Intrinsic value of Eldorado Gold Corporation - EGO

Previous Close

$5.43

  Intrinsic Value

$5.59

stock screener

  Rating & Target

hold

+3%

Previous close

$5.43

 
Intrinsic value

$5.59

 
Up/down potential

+3%

 
Rating

hold

We calculate the intrinsic value of EGO 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 0.9

 

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
  399
  408
  418
  430
  443
  458
  473
  490
  508
  528
  549
  571
  595
  620
  647
  675
  705
  737
  770
  805
  843
  882
  924
  967
  1,013
  1,062
  1,113
  1,167
  1,223
  1,283
Variable operating expenses, $m
  338
  346
  355
  364
  375
  387
  400
  414
  429
  445
  453
  471
  491
  511
  534
  557
  582
  608
  635
  665
  695
  728
  762
  798
  836
  876
  918
  963
  1,009
  1,058
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
  338
  346
  355
  364
  375
  387
  400
  414
  429
  445
  453
  471
  491
  511
  534
  557
  582
  608
  635
  665
  695
  728
  762
  798
  836
  876
  918
  963
  1,009
  1,058
Operating income, $m
  60
  62
  64
  66
  68
  71
  73
  76
  80
  83
  96
  100
  104
  108
  113
  118
  123
  129
  135
  141
  147
  154
  161
  169
  177
  186
  195
  204
  214
  224
EBITDA, $m
  204
  209
  214
  220
  227
  234
  242
  251
  260
  270
  281
  292
  305
  318
  331
  346
  361
  377
  395
  413
  432
  452
  473
  496
  519
  544
  570
  598
  627
  657
Interest expense (income), $m
  34
  32
  34
  35
  38
  40
  42
  45
  48
  52
  55
  59
  64
  68
  73
  78
  83
  89
  95
  101
  108
  115
  122
  130
  138
  147
  156
  166
  176
  187
  198
Earnings before tax, $m
  28
  28
  28
  28
  28
  28
  28
  28
  28
  27
  37
  36
  36
  36
  35
  35
  34
  34
  34
  33
  32
  32
  31
  31
  30
  29
  28
  28
  27
  26
Tax expense, $m
  8
  8
  8
  8
  8
  8
  8
  8
  7
  7
  10
  10
  10
  10
  10
  9
  9
  9
  9
  9
  9
  9
  8
  8
  8
  8
  8
  7
  7
  7
Net income, $m
  21
  21
  21
  21
  21
  21
  20
  20
  20
  20
  27
  26
  26
  26
  26
  25
  25
  25
  24
  24
  24
  23
  23
  22
  22
  21
  21
  20
  20
  19

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
  4,805
  4,916
  5,042
  5,184
  5,341
  5,513
  5,701
  5,904
  6,123
  6,358
  6,610
  6,878
  7,164
  7,467
  7,789
  8,131
  8,492
  8,874
  9,278
  9,704
  10,154
  10,628
  11,128
  11,655
  12,210
  12,794
  13,409
  14,056
  14,737
  15,453
Adjusted assets (=assets-cash), $m
  4,805
  4,916
  5,042
  5,184
  5,341
  5,513
  5,701
  5,904
  6,123
  6,358
  6,610
  6,878
  7,164
  7,467
  7,789
  8,131
  8,492
  8,874
  9,278
  9,704
  10,154
  10,628
  11,128
  11,655
  12,210
  12,794
  13,409
  14,056
  14,737
  15,453
Revenue / Adjusted assets
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
  0.083
Average production assets, $m
  4,039
  4,132
  4,238
  4,357
  4,489
  4,634
  4,792
  4,963
  5,147
  5,344
  5,556
  5,781
  6,021
  6,276
  6,547
  6,834
  7,138
  7,459
  7,798
  8,157
  8,535
  8,933
  9,354
  9,797
  10,263
  10,754
  11,271
  11,815
  12,387
  12,989
Working capital, $m
  136
  139
  142
  146
  151
  156
  161
  167
  173
  179
  187
  194
  202
  211
  220
  229
  240
  250
  262
  274
  287
  300
  314
  329
  345
  361
  378
  397
  416
  436
Total debt, $m
  622
  656
  695
  738
  787
  840
  897
  960
  1,027
  1,099
  1,176
  1,259
  1,346
  1,439
  1,538
  1,643
  1,754
  1,871
  1,995
  2,126
  2,264
  2,410
  2,563
  2,725
  2,895
  3,075
  3,264
  3,462
  3,671
  3,891
Total liabilities, $m
  1,475
  1,509
  1,548
  1,591
  1,640
  1,693
  1,750
  1,813
  1,880
  1,952
  2,029
  2,112
  2,199
  2,292
  2,391
  2,496
  2,607
  2,724
  2,848
  2,979
  3,117
  3,263
  3,416
  3,578
  3,748
  3,928
  4,117
  4,315
  4,524
  4,744
Total equity, $m
  3,330
  3,406
  3,494
  3,592
  3,701
  3,821
  3,951
  4,092
  4,243
  4,406
  4,581
  4,766
  4,964
  5,175
  5,398
  5,635
  5,885
  6,150
  6,430
  6,725
  7,037
  7,365
  7,712
  8,077
  8,462
  8,866
  9,292
  9,741
  10,213
  10,709
Total liabilities and equity, $m
  4,805
  4,915
  5,042
  5,183
  5,341
  5,514
  5,701
  5,905
  6,123
  6,358
  6,610
  6,878
  7,163
  7,467
  7,789
  8,131
  8,492
  8,874
  9,278
  9,704
  10,154
  10,628
  11,128
  11,655
  12,210
  12,794
  13,409
  14,056
  14,737
  15,453
Debt-to-equity ratio
  0.190
  0.190
  0.200
  0.210
  0.210
  0.220
  0.230
  0.230
  0.240
  0.250
  0.260
  0.260
  0.270
  0.280
  0.280
  0.290
  0.300
  0.300
  0.310
  0.320
  0.320
  0.330
  0.330
  0.340
  0.340
  0.350
  0.350
  0.360
  0.360
  0.360
Adjusted equity ratio
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693
  0.693

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  21
  21
  21
  21
  21
  21
  20
  20
  20
  20
  27
  26
  26
  26
  26
  25
  25
  25
  24
  24
  24
  23
  23
  22
  22
  21
  21
  20
  20
  19
Depreciation, amort., depletion, $m
  144
  147
  151
  155
  159
  164
  169
  175
  181
  187
  185
  193
  201
  209
  218
  228
  238
  249
  260
  272
  284
  298
  312
  327
  342
  358
  376
  394
  413
  433
Funds from operations, $m
  165
  168
  171
  175
  180
  184
  190
  195
  201
  208
  212
  219
  227
  235
  244
  253
  263
  273
  284
  296
  308
  321
  335
  349
  364
  380
  396
  414
  432
  452
Change in working capital, $m
  3
  3
  4
  4
  4
  5
  5
  6
  6
  7
  7
  8
  8
  9
  9
  10
  10
  11
  11
  12
  13
  13
  14
  15
  16
  16
  17
  18
  19
  20
Cash from operations, $m
  162
  165
  168
  171
  175
  179
  184
  189
  195
  201
  205
  212
  219
  227
  235
  244
  253
  263
  273
  284
  296
  308
  321
  334
  348
  363
  379
  396
  413
  432
Maintenance CAPEX, $m
  -132
  -135
  -138
  -141
  -145
  -150
  -154
  -160
  -165
  -172
  -178
  -185
  -193
  -201
  -209
  -218
  -228
  -238
  -249
  -260
  -272
  -284
  -298
  -312
  -327
  -342
  -358
  -376
  -394
  -413
New CAPEX, $m
  -79
  -93
  -106
  -119
  -132
  -145
  -158
  -171
  -184
  -198
  -211
  -225
  -240
  -255
  -271
  -287
  -304
  -321
  -339
  -358
  -378
  -399
  -420
  -443
  -466
  -491
  -517
  -544
  -572
  -602
Cash from investing activities, $m
  -211
  -228
  -244
  -260
  -277
  -295
  -312
  -331
  -349
  -370
  -389
  -410
  -433
  -456
  -480
  -505
  -532
  -559
  -588
  -618
  -650
  -683
  -718
  -755
  -793
  -833
  -875
  -920
  -966
  -1,015
Free cash flow, $m
  -49
  -63
  -76
  -89
  -102
  -115
  -128
  -141
  -155
  -168
  -185
  -199
  -214
  -229
  -245
  -262
  -279
  -296
  -315
  -334
  -354
  -376
  -398
  -421
  -445
  -470
  -496
  -524
  -553
  -583
Issuance/(repayment) of debt, $m
  28
  34
  39
  44
  48
  53
  58
  62
  67
  72
  77
  82
  88
  93
  99
  105
  111
  117
  124
  131
  138
  146
  154
  162
  170
  179
  189
  199
  209
  220
Issuance/(repurchase) of shares, $m
  42
  56
  67
  78
  88
  99
  110
  120
  132
  143
  148
  159
  172
  184
  197
  211
  225
  240
  255
  271
  288
  305
  324
  343
  363
  383
  405
  428
  452
  477
Cash from financing (excl. dividends), $m  
  70
  90
  106
  122
  136
  152
  168
  182
  199
  215
  225
  241
  260
  277
  296
  316
  336
  357
  379
  402
  426
  451
  478
  505
  533
  562
  594
  627
  661
  697
Total cash flow (excl. dividends), $m
  21
  27
  29
  32
  34
  37
  39
  42
  44
  47
  40
  43
  45
  48
  51
  54
  58
  61
  64
  68
  72
  76
  80
  84
  88
  93
  98
  103
  108
  114
Retained Cash Flow (-), $m
  -63
  -77
  -88
  -98
  -109
  -119
  -130
  -141
  -152
  -163
  -174
  -186
  -198
  -210
  -223
  -237
  -250
  -265
  -280
  -295
  -312
  -329
  -347
  -365
  -385
  -405
  -426
  -448
  -472
  -496
Prev. year cash balance distribution, $m
  376
  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
  335
  -50
  -58
  -66
  -75
  -83
  -91
  -99
  -108
  -116
  -134
  -143
  -152
  -162
  -172
  -182
  -193
  -204
  -215
  -228
  -240
  -253
  -267
  -281
  -296
  -312
  -328
  -345
  -363
  -382
Discount rate, %
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  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
  16.43
  17.25
  18.11
PV of cash for distribution, $m
  321
  -45
  -50
  -54
  -57
  -60
  -61
  -61
  -61
  -60
  -63
  -60
  -57
  -53
  -49
  -45
  -41
  -36
  -32
  -28
  -24
  -20
  -16
  -13
  -11
  -8
  -6
  -5
  -4
  -3
Current shareholders' claim on cash, %
  98.2
  95.9
  93.3
  90.4
  87.4
  84.1
  80.8
  77.5
  74.1
  70.7
  67.4
  64.2
  61.1
  58.0
  55.0
  52.1
  49.3
  46.6
  44.0
  41.5
  39.1
  36.8
  34.6
  32.6
  30.6
  28.7
  27.0
  25.3
  23.7
  22.2

Eldorado Gold Corp is a Canada-based gold exploration, development and mining company. The Company's geographical segments include Turkey, Brazil, Greece, Romania and Other. The Turkey segment includes the Kisladag and the Efemcukuru mines and exploration activities in Turkey. The Brazil segment includes the Vila Nova mine, the Tocantinzinho project and exploration activities in Brazil. The Greece segment includes the Stratoni mine, the Olympias, Skouries, Perama Hill and Sapes projects, and exploration activities in Greece. The Romania segment includes the Certej project and exploration activities in Romania. The Other segment includes operations of the Company's corporate office and exploration activities in other countries. The Company has operations and ongoing exploration and development projects in Turkey, Greece, Brazil and Romania. Its Operating gold mines include the Kisladag and Efemcukuru mines in Turkey.

FINANCIAL RATIOS  of  Eldorado Gold Corporation (EGO)

Valuation Ratios
P/E Ratio -11.3
Price to Sales 9
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 34.1
Price to Free Cash Flow -21.1
Growth Rates
Sales Growth Rate -9.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -14.1%
Cap. Spend. - 3 Yr. Gr. Rate -9.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 17%
Total Debt to Equity 17%
Interest Coverage 2
Management Effectiveness
Return On Assets -6.8%
Ret/ On Assets - 3 Yr. Avg. -9.6%
Return On Total Capital -8.2%
Ret/ On T. Cap. - 3 Yr. Avg. -12.2%
Return On Equity -9.5%
Return On Equity - 3 Yr. Avg. -13.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 37.6%
Gross Margin - 3 Yr. Avg. 32.8%
EBITDA Margin 36.5%
EBITDA Margin - 3 Yr. Avg. -93.9%
Operating Margin 15.5%
Oper. Margin - 3 Yr. Avg. -114.4%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. -117.4%
Net Profit Margin -79.4%
Net Profit Margin - 3 Yr. Avg. -130.5%
Effective Tax Rate 116.3%
Eff/ Tax Rate - 3 Yr. Avg. 60.5%
Payout Ratio 0%

EGO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EGO stock intrinsic value calculation we used $391 million for the last fiscal year's total revenue generated by Eldorado Gold Corporation. The default revenue input number comes from 0001 income statement of Eldorado Gold 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 EGO 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 4.4%, whose default value for EGO is calculated based on our internal credit rating of Eldorado Gold 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 Eldorado Gold 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 EGO stock the variable cost ratio is equal to 84.9%.

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 EGO 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 Eldorado Gold Corporation.

Corporate tax rate of 27% is the nominal tax rate for Eldorado Gold 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 EGO 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 EGO are equal to 1012.7%.

Life of production assets of 55.2 years is the average useful life of capital assets used in Eldorado Gold 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 EGO is equal to 34%. 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 - $3643.542 million for Eldorado Gold 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 158.802 million for Eldorado Gold 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 Eldorado Gold Corporation at the current share price and the inputted number of shares is $0.9 billion.

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