Intrinsic value of Vistra Energy - VST

Previous Close

$19.49

  Intrinsic Value

$2.80

stock screener

  Rating & Target

str. sell

-86%

Previous close

$19.49

 
Intrinsic value

$2.80

 
Up/down potential

-86%

 
Rating

str. sell

We calculate the intrinsic value of VST 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -3.84
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
Revenue, $m
  0
  5,603
  6,060
  6,534
  7,028
  7,541
  8,073
  8,627
  9,203
  9,802
  10,425
  11,073
  11,749
  12,452
  13,186
  13,950
  14,748
  15,582
  16,452
  17,361
  18,311
  19,304
  20,343
  21,431
  22,569
  23,760
  25,008
  26,315
  27,684
  29,119
  30,623
Variable operating expenses, $m
 
  10,047
  10,850
  11,685
  12,553
  13,455
  14,392
  15,367
  16,380
  17,433
  18,529
  19,479
  20,667
  21,904
  23,194
  24,540
  25,944
  27,409
  28,940
  30,539
  32,210
  33,957
  35,785
  37,698
  39,700
  41,796
  43,990
  46,289
  48,698
  51,222
  53,868
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
  -17,319
  10,047
  10,850
  11,685
  12,553
  13,455
  14,392
  15,367
  16,380
  17,433
  18,529
  19,479
  20,667
  21,904
  23,194
  24,540
  25,944
  27,409
  28,940
  30,539
  32,210
  33,957
  35,785
  37,698
  39,700
  41,796
  43,990
  46,289
  48,698
  51,222
  53,868
Operating income, $m
  22,483
  -4,444
  -4,790
  -5,151
  -5,525
  -5,915
  -6,319
  -6,739
  -7,176
  -7,631
  -8,104
  -8,405
  -8,918
  -9,452
  -10,009
  -10,589
  -11,195
  -11,828
  -12,488
  -13,178
  -13,899
  -14,653
  -15,442
  -16,267
  -17,131
  -18,036
  -18,983
  -19,975
  -21,014
  -22,103
  -23,245
EBITDA, $m
  23,300
  -3,457
  -3,738
  -4,031
  -4,336
  -4,652
  -4,981
  -5,322
  -5,678
  -6,047
  -6,431
  -6,831
  -7,248
  -7,682
  -8,134
  -8,606
  -9,099
  -9,613
  -10,149
  -10,710
  -11,296
  -11,909
  -12,550
  -13,221
  -13,923
  -14,658
  -15,428
  -16,234
  -17,079
  -17,964
  -18,892
Interest expense (income), $m
  1,071
  261
  301
  344
  389
  435
  483
  533
  586
  640
  696
  754
  815
  879
  945
  1,014
  1,086
  1,161
  1,239
  1,321
  1,406
  1,495
  1,589
  1,686
  1,788
  1,895
  2,007
  2,124
  2,247
  2,376
  2,511
Earnings before tax, $m
  21,351
  -4,705
  -5,092
  -5,495
  -5,914
  -6,350
  -6,802
  -7,273
  -7,762
  -8,271
  -8,800
  -9,160
  -9,733
  -10,331
  -10,954
  -11,603
  -12,281
  -12,988
  -13,727
  -14,499
  -15,305
  -16,149
  -17,031
  -17,954
  -18,920
  -19,931
  -20,990
  -22,099
  -23,261
  -24,479
  -25,756
Tax expense, $m
  -1,337
  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
  22,688
  -4,705
  -5,092
  -5,495
  -5,914
  -6,350
  -6,802
  -7,273
  -7,762
  -8,271
  -8,800
  -9,160
  -9,733
  -10,331
  -10,954
  -11,603
  -12,281
  -12,988
  -13,727
  -14,499
  -15,305
  -16,149
  -17,031
  -17,954
  -18,920
  -19,931
  -20,990
  -22,099
  -23,261
  -24,479
  -25,756

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  843
  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
  15,167
  15,521
  16,786
  18,101
  19,468
  20,888
  22,364
  23,898
  25,493
  27,152
  28,878
  30,674
  32,545
  34,494
  36,525
  38,644
  40,855
  43,162
  45,572
  48,090
  50,722
  53,474
  56,353
  59,365
  62,517
  65,817
  69,273
  72,894
  76,687
  80,662
  84,828
Adjusted assets (=assets-cash), $m
  14,324
  15,521
  16,786
  18,101
  19,468
  20,888
  22,364
  23,898
  25,493
  27,152
  28,878
  30,674
  32,545
  34,494
  36,525
  38,644
  40,855
  43,162
  45,572
  48,090
  50,722
  53,474
  56,353
  59,365
  62,517
  65,817
  69,273
  72,894
  76,687
  80,662
  84,828
Revenue / Adjusted assets
  0.000
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
  0.361
Average production assets, $m
  8,881
  9,637
  10,422
  11,239
  12,088
  12,970
  13,886
  14,839
  15,829
  16,859
  17,931
  19,046
  20,208
  21,418
  22,679
  23,995
  25,367
  26,800
  28,297
  29,860
  31,494
  33,203
  34,990
  36,861
  38,818
  40,867
  43,013
  45,261
  47,616
  50,084
  52,671
Working capital, $m
  969
  185
  200
  216
  232
  249
  266
  285
  304
  323
  344
  365
  388
  411
  435
  460
  487
  514
  543
  573
  604
  637
  671
  707
  745
  784
  825
  868
  914
  961
  1,011
Total debt, $m
  4,623
  5,288
  6,040
  6,823
  7,636
  8,481
  9,360
  10,272
  11,221
  12,208
  13,235
  14,304
  15,417
  16,577
  17,785
  19,046
  20,361
  21,735
  23,169
  24,667
  26,233
  27,870
  29,583
  31,375
  33,251
  35,214
  37,271
  39,425
  41,682
  44,047
  46,526
Total liabilities, $m
  8,570
  9,235
  9,987
  10,770
  11,583
  12,428
  13,307
  14,219
  15,168
  16,155
  17,182
  18,251
  19,364
  20,524
  21,732
  22,993
  24,308
  25,682
  27,116
  28,614
  30,180
  31,817
  33,530
  35,322
  37,198
  39,161
  41,218
  43,372
  45,629
  47,994
  50,473
Total equity, $m
  6,597
  6,286
  6,798
  7,331
  7,884
  8,460
  9,057
  9,679
  10,325
  10,997
  11,695
  12,423
  13,181
  13,970
  14,793
  15,651
  16,546
  17,481
  18,457
  19,477
  20,542
  21,657
  22,823
  24,043
  25,319
  26,656
  28,056
  29,522
  31,058
  32,668
  34,355
Total liabilities and equity, $m
  15,167
  15,521
  16,785
  18,101
  19,467
  20,888
  22,364
  23,898
  25,493
  27,152
  28,877
  30,674
  32,545
  34,494
  36,525
  38,644
  40,854
  43,163
  45,573
  48,091
  50,722
  53,474
  56,353
  59,365
  62,517
  65,817
  69,274
  72,894
  76,687
  80,662
  84,828
Debt-to-equity ratio
  0.701
  0.840
  0.890
  0.930
  0.970
  1.000
  1.030
  1.060
  1.090
  1.110
  1.130
  1.150
  1.170
  1.190
  1.200
  1.220
  1.230
  1.240
  1.260
  1.270
  1.280
  1.290
  1.300
  1.300
  1.310
  1.320
  1.330
  1.340
  1.340
  1.350
  1.350
Adjusted equity ratio
  0.402
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405
  0.405

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  22,688
  -4,705
  -5,092
  -5,495
  -5,914
  -6,350
  -6,802
  -7,273
  -7,762
  -8,271
  -8,800
  -9,160
  -9,733
  -10,331
  -10,954
  -11,603
  -12,281
  -12,988
  -13,727
  -14,499
  -15,305
  -16,149
  -17,031
  -17,954
  -18,920
  -19,931
  -20,990
  -22,099
  -23,261
  -24,479
  -25,756
Depreciation, amort., depletion, $m
  817
  987
  1,052
  1,120
  1,190
  1,263
  1,338
  1,417
  1,499
  1,584
  1,673
  1,574
  1,670
  1,770
  1,874
  1,983
  2,096
  2,215
  2,339
  2,468
  2,603
  2,744
  2,892
  3,046
  3,208
  3,377
  3,555
  3,741
  3,935
  4,139
  4,353
Funds from operations, $m
  -504
  -3,717
  -4,040
  -4,375
  -4,725
  -5,087
  -5,464
  -5,856
  -6,263
  -6,687
  -7,127
  -7,586
  -8,063
  -8,561
  -9,079
  -9,620
  -10,184
  -10,773
  -11,388
  -12,031
  -12,702
  -13,404
  -14,139
  -14,907
  -15,711
  -16,553
  -17,435
  -18,359
  -19,326
  -20,340
  -21,403
Change in working capital, $m
  -347
  14
  15
  16
  16
  17
  18
  18
  19
  20
  21
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  47
  50
Cash from operations, $m
  -157
  -3,732
  -4,055
  -4,391
  -4,741
  -5,104
  -5,482
  -5,874
  -6,282
  -6,706
  -7,148
  -7,607
  -8,086
  -8,584
  -9,104
  -9,645
  -10,211
  -10,801
  -11,417
  -12,061
  -12,734
  -13,437
  -14,173
  -14,943
  -15,749
  -16,593
  -17,476
  -18,402
  -19,371
  -20,387
  -21,452
Maintenance CAPEX, $m
  0
  -734
  -796
  -861
  -929
  -999
  -1,072
  -1,148
  -1,226
  -1,308
  -1,393
  -1,482
  -1,574
  -1,670
  -1,770
  -1,874
  -1,983
  -2,096
  -2,215
  -2,339
  -2,468
  -2,603
  -2,744
  -2,892
  -3,046
  -3,208
  -3,377
  -3,555
  -3,741
  -3,935
  -4,139
New CAPEX, $m
  -278
  -756
  -785
  -817
  -849
  -882
  -917
  -953
  -990
  -1,030
  -1,072
  -1,115
  -1,161
  -1,210
  -1,261
  -1,316
  -1,373
  -1,433
  -1,496
  -1,563
  -1,634
  -1,709
  -1,787
  -1,870
  -1,957
  -2,049
  -2,146
  -2,248
  -2,355
  -2,468
  -2,587
Cash from investing activities, $m
  -1,465
  -1,490
  -1,581
  -1,678
  -1,778
  -1,881
  -1,989
  -2,101
  -2,216
  -2,338
  -2,465
  -2,597
  -2,735
  -2,880
  -3,031
  -3,190
  -3,356
  -3,529
  -3,711
  -3,902
  -4,102
  -4,312
  -4,531
  -4,762
  -5,003
  -5,257
  -5,523
  -5,803
  -6,096
  -6,403
  -6,726
Free cash flow, $m
  -1,622
  -5,222
  -5,637
  -6,069
  -6,518
  -6,985
  -7,470
  -7,974
  -8,499
  -9,045
  -9,613
  -10,204
  -10,821
  -11,464
  -12,135
  -12,835
  -13,566
  -14,330
  -15,128
  -15,963
  -16,836
  -17,749
  -18,705
  -19,705
  -20,753
  -21,850
  -23,000
  -24,204
  -25,467
  -26,791
  -28,178
Issuance/(repayment) of debt, $m
  3,025
  711
  753
  783
  813
  845
  878
  913
  949
  987
  1,027
  1,069
  1,113
  1,160
  1,209
  1,261
  1,315
  1,373
  1,434
  1,498
  1,566
  1,637
  1,713
  1,792
  1,876
  1,964
  2,056
  2,154
  2,257
  2,365
  2,479
Issuance/(repurchase) of shares, $m
  69
  5,190
  5,604
  6,028
  6,468
  6,925
  7,400
  7,894
  8,408
  8,942
  9,499
  9,887
  10,491
  11,120
  11,776
  12,461
  13,176
  13,923
  14,703
  15,518
  16,371
  17,263
  18,196
  19,173
  20,196
  21,267
  22,390
  23,565
  24,797
  26,089
  27,443
Cash from financing (excl. dividends), $m  
  1,065
  5,901
  6,357
  6,811
  7,281
  7,770
  8,278
  8,807
  9,357
  9,929
  10,526
  10,956
  11,604
  12,280
  12,985
  13,722
  14,491
  15,296
  16,137
  17,016
  17,937
  18,900
  19,909
  20,965
  22,072
  23,231
  24,446
  25,719
  27,054
  28,454
  29,922
Total cash flow (excl. dividends), $m
  -557
  679
  720
  741
  763
  785
  808
  833
  858
  885
  913
  752
  783
  816
  850
  887
  925
  966
  1,009
  1,054
  1,101
  1,152
  1,205
  1,260
  1,319
  1,381
  1,446
  1,515
  1,587
  1,663
  1,743
Retained Cash Flow (-), $m
  -29,481
  -5,190
  -5,604
  -6,028
  -6,468
  -6,925
  -7,400
  -7,894
  -8,408
  -8,942
  -9,499
  -9,887
  -10,491
  -11,120
  -11,776
  -12,461
  -13,176
  -13,923
  -14,703
  -15,518
  -16,371
  -17,263
  -18,196
  -19,173
  -20,196
  -21,267
  -22,390
  -23,565
  -24,797
  -26,089
  -27,443
Prev. year cash balance distribution, $m
 
  797
  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
 
  -3,714
  -4,884
  -5,287
  -5,705
  -6,140
  -6,592
  -7,062
  -7,550
  -8,058
  -8,586
  -9,136
  -9,708
  -10,305
  -10,926
  -11,575
  -12,251
  -12,957
  -13,694
  -14,465
  -15,270
  -16,111
  -16,992
  -17,913
  -18,877
  -19,886
  -20,943
  -22,050
  -23,210
  -24,426
  -25,699
Discount rate, %
 
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.42
  17.24
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
  28.09
  29.49
  30.97
  32.52
PV of cash for distribution, $m
 
  -3,442
  -4,164
  -4,115
  -4,020
  -3,882
  -3,704
  -3,491
  -3,249
  -2,983
  -2,702
  -2,412
  -2,122
  -1,837
  -1,564
  -1,309
  -1,075
  -867
  -685
  -530
  -401
  -296
  -214
  -150
  -103
  -68
  -44
  -28
  -17
  -10
  -6
Current shareholders' claim on cash, %
  100
  58.0
  33.7
  19.6
  11.5
  6.7
  3.9
  2.3
  1.4
  0.8
  0.5
  0.3
  0.2
  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
  0.0
  0.0
  0.0

Vistra Energy Corp, formerly TCEH Corp. is a holding company. The Company is an energy company, which is focused on energy and power generation markets through operation as a generator and retailer of electricity in Texas market. Its portfolio of businesses consists primarily of Luminant and TXU Energy. It is engaged in electricity market activities in Texas, including electricity generation, wholesale energy sales and purchases, commodity risk management activities and retail electricity operations. Luminant generates and sells electricity and related products from its fleet of generation facilities totaling approximately 17,000 megawatts of generation in Texas, including 2,300 megawatts fueled by nuclear power, 8,000 megawatts fueled by coal and 6,000 megawatts fueled by natural gas. The Company is a purchaser of wind-generated electricity. TXU Energy sells retail electricity and services to approximately 1.7 million residential and business customers in Texas.


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FINANCIAL RATIOS  of  Vistra Energy (VST)

Valuation Ratios
P/E Ratio 0.4
Price to Sales 1.6
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow -53.1
Price to Free Cash Flow -19.2
Growth Rates
Sales Growth Rate -3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.5%
Cap. Spend. - 3 Yr. Gr. Rate -10%
Financial Strength
Quick Ratio 18
Current Ratio 0.5
LT Debt to Equity 69.4%
Total Debt to Equity 70.1%
Interest Coverage 21
Management Effectiveness
Return On Assets 154.6%
Ret/ On Assets - 3 Yr. Avg. 28.4%
Return On Total Capital 211.6%
Ret/ On T. Cap. - 3 Yr. Avg. 29.1%
Return On Equity -278.6%
Return On Equity - 3 Yr. Avg. -62.5%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 450%
EBITDA Margin - 3 Yr. Avg. 96.9%
Operating Margin 435.4%
Oper. Margin - 3 Yr. Avg. 80.7%
Pre-Tax Margin 413.5%
Pre-Tax Margin - 3 Yr. Avg. 55.7%
Net Profit Margin 439.3%
Net Profit Margin - 3 Yr. Avg. 82.7%
Effective Tax Rate -6.3%
Eff/ Tax Rate - 3 Yr. Avg. 12.2%
Payout Ratio 0%

VST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the VST stock intrinsic value calculation we used $5164 million for the last fiscal year's total revenue generated by Vistra Energy. The default revenue input number comes from 2016 income statement of Vistra Energy. 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 VST stock valuation model: a) initial revenue growth rate of 8.5% 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 7.9%, whose default value for VST is calculated based on our internal credit rating of Vistra Energy, 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 Vistra Energy.
    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 VST stock the variable cost ratio is equal to 179.6%.

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 VST 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 5.7% for Vistra Energy.

Corporate tax rate of 27% is the nominal tax rate for Vistra Energy. 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 VST 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 VST are equal to 172%.

Life of production assets of 12.1 years is the average useful life of capital assets used in Vistra Energy 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 VST is equal to 3.3%. 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 - $6597 million for Vistra Energy - 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 418.668 million for Vistra Energy 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 Vistra Energy at the current share price and the inputted number of shares is $8.2 billion.

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COMPANY NEWS

▶ Luminant cuts about 600 jobs as it closes Texas coal plants   [Nov-20-17 12:57PM  Associated Press]
▶ PRESS DIGEST -Wall Street Journal - Oct 26   [Oct-26-17 12:26AM  Reuters]
▶ [$$] Vistra Energy, Energy Future Agree to Arbitrate Tax Fight   [Oct-13-17 01:54PM  The Wall Street Journal]
▶ Luminant to Close Two Texas Power Plants   [08:30AM  PR Newswire]
▶ [$$] Energy Future Wrangles With Vistra Over Tax Breaks   [Oct-11-17 03:54PM  The Wall Street Journal]
▶ Power Producers Should Cheer Coal's Closing Time   [Oct-09-17 12:39PM  Bloomberg]
▶ What Does Howard Marks See in Vistra Energy?   [Aug-24-17 05:04PM  GuruFocus.com]
▶ Company News for May 22, 2017   [May-22-17 10:31AM  Zacks]
▶ Dallas power co. reportedly interested in Dynegy takeover   [09:45AM  American City Business Journals]
Financial statements of VST
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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