Intrinsic value of DTE Energy - DTE

Previous Close

$112.24

  Intrinsic Value

$639.09

stock screener

  Rating & Target

str. buy

+469%

  Value-price divergence*

+263%

Previous close

$112.24

 
Intrinsic value

$639.09

 
Up/down potential

+469%

 
Rating

str. buy

 
Value-price divergence*

+263%

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

We calculate the intrinsic value of DTE 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 20.1

 

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, %
  2.83
  26.20
  24.08
  22.17
  20.45
  18.91
  17.52
  16.27
  15.14
  14.13
  13.21
  12.39
  11.65
  10.99
  10.39
  9.85
  9.36
  8.93
  8.54
  8.18
  7.86
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
  6.23
  6.11
  6.00
Revenue, $m
  0
  13,415
  16,645
  20,336
  24,496
  29,128
  34,230
  39,798
  45,824
  52,297
  59,207
  66,544
  74,298
  82,462
  91,029
  99,995
  109,359
  119,123
  129,291
  139,870
  150,869
  162,301
  174,181
  186,526
  199,357
  212,696
  226,568
  241,000
  256,021
  271,663
  287,958
Variable operating expenses, $m
 
  3,924
  4,814
  5,831
  6,977
  8,253
  9,659
  11,193
  12,853
  14,636
  16,540
  18,333
  20,469
  22,718
  25,078
  27,548
  30,128
  32,818
  35,619
  38,533
  41,564
  44,713
  47,986
  51,387
  54,922
  58,597
  62,418
  66,394
  70,532
  74,842
  79,331
Fixed operating expenses, $m
 
  6,335
  6,493
  6,655
  6,822
  6,992
  7,167
  7,346
  7,530
  7,718
  7,911
  8,109
  8,311
  8,519
  8,732
  8,950
  9,174
  9,404
  9,639
  9,880
  10,127
  10,380
  10,639
  10,905
  11,178
  11,457
  11,744
  12,037
  12,338
  12,647
  12,963
Total operating expenses, $m
  9,185
  10,259
  11,307
  12,486
  13,799
  15,245
  16,826
  18,539
  20,383
  22,354
  24,451
  26,442
  28,780
  31,237
  33,810
  36,498
  39,302
  42,222
  45,258
  48,413
  51,691
  55,093
  58,625
  62,292
  66,100
  70,054
  74,162
  78,431
  82,870
  87,489
  92,294
Operating income, $m
  1,445
  3,156
  5,338
  7,850
  10,697
  13,882
  17,405
  21,260
  25,441
  29,943
  34,756
  40,103
  45,518
  51,225
  57,219
  63,496
  70,057
  76,902
  84,033
  91,457
  99,179
  107,208
  115,556
  124,234
  133,257
  142,642
  152,406
  162,568
  173,150
  184,174
  195,664
EBITDA, $m
  2,421
  4,293
  6,693
  9,455
  12,584
  16,083
  19,950
  24,182
  28,771
  33,711
  38,992
  44,607
  50,547
  56,806
  63,380
  70,264
  77,459
  84,964
  92,784
  100,924
  109,390
  118,193
  127,345
  136,859
  146,750
  157,038
  167,741
  178,880
  190,478
  202,561
  215,154
Interest expense (income), $m
  448
  491
  742
  1,035
  1,369
  1,746
  2,165
  2,627
  3,132
  3,677
  4,264
  4,889
  5,554
  6,256
  6,995
  7,771
  8,583
  9,431
  10,315
  11,236
  12,194
  13,190
  14,225
  15,301
  16,419
  17,581
  18,789
  20,045
  21,352
  22,712
  24,129
Earnings before tax, $m
  1,105
  2,665
  4,596
  6,815
  9,328
  12,137
  15,239
  18,632
  22,310
  26,266
  30,493
  35,214
  39,964
  44,969
  50,223
  55,725
  61,474
  67,471
  73,718
  80,221
  86,985
  94,018
  101,330
  108,933
  116,838
  125,061
  133,617
  142,523
  151,798
  161,462
  171,535
Tax expense, $m
  271
  720
  1,241
  1,840
  2,519
  3,277
  4,115
  5,031
  6,024
  7,092
  8,233
  9,508
  10,790
  12,142
  13,560
  15,046
  16,598
  18,217
  19,904
  21,660
  23,486
  25,385
  27,359
  29,412
  31,546
  33,766
  36,077
  38,481
  40,985
  43,595
  46,315
Net income, $m
  868
  1,946
  3,355
  4,975
  6,809
  8,860
  11,125
  13,601
  16,286
  19,174
  22,260
  25,706
  29,174
  32,827
  36,663
  40,679
  44,876
  49,254
  53,814
  58,561
  63,499
  68,633
  73,971
  79,521
  85,292
  91,295
  97,540
  104,042
  110,813
  117,867
  125,221

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  92
  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
  32,041
  40,285
  49,986
  61,069
  73,561
  87,471
  102,794
  119,515
  137,609
  157,048
  177,799
  199,832
  223,118
  247,633
  273,359
  300,285
  328,406
  357,728
  388,262
  420,029
  453,060
  487,390
  523,065
  560,139
  598,670
  638,728
  680,385
  723,724
  768,832
  815,804
  864,740
Adjusted assets (=assets-cash), $m
  31,949
  40,285
  49,986
  61,069
  73,561
  87,471
  102,794
  119,515
  137,609
  157,048
  177,799
  199,832
  223,118
  247,633
  273,359
  300,285
  328,406
  357,728
  388,262
  420,029
  453,060
  487,390
  523,065
  560,139
  598,670
  638,728
  680,385
  723,724
  768,832
  815,804
  864,740
Revenue / Adjusted assets
  0.000
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
  0.333
Average production assets, $m
  5,896
  7,445
  9,238
  11,286
  13,595
  16,166
  18,998
  22,088
  25,432
  29,025
  32,860
  36,932
  41,236
  45,766
  50,521
  55,497
  60,694
  66,113
  71,757
  77,628
  83,732
  90,077
  96,670
  103,522
  110,643
  118,046
  125,745
  133,755
  142,092
  150,773
  159,817
Working capital, $m
  325
  939
  1,165
  1,424
  1,715
  2,039
  2,396
  2,786
  3,208
  3,661
  4,145
  4,658
  5,201
  5,772
  6,372
  7,000
  7,655
  8,339
  9,050
  9,791
  10,561
  11,361
  12,193
  13,057
  13,955
  14,889
  15,860
  16,870
  17,921
  19,016
  20,157
Total debt, $m
  11,782
  17,677
  24,642
  32,600
  41,569
  51,556
  62,558
  74,564
  87,556
  101,512
  116,412
  132,231
  148,951
  166,553
  185,024
  204,357
  224,548
  245,600
  267,524
  290,333
  314,049
  338,698
  364,313
  390,932
  418,597
  447,358
  477,268
  508,386
  540,773
  574,499
  609,635
Total liabilities, $m
  23,030
  28,925
  35,890
  43,848
  52,817
  62,804
  73,806
  85,812
  98,804
  112,760
  127,660
  143,479
  160,199
  177,801
  196,272
  215,605
  235,796
  256,848
  278,772
  301,581
  325,297
  349,946
  375,561
  402,180
  429,845
  458,606
  488,516
  519,634
  552,021
  585,747
  620,883
Total equity, $m
  9,011
  11,361
  14,096
  17,221
  20,744
  24,667
  28,988
  33,703
  38,806
  44,288
  50,139
  56,353
  62,919
  69,833
  77,087
  84,680
  92,611
  100,879
  109,490
  118,448
  127,763
  137,444
  147,504
  157,959
  168,825
  180,121
  191,869
  204,090
  216,811
  230,057
  243,857
Total liabilities and equity, $m
  32,041
  40,286
  49,986
  61,069
  73,561
  87,471
  102,794
  119,515
  137,610
  157,048
  177,799
  199,832
  223,118
  247,634
  273,359
  300,285
  328,407
  357,727
  388,262
  420,029
  453,060
  487,390
  523,065
  560,139
  598,670
  638,727
  680,385
  723,724
  768,832
  815,804
  864,740
Debt-to-equity ratio
  1.308
  1.560
  1.750
  1.890
  2.000
  2.090
  2.160
  2.210
  2.260
  2.290
  2.320
  2.350
  2.370
  2.390
  2.400
  2.410
  2.420
  2.430
  2.440
  2.450
  2.460
  2.460
  2.470
  2.470
  2.480
  2.480
  2.490
  2.490
  2.490
  2.500
  2.500
Adjusted equity ratio
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282
  0.282

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  868
  1,946
  3,355
  4,975
  6,809
  8,860
  11,125
  13,601
  16,286
  19,174
  22,260
  25,706
  29,174
  32,827
  36,663
  40,679
  44,876
  49,254
  53,814
  58,561
  63,499
  68,633
  73,971
  79,521
  85,292
  91,295
  97,540
  104,042
  110,813
  117,867
  125,221
Depreciation, amort., depletion, $m
  976
  1,137
  1,355
  1,605
  1,887
  2,200
  2,545
  2,922
  3,330
  3,768
  4,236
  4,504
  5,029
  5,581
  6,161
  6,768
  7,402
  8,063
  8,751
  9,467
  10,211
  10,985
  11,789
  12,625
  13,493
  14,396
  15,335
  16,312
  17,328
  18,387
  19,490
Funds from operations, $m
  1,990
  3,082
  4,710
  6,580
  8,696
  11,060
  13,670
  16,524
  19,616
  22,942
  26,496
  30,210
  34,203
  38,409
  42,824
  47,447
  52,278
  57,316
  62,565
  68,028
  73,710
  79,618
  85,760
  92,146
  98,785
  105,691
  112,875
  120,353
  128,141
  136,254
  144,711
Change in working capital, $m
  -94
  195
  226
  258
  291
  324
  357
  390
  422
  453
  484
  514
  543
  571
  600
  628
  656
  683
  712
  741
  770
  800
  832
  864
  898
  934
  971
  1,010
  1,051
  1,095
  1,141
Cash from operations, $m
  2,084
  2,887
  4,484
  6,321
  8,405
  10,736
  13,313
  16,134
  19,194
  22,489
  26,012
  29,696
  33,660
  37,837
  42,224
  46,820
  51,622
  56,633
  61,853
  67,287
  72,940
  78,818
  84,929
  91,281
  97,887
  104,757
  111,904
  119,343
  127,089
  135,159
  143,570
Maintenance CAPEX, $m
  0
  -719
  -908
  -1,127
  -1,376
  -1,658
  -1,971
  -2,317
  -2,694
  -3,101
  -3,540
  -4,007
  -4,504
  -5,029
  -5,581
  -6,161
  -6,768
  -7,402
  -8,063
  -8,751
  -9,467
  -10,211
  -10,985
  -11,789
  -12,625
  -13,493
  -14,396
  -15,335
  -16,312
  -17,328
  -18,387
New CAPEX, $m
  -2,045
  -1,550
  -1,793
  -2,048
  -2,309
  -2,571
  -2,832
  -3,090
  -3,344
  -3,593
  -3,835
  -4,072
  -4,304
  -4,531
  -4,755
  -4,976
  -5,197
  -5,419
  -5,643
  -5,871
  -6,104
  -6,345
  -6,593
  -6,852
  -7,121
  -7,403
  -7,699
  -8,010
  -8,337
  -8,681
  -9,044
Cash from investing activities, $m
  -3,388
  -2,269
  -2,701
  -3,175
  -3,685
  -4,229
  -4,803
  -5,407
  -6,038
  -6,694
  -7,375
  -8,079
  -8,808
  -9,560
  -10,336
  -11,137
  -11,965
  -12,821
  -13,706
  -14,622
  -15,571
  -16,556
  -17,578
  -18,641
  -19,746
  -20,896
  -22,095
  -23,345
  -24,649
  -26,009
  -27,431
Free cash flow, $m
  -1,304
  618
  1,783
  3,147
  4,720
  6,507
  8,509
  10,727
  13,157
  15,795
  18,637
  21,617
  24,852
  28,278
  31,889
  35,682
  39,657
  43,812
  48,148
  52,665
  57,369
  62,262
  67,350
  72,641
  78,141
  83,860
  89,809
  95,999
  102,441
  109,150
  116,139
Issuance/(repayment) of debt, $m
  1,169
  5,987
  6,965
  7,958
  8,969
  9,987
  11,002
  12,006
  12,992
  13,957
  14,899
  15,820
  16,719
  17,602
  18,471
  19,333
  20,191
  21,053
  21,923
  22,809
  23,716
  24,649
  25,615
  26,619
  27,666
  28,761
  29,910
  31,117
  32,388
  33,726
  35,136
Issuance/(repurchase) of shares, $m
  621
  404
  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 from financing (excl. dividends), $m  
  1,890
  6,391
  6,965
  7,958
  8,969
  9,987
  11,002
  12,006
  12,992
  13,957
  14,899
  15,820
  16,719
  17,602
  18,471
  19,333
  20,191
  21,053
  21,923
  22,809
  23,716
  24,649
  25,615
  26,619
  27,666
  28,761
  29,910
  31,117
  32,388
  33,726
  35,136
Total cash flow (excl. dividends), $m
  586
  7,009
  8,748
  11,104
  13,689
  16,494
  19,512
  22,733
  26,148
  29,752
  33,537
  37,436
  41,572
  45,879
  50,360
  55,015
  59,848
  64,865
  70,071
  75,475
  81,085
  86,911
  92,965
  99,259
  105,807
  112,622
  119,719
  127,116
  134,829
  142,875
  151,275
Retained Cash Flow (-), $m
  -239
  -2,350
  -2,736
  -3,125
  -3,523
  -3,923
  -4,321
  -4,715
  -5,103
  -5,482
  -5,852
  -6,213
  -6,567
  -6,913
  -7,255
  -7,593
  -7,930
  -8,269
  -8,611
  -8,958
  -9,315
  -9,681
  -10,060
  -10,455
  -10,866
  -11,296
  -11,747
  -12,222
  -12,720
  -13,246
  -13,800
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
 
  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
 
  4,660
  6,013
  7,979
  10,166
  12,572
  15,190
  18,017
  21,046
  24,270
  27,685
  31,223
  35,005
  38,966
  43,105
  47,422
  51,918
  56,596
  61,460
  66,516
  71,770
  77,230
  82,905
  88,805
  94,941
  101,325
  107,972
  114,894
  122,108
  129,629
  137,475
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
 
  4,291
  5,058
  6,080
  6,955
  7,647
  8,132
  8,396
  8,439
  8,271
  7,913
  7,382
  6,745
  6,023
  5,257
  4,484
  3,735
  3,038
  2,411
  1,865
  1,406
  1,031
  735
  509
  342
  223
  140
  85
  50
  28
  15
Current shareholders' claim on cash, %
  100
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0
  98.0

DTE Energy Company is an energy company. Its segments include Electric, which consists of DTE Electric Company, which is engaged in the generation, purchase, distribution and sale of electricity to residential, commercial and industrial customers in southeastern Michigan; Gas, which consists of DTE Gas Company, which is engaged in the purchase, storage, transportation, distribution and sale of natural gas to residential, commercial and industrial customers throughout Michigan; Gas Storage and Pipelines, which consists of natural gas pipeline, gathering and storage businesses; Power and Industrial Projects, which consists of projects that deliver energy and utility-type products and services to industrial, commercial and institutional customers, and sell electricity from renewable energy projects; Energy Trading, which consists of energy marketing and trading operations, and Corporate and Other, which includes various holding company activities and holds certain non-utility debt.

FINANCIAL RATIOS  of  DTE Energy (DTE)

Valuation Ratios
P/E Ratio 23.2
Price to Sales 1.9
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 9.7
Price to Free Cash Flow 516.4
Growth Rates
Sales Growth Rate 2.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1.2%
Cap. Spend. - 3 Yr. Gr. Rate 1.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.1
LT Debt to Equity 125.1%
Total Debt to Equity 130.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 4%
Ret/ On Assets - 3 Yr. Avg. 4%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 4.6%
Return On Equity 9.8%
Return On Equity - 3 Yr. Avg. 9.8%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 23.8%
EBITDA Margin - 3 Yr. Avg. 22.8%
Operating Margin 13.6%
Oper. Margin - 3 Yr. Avg. 12.8%
Pre-Tax Margin 10.4%
Pre-Tax Margin - 3 Yr. Avg. 10%
Net Profit Margin 8.2%
Net Profit Margin - 3 Yr. Avg. 7.5%
Effective Tax Rate 24.5%
Eff/ Tax Rate - 3 Yr. Avg. 25.8%
Payout Ratio 61.2%

DTE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DTE stock intrinsic value calculation we used $10630 million for the last fiscal year's total revenue generated by DTE Energy. The default revenue input number comes from 2016 income statement of DTE 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 DTE stock valuation model: a) initial revenue growth rate of 26.2% 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 8.6%, whose default value for DTE is calculated based on our internal credit rating of DTE 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 DTE 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 DTE stock the variable cost ratio is equal to 29.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6180 million in the base year in the intrinsic value calculation for DTE 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 4.2% for DTE Energy.

Corporate tax rate of 27% is the nominal tax rate for DTE 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 DTE 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 DTE are equal to 55.5%.

Life of production assets of 8.2 years is the average useful life of capital assets used in DTE 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 DTE is equal to 7%. 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 - $9011 million for DTE 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 179.013 million for DTE 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 DTE Energy at the current share price and the inputted number of shares is $20.1 billion.

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COMPANY NEWS

▶ Where CMS Energys Dividend Growth Stands among Peers   [Oct-20-17 09:09AM  Market Realist]
▶ ETFs with exposure to DTE Energy Co. : October 17, 2017   [Oct-17-17 09:40AM  Capital Cube]
▶ Stocks Showing Improved Relative Strength: DTE Energy   [03:00AM  Investor's Business Daily]
▶ ETFs with exposure to DTE Energy Co. : August 11, 2017   [Aug-11-17 05:19PM  Capital Cube]
▶ The $50 Billion Backlog Of U.S. Energy Projects   [Aug-08-17 04:00PM  Oilprice.com]
▶ DTE seeks permission for nearly $1B natural gas power plant   [Aug-01-17 10:38AM  Associated Press]
▶ DTE Energy beats 2Q profit forecasts   [Jul-26-17 09:56PM  Associated Press]
▶ ETFs with exposure to DTE Energy Co. : July 14, 2017   [Jul-14-17 02:01PM  Capital Cube]
▶ DTE Energy Co. Value Analysis (NYSE:DTE) : June 30, 2017   [Jun-30-17 03:48PM  Capital Cube]
▶ 5 Companies Reach Yearly Highs   [Jun-06-17 01:47PM  GuruFocus.com]
▶ U.S. Pipeline Cos. Ready to Blow Past Regulatory Roadblock   [Jun-02-17 11:19AM  TheStreet.com]
▶ DTE Biomass Acquires Renewable Natural Gas Facilities   [May-25-17 10:28AM  PR Newswire]
▶ ETFs with exposure to DTE Energy Co. : May 8, 2017   [May-08-17 04:25PM  Capital Cube]
▶ DTE Energy declares dividend   [10:27AM  PR Newswire]
▶ DTE Energy recognized as national safety leader   [May-03-17 09:00AM  PR Newswire]
▶ ETFs with exposure to DTE Energy Co. : April 28, 2017   [Apr-28-17 03:51PM  Capital Cube]
▶ DTE Energy beats 1Q profit forecasts   [07:22AM  Associated Press]
Financial statements of DTE
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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