Intrinsic value of ENI S.p.A. - E

Previous Close

$33.02

  Intrinsic Value

$29.38

stock screener

  Rating & Target

hold

-11%

Previous close

$33.02

 
Intrinsic value

$29.38

 
Up/down potential

-11%

 
Rating

hold

We calculate the intrinsic value of E 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 60.0

 

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, %
  42.80
  39.02
  35.62
  32.56
  29.80
  27.32
  25.09
  23.08
  21.27
  19.64
  18.18
  16.86
  15.68
  14.61
  13.65
  12.78
  12.00
  11.30
  10.67
  10.11
  9.60
  9.14
  8.72
  8.35
  8.02
  7.71
  7.44
  7.20
  6.98
  6.78
Revenue, $m
  121,674
  169,151
  229,400
  304,084
  394,702
  502,537
  628,616
  773,698
  938,277
  1,122,596
  1,326,685
  1,550,391
  1,793,428
  2,055,416
  2,335,927
  2,634,522
  2,950,781
  3,284,336
  3,634,892
  4,002,242
  4,386,281
  4,787,014
  5,204,558
  5,639,148
  6,091,136
  6,560,985
  7,049,272
  7,556,683
  8,084,008
  8,632,138
Variable operating expenses, $m
  86,482
  120,090
  162,738
  215,606
  279,753
  356,087
  445,335
  548,036
  664,538
  795,014
  939,133
  1,097,490
  1,269,530
  1,454,987
  1,653,555
  1,864,924
  2,088,797
  2,324,914
  2,573,065
  2,833,105
  3,104,958
  3,388,628
  3,684,199
  3,991,837
  4,311,790
  4,644,386
  4,990,035
  5,349,220
  5,722,503
  6,110,513
Fixed operating expenses, $m
  15,567
  15,910
  16,260
  16,617
  16,983
  17,357
  17,738
  18,129
  18,527
  18,935
  19,352
  19,777
  20,212
  20,657
  21,112
  21,576
  22,051
  22,536
  23,032
  23,538
  24,056
  24,585
  25,126
  25,679
  26,244
  26,821
  27,411
  28,014
  28,631
  29,261
Total operating expenses, $m
  102,049
  136,000
  178,998
  232,223
  296,736
  373,444
  463,073
  566,165
  683,065
  813,949
  958,485
  1,117,267
  1,289,742
  1,475,644
  1,674,667
  1,886,500
  2,110,848
  2,347,450
  2,596,097
  2,856,643
  3,129,014
  3,413,213
  3,709,325
  4,017,516
  4,338,034
  4,671,207
  5,017,446
  5,377,234
  5,751,134
  6,139,774
Operating income, $m
  19,625
  33,152
  50,402
  71,861
  97,967
  129,094
  165,542
  207,533
  255,211
  308,647
  368,200
  433,124
  503,685
  579,772
  661,261
  748,022
  839,933
  936,886
  1,038,795
  1,145,599
  1,257,267
  1,373,800
  1,495,232
  1,621,632
  1,753,102
  1,889,778
  2,031,826
  2,179,448
  2,332,874
  2,492,365
EBITDA, $m
  32,462
  50,860
  74,292
  103,415
  138,820
  181,012
  230,398
  287,277
  351,842
  424,192
  504,336
  592,215
  687,715
  790,686
  900,959
  1,018,360
  1,142,723
  1,273,904
  1,411,785
  1,556,284
  1,707,359
  1,865,013
  2,029,291
  2,200,286
  2,378,136
  2,563,024
  2,755,178
  2,954,867
  3,162,404
  3,378,140
Interest expense (income), $m
  823
  7,178
  15,487
  26,307
  40,038
  57,059
  77,711
  102,287
  131,020
  164,085
  201,593
  243,600
  290,112
  341,096
  396,484
  456,192
  520,122
  588,172
  660,249
  736,267
  816,160
  899,880
  987,403
  1,078,731
  1,173,891
  1,272,935
  1,375,945
  1,483,025
  1,594,307
  1,709,947
  1,830,126
Earnings before tax, $m
  12,448
  17,665
  24,095
  31,823
  40,908
  51,383
  63,255
  76,513
  91,126
  107,054
  124,600
  143,011
  162,589
  183,288
  205,069
  227,900
  251,761
  276,638
  302,528
  329,440
  357,387
  386,397
  416,501
  447,741
  480,167
  513,833
  548,802
  585,142
  622,927
  662,239
Tax expense, $m
  3,361
  4,770
  6,506
  8,592
  11,045
  13,873
  17,079
  20,659
  24,604
  28,905
  33,642
  38,613
  43,899
  49,488
  55,369
  61,533
  67,975
  74,692
  81,683
  88,949
  96,495
  104,327
  112,455
  120,890
  129,645
  138,735
  148,176
  157,988
  168,190
  178,804
Net income, $m
  9,087
  12,895
  17,589
  23,231
  29,863
  37,510
  46,177
  55,854
  66,522
  78,150
  90,958
  104,398
  118,690
  133,800
  149,700
  166,367
  183,785
  201,946
  220,846
  240,491
  260,893
  282,070
  304,046
  326,851
  350,522
  375,098
  400,625
  427,153
  454,737
  483,434

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
  196,884
  273,708
  371,197
  492,045
  638,677
  813,167
  1,017,178
  1,251,939
  1,518,247
  1,816,499
  2,146,739
  2,508,723
  2,901,986
  3,325,916
  3,779,818
  4,262,980
  4,774,726
  5,314,460
  5,881,703
  6,476,120
  7,097,543
  7,745,977
  8,421,615
  9,124,836
  9,856,207
  10,616,481
  11,406,590
  12,227,643
  13,080,919
  13,967,861
Adjusted assets (=assets-cash), $m
  196,884
  273,708
  371,197
  492,045
  638,677
  813,167
  1,017,178
  1,251,939
  1,518,247
  1,816,499
  2,146,739
  2,508,723
  2,901,986
  3,325,916
  3,779,818
  4,262,980
  4,774,726
  5,314,460
  5,881,703
  6,476,120
  7,097,543
  7,745,977
  8,421,615
  9,124,836
  9,856,207
  10,616,481
  11,406,590
  12,227,643
  13,080,919
  13,967,861
Revenue / Adjusted assets
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
  0.618
Average production assets, $m
  109,872
  152,744
  207,148
  274,588
  356,416
  453,791
  567,640
  698,649
  847,264
  1,013,704
  1,197,996
  1,400,003
  1,619,465
  1,856,041
  2,109,342
  2,378,973
  2,664,555
  2,965,755
  3,282,308
  3,614,025
  3,960,812
  4,322,673
  4,699,716
  5,092,151
  5,500,296
  5,924,569
  6,365,493
  6,823,685
  7,299,859
  7,794,821
Working capital, $m
  4,502
  6,259
  8,488
  11,251
  14,604
  18,594
  23,259
  28,627
  34,716
  41,536
  49,087
  57,364
  66,357
  76,050
  86,429
  97,477
  109,179
  121,520
  134,491
  148,083
  162,292
  177,120
  192,569
  208,648
  225,372
  242,756
  260,823
  279,597
  299,108
  319,389
Total debt, $m
  63,996
  108,707
  165,446
  235,779
  321,119
  422,672
  541,407
  678,038
  833,029
  1,006,612
  1,198,811
  1,409,486
  1,638,365
  1,885,092
  2,149,263
  2,430,464
  2,728,300
  3,042,425
  3,372,560
  3,718,511
  4,080,179
  4,457,568
  4,850,789
  5,260,064
  5,685,722
  6,128,201
  6,588,045
  7,065,898
  7,562,504
  8,078,705
Total liabilities, $m
  114,586
  159,298
  216,037
  286,370
  371,710
  473,263
  591,998
  728,628
  883,620
  1,057,202
  1,249,402
  1,460,077
  1,688,956
  1,935,683
  2,199,854
  2,481,054
  2,778,890
  3,093,016
  3,423,151
  3,769,102
  4,130,770
  4,508,159
  4,901,380
  5,310,654
  5,736,312
  6,178,792
  6,638,635
  7,116,488
  7,613,095
  8,129,295
Total equity, $m
  82,297
  114,410
  155,160
  205,675
  266,967
  339,904
  425,180
  523,310
  634,627
  759,296
  897,337
  1,048,646
  1,213,030
  1,390,233
  1,579,964
  1,781,926
  1,995,835
  2,221,444
  2,458,552
  2,707,018
  2,966,773
  3,237,818
  3,520,235
  3,814,181
  4,119,894
  4,437,689
  4,767,955
  5,111,155
  5,467,824
  5,838,566
Total liabilities and equity, $m
  196,883
  273,708
  371,197
  492,045
  638,677
  813,167
  1,017,178
  1,251,938
  1,518,247
  1,816,498
  2,146,739
  2,508,723
  2,901,986
  3,325,916
  3,779,818
  4,262,980
  4,774,725
  5,314,460
  5,881,703
  6,476,120
  7,097,543
  7,745,977
  8,421,615
  9,124,835
  9,856,206
  10,616,481
  11,406,590
  12,227,643
  13,080,919
  13,967,861
Debt-to-equity ratio
  0.780
  0.950
  1.070
  1.150
  1.200
  1.240
  1.270
  1.300
  1.310
  1.330
  1.340
  1.340
  1.350
  1.360
  1.360
  1.360
  1.370
  1.370
  1.370
  1.370
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
  1.380
Adjusted equity ratio
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9,087
  12,895
  17,589
  23,231
  29,863
  37,510
  46,177
  55,854
  66,522
  78,150
  90,958
  104,398
  118,690
  133,800
  149,700
  166,367
  183,785
  201,946
  220,846
  240,491
  260,893
  282,070
  304,046
  326,851
  350,522
  375,098
  400,625
  427,153
  454,737
  483,434
Depreciation, amort., depletion, $m
  12,837
  17,708
  23,891
  31,554
  40,853
  51,918
  64,856
  79,743
  96,631
  115,545
  136,136
  159,091
  184,030
  210,914
  239,698
  270,338
  302,790
  337,018
  372,990
  410,685
  450,092
  491,213
  534,059
  578,654
  625,034
  673,247
  723,351
  775,419
  829,529
  885,775
Funds from operations, $m
  21,923
  30,604
  41,480
  54,785
  70,716
  89,428
  111,032
  135,598
  163,153
  193,694
  227,094
  263,490
  302,720
  344,714
  389,398
  436,705
  486,576
  538,963
  593,835
  651,176
  710,985
  773,282
  838,104
  905,505
  975,555
  1,048,345
  1,123,977
  1,202,572
  1,284,266
  1,369,209
Change in working capital, $m
  1,349
  1,757
  2,229
  2,763
  3,353
  3,990
  4,665
  5,368
  6,089
  6,820
  7,551
  8,277
  8,992
  9,694
  10,379
  11,048
  11,702
  12,342
  12,971
  13,592
  14,209
  14,827
  15,449
  16,080
  16,724
  17,384
  18,067
  18,774
  19,511
  20,281
Cash from operations, $m
  20,574
  28,847
  39,250
  52,022
  67,363
  85,438
  106,367
  130,230
  157,064
  186,875
  219,543
  255,212
  293,728
  335,020
  379,019
  425,657
  474,874
  526,622
  580,865
  637,584
  696,776
  758,455
  822,655
  889,425
  958,832
  1,030,960
  1,105,910
  1,183,798
  1,264,755
  1,348,929
Maintenance CAPEX, $m
  -8,739
  -12,485
  -17,357
  -23,540
  -31,203
  -40,502
  -51,567
  -64,505
  -79,392
  -96,280
  -115,194
  -136,136
  -159,091
  -184,030
  -210,914
  -239,698
  -270,338
  -302,790
  -337,018
  -372,990
  -410,685
  -450,092
  -491,213
  -534,059
  -578,654
  -625,034
  -673,247
  -723,351
  -775,419
  -829,529
New CAPEX, $m
  -32,964
  -42,872
  -54,404
  -67,440
  -81,829
  -97,375
  -113,849
  -131,009
  -148,614
  -166,441
  -184,292
  -202,007
  -219,462
  -236,576
  -253,302
  -269,631
  -285,582
  -301,201
  -316,552
  -331,717
  -346,787
  -361,861
  -377,042
  -392,435
  -408,145
  -424,274
  -440,924
  -458,192
  -476,174
  -494,962
Cash from investing activities, $m
  -41,703
  -55,357
  -71,761
  -90,980
  -113,032
  -137,877
  -165,416
  -195,514
  -228,006
  -262,721
  -299,486
  -338,143
  -378,553
  -420,606
  -464,216
  -509,329
  -555,920
  -603,991
  -653,570
  -704,707
  -757,472
  -811,953
  -868,255
  -926,494
  -986,799
  -1,049,308
  -1,114,171
  -1,181,543
  -1,251,593
  -1,324,491
Free cash flow, $m
  -21,130
  -26,510
  -32,511
  -38,958
  -45,669
  -52,439
  -59,049
  -65,284
  -70,942
  -75,846
  -79,943
  -82,930
  -84,826
  -85,585
  -85,196
  -83,672
  -81,045
  -77,369
  -72,705
  -67,123
  -60,696
  -53,498
  -45,600
  -37,069
  -27,966
  -18,347
  -8,260
  2,254
  13,163
  24,437
Issuance/(repayment) of debt, $m
  34,335
  44,712
  56,739
  70,333
  85,340
  101,553
  118,734
  136,631
  154,991
  173,583
  192,200
  210,675
  228,879
  246,727
  264,171
  281,200
  297,836
  314,125
  330,135
  345,951
  361,668
  377,389
  393,221
  409,275
  425,658
  442,479
  459,844
  477,853
  496,607
  516,200
Issuance/(repurchase) of shares, $m
  15,493
  19,217
  23,161
  27,284
  31,429
  35,427
  39,100
  42,276
  44,795
  46,520
  47,082
  46,911
  45,694
  43,402
  40,031
  35,595
  30,124
  23,663
  16,262
  7,976
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  49,828
  63,929
  79,900
  97,617
  116,769
  136,980
  157,834
  178,907
  199,786
  220,103
  239,282
  257,586
  274,573
  290,129
  304,202
  316,795
  327,960
  337,788
  346,397
  353,927
  361,668
  377,389
  393,221
  409,275
  425,658
  442,479
  459,844
  477,853
  496,607
  516,200
Total cash flow (excl. dividends), $m
  28,698
  37,418
  47,389
  58,660
  71,100
  84,542
  98,785
  113,622
  128,844
  144,256
  159,339
  174,656
  189,748
  204,544
  219,006
  233,123
  246,915
  260,419
  273,692
  286,804
  300,972
  323,890
  347,621
  372,206
  397,692
  424,132
  451,583
  480,107
  509,769
  540,638
Retained Cash Flow (-), $m
  -24,580
  -32,112
  -40,751
  -50,514
  -61,292
  -72,937
  -85,277
  -98,130
  -111,317
  -124,669
  -138,040
  -151,309
  -164,384
  -177,203
  -189,731
  -201,962
  -213,910
  -225,609
  -237,108
  -248,467
  -259,755
  -271,045
  -282,417
  -293,946
  -305,713
  -317,794
  -330,266
  -343,200
  -356,669
  -370,742
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
  4,119
  5,306
  6,639
  8,145
  9,808
  11,605
  13,509
  15,492
  17,527
  19,587
  21,299
  23,346
  25,364
  27,341
  29,275
  31,162
  33,005
  34,810
  36,584
  38,337
  41,217
  52,845
  65,204
  78,259
  91,979
  106,338
  121,318
  136,907
  153,100
  169,896
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
  3,949
  4,857
  5,777
  6,707
  7,603
  8,422
  9,126
  9,683
  10,068
  10,269
  10,115
  9,963
  9,644
  9,179
  8,595
  7,919
  7,181
  6,411
  5,633
  4,871
  4,263
  4,385
  4,274
  3,986
  3,578
  3,102
  2,604
  2,118
  1,671
  1,279
Current shareholders' claim on cash, %
  79.5
  64.9
  54.3
  46.5
  40.5
  35.9
  32.3
  29.5
  27.3
  25.5
  24.0
  22.9
  22.0
  21.2
  20.7
  20.2
  19.9
  19.7
  19.5
  19.5
  19.5
  19.5
  19.5
  19.5
  19.5
  19.5
  19.5
  19.5
  19.5
  19.5

Eni SpA (Eni) is an Italy-based company engaged in the exploration, development and production of hydrocarbons, in the supply and marketing of gas, liquefied natural gas (LNG) and power, in the refining and marketing of petroleum products, in the production and marketing of basic petrochemicals, plastics and elastomers and in commodity trading. The Company's segments include Exploration & Production, Gas & Power, and Refining & Marketing. Its Exploration & Production segment engages in oil and natural gas exploration and field development and production, as well as LNG operations in over 40 countries, including Italy, Libya, Egypt, Norway, the United Kingdom, Angola, Congo, Nigeria, the United States, Kazakhstan, Algeria, Australia, Venezuela, Iraq, Ghana and Mozambique. Its Gas & Power segment engages in supply, trading and marketing of gas, LNG and electricity, international gas transport activities and commodity trading and derivatives.

FINANCIAL RATIOS  of  ENI S.p.A. (E)

Valuation Ratios
P/E Ratio -77
Price to Sales 2
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 13.2
Price to Free Cash Flow -180.7
Growth Rates
Sales Growth Rate -22.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.8%
Cap. Spend. - 3 Yr. Gr. Rate -6.4%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 38.8%
Total Debt to Equity 51.4%
Interest Coverage 2
Management Effectiveness
Return On Assets -1.8%
Ret/ On Assets - 3 Yr. Avg. -2%
Return On Total Capital -1.8%
Ret/ On T. Cap. - 3 Yr. Avg. -3.5%
Return On Equity -2.7%
Return On Equity - 3 Yr. Avg. -5.1%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 48.7%
Gross Margin - 3 Yr. Avg. 42.8%
EBITDA Margin 16.6%
EBITDA Margin - 3 Yr. Avg. 13.7%
Operating Margin 3.6%
Oper. Margin - 3 Yr. Avg. 2.9%
Pre-Tax Margin 1.6%
Pre-Tax Margin - 3 Yr. Avg. 1.4%
Net Profit Margin -2.6%
Net Profit Margin - 3 Yr. Avg. -4.5%
Effective Tax Rate 217.1%
Eff/ Tax Rate - 3 Yr. Avg. 74.1%
Payout Ratio -196.8%

E stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the E stock intrinsic value calculation we used $85206 million for the last fiscal year's total revenue generated by ENI S.p.A.. The default revenue input number comes from 0001 income statement of ENI S.p.A.. 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 E stock valuation model: a) initial revenue growth rate of 42.8% 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 E is calculated based on our internal credit rating of ENI S.p.A., 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 ENI S.p.A..
    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 E stock the variable cost ratio is equal to 71.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $15232 million in the base year in the intrinsic value calculation for E 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 24.2% for ENI S.p.A..

Corporate tax rate of 27% is the nominal tax rate for ENI S.p.A.. 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 E 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 E are equal to 90.3%.

Life of production assets of 8.8 years is the average useful life of capital assets used in ENI S.p.A. 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 E is equal to 3.7%. 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 - $57717.8871549 million for ENI S.p.A. - 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 1817.177 million for ENI S.p.A. 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 ENI S.p.A. at the current share price and the inputted number of shares is $60.0 billion.

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