Intrinsic value of Algonquin Power&Utilities - AQN

Previous Close

$10.18

  Intrinsic Value

$7.20

stock screener

  Rating & Target

sell

-29%

Previous close

$10.18

 
Intrinsic value

$7.20

 
Up/down potential

-29%

 
Rating

sell

We calculate the intrinsic value of AQN 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 2017), $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 2.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  2,486
  3,841
  5,745
  8,336
  11,760
  16,168
  21,702
  28,496
  36,667
  46,314
  57,511
  70,313
  84,751
  100,837
  118,566
  137,921
  158,874
  181,390
  205,433
  230,968
  257,961
  286,383
  316,213
  347,438
  380,053
  414,061
  449,479
  486,328
  524,643
  564,466
Variable operating expenses, $m
  1,887
  2,862
  4,231
  6,095
  8,558
  11,728
  15,709
  20,596
  26,474
  33,412
  41,368
  50,576
  60,961
  72,531
  85,284
  99,206
  114,277
  130,472
  147,767
  166,134
  185,549
  205,993
  227,450
  249,910
  273,369
  297,832
  323,307
  349,812
  377,372
  406,017
Fixed operating expenses, $m
  12
  13
  13
  13
  13
  14
  14
  14
  15
  15
  15
  16
  16
  16
  17
  17
  17
  18
  18
  19
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
Total operating expenses, $m
  1,899
  2,875
  4,244
  6,108
  8,571
  11,742
  15,723
  20,610
  26,489
  33,427
  41,383
  50,592
  60,977
  72,547
  85,301
  99,223
  114,294
  130,490
  147,785
  166,153
  185,568
  206,012
  227,470
  249,930
  273,390
  297,853
  323,329
  349,834
  377,395
  406,040
Operating income, $m
  587
  967
  1,501
  2,228
  3,189
  4,426
  5,979
  7,886
  10,179
  12,887
  16,129
  19,722
  23,774
  28,289
  33,266
  38,698
  44,579
  50,900
  57,648
  64,816
  72,392
  80,370
  88,743
  97,508
  106,663
  116,209
  126,150
  136,493
  147,248
  158,426
EBITDA, $m
  1,575
  2,440
  3,655
  5,309
  7,496
  10,310
  13,843
  18,181
  23,398
  29,557
  36,706
  44,880
  54,098
  64,369
  75,689
  88,047
  101,424
  115,801
  131,152
  147,456
  164,691
  182,838
  201,884
  221,821
  242,645
  264,360
  286,973
  310,501
  334,965
  360,392
Interest expense (income), $m
  0
  168
  348
  611
  981
  1,484
  2,149
  3,005
  4,079
  5,398
  6,985
  8,858
  11,032
  13,518
  16,321
  19,445
  22,887
  26,646
  30,714
  35,086
  39,754
  44,713
  49,954
  55,472
  61,265
  67,328
  73,660
  80,264
  87,141
  94,296
  101,735
Earnings before tax, $m
  419
  619
  890
  1,247
  1,705
  2,277
  2,974
  3,806
  4,781
  5,902
  7,270
  8,689
  10,256
  11,968
  13,821
  15,811
  17,934
  20,186
  22,562
  25,061
  27,680
  30,417
  33,271
  36,243
  39,335
  42,548
  45,886
  49,353
  52,952
  56,691
Tax expense, $m
  113
  167
  240
  337
  460
  615
  803
  1,028
  1,291
  1,593
  1,963
  2,346
  2,769
  3,231
  3,732
  4,269
  4,842
  5,450
  6,092
  6,767
  7,474
  8,212
  8,983
  9,786
  10,620
  11,488
  12,389
  13,325
  14,297
  15,307
Net income, $m
  306
  452
  649
  910
  1,245
  1,662
  2,171
  2,779
  3,490
  4,308
  5,307
  6,343
  7,487
  8,737
  10,089
  11,542
  13,092
  14,736
  16,471
  18,295
  20,206
  22,204
  24,288
  26,458
  28,715
  31,060
  33,497
  36,027
  38,655
  41,384

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  13,226
  20,433
  30,558
  44,338
  62,555
  85,999
  115,436
  151,574
  195,039
  246,350
  305,911
  374,006
  450,803
  536,367
  630,672
  733,623
  845,072
  964,839
  1,092,731
  1,228,554
  1,372,131
  1,523,313
  1,681,985
  1,848,075
  2,021,557
  2,202,454
  2,390,843
  2,586,850
  2,790,653
  3,002,480
Adjusted assets (=assets-cash), $m
  13,226
  20,433
  30,558
  44,338
  62,555
  85,999
  115,436
  151,574
  195,039
  246,350
  305,911
  374,006
  450,803
  536,367
  630,672
  733,623
  845,072
  964,839
  1,092,731
  1,228,554
  1,372,131
  1,523,313
  1,681,985
  1,848,075
  2,021,557
  2,202,454
  2,390,843
  2,586,850
  2,790,653
  3,002,480
Revenue / Adjusted assets
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
  0.188
Average production assets, $m
  8,896
  13,745
  20,555
  29,825
  42,079
  57,848
  77,649
  101,959
  131,196
  165,711
  205,776
  251,580
  303,239
  360,795
  424,230
  493,482
  568,449
  649,013
  735,041
  826,404
  922,983
  1,024,678
  1,131,411
  1,243,133
  1,359,828
  1,481,512
  1,608,234
  1,740,081
  1,877,172
  2,019,660
Working capital, $m
  -47
  -73
  -109
  -158
  -223
  -307
  -412
  -541
  -697
  -880
  -1,093
  -1,336
  -1,610
  -1,916
  -2,253
  -2,621
  -3,019
  -3,446
  -3,903
  -4,388
  -4,901
  -5,441
  -6,008
  -6,601
  -7,221
  -7,867
  -8,540
  -9,240
  -9,968
  -10,725
Total debt, $m
  6,448
  11,320
  18,164
  27,480
  39,794
  55,642
  75,542
  99,971
  129,354
  164,040
  204,303
  250,335
  302,250
  360,091
  423,841
  493,436
  568,776
  649,738
  736,193
  828,009
  925,068
  1,027,267
  1,134,529
  1,246,806
  1,364,079
  1,486,366
  1,613,717
  1,746,218
  1,883,989
  2,027,183
Total liabilities, $m
  8,940
  13,813
  20,657
  29,973
  42,287
  58,135
  78,034
  102,464
  131,847
  166,533
  206,796
  252,828
  304,743
  362,584
  426,334
  495,929
  571,269
  652,231
  738,686
  830,502
  927,561
  1,029,760
  1,137,022
  1,249,299
  1,366,572
  1,488,859
  1,616,210
  1,748,711
  1,886,481
  2,029,676
Total equity, $m
  4,285
  6,620
  9,901
  14,366
  20,268
  27,864
  37,401
  49,110
  63,193
  79,818
  99,115
  121,178
  146,060
  173,783
  204,338
  237,694
  273,803
  312,608
  354,045
  398,051
  444,571
  493,554
  544,963
  598,776
  654,984
  713,595
  774,633
  838,140
  904,172
  972,803
Total liabilities and equity, $m
  13,225
  20,433
  30,558
  44,339
  62,555
  85,999
  115,435
  151,574
  195,040
  246,351
  305,911
  374,006
  450,803
  536,367
  630,672
  733,623
  845,072
  964,839
  1,092,731
  1,228,553
  1,372,132
  1,523,314
  1,681,985
  1,848,075
  2,021,556
  2,202,454
  2,390,843
  2,586,851
  2,790,653
  3,002,479
Debt-to-equity ratio
  1.500
  1.710
  1.830
  1.910
  1.960
  2.000
  2.020
  2.040
  2.050
  2.060
  2.060
  2.070
  2.070
  2.070
  2.070
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
  2.080
Adjusted equity ratio
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324
  0.324

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  306
  452
  649
  910
  1,245
  1,662
  2,171
  2,779
  3,490
  4,308
  5,307
  6,343
  7,487
  8,737
  10,089
  11,542
  13,092
  14,736
  16,471
  18,295
  20,206
  22,204
  24,288
  26,458
  28,715
  31,060
  33,497
  36,027
  38,655
  41,384
Depreciation, amort., depletion, $m
  989
  1,473
  2,155
  3,081
  4,307
  5,884
  7,864
  10,295
  13,219
  16,670
  20,578
  25,158
  30,324
  36,079
  42,423
  49,348
  56,845
  64,901
  73,504
  82,640
  92,298
  102,468
  113,141
  124,313
  135,983
  148,151
  160,823
  174,008
  187,717
  201,966
Funds from operations, $m
  1,295
  1,925
  2,804
  3,992
  5,551
  7,546
  10,035
  13,074
  16,709
  20,978
  25,885
  31,501
  37,811
  44,816
  52,512
  60,890
  69,937
  79,637
  89,975
  100,935
  112,505
  124,672
  137,429
  150,771
  164,697
  179,211
  194,320
  210,036
  226,372
  243,350
Change in working capital, $m
  -18
  -26
  -36
  -49
  -65
  -84
  -105
  -129
  -155
  -183
  -213
  -243
  -274
  -306
  -337
  -368
  -398
  -428
  -457
  -485
  -513
  -540
  -567
  -593
  -620
  -646
  -673
  -700
  -728
  -757
Cash from operations, $m
  1,312
  1,951
  2,840
  4,041
  5,617
  7,630
  10,140
  13,203
  16,864
  21,162
  26,098
  31,745
  38,085
  45,122
  52,849
  61,258
  70,335
  80,065
  90,432
  101,420
  113,017
  125,212
  137,996
  151,364
  165,317
  179,858
  194,993
  210,736
  227,100
  244,107
Maintenance CAPEX, $m
  -556
  -890
  -1,374
  -2,056
  -2,982
  -4,208
  -5,785
  -7,765
  -10,196
  -13,120
  -16,571
  -20,578
  -25,158
  -30,324
  -36,079
  -42,423
  -49,348
  -56,845
  -64,901
  -73,504
  -82,640
  -92,298
  -102,468
  -113,141
  -124,313
  -135,983
  -148,151
  -160,823
  -174,008
  -187,717
New CAPEX, $m
  -3,337
  -4,849
  -6,811
  -9,269
  -12,254
  -15,770
  -19,801
  -24,309
  -29,237
  -34,515
  -40,064
  -45,805
  -51,659
  -57,556
  -63,436
  -69,251
  -74,968
  -80,563
  -86,028
  -91,363
  -96,579
  -101,695
  -106,733
  -111,722
  -116,695
  -121,683
  -126,723
  -131,847
  -137,091
  -142,488
Cash from investing activities, $m
  -3,893
  -5,739
  -8,185
  -11,325
  -15,236
  -19,978
  -25,586
  -32,074
  -39,433
  -47,635
  -56,635
  -66,383
  -76,817
  -87,880
  -99,515
  -111,674
  -124,316
  -137,408
  -150,929
  -164,867
  -179,219
  -193,993
  -209,201
  -224,863
  -241,008
  -257,666
  -274,874
  -292,670
  -311,099
  -330,205
Free cash flow, $m
  -2,581
  -3,787
  -5,345
  -7,284
  -9,620
  -12,348
  -15,446
  -18,871
  -22,569
  -26,473
  -30,538
  -34,638
  -38,731
  -42,758
  -46,666
  -50,417
  -53,981
  -57,344
  -60,498
  -63,447
  -66,202
  -68,781
  -71,205
  -73,499
  -75,691
  -77,809
  -79,880
  -81,935
  -83,998
  -86,098
Issuance/(repayment) of debt, $m
  3,344
  4,873
  6,844
  9,315
  12,314
  15,848
  19,899
  24,430
  29,382
  34,686
  40,263
  46,032
  51,915
  57,841
  63,750
  69,595
  75,340
  80,963
  86,455
  91,816
  97,058
  102,199
  107,262
  112,277
  117,274
  122,287
  127,351
  132,501
  137,771
  143,195
Issuance/(repurchase) of shares, $m
  1,301
  1,884
  2,631
  3,555
  4,658
  5,934
  7,366
  8,930
  10,593
  12,317
  13,990
  15,719
  17,395
  18,986
  20,466
  21,814
  23,018
  24,069
  24,966
  25,712
  26,313
  26,779
  27,122
  27,355
  27,493
  27,551
  27,541
  27,479
  27,377
  27,247
Cash from financing (excl. dividends), $m  
  4,645
  6,757
  9,475
  12,870
  16,972
  21,782
  27,265
  33,360
  39,975
  47,003
  54,253
  61,751
  69,310
  76,827
  84,216
  91,409
  98,358
  105,032
  111,421
  117,528
  123,371
  128,978
  134,384
  139,632
  144,767
  149,838
  154,892
  159,980
  165,148
  170,442
Total cash flow (excl. dividends), $m
  2,064
  2,969
  4,130
  5,586
  7,352
  9,434
  11,820
  14,488
  17,406
  20,530
  23,716
  27,114
  30,579
  34,069
  37,550
  40,992
  44,376
  47,688
  50,923
  54,081
  57,169
  60,197
  63,179
  66,133
  69,076
  72,029
  75,012
  78,045
  81,149
  84,344
Retained Cash Flow (-), $m
  -1,607
  -2,335
  -3,280
  -4,465
  -5,902
  -7,596
  -9,538
  -11,709
  -14,083
  -16,625
  -19,298
  -22,063
  -24,882
  -27,723
  -30,555
  -33,356
  -36,110
  -38,805
  -41,437
  -44,007
  -46,519
  -48,983
  -51,410
  -53,813
  -56,208
  -58,611
  -61,038
  -63,506
  -66,032
  -68,632
Prev. year cash balance distribution, $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 flow adjustment, $m
  8
  12
  19
  29
  42
  59
  81
  109
  142
  183
  232
  288
  352
  424
  504
  593
  690
  794
  907
  1,027
  1,155
  1,290
  1,432
  1,581
  1,737
  1,900
  2,070
  2,247
  2,432
  2,623
Cash available for distribution, $m
  457
  634
  850
  1,121
  1,450
  1,838
  2,282
  2,780
  3,323
  3,905
  4,418
  5,051
  5,696
  6,347
  6,995
  7,636
  8,267
  8,884
  9,486
  10,075
  10,650
  11,214
  11,769
  12,320
  12,868
  13,418
  13,974
  14,539
  15,117
  15,712
Discount rate, %
  8.60
  9.03
  9.48
  9.96
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.42
  27.74
  29.12
  30.58
  32.11
  33.71
  35.40
PV of cash for distribution, $m
  421
  533
  648
  767
  882
  984
  1,064
  1,115
  1,132
  1,116
  1,044
  973
  881
  774
  661
  549
  444
  348
  266
  197
  142
  99
  67
  44
  28
  17
  10
  6
  3
  2
Current shareholders' claim on cash, %
  68.2
  48.0
  34.7
  25.8
  19.7
  15.4
  12.3
  10.0
  8.3
  7.0
  6.0
  5.2
  4.5
  4.0
  3.6
  3.3
  3.0
  2.8
  2.6
  2.4
  2.3
  2.1
  2.0
  1.9
  1.9
  1.8
  1.7
  1.7
  1.6
  1.6

Algonquin Power & Utilities Corp., through its subsidiaries, engages in the generation, distribution, and transmission utility assets in North America. The company generates and sells electrical energy through a portfolio of non-regulated renewable and clean energy power generation facilities. It owns or has interests in hydroelectric facilities with a combined generating capacity of approximately 120 megawatts (MW); wind powered generating facilities with a combined generating capacity of 700 MW; and solar energy facilities with a generating capacity of 30 MW, as well as interests in thermal energy facilities with an installed generating capacity of approximately 335 MW. The company also owns and operates electricity, natural gas, water distribution, and wastewater collection utility systems to approximately 489,000 connections. It serves approximately 93,000 electric connections; 292,000 natural gas connections; and 104,000 regulated water distribution and wastewater collection connections in the states of California, New Hampshire, Georgia, Illinois, Iowa, Massachusetts, Missouri, Arizona, Arkansas, and Texas. The company was founded in 1996 and is headquartered in Oakville, Canada.

FINANCIAL RATIOS  of  Algonquin Power&Utilities (AQN)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AQN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AQN stock intrinsic value calculation we used $1554 million for the last fiscal year's total revenue generated by Algonquin Power&Utilities. The default revenue input number comes from 2017 income statement of Algonquin Power&Utilities. 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 AQN 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 8.6%, whose default value for AQN is calculated based on our internal credit rating of Algonquin Power&Utilities, 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 Algonquin Power&Utilities.
    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 AQN stock the variable cost ratio is equal to 78.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12 million in the base year in the intrinsic value calculation for AQN 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 5.4% for Algonquin Power&Utilities.

Corporate tax rate of 27% is the nominal tax rate for Algonquin Power&Utilities. 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 AQN stock is equal to 0.5%.

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 AQN are equal to 357.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Algonquin Power&Utilities 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 AQN is equal to -1.9%. 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 - $2678 million for Algonquin Power&Utilities - 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 274 million for Algonquin Power&Utilities 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 Algonquin Power&Utilities at the current share price and the inputted number of shares is $2.8 billion.

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▶ Algonquin Power & Utilities: 1Q Earnings Snapshot   [May-10-18 06:09PM  Associated Press]
▶ Algonquin Power & Utilities posts 4Q profit   [Mar-01-18 07:31PM  Associated Press]
▶ Bear of the Day: El Paso Energy (EE)   [Jan-30-18 07:00AM  Zacks]
▶ Algonquin Power & Utilities posts 3Q profit   [05:12AM  Associated Press]
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