Intrinsic value of Vistra Energy - VST

Previous Close

$19.15

  Intrinsic Value

$2.74

stock screener

  Rating & Target

str. sell

-86%

Previous close

$19.15

 
Intrinsic value

$2.74

 
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

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 8.2

 

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
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  0
  5,267
  5,388
  5,527
  5,682
  5,855
  6,044
  6,250
  6,472
  6,712
  6,970
  7,246
  7,540
  7,853
  8,185
  8,539
  8,913
  9,309
  9,728
  10,170
  10,638
  11,131
  11,651
  12,199
  12,776
  13,384
  14,025
  14,699
  15,408
  16,154
  16,939
Variable operating expenses, $m
 
  9,456
  9,669
  9,913
  10,186
  10,489
  10,822
  11,184
  11,576
  11,998
  12,451
  12,745
  13,263
  13,813
  14,399
  15,020
  15,678
  16,375
  17,112
  17,890
  18,712
  19,580
  20,494
  21,458
  22,474
  23,544
  24,671
  25,856
  27,104
  28,417
  29,798
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
  9,456
  9,669
  9,913
  10,186
  10,489
  10,822
  11,184
  11,576
  11,998
  12,451
  12,745
  13,263
  13,813
  14,399
  15,020
  15,678
  16,375
  17,112
  17,890
  18,712
  19,580
  20,494
  21,458
  22,474
  23,544
  24,671
  25,856
  27,104
  28,417
  29,798
Operating income, $m
  22,483
  -4,189
  -4,281
  -4,386
  -4,504
  -4,635
  -4,778
  -4,935
  -5,104
  -5,286
  -5,481
  -5,500
  -5,723
  -5,961
  -6,213
  -6,481
  -6,765
  -7,066
  -7,384
  -7,720
  -8,075
  -8,449
  -8,844
  -9,260
  -9,698
  -10,160
  -10,646
  -11,158
  -11,696
  -12,262
  -12,858
EBITDA, $m
  23,300
  -3,250
  -3,324
  -3,410
  -3,506
  -3,612
  -3,728
  -3,855
  -3,993
  -4,141
  -4,300
  -4,470
  -4,651
  -4,845
  -5,050
  -5,268
  -5,498
  -5,743
  -6,001
  -6,274
  -6,563
  -6,867
  -7,188
  -7,526
  -7,882
  -8,257
  -8,652
  -9,068
  -9,506
  -9,966
  -10,450
Interest expense (income), $m
  1,071
  261
  270
  281
  294
  309
  325
  343
  362
  383
  406
  430
  456
  483
  513
  544
  577
  612
  650
  689
  730
  774
  821
  870
  921
  975
  1,032
  1,093
  1,156
  1,223
  1,293
Earnings before tax, $m
  21,351
  -4,450
  -4,551
  -4,667
  -4,798
  -4,944
  -5,103
  -5,277
  -5,466
  -5,669
  -5,887
  -5,930
  -6,179
  -6,444
  -6,726
  -7,025
  -7,343
  -7,678
  -8,034
  -8,409
  -8,805
  -9,223
  -9,664
  -10,129
  -10,619
  -11,135
  -11,678
  -12,250
  -12,852
  -13,485
  -14,151
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
  -4,450
  -4,551
  -4,667
  -4,798
  -4,944
  -5,103
  -5,277
  -5,466
  -5,669
  -5,887
  -5,930
  -6,179
  -6,444
  -6,726
  -7,025
  -7,343
  -7,678
  -8,034
  -8,409
  -8,805
  -9,223
  -9,664
  -10,129
  -10,619
  -11,135
  -11,678
  -12,250
  -12,852
  -13,485
  -14,151

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
  14,591
  14,926
  15,310
  15,741
  16,218
  16,741
  17,312
  17,929
  18,594
  19,307
  20,071
  20,885
  21,753
  22,674
  23,652
  24,689
  25,786
  26,946
  28,172
  29,467
  30,833
  32,273
  33,792
  35,391
  37,076
  38,850
  40,717
  42,682
  44,749
  46,923
Adjusted assets (=assets-cash), $m
  14,324
  14,591
  14,926
  15,310
  15,741
  16,218
  16,741
  17,312
  17,929
  18,594
  19,307
  20,071
  20,885
  21,753
  22,674
  23,652
  24,689
  25,786
  26,946
  28,172
  29,467
  30,833
  32,273
  33,792
  35,391
  37,076
  38,850
  40,717
  42,682
  44,749
  46,923
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
  9,060
  9,268
  9,506
  9,774
  10,070
  10,395
  10,749
  11,132
  11,545
  11,988
  12,462
  12,968
  13,507
  14,079
  14,686
  15,330
  16,011
  16,732
  17,493
  18,297
  19,145
  20,039
  20,982
  21,975
  23,021
  24,123
  25,282
  26,502
  27,786
  29,136
Working capital, $m
  969
  174
  178
  182
  188
  193
  199
  206
  214
  222
  230
  239
  249
  259
  270
  282
  294
  307
  321
  336
  351
  367
  384
  403
  422
  442
  463
  485
  508
  533
  559
Total debt, $m
  4,623
  4,735
  4,934
  5,162
  5,419
  5,703
  6,014
  6,353
  6,721
  7,116
  7,541
  7,995
  8,480
  8,996
  9,544
  10,126
  10,743
  11,396
  12,086
  12,816
  13,586
  14,399
  15,256
  16,159
  17,111
  18,113
  19,169
  20,280
  21,449
  22,679
  23,972
Total liabilities, $m
  8,570
  8,682
  8,881
  9,109
  9,366
  9,650
  9,961
  10,300
  10,668
  11,063
  11,488
  11,942
  12,427
  12,943
  13,491
  14,073
  14,690
  15,343
  16,033
  16,763
  17,533
  18,346
  19,203
  20,106
  21,058
  22,060
  23,116
  24,227
  25,396
  26,626
  27,919
Total equity, $m
  6,597
  5,909
  6,045
  6,201
  6,375
  6,568
  6,780
  7,011
  7,261
  7,530
  7,819
  8,129
  8,459
  8,810
  9,183
  9,579
  9,999
  10,443
  10,913
  11,410
  11,934
  12,487
  13,071
  13,686
  14,333
  15,016
  15,734
  16,491
  17,286
  18,123
  19,004
Total liabilities and equity, $m
  15,167
  14,591
  14,926
  15,310
  15,741
  16,218
  16,741
  17,311
  17,929
  18,593
  19,307
  20,071
  20,886
  21,753
  22,674
  23,652
  24,689
  25,786
  26,946
  28,173
  29,467
  30,833
  32,274
  33,792
  35,391
  37,076
  38,850
  40,718
  42,682
  44,749
  46,923
Debt-to-equity ratio
  0.701
  0.800
  0.820
  0.830
  0.850
  0.870
  0.890
  0.910
  0.930
  0.940
  0.960
  0.980
  1.000
  1.020
  1.040
  1.060
  1.070
  1.090
  1.110
  1.120
  1.140
  1.150
  1.170
  1.180
  1.190
  1.210
  1.220
  1.230
  1.240
  1.250
  1.260
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
  -4,450
  -4,551
  -4,667
  -4,798
  -4,944
  -5,103
  -5,277
  -5,466
  -5,669
  -5,887
  -5,930
  -6,179
  -6,444
  -6,726
  -7,025
  -7,343
  -7,678
  -8,034
  -8,409
  -8,805
  -9,223
  -9,664
  -10,129
  -10,619
  -11,135
  -11,678
  -12,250
  -12,852
  -13,485
  -14,151
Depreciation, amort., depletion, $m
  817
  939
  957
  976
  998
  1,023
  1,050
  1,079
  1,111
  1,145
  1,181
  1,030
  1,072
  1,116
  1,164
  1,214
  1,267
  1,323
  1,383
  1,446
  1,512
  1,582
  1,656
  1,734
  1,816
  1,903
  1,994
  2,089
  2,190
  2,296
  2,408
Funds from operations, $m
  -504
  -3,510
  -3,594
  -3,691
  -3,800
  -3,921
  -4,054
  -4,198
  -4,355
  -4,524
  -4,706
  -4,900
  -5,107
  -5,328
  -5,563
  -5,812
  -6,076
  -6,355
  -6,651
  -6,963
  -7,293
  -7,641
  -8,008
  -8,395
  -8,803
  -9,233
  -9,685
  -10,161
  -10,662
  -11,189
  -11,743
Change in working capital, $m
  -347
  3
  4
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  12
  12
  13
  14
  15
  15
  16
  17
  18
  19
  20
  21
  22
  23
  25
  26
Cash from operations, $m
  -157
  -3,514
  -3,598
  -3,695
  -3,805
  -3,926
  -4,060
  -4,205
  -4,362
  -4,532
  -4,714
  -4,909
  -5,117
  -5,338
  -5,574
  -5,823
  -6,088
  -6,368
  -6,665
  -6,978
  -7,308
  -7,657
  -8,025
  -8,413
  -8,822
  -9,253
  -9,706
  -10,183
  -10,685
  -11,213
  -11,769
Maintenance CAPEX, $m
  0
  -734
  -749
  -766
  -786
  -808
  -832
  -859
  -888
  -920
  -954
  -991
  -1,030
  -1,072
  -1,116
  -1,164
  -1,214
  -1,267
  -1,323
  -1,383
  -1,446
  -1,512
  -1,582
  -1,656
  -1,734
  -1,816
  -1,903
  -1,994
  -2,089
  -2,190
  -2,296
New CAPEX, $m
  -278
  -179
  -208
  -238
  -267
  -296
  -325
  -354
  -383
  -413
  -443
  -474
  -506
  -539
  -572
  -607
  -644
  -681
  -720
  -761
  -804
  -848
  -894
  -943
  -993
  -1,046
  -1,101
  -1,159
  -1,220
  -1,283
  -1,350
Cash from investing activities, $m
  -1,465
  -913
  -957
  -1,004
  -1,053
  -1,104
  -1,157
  -1,213
  -1,271
  -1,333
  -1,397
  -1,465
  -1,536
  -1,611
  -1,688
  -1,771
  -1,858
  -1,948
  -2,043
  -2,144
  -2,250
  -2,360
  -2,476
  -2,599
  -2,727
  -2,862
  -3,004
  -3,153
  -3,309
  -3,473
  -3,646
Free cash flow, $m
  -1,622
  -4,426
  -4,555
  -4,700
  -4,858
  -5,030
  -5,217
  -5,418
  -5,634
  -5,865
  -6,111
  -6,374
  -6,653
  -6,948
  -7,262
  -7,594
  -7,945
  -8,316
  -8,708
  -9,122
  -9,558
  -10,018
  -10,502
  -11,012
  -11,549
  -12,115
  -12,710
  -13,336
  -13,994
  -14,687
  -15,415
Issuance/(repayment) of debt, $m
  3,025
  158
  200
  228
  256
  284
  312
  339
  367
  396
  425
  454
  485
  516
  548
  582
  617
  653
  690
  729
  770
  813
  857
  903
  952
  1,002
  1,056
  1,111
  1,169
  1,230
  1,294
Issuance/(repurchase) of shares, $m
  69
  4,559
  4,687
  4,823
  4,973
  5,137
  5,315
  5,508
  5,716
  5,938
  6,176
  6,239
  6,509
  6,795
  7,099
  7,422
  7,762
  8,123
  8,503
  8,905
  9,329
  9,777
  10,248
  10,744
  11,267
  11,817
  12,397
  13,006
  13,648
  14,322
  15,031
Cash from financing (excl. dividends), $m  
  1,065
  4,717
  4,887
  5,051
  5,229
  5,421
  5,627
  5,847
  6,083
  6,334
  6,601
  6,693
  6,994
  7,311
  7,647
  8,004
  8,379
  8,776
  9,193
  9,634
  10,099
  10,590
  11,105
  11,647
  12,219
  12,819
  13,453
  14,117
  14,817
  15,552
  16,325
Total cash flow (excl. dividends), $m
  -557
  290
  331
  351
  371
  390
  410
  429
  449
  469
  489
  319
  341
  363
  386
  409
  434
  459
  486
  513
  542
  572
  603
  635
  669
  705
  742
  781
  822
  865
  910
Retained Cash Flow (-), $m
  -29,481
  -4,559
  -4,687
  -4,823
  -4,973
  -5,137
  -5,315
  -5,508
  -5,716
  -5,938
  -6,176
  -6,239
  -6,509
  -6,795
  -7,099
  -7,422
  -7,762
  -8,123
  -8,503
  -8,905
  -9,329
  -9,777
  -10,248
  -10,744
  -11,267
  -11,817
  -12,397
  -13,006
  -13,648
  -14,322
  -15,031
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
 
  -3,472
  -4,356
  -4,471
  -4,602
  -4,747
  -4,906
  -5,079
  -5,267
  -5,469
  -5,687
  -5,919
  -6,168
  -6,432
  -6,714
  -7,012
  -7,329
  -7,664
  -8,018
  -8,392
  -8,788
  -9,205
  -9,645
  -10,109
  -10,598
  -11,112
  -11,654
  -12,225
  -12,825
  -13,457
  -14,122
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
 
  -3,218
  -3,714
  -3,480
  -3,243
  -3,001
  -2,757
  -2,511
  -2,266
  -2,025
  -1,790
  -1,563
  -1,348
  -1,146
  -961
  -793
  -643
  -513
  -401
  -307
  -231
  -169
  -121
  -85
  -58
  -38
  -25
  -15
  -9
  -5
  -3
Current shareholders' claim on cash, %
  100
  61.2
  37.4
  22.8
  13.8
  8.4
  5.1
  3.1
  1.9
  1.1
  0.7
  0.4
  0.2
  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

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.

FINANCIAL RATIOS  of  Vistra Energy (VST)

Valuation Ratios
P/E Ratio 0.4
Price to Sales 1.6
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow -52.2
Price to Free Cash Flow -18.8
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 2% 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 427.746 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

▶ 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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