Intrinsic value of Companhia Paranaense de Energia (COPEL) - ELP

Previous Close

$13.16

  Intrinsic Value

$7.94

stock screener

  Rating & Target

sell

-40%

Previous close

$13.16

 
Intrinsic value

$7.94

 
Up/down potential

-40%

 
Rating

sell

We calculate the intrinsic value of ELP 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 3.6

 

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, %
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
Revenue, $m
  4,461
  4,696
  4,942
  5,200
  5,470
  5,753
  6,050
  6,361
  6,687
  7,029
  7,388
  7,765
  8,159
  8,574
  9,008
  9,464
  9,943
  10,445
  10,972
  11,525
  12,105
  12,714
  13,354
  14,025
  14,730
  15,469
  16,246
  17,061
  17,917
  18,815
Variable operating expenses, $m
  3,259
  3,421
  3,590
  3,767
  3,953
  4,147
  4,351
  4,565
  4,789
  5,024
  5,076
  5,334
  5,605
  5,890
  6,189
  6,502
  6,831
  7,175
  7,537
  7,917
  8,316
  8,735
  9,174
  9,635
  10,119
  10,627
  11,161
  11,721
  12,309
  12,926
Fixed operating expenses, $m
  536
  547
  559
  572
  584
  597
  610
  624
  637
  651
  666
  680
  695
  711
  726
  742
  759
  775
  792
  810
  828
  846
  864
  883
  903
  923
  943
  964
  985
  1,007
Total operating expenses, $m
  3,795
  3,968
  4,149
  4,339
  4,537
  4,744
  4,961
  5,189
  5,426
  5,675
  5,742
  6,014
  6,300
  6,601
  6,915
  7,244
  7,590
  7,950
  8,329
  8,727
  9,144
  9,581
  10,038
  10,518
  11,022
  11,550
  12,104
  12,685
  13,294
  13,933
Operating income, $m
  666
  728
  793
  861
  933
  1,009
  1,089
  1,173
  1,261
  1,354
  1,647
  1,750
  1,859
  1,973
  2,093
  2,220
  2,354
  2,494
  2,642
  2,798
  2,961
  3,134
  3,316
  3,507
  3,708
  3,919
  4,142
  4,377
  4,623
  4,883
EBITDA, $m
  1,046
  1,118
  1,193
  1,272
  1,355
  1,443
  1,535
  1,632
  1,734
  1,841
  1,954
  2,073
  2,198
  2,329
  2,468
  2,613
  2,767
  2,928
  3,098
  3,277
  3,465
  3,662
  3,871
  4,090
  4,320
  4,562
  4,817
  5,086
  5,368
  5,665
Interest expense (income), $m
  288
  457
  501
  547
  595
  646
  699
  755
  814
  875
  939
  1,007
  1,077
  1,151
  1,229
  1,311
  1,396
  1,486
  1,580
  1,679
  1,783
  1,892
  2,006
  2,126
  2,252
  2,385
  2,523
  2,669
  2,822
  2,982
  3,151
Earnings before tax, $m
  209
  227
  246
  266
  287
  309
  333
  359
  386
  415
  640
  673
  707
  744
  783
  824
  867
  914
  963
  1,014
  1,069
  1,128
  1,189
  1,254
  1,323
  1,396
  1,473
  1,555
  1,641
  1,732
Tax expense, $m
  56
  61
  66
  72
  77
  84
  90
  97
  104
  112
  173
  182
  191
  201
  211
  222
  234
  247
  260
  274
  289
  304
  321
  339
  357
  377
  398
  420
  443
  468
Net income, $m
  152
  166
  179
  194
  209
  226
  243
  262
  282
  303
  467
  491
  516
  543
  571
  601
  633
  667
  703
  741
  781
  823
  868
  916
  966
  1,019
  1,075
  1,135
  1,198
  1,264

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
  10,545
  11,101
  11,683
  12,292
  12,931
  13,601
  14,302
  15,038
  15,809
  16,618
  17,466
  18,356
  19,290
  20,269
  21,296
  22,374
  23,505
  24,692
  25,938
  27,245
  28,618
  30,058
  31,570
  33,156
  34,822
  36,571
  38,406
  40,333
  42,356
  44,480
Adjusted assets (=assets-cash), $m
  10,545
  11,101
  11,683
  12,292
  12,931
  13,601
  14,302
  15,038
  15,809
  16,618
  17,466
  18,356
  19,290
  20,269
  21,296
  22,374
  23,505
  24,692
  25,938
  27,245
  28,618
  30,058
  31,570
  33,156
  34,822
  36,571
  38,406
  40,333
  42,356
  44,480
Revenue / Adjusted assets
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
  0.423
Average production assets, $m
  4,041
  4,254
  4,477
  4,711
  4,956
  5,212
  5,481
  5,763
  6,059
  6,369
  6,694
  7,035
  7,392
  7,768
  8,161
  8,575
  9,008
  9,463
  9,940
  10,441
  10,967
  11,519
  12,099
  12,707
  13,345
  14,015
  14,719
  15,457
  16,233
  17,047
Working capital, $m
  308
  324
  341
  359
  377
  397
  417
  439
  461
  485
  510
  536
  563
  592
  622
  653
  686
  721
  757
  795
  835
  877
  921
  968
  1,016
  1,067
  1,121
  1,177
  1,236
  1,298
Total debt, $m
  3,251
  3,552
  3,867
  4,197
  4,542
  4,904
  5,284
  5,682
  6,099
  6,537
  6,996
  7,477
  7,982
  8,512
  9,068
  9,651
  10,263
  10,905
  11,579
  12,286
  13,028
  13,808
  14,625
  15,484
  16,385
  17,331
  18,324
  19,367
  20,461
  21,610
Total liabilities, $m
  5,705
  6,005
  6,320
  6,650
  6,996
  7,358
  7,738
  8,136
  8,553
  8,990
  9,449
  9,931
  10,436
  10,965
  11,521
  12,104
  12,716
  13,358
  14,032
  14,740
  15,482
  16,261
  17,079
  17,938
  18,839
  19,785
  20,778
  21,820
  22,915
  24,064
Total equity, $m
  4,840
  5,095
  5,362
  5,642
  5,935
  6,243
  6,565
  6,902
  7,256
  7,628
  8,017
  8,425
  8,854
  9,303
  9,775
  10,270
  10,789
  11,334
  11,906
  12,506
  13,135
  13,797
  14,490
  15,219
  15,983
  16,786
  17,629
  18,513
  19,442
  20,416
Total liabilities and equity, $m
  10,545
  11,100
  11,682
  12,292
  12,931
  13,601
  14,303
  15,038
  15,809
  16,618
  17,466
  18,356
  19,290
  20,268
  21,296
  22,374
  23,505
  24,692
  25,938
  27,246
  28,617
  30,058
  31,569
  33,157
  34,822
  36,571
  38,407
  40,333
  42,357
  44,480
Debt-to-equity ratio
  0.670
  0.700
  0.720
  0.740
  0.770
  0.790
  0.800
  0.820
  0.840
  0.860
  0.870
  0.890
  0.900
  0.910
  0.930
  0.940
  0.950
  0.960
  0.970
  0.980
  0.990
  1.000
  1.010
  1.020
  1.030
  1.030
  1.040
  1.050
  1.050
  1.060
Adjusted equity ratio
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459
  0.459

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  152
  166
  179
  194
  209
  226
  243
  262
  282
  303
  467
  491
  516
  543
  571
  601
  633
  667
  703
  741
  781
  823
  868
  916
  966
  1,019
  1,075
  1,135
  1,198
  1,264
Depreciation, amort., depletion, $m
  380
  390
  400
  411
  422
  434
  446
  459
  473
  487
  307
  323
  339
  356
  374
  393
  413
  434
  456
  479
  503
  528
  555
  583
  612
  643
  675
  709
  745
  782
Funds from operations, $m
  533
  556
  580
  605
  632
  660
  690
  721
  755
  790
  774
  814
  855
  899
  946
  995
  1,046
  1,101
  1,159
  1,220
  1,284
  1,352
  1,423
  1,499
  1,578
  1,662
  1,751
  1,844
  1,942
  2,046
Change in working capital, $m
  15
  16
  17
  18
  19
  20
  20
  21
  23
  24
  25
  26
  27
  29
  30
  31
  33
  35
  36
  38
  40
  42
  44
  46
  49
  51
  54
  56
  59
  62
Cash from operations, $m
  517
  539
  563
  587
  613
  640
  669
  700
  732
  766
  750
  788
  828
  871
  916
  963
  1,013
  1,066
  1,122
  1,181
  1,244
  1,310
  1,379
  1,452
  1,529
  1,611
  1,697
  1,788
  1,883
  1,984
Maintenance CAPEX, $m
  -176
  -185
  -195
  -205
  -216
  -227
  -239
  -251
  -264
  -278
  -292
  -307
  -323
  -339
  -356
  -374
  -393
  -413
  -434
  -456
  -479
  -503
  -528
  -555
  -583
  -612
  -643
  -675
  -709
  -745
New CAPEX, $m
  -202
  -213
  -223
  -234
  -245
  -257
  -269
  -282
  -296
  -310
  -325
  -341
  -358
  -375
  -394
  -413
  -433
  -455
  -477
  -501
  -526
  -552
  -579
  -608
  -638
  -670
  -703
  -739
  -775
  -814
Cash from investing activities, $m
  -378
  -398
  -418
  -439
  -461
  -484
  -508
  -533
  -560
  -588
  -617
  -648
  -681
  -714
  -750
  -787
  -826
  -868
  -911
  -957
  -1,005
  -1,055
  -1,107
  -1,163
  -1,221
  -1,282
  -1,346
  -1,414
  -1,484
  -1,559
Free cash flow, $m
  139
  141
  144
  148
  152
  156
  161
  166
  172
  178
  132
  140
  148
  156
  166
  176
  187
  198
  211
  224
  239
  254
  271
  289
  308
  329
  351
  374
  399
  426
Issuance/(repayment) of debt, $m
  282
  301
  315
  330
  346
  362
  380
  398
  417
  438
  459
  481
  505
  530
  556
  583
  612
  642
  674
  707
  742
  779
  818
  858
  901
  946
  993
  1,043
  1,094
  1,149
Issuance/(repurchase) of shares, $m
  95
  89
  88
  86
  84
  81
  79
  76
  72
  69
  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  
  377
  390
  403
  416
  430
  443
  459
  474
  489
  507
  459
  481
  505
  530
  556
  583
  612
  642
  674
  707
  742
  779
  818
  858
  901
  946
  993
  1,043
  1,094
  1,149
Total cash flow (excl. dividends), $m
  516
  531
  547
  564
  581
  600
  620
  640
  662
  684
  591
  621
  653
  686
  721
  759
  799
  840
  885
  932
  981
  1,034
  1,089
  1,148
  1,209
  1,275
  1,344
  1,417
  1,493
  1,575
Retained Cash Flow (-), $m
  -247
  -255
  -267
  -280
  -293
  -307
  -322
  -338
  -354
  -371
  -389
  -408
  -428
  -449
  -472
  -495
  -519
  -545
  -572
  -600
  -630
  -661
  -694
  -728
  -765
  -803
  -843
  -885
  -929
  -975
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
  269
  276
  280
  284
  288
  293
  297
  302
  308
  313
  202
  213
  224
  237
  250
  264
  279
  296
  313
  332
  351
  373
  395
  419
  445
  472
  501
  532
  565
  600
Discount rate, %
  6.00
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
PV of cash for distribution, $m
  254
  244
  231
  217
  203
  188
  173
  158
  143
  129
  72
  66
  59
  53
  46
  40
  34
  29
  24
  20
  16
  12
  10
  7
  5
  4
  3
  2
  1
  1
Current shareholders' claim on cash, %
  97.4
  95.2
  93.2
  91.3
  89.6
  88.1
  86.7
  85.4
  84.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3
  83.3

Companhia Paranaense de Energia is engaged in the generation, transmission, distribution and sale of electricity in the Brazilian State of Parana. The Company also provides telecommunications and other services. Its segments are Power generation and transmission (GET), Power distribution and sales (DIS), Telecommunications (TEL), GAS and Holding Company (HOL). The GET segment includes the generation of electric energy from hydraulic, wind and thermal projects; the transport and transformation of the power generated by the Company, and the construction, operation and maintenance of all power transmission substations and lines. The DIS segment includes the distribution and sale of electric energy, and the operation and maintenance of the distribution infrastructure. The TEL segment includes telecommunications and general communications services. The GAS segment includes the public service of piped natural gas distribution. The HOL segment includes participation in other companies.

FINANCIAL RATIOS  of  Companhia Paranaense de Energia (COPEL) (ELP)

Valuation Ratios
P/E Ratio 11.9
Price to Sales 0.9
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 7.7
Price to Free Cash Flow -15.5
Growth Rates
Sales Growth Rate -12.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 28.7%
Cap. Spend. - 3 Yr. Gr. Rate 5.2%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 41.9%
Total Debt to Equity 59.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 4.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 6.6%
Return On Equity - 3 Yr. Avg. 8.2%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 23.6%
EBITDA Margin - 3 Yr. Avg. 22.3%
Operating Margin 15.6%
Oper. Margin - 3 Yr. Avg. 14.1%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. 12.2%
Net Profit Margin 7.3%
Net Profit Margin - 3 Yr. Avg. 8%
Effective Tax Rate 35.8%
Eff/ Tax Rate - 3 Yr. Avg. 31.1%
Payout Ratio 38.6%

ELP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ELP stock intrinsic value calculation we used $4236 million for the last fiscal year's total revenue generated by Companhia Paranaense de Energia (COPEL). The default revenue input number comes from 0001 income statement of Companhia Paranaense de Energia (COPEL). 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 ELP stock valuation model: a) initial revenue growth rate of 5.3% 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 6%, whose default value for ELP is calculated based on our internal credit rating of Companhia Paranaense de Energia (COPEL), 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 Companhia Paranaense de Energia (COPEL).
    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 ELP stock the variable cost ratio is equal to 73.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $524 million in the base year in the intrinsic value calculation for ELP 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 15.4% for Companhia Paranaense de Energia (COPEL).

Corporate tax rate of 27% is the nominal tax rate for Companhia Paranaense de Energia (COPEL). 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 ELP 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 ELP are equal to 90.6%.

Life of production assets of 21.8 years is the average useful life of capital assets used in Companhia Paranaense de Energia (COPEL) 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 ELP is equal to 6.9%. 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 - $4593.12654787 million for Companhia Paranaense de Energia (COPEL) - 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 274.081 million for Companhia Paranaense de Energia (COPEL) 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 Companhia Paranaense de Energia (COPEL) at the current share price and the inputted number of shares is $3.6 billion.

RELATED COMPANIES Price Int.Val. Rating
CIG Comp En De Mn 3.84 8.32  str.buy
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