Intrinsic value of Exelon - EXC

Previous Close

$39.62

  Intrinsic Value

$85.57

stock screener

  Rating & Target

str. buy

+116%

  Value-price divergence*

-95%

Previous close

$39.62

 
Intrinsic value

$85.57

 
Up/down potential

+116%

 
Rating

str. buy

 
Value-price divergence*

-95%

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

We calculate the intrinsic value of EXC 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 38.0

 

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, %
  6.50
  10.30
  9.77
  9.29
  8.86
  8.48
  8.13
  7.82
  7.53
  7.28
  7.05
  6.85
  6.66
  6.50
  6.35
  6.21
  6.09
  5.98
  5.88
  5.80
  5.72
  5.64
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
  5.31
  5.28
  5.25
Revenue, $m
  31,360
  34,590
  37,970
  41,498
  45,176
  49,006
  52,990
  57,132
  61,437
  65,910
  70,559
  75,391
  80,415
  85,639
  91,075
  96,733
  102,625
  108,764
  115,164
  121,838
  128,802
  136,072
  143,665
  151,598
  159,890
  168,561
  177,630
  187,120
  197,053
  207,452
  218,342
Variable operating expenses, $m
 
  29,333
  32,133
  35,057
  38,106
  41,279
  44,581
  48,014
  51,581
  55,288
  59,141
  62,477
  66,640
  70,970
  75,475
  80,163
  85,046
  90,134
  95,437
  100,968
  106,740
  112,764
  119,056
  125,631
  132,502
  139,688
  147,204
  155,068
  163,299
  171,917
  180,942
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
  28,248
  29,333
  32,133
  35,057
  38,106
  41,279
  44,581
  48,014
  51,581
  55,288
  59,141
  62,477
  66,640
  70,970
  75,475
  80,163
  85,046
  90,134
  95,437
  100,968
  106,740
  112,764
  119,056
  125,631
  132,502
  139,688
  147,204
  155,068
  163,299
  171,917
  180,942
Operating income, $m
  3,112
  5,257
  5,836
  6,441
  7,071
  7,727
  8,409
  9,119
  9,856
  10,622
  11,419
  12,914
  13,774
  14,669
  15,600
  16,570
  17,579
  18,630
  19,727
  20,870
  22,063
  23,308
  24,609
  25,967
  27,388
  28,873
  30,427
  32,052
  33,753
  35,535
  37,400
EBITDA, $m
  6,641
  7,087
  7,780
  8,503
  9,256
  10,041
  10,857
  11,706
  12,588
  13,504
  14,457
  15,447
  16,476
  17,547
  18,660
  19,820
  21,027
  22,285
  23,596
  24,964
  26,390
  27,880
  29,436
  31,061
  32,760
  34,537
  36,395
  38,339
  40,374
  42,505
  44,736
Interest expense (income), $m
  1,340
  1,463
  1,854
  2,259
  2,681
  3,121
  3,580
  4,057
  4,552
  5,068
  5,603
  6,159
  6,738
  7,339
  7,964
  8,615
  9,292
  9,997
  10,732
  11,498
  12,297
  13,130
  14,000
  14,909
  15,859
  16,851
  17,889
  18,974
  20,110
  21,299
  22,543
Earnings before tax, $m
  1,989
  3,794
  3,982
  4,182
  4,390
  4,605
  4,829
  5,062
  5,304
  5,555
  5,816
  6,755
  7,037
  7,330
  7,636
  7,955
  8,287
  8,633
  8,995
  9,372
  9,766
  10,178
  10,608
  11,058
  11,529
  12,022
  12,538
  13,078
  13,643
  14,236
  14,857
Tax expense, $m
  761
  1,024
  1,075
  1,129
  1,185
  1,243
  1,304
  1,367
  1,432
  1,500
  1,570
  1,824
  1,900
  1,979
  2,062
  2,148
  2,237
  2,331
  2,429
  2,530
  2,637
  2,748
  2,864
  2,986
  3,113
  3,246
  3,385
  3,531
  3,684
  3,844
  4,011
Net income, $m
  1,134
  2,770
  2,907
  3,053
  3,204
  3,362
  3,525
  3,695
  3,872
  4,055
  4,245
  4,931
  5,137
  5,351
  5,574
  5,807
  6,049
  6,302
  6,566
  6,842
  7,129
  7,430
  7,744
  8,073
  8,416
  8,776
  9,153
  9,547
  9,960
  10,392
  10,845

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,885
  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
  114,904
  124,874
  137,074
  149,812
  163,091
  176,917
  191,300
  206,253
  221,794
  237,944
  254,727
  272,171
  290,306
  309,167
  328,790
  349,216
  370,488
  392,651
  415,754
  439,849
  464,990
  491,236
  518,647
  547,286
  577,221
  608,522
  641,264
  675,523
  711,381
  748,923
  788,239
Adjusted assets (=assets-cash), $m
  113,019
  124,874
  137,074
  149,812
  163,091
  176,917
  191,300
  206,253
  221,794
  237,944
  254,727
  272,171
  290,306
  309,167
  328,790
  349,216
  370,488
  392,651
  415,754
  439,849
  464,990
  491,236
  518,647
  547,286
  577,221
  608,522
  641,264
  675,523
  711,381
  748,923
  788,239
Revenue / Adjusted assets
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
Average production assets, $m
  5,260
  5,811
  6,379
  6,972
  7,590
  8,233
  8,902
  9,598
  10,321
  11,073
  11,854
  12,666
  13,510
  14,387
  15,301
  16,251
  17,241
  18,272
  19,348
  20,469
  21,639
  22,860
  24,136
  25,468
  26,862
  28,318
  29,842
  31,436
  33,105
  34,852
  36,681
Working capital, $m
  -1,045
  830
  911
  996
  1,084
  1,176
  1,272
  1,371
  1,474
  1,582
  1,693
  1,809
  1,930
  2,055
  2,186
  2,322
  2,463
  2,610
  2,764
  2,924
  3,091
  3,266
  3,448
  3,638
  3,837
  4,045
  4,263
  4,491
  4,729
  4,979
  5,240
Total debt, $m
  35,913
  43,124
  52,530
  62,351
  72,589
  83,249
  94,338
  105,867
  117,849
  130,301
  143,240
  156,690
  170,672
  185,214
  200,343
  216,092
  232,492
  249,580
  267,392
  285,969
  305,353
  325,589
  346,722
  368,803
  391,883
  416,017
  441,260
  467,674
  495,321
  524,266
  554,578
Total liabilities, $m
  89,067
  96,278
  105,684
  115,505
  125,743
  136,403
  147,492
  159,021
  171,003
  183,455
  196,394
  209,844
  223,826
  238,368
  253,497
  269,246
  285,646
  302,734
  320,546
  339,123
  358,507
  378,743
  399,876
  421,957
  445,037
  469,171
  494,414
  520,828
  548,475
  577,420
  607,732
Total equity, $m
  25,837
  28,596
  31,390
  34,307
  37,348
  40,514
  43,808
  47,232
  50,791
  54,489
  58,332
  62,327
  66,480
  70,799
  75,293
  79,970
  84,842
  89,917
  95,208
  100,725
  106,483
  112,493
  118,770
  125,328
  132,184
  139,352
  146,849
  154,695
  162,906
  171,503
  180,507
Total liabilities and equity, $m
  114,904
  124,874
  137,074
  149,812
  163,091
  176,917
  191,300
  206,253
  221,794
  237,944
  254,726
  272,171
  290,306
  309,167
  328,790
  349,216
  370,488
  392,651
  415,754
  439,848
  464,990
  491,236
  518,646
  547,285
  577,221
  608,523
  641,263
  675,523
  711,381
  748,923
  788,239
Debt-to-equity ratio
  1.390
  1.510
  1.670
  1.820
  1.940
  2.050
  2.150
  2.240
  2.320
  2.390
  2.460
  2.510
  2.570
  2.620
  2.660
  2.700
  2.740
  2.780
  2.810
  2.840
  2.870
  2.890
  2.920
  2.940
  2.960
  2.990
  3.000
  3.020
  3.040
  3.060
  3.070
Adjusted equity ratio
  0.223
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229
  0.229

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,134
  2,770
  2,907
  3,053
  3,204
  3,362
  3,525
  3,695
  3,872
  4,055
  4,245
  4,931
  5,137
  5,351
  5,574
  5,807
  6,049
  6,302
  6,566
  6,842
  7,129
  7,430
  7,744
  8,073
  8,416
  8,776
  9,153
  9,547
  9,960
  10,392
  10,845
Depreciation, amort., depletion, $m
  3,529
  1,830
  1,943
  2,062
  2,186
  2,314
  2,448
  2,587
  2,732
  2,882
  3,038
  2,533
  2,702
  2,877
  3,060
  3,250
  3,448
  3,654
  3,870
  4,094
  4,328
  4,572
  4,827
  5,094
  5,372
  5,664
  5,968
  6,287
  6,621
  6,970
  7,336
Funds from operations, $m
  9,214
  4,600
  4,850
  5,115
  5,390
  5,676
  5,974
  6,283
  6,604
  6,937
  7,284
  7,464
  7,839
  8,229
  8,635
  9,057
  9,498
  9,957
  10,436
  10,935
  11,457
  12,002
  12,571
  13,166
  13,789
  14,440
  15,121
  15,834
  16,581
  17,363
  18,182
Change in working capital, $m
  769
  78
  81
  85
  88
  92
  96
  99
  103
  107
  112
  116
  121
  125
  130
  136
  141
  147
  154
  160
  167
  174
  182
  190
  199
  208
  218
  228
  238
  250
  261
Cash from operations, $m
  8,445
  4,522
  4,769
  5,030
  5,302
  5,584
  5,878
  6,183
  6,500
  6,830
  7,172
  7,348
  7,718
  8,103
  8,504
  8,921
  9,356
  9,809
  10,282
  10,775
  11,290
  11,827
  12,389
  12,976
  13,590
  14,232
  14,903
  15,606
  16,342
  17,113
  17,920
Maintenance CAPEX, $m
  0
  -1,052
  -1,162
  -1,276
  -1,394
  -1,518
  -1,647
  -1,780
  -1,920
  -2,064
  -2,215
  -2,371
  -2,533
  -2,702
  -2,877
  -3,060
  -3,250
  -3,448
  -3,654
  -3,870
  -4,094
  -4,328
  -4,572
  -4,827
  -5,094
  -5,372
  -5,664
  -5,968
  -6,287
  -6,621
  -6,970
New CAPEX, $m
  -8,553
  -551
  -568
  -593
  -618
  -643
  -669
  -696
  -723
  -752
  -781
  -812
  -844
  -878
  -913
  -951
  -990
  -1,031
  -1,075
  -1,121
  -1,170
  -1,221
  -1,276
  -1,333
  -1,393
  -1,457
  -1,524
  -1,594
  -1,669
  -1,747
  -1,830
Cash from investing activities, $m
  -15,503
  -1,603
  -1,730
  -1,869
  -2,012
  -2,161
  -2,316
  -2,476
  -2,643
  -2,816
  -2,996
  -3,183
  -3,377
  -3,580
  -3,790
  -4,011
  -4,240
  -4,479
  -4,729
  -4,991
  -5,264
  -5,549
  -5,848
  -6,160
  -6,487
  -6,829
  -7,188
  -7,562
  -7,956
  -8,368
  -8,800
Free cash flow, $m
  -7,058
  2,919
  3,039
  3,161
  3,289
  3,423
  3,562
  3,707
  3,857
  4,014
  4,177
  4,165
  4,341
  4,524
  4,713
  4,911
  5,116
  5,330
  5,552
  5,784
  6,026
  6,278
  6,541
  6,816
  7,103
  7,403
  7,716
  8,044
  8,386
  8,745
  9,120
Issuance/(repayment) of debt, $m
  2,205
  9,096
  9,406
  9,821
  10,238
  10,660
  11,089
  11,529
  11,982
  12,452
  12,940
  13,449
  13,982
  14,542
  15,130
  15,748
  16,400
  17,088
  17,813
  18,577
  19,384
  20,235
  21,134
  22,081
  23,080
  24,133
  25,244
  26,414
  27,647
  28,945
  30,312
Issuance/(repurchase) of shares, $m
  -135
  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 from financing (excl. dividends), $m  
  2,357
  9,096
  9,406
  9,821
  10,238
  10,660
  11,089
  11,529
  11,982
  12,452
  12,940
  13,449
  13,982
  14,542
  15,130
  15,748
  16,400
  17,088
  17,813
  18,577
  19,384
  20,235
  21,134
  22,081
  23,080
  24,133
  25,244
  26,414
  27,647
  28,945
  30,312
Total cash flow (excl. dividends), $m
  -4,701
  12,015
  12,445
  12,983
  13,527
  14,083
  14,651
  15,236
  15,840
  16,466
  17,116
  17,615
  18,323
  19,065
  19,843
  20,659
  21,516
  22,417
  23,365
  24,362
  25,410
  26,514
  27,675
  28,897
  30,183
  31,536
  32,960
  34,457
  36,033
  37,690
  39,433
Retained Cash Flow (-), $m
  149
  -2,759
  -2,794
  -2,917
  -3,041
  -3,166
  -3,294
  -3,424
  -3,559
  -3,698
  -3,843
  -3,995
  -4,153
  -4,319
  -4,494
  -4,678
  -4,871
  -5,075
  -5,291
  -5,518
  -5,757
  -6,010
  -6,277
  -6,558
  -6,855
  -7,168
  -7,498
  -7,845
  -8,211
  -8,597
  -9,003
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
 
  9,256
  9,652
  10,066
  10,487
  10,916
  11,357
  11,811
  12,281
  12,767
  13,273
  13,620
  14,170
  14,746
  15,349
  15,982
  16,645
  17,342
  18,074
  18,844
  19,653
  20,503
  21,398
  22,339
  23,328
  24,368
  25,462
  26,612
  27,821
  29,093
  30,429
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  8,554
  8,182
  7,764
  7,296
  6,788
  6,251
  5,693
  5,127
  4,562
  4,008
  3,430
  2,934
  2,472
  2,051
  1,673
  1,341
  1,055
  814
  615
  455
  328
  231
  159
  106
  69
  44
  27
  16
  9
  5
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Exelon Corporation is a utility services holding company. The Company, through its subsidiary, Exelon Generation Company, LLC (Generation), is engaged in the energy generation business. The Company, through its subsidiaries, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Pepco Holdings LLC (PHI), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE), is engaged in the energy delivery businesses. It operates through 12 segments: Generation's six segments: Mid-Atlantic, Midwest, New England, New York, ERCOT and Other Power Regions; ComEd; PECO; BGE, and PHI's three utility segments: Pepco, DPL and ACE. Generation's integrated business consists of the generation, physical delivery and marketing of power across geographical regions through its customer-facing business, Constellation, which sells electricity and natural gas to both wholesale and retail customers.

FINANCIAL RATIOS  of  Exelon (EXC)

Valuation Ratios
P/E Ratio 32.3
Price to Sales 1.2
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow -339
Growth Rates
Sales Growth Rate 6.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 12.2%
Cap. Spend. - 3 Yr. Gr. Rate 9.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 124.7%
Total Debt to Equity 139%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 2.6%
Return On Total Capital 2%
Ret/ On T. Cap. - 3 Yr. Avg. 3.4%
Return On Equity 4.4%
Return On Equity - 3 Yr. Avg. 6.9%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 21.9%
EBITDA Margin - 3 Yr. Avg. 21.4%
Operating Margin 9.9%
Oper. Margin - 3 Yr. Avg. 12.1%
Pre-Tax Margin 6.3%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 38.3%
Eff/ Tax Rate - 3 Yr. Avg. 32.4%
Payout Ratio 102.8%

EXC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EXC stock intrinsic value calculation we used $31360 million for the last fiscal year's total revenue generated by Exelon. The default revenue input number comes from 2016 income statement of Exelon. 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 EXC stock valuation model: a) initial revenue growth rate of 10.3% 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 8.2%, whose default value for EXC is calculated based on our internal credit rating of Exelon, 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 Exelon.
    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 EXC stock the variable cost ratio is equal to 85%.

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 EXC 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 4.3% for Exelon.

Corporate tax rate of 27% is the nominal tax rate for Exelon. 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 EXC 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 EXC are equal to 16.8%.

Life of production assets of 2.8 years is the average useful life of capital assets used in Exelon 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 EXC is equal to 2.4%. 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 - $25837 million for Exelon - 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 959.008 million for Exelon 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 Exelon at the current share price and the inputted number of shares is $38.0 billion.

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COMPANY NEWS

▶ ETFs with exposure to Exelon Corp. : October 13, 2017   [Oct-13-17 10:46AM  Capital Cube]
▶ Behind FirstEnergys Price Targets and Analyst Views   [Oct-10-17 10:40AM  Market Realist]
▶ Could Exelon Stock Offer a Decent Gain Potential?   [Oct-06-17 09:10AM  Market Realist]
▶ ETFs with exposure to Exelon Corp. : October 2, 2017   [Oct-02-17 10:50AM  Capital Cube]
▶ Exelon Corporation Declares Dividend   [Sep-25-17 10:13AM  Business Wire]
▶ How Did Novartiss Established Medicines Perform in 1H17?   [Sep-21-17 10:36AM  Market Realist]
▶ ETFs with exposure to Exelon Corp. : September 20, 2017   [Sep-19-17 10:45PM  Capital Cube]
▶ Whats FirstEnergys Growth Outlook?   [07:37AM  Market Realist]
▶ ComEd Announces $1.0 Billion Bond Sale   [Sep-05-17 01:19PM  Business Wire]
▶ 5 Energy Stats That Will Blow You Away   [Aug-05-17 10:32AM  Motley Fool]
▶ Exelon tops Street 2Q forecasts   [Aug-02-17 11:04PM  Associated Press]
▶ Exelon Reports Second Quarter 2017 Results   [08:00AM  Business Wire]
▶ Exelon Corporation Declares Dividend   [10:00AM  Business Wire]
▶ ETFs with exposure to Exelon Corp. : July 24, 2017   [Jul-24-17 03:48PM  Capital Cube]
▶ How Exelon Stock Has Performed Recently   [11:06AM  Market Realist]
▶ What Dominion Energys Chart Indicators Imply   [Jul-18-17 07:37AM  Market Realist]
▶ PECO Celebrates National Lineworker Appreciation Day   [Jul-10-17 04:08PM  Business Wire]
▶ Exelon Corp. Value Analysis (NYSE:EXC) : July 7, 2017   [Jul-07-17 03:57PM  Capital Cube]
▶ Customer Focus Earns ComEd Most Trusted Brand Recognition   [Jul-06-17 02:50PM  Business Wire]
▶ Where Exelon Stock Could Go in the Near Future   [Jun-29-17 09:06AM  Market Realist]
Financial statements of EXC
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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