos]
▶ Vivint Solar misses 1Q profit forecasts   [May-09-17 05:32PM  Associated Press]
▶ Solar Industry Slowdown Catches Up With SolarCity   [May-05-17 11:04AM  Investopedia]
▶ Alternative Energy Stock Outlook - May 2017   [May-01-17 04:54PM  Zacks]
▶ Residential Solar Giants May Not Be Low Cost After All   [Apr-21-17 08:26AM  Motley Fool]
▶ [$$] Solar Installers Struggle as Panels Become Cheap Enough to Own   [Apr-15-17 12:33AM  The Wall Street Journal]
▶ ETFs with exposure to Vivint Solar, Inc. : April 7, 2017   [Apr-07-17 05:43PM  Capital Cube]
▶ ETFs with exposure to Vivint Solar, Inc. : March 27, 2017   [Mar-27-17 04:10PM  Capital Cube]
▶ Vivint Solar's Changing (and Shrinking) Solar Business   [Mar-18-17 10:26AM  Motley Fool]
▶ Vivint Solar Brings Rooftop Solar to Orlando, Florida   [Mar-02-17 08:00AM  PR Newswire]
▶ This Week in Solar   [Feb-25-17 09:03AM  at Motley Fool]
▶ Is SunPower Coming Up Roses in Residential Solar?   [Feb-23-17 08:29PM  at Motley Fool]
Stock chart of VSLR Financial statements of VSLR
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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