Intrinsic value of Cameco Corporation - CCJ

Previous Close

$11.81

  Intrinsic Value

$2.37

stock screener

  Rating & Target

str. sell

-80%

Previous close

$11.81

 
Intrinsic value

$2.37

 
Up/down potential

-80%

 
Rating

str. sell

We calculate the intrinsic value of CCJ 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 0001), $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 4.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  1,728
  1,768
  1,813
  1,864
  1,921
  1,983
  2,050
  2,123
  2,202
  2,286
  2,377
  2,473
  2,576
  2,685
  2,801
  2,924
  3,054
  3,191
  3,336
  3,490
  3,651
  3,822
  4,002
  4,191
  4,391
  4,601
  4,822
  5,055
  5,299
  5,557
Variable operating expenses, $m
  1,800
  1,842
  1,889
  1,942
  2,000
  2,065
  2,135
  2,211
  2,293
  2,381
  2,469
  2,569
  2,676
  2,789
  2,910
  3,037
  3,172
  3,315
  3,466
  3,625
  3,793
  3,970
  4,157
  4,354
  4,561
  4,779
  5,009
  5,250
  5,505
  5,772
Fixed operating expenses, $m
  32
  32
  33
  34
  35
  35
  36
  37
  38
  39
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  53
  55
  56
  57
  58
  60
Total operating expenses, $m
  1,832
  1,874
  1,922
  1,976
  2,035
  2,100
  2,171
  2,248
  2,331
  2,420
  2,508
  2,609
  2,717
  2,831
  2,953
  3,081
  3,217
  3,361
  3,513
  3,673
  3,842
  4,020
  4,208
  4,406
  4,614
  4,834
  5,065
  5,307
  5,563
  5,832
Operating income, $m
  -104
  -106
  -109
  -112
  -114
  -118
  -121
  -125
  -129
  -133
  -131
  -136
  -141
  -146
  -152
  -157
  -163
  -170
  -176
  -183
  -190
  -198
  -206
  -215
  -224
  -233
  -243
  -253
  -264
  -275
EBITDA, $m
  162
  166
  171
  176
  181
  187
  194
  202
  210
  218
  228
  238
  248
  260
  272
  285
  298
  313
  328
  344
  361
  379
  399
  419
  440
  462
  486
  511
  537
  565
Interest expense (income), $m
  52
  89
  93
  97
  102
  107
  113
  119
  126
  133
  142
  150
  160
  170
  180
  191
  203
  216
  229
  243
  258
  274
  291
  308
  327
  346
  367
  388
  411
  435
  460
Earnings before tax, $m
  -193
  -199
  -206
  -213
  -221
  -230
  -240
  -251
  -262
  -274
  -282
  -296
  -310
  -326
  -343
  -360
  -379
  -399
  -420
  -441
  -465
  -489
  -515
  -542
  -570
  -600
  -631
  -664
  -699
  -735
Tax expense, $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
Net income, $m
  -193
  -199
  -206
  -213
  -221
  -230
  -240
  -251
  -262
  -274
  -282
  -296
  -310
  -326
  -343
  -360
  -379
  -399
  -420
  -441
  -465
  -489
  -515
  -542
  -570
  -600
  -631
  -664
  -699
  -735

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
  6,063
  6,202
  6,362
  6,541
  6,739
  6,956
  7,193
  7,450
  7,726
  8,023
  8,340
  8,678
  9,039
  9,422
  9,828
  10,259
  10,715
  11,197
  11,706
  12,244
  12,812
  13,410
  14,041
  14,706
  15,406
  16,143
  16,919
  17,735
  18,594
  19,498
Adjusted assets (=assets-cash), $m
  6,063
  6,202
  6,362
  6,541
  6,739
  6,956
  7,193
  7,450
  7,726
  8,023
  8,340
  8,678
  9,039
  9,422
  9,828
  10,259
  10,715
  11,197
  11,706
  12,244
  12,812
  13,410
  14,041
  14,706
  15,406
  16,143
  16,919
  17,735
  18,594
  19,498
Revenue / Adjusted assets
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
Average production assets, $m
  3,499
  3,579
  3,671
  3,775
  3,889
  4,015
  4,151
  4,299
  4,459
  4,630
  4,813
  5,008
  5,216
  5,437
  5,672
  5,921
  6,184
  6,462
  6,756
  7,066
  7,394
  7,739
  8,103
  8,487
  8,891
  9,316
  9,764
  10,235
  10,731
  11,253
Working capital, $m
  864
  884
  907
  932
  960
  991
  1,025
  1,062
  1,101
  1,143
  1,188
  1,237
  1,288
  1,343
  1,400
  1,462
  1,527
  1,596
  1,668
  1,745
  1,826
  1,911
  2,001
  2,096
  2,195
  2,300
  2,411
  2,527
  2,650
  2,778
Total debt, $m
  1,221
  1,275
  1,336
  1,405
  1,482
  1,566
  1,657
  1,756
  1,863
  1,977
  2,100
  2,230
  2,370
  2,517
  2,674
  2,840
  3,016
  3,203
  3,399
  3,607
  3,826
  4,057
  4,300
  4,557
  4,827
  5,112
  5,411
  5,726
  6,058
  6,407
Total liabilities, $m
  2,340
  2,394
  2,456
  2,525
  2,601
  2,685
  2,777
  2,876
  2,982
  3,097
  3,219
  3,350
  3,489
  3,637
  3,794
  3,960
  4,136
  4,322
  4,519
  4,726
  4,945
  5,176
  5,420
  5,676
  5,947
  6,231
  6,531
  6,846
  7,177
  7,526
Total equity, $m
  3,723
  3,808
  3,906
  4,016
  4,138
  4,271
  4,417
  4,574
  4,744
  4,926
  5,121
  5,328
  5,550
  5,785
  6,034
  6,299
  6,579
  6,875
  7,188
  7,518
  7,866
  8,234
  8,621
  9,029
  9,459
  9,912
  10,388
  10,889
  11,417
  11,971
Total liabilities and equity, $m
  6,063
  6,202
  6,362
  6,541
  6,739
  6,956
  7,194
  7,450
  7,726
  8,023
  8,340
  8,678
  9,039
  9,422
  9,828
  10,259
  10,715
  11,197
  11,707
  12,244
  12,811
  13,410
  14,041
  14,705
  15,406
  16,143
  16,919
  17,735
  18,594
  19,497
Debt-to-equity ratio
  0.330
  0.330
  0.340
  0.350
  0.360
  0.370
  0.380
  0.380
  0.390
  0.400
  0.410
  0.420
  0.430
  0.440
  0.440
  0.450
  0.460
  0.470
  0.470
  0.480
  0.490
  0.490
  0.500
  0.500
  0.510
  0.520
  0.520
  0.530
  0.530
  0.540
Adjusted equity ratio
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614
  0.614

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -193
  -199
  -206
  -213
  -221
  -230
  -240
  -251
  -262
  -274
  -282
  -296
  -310
  -326
  -343
  -360
  -379
  -399
  -420
  -441
  -465
  -489
  -515
  -542
  -570
  -600
  -631
  -664
  -699
  -735
Depreciation, amort., depletion, $m
  267
  273
  279
  287
  296
  305
  315
  326
  338
  351
  359
  374
  389
  406
  423
  442
  461
  482
  504
  527
  552
  578
  605
  633
  664
  695
  729
  764
  801
  840
Funds from operations, $m
  73
  73
  74
  74
  74
  75
  75
  76
  76
  77
  77
  78
  79
  80
  80
  81
  82
  83
  85
  86
  87
  89
  90
  92
  94
  96
  98
  100
  102
  104
Change in working capital, $m
  17
  20
  23
  26
  28
  31
  34
  37
  39
  42
  45
  48
  51
  55
  58
  61
  65
  69
  73
  77
  81
  85
  90
  95
  100
  105
  111
  116
  122
  129
Cash from operations, $m
  56
  54
  51
  49
  46
  44
  42
  39
  37
  35
  32
  30
  27
  25
  23
  20
  17
  15
  12
  9
  6
  3
  0
  -3
  -6
  -10
  -13
  -17
  -20
  -24
Maintenance CAPEX, $m
  -256
  -261
  -267
  -274
  -282
  -290
  -300
  -310
  -321
  -333
  -346
  -359
  -374
  -389
  -406
  -423
  -442
  -461
  -482
  -504
  -527
  -552
  -578
  -605
  -633
  -664
  -695
  -729
  -764
  -801
New CAPEX, $m
  -69
  -80
  -92
  -103
  -114
  -126
  -137
  -148
  -159
  -171
  -183
  -195
  -208
  -221
  -235
  -249
  -263
  -278
  -294
  -310
  -328
  -345
  -364
  -384
  -404
  -425
  -448
  -471
  -496
  -521
Cash from investing activities, $m
  -325
  -341
  -359
  -377
  -396
  -416
  -437
  -458
  -480
  -504
  -529
  -554
  -582
  -610
  -641
  -672
  -705
  -739
  -776
  -814
  -855
  -897
  -942
  -989
  -1,037
  -1,089
  -1,143
  -1,200
  -1,260
  -1,322
Free cash flow, $m
  -269
  -288
  -308
  -329
  -350
  -372
  -395
  -419
  -443
  -469
  -496
  -525
  -554
  -585
  -618
  -652
  -688
  -725
  -764
  -805
  -849
  -894
  -941
  -991
  -1,044
  -1,098
  -1,156
  -1,217
  -1,280
  -1,347
Issuance/(repayment) of debt, $m
  47
  54
  62
  69
  77
  84
  91
  99
  107
  114
  122
  131
  139
  148
  157
  166
  176
  186
  197
  208
  219
  231
  244
  257
  270
  285
  299
  315
  332
  349
Issuance/(repurchase) of shares, $m
  269
  285
  304
  323
  343
  364
  386
  408
  432
  456
  477
  504
  532
  561
  592
  625
  659
  695
  732
  772
  813
  856
  902
  950
  1,000
  1,052
  1,108
  1,165
  1,226
  1,290
Cash from financing (excl. dividends), $m  
  316
  339
  366
  392
  420
  448
  477
  507
  539
  570
  599
  635
  671
  709
  749
  791
  835
  881
  929
  980
  1,032
  1,087
  1,146
  1,207
  1,270
  1,337
  1,407
  1,480
  1,558
  1,639
Total cash flow (excl. dividends), $m
  47
  51
  57
  63
  70
  76
  82
  88
  95
  101
  103
  109
  117
  124
  131
  139
  147
  156
  165
  174
  184
  194
  204
  215
  226
  238
  251
  264
  278
  292
Retained Cash Flow (-), $m
  -269
  -285
  -304
  -323
  -343
  -364
  -386
  -408
  -432
  -456
  -477
  -504
  -532
  -561
  -592
  -625
  -659
  -695
  -732
  -772
  -813
  -856
  -902
  -950
  -1,000
  -1,052
  -1,108
  -1,165
  -1,226
  -1,290
Prev. year cash balance distribution, $m
  170
  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
  -51
  -234
  -247
  -260
  -273
  -288
  -303
  -320
  -337
  -355
  -374
  -394
  -415
  -437
  -461
  -486
  -512
  -539
  -568
  -598
  -629
  -663
  -698
  -735
  -773
  -814
  -857
  -901
  -948
  -998
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -49
  -214
  -215
  -214
  -212
  -209
  -205
  -200
  -193
  -186
  -178
  -168
  -158
  -147
  -135
  -123
  -111
  -99
  -87
  -76
  -65
  -55
  -46
  -37
  -30
  -24
  -18
  -14
  -10
  -8
Current shareholders' claim on cash, %
  94.3
  88.8
  83.4
  78.1
  73.0
  68.1
  63.4
  59.0
  54.8
  50.8
  47.1
  43.6
  40.3
  37.2
  34.4
  31.7
  29.2
  26.9
  24.7
  22.7
  20.9
  19.2
  17.6
  16.2
  14.8
  13.6
  12.5
  11.4
  10.4
  9.6

Cameco Corporation (Cameco) is a uranium producer. The Company is primarily engaged in the exploration for and the development, mining, refining, conversion, fabrication and trading of uranium for sale as fuel for generating electricity in nuclear power reactors in Canada and other countries. The Company operates through three segments: uranium, fuel services and NUKEM. The uranium segment involves the exploration for, mining, milling, purchase and sale of uranium concentrate. The fuel services segment involves the refining, conversion and fabrication of uranium concentrate, and the purchase and sale of conversion services. The NUKEM segment acts as a market intermediary between uranium producers and nuclear-electric utilities. Cameco conducts a portion of its exploration, development, mining and milling activities through joint operations located around the world. Cameco's Canadian uranium joint operation interests are McArthur River, Key Lake and Cigar Lake.

FINANCIAL RATIOS  of  Cameco Corporation (CCJ)

Valuation Ratios
P/E Ratio -101.6
Price to Sales 2.6
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 20.2
Price to Free Cash Flow 66.8
Growth Rates
Sales Growth Rate -11.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -39.2%
Cap. Spend. - 3 Yr. Gr. Rate -19.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 28.4%
Total Debt to Equity 28.4%
Interest Coverage -1
Management Effectiveness
Return On Assets -0.4%
Ret/ On Assets - 3 Yr. Avg. 0.5%
Return On Total Capital -0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 0.9%
Return On Equity -1.2%
Return On Equity - 3 Yr. Avg. 1.2%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 19.1%
Gross Margin - 3 Yr. Avg. 23.7%
EBITDA Margin 11.8%
EBITDA Margin - 3 Yr. Avg. 11.7%
Operating Margin -5.8%
Oper. Margin - 3 Yr. Avg. 1.6%
Pre-Tax Margin -6.3%
Pre-Tax Margin - 3 Yr. Avg. -4.7%
Net Profit Margin -2.6%
Net Profit Margin - 3 Yr. Avg. 2.5%
Effective Tax Rate 61.4%
Eff/ Tax Rate - 3 Yr. Avg. 129.6%
Payout Ratio -254.3%

CCJ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CCJ stock intrinsic value calculation we used $1694 million for the last fiscal year's total revenue generated by Cameco Corporation. The default revenue input number comes from 0001 income statement of Cameco Corporation. 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 CCJ 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 4.3%, whose default value for CCJ is calculated based on our internal credit rating of Cameco Corporation, 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 Cameco Corporation.
    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 CCJ stock the variable cost ratio is equal to 104.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $31 million in the base year in the intrinsic value calculation for CCJ 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 7.6% for Cameco Corporation.

Corporate tax rate of 27% is the nominal tax rate for Cameco Corporation. 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 CCJ 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 CCJ are equal to 202.5%.

Life of production assets of 13.4 years is the average useful life of capital assets used in Cameco Corporation 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 CCJ is equal to 50%. 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 - $3817.19402985 million for Cameco Corporation - 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 396.135 million for Cameco Corporation 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 Cameco Corporation at the current share price and the inputted number of shares is $4.7 billion.

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