Intrinsic value of Imperial Oil - IMO

Previous Close

$31.87

  Intrinsic Value

$7.55

stock screener

  Rating & Target

str. sell

-76%

Previous close

$31.87

 
Intrinsic value

$7.55

 
Up/down potential

-76%

 
Rating

str. sell

We calculate the intrinsic value of IMO 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 25.6

 

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, %
  35.70
  32.63
  29.87
  27.38
  25.14
  23.13
  21.32
  19.68
  18.22
  16.89
  15.70
  14.63
  13.67
  12.80
  12.02
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.79
  6.61
  6.45
Revenue, $m
  39,928
  52,957
  68,774
  87,604
  109,630
  134,985
  163,757
  195,991
  231,691
  270,833
  313,365
  359,223
  408,331
  460,612
  515,992
  574,407
  635,804
  700,147
  767,416
  837,613
  910,756
  986,888
  1,066,069
  1,148,379
  1,233,920
  1,322,811
  1,415,190
  1,511,213
  1,611,054
  1,714,903
Variable operating expenses, $m
  36,248
  48,070
  62,422
  79,508
  99,493
  122,500
  148,607
  177,854
  210,248
  245,764
  284,338
  325,948
  370,507
  417,945
  468,195
  521,199
  576,908
  635,291
  696,329
  760,023
  826,391
  895,470
  967,316
  1,042,002
  1,119,619
  1,200,276
  1,284,098
  1,371,226
  1,461,819
  1,556,048
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
  36,248
  48,070
  62,422
  79,508
  99,493
  122,500
  148,607
  177,854
  210,248
  245,764
  284,338
  325,948
  370,507
  417,945
  468,195
  521,199
  576,908
  635,291
  696,329
  760,023
  826,391
  895,470
  967,316
  1,042,002
  1,119,619
  1,200,276
  1,284,098
  1,371,226
  1,461,819
  1,556,048
Operating income, $m
  3,680
  4,887
  6,352
  8,096
  10,137
  12,485
  15,151
  18,136
  21,443
  25,069
  29,028
  33,276
  37,825
  42,667
  47,797
  53,209
  58,896
  64,856
  71,087
  77,590
  84,365
  91,418
  98,752
  106,377
  114,301
  122,535
  131,092
  139,987
  149,235
  158,855
EBITDA, $m
  6,635
  8,800
  11,428
  14,557
  18,217
  22,430
  27,211
  32,568
  38,500
  45,004
  52,072
  59,692
  67,852
  76,539
  85,742
  95,448
  105,651
  116,343
  127,521
  139,185
  151,339
  163,990
  177,147
  190,825
  205,039
  219,810
  235,160
  251,116
  267,707
  284,963
Interest expense (income), $m
  54
  281
  614
  1,025
  1,524
  2,118
  2,812
  3,612
  4,520
  5,537
  6,663
  7,898
  9,239
  10,686
  12,235
  13,884
  15,631
  17,474
  19,410
  21,440
  23,562
  25,776
  28,084
  30,485
  32,983
  35,579
  38,278
  41,082
  43,996
  47,025
  50,174
Earnings before tax, $m
  3,399
  4,273
  5,327
  6,573
  8,019
  9,673
  11,538
  13,617
  15,907
  18,406
  21,130
  24,036
  27,139
  30,433
  33,913
  37,578
  41,422
  45,446
  49,647
  54,028
  58,589
  63,334
  68,267
  73,394
  78,721
  84,257
  90,010
  95,991
  102,211
  108,681
Tax expense, $m
  918
  1,154
  1,438
  1,775
  2,165
  2,612
  3,115
  3,676
  4,295
  4,970
  5,705
  6,490
  7,327
  8,217
  9,157
  10,146
  11,184
  12,270
  13,405
  14,588
  15,819
  17,100
  18,432
  19,816
  21,255
  22,749
  24,303
  25,918
  27,597
  29,344
Net income, $m
  2,481
  3,119
  3,889
  4,798
  5,854
  7,061
  8,423
  9,940
  11,612
  13,437
  15,425
  17,547
  19,811
  22,216
  24,757
  27,432
  30,238
  33,175
  36,243
  39,440
  42,770
  46,234
  49,835
  53,578
  57,467
  61,508
  65,708
  70,074
  74,614
  79,337

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
  56,476
  74,904
  97,275
  123,910
  155,063
  190,926
  231,623
  277,215
  327,710
  383,073
  443,233
  508,095
  577,555
  651,502
  729,834
  812,457
  899,299
  990,307
  1,085,454
  1,184,742
  1,288,199
  1,395,881
  1,507,876
  1,624,298
  1,745,289
  1,871,019
  2,001,683
  2,137,501
  2,278,719
  2,425,605
Adjusted assets (=assets-cash), $m
  56,476
  74,904
  97,275
  123,910
  155,063
  190,926
  231,623
  277,215
  327,710
  383,073
  443,233
  508,095
  577,555
  651,502
  729,834
  812,457
  899,299
  990,307
  1,085,454
  1,184,742
  1,288,199
  1,395,881
  1,507,876
  1,624,298
  1,745,289
  1,871,019
  2,001,683
  2,137,501
  2,278,719
  2,425,605
Revenue / Adjusted assets
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
  0.707
Average production assets, $m
  48,154
  63,866
  82,941
  105,651
  132,213
  162,792
  197,491
  236,365
  279,420
  326,624
  377,919
  433,223
  492,448
  555,498
  622,287
  692,735
  766,780
  844,377
  925,504
  1,010,161
  1,098,372
  1,190,187
  1,285,679
  1,384,945
  1,488,107
  1,595,309
  1,706,719
  1,822,523
  1,942,931
  2,068,173
Working capital, $m
  359
  477
  619
  788
  987
  1,215
  1,474
  1,764
  2,085
  2,437
  2,820
  3,233
  3,675
  4,146
  4,644
  5,170
  5,722
  6,301
  6,907
  7,539
  8,197
  8,882
  9,595
  10,335
  11,105
  11,905
  12,737
  13,601
  14,499
  15,434
Total debt, $m
  11,365
  18,976
  28,216
  39,216
  52,082
  66,894
  83,701
  102,531
  123,385
  146,250
  171,096
  197,884
  226,571
  257,111
  289,462
  323,586
  359,451
  397,038
  436,334
  477,340
  520,067
  564,540
  610,794
  658,876
  708,846
  760,772
  814,736
  870,829
  929,152
  989,816
Total liabilities, $m
  23,324
  30,935
  40,175
  51,175
  64,041
  78,853
  95,660
  114,490
  135,344
  158,209
  183,055
  209,843
  238,530
  269,070
  301,421
  335,545
  371,410
  408,997
  448,293
  489,299
  532,026
  576,499
  622,753
  670,835
  720,805
  772,731
  826,695
  882,788
  941,111
  1,001,775
Total equity, $m
  33,151
  43,969
  57,101
  72,735
  91,022
  112,074
  135,963
  162,725
  192,366
  224,864
  260,178
  298,252
  339,025
  382,432
  428,412
  476,912
  527,888
  581,310
  637,162
  695,444
  756,173
  819,382
  885,123
  953,463
  1,024,485
  1,098,288
  1,174,988
  1,254,713
  1,337,608
  1,423,830
Total liabilities and equity, $m
  56,475
  74,904
  97,276
  123,910
  155,063
  190,927
  231,623
  277,215
  327,710
  383,073
  443,233
  508,095
  577,555
  651,502
  729,833
  812,457
  899,298
  990,307
  1,085,455
  1,184,743
  1,288,199
  1,395,881
  1,507,876
  1,624,298
  1,745,290
  1,871,019
  2,001,683
  2,137,501
  2,278,719
  2,425,605
Debt-to-equity ratio
  0.340
  0.430
  0.490
  0.540
  0.570
  0.600
  0.620
  0.630
  0.640
  0.650
  0.660
  0.660
  0.670
  0.670
  0.680
  0.680
  0.680
  0.680
  0.680
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.690
  0.700
Adjusted equity ratio
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587
  0.587

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,481
  3,119
  3,889
  4,798
  5,854
  7,061
  8,423
  9,940
  11,612
  13,437
  15,425
  17,547
  19,811
  22,216
  24,757
  27,432
  30,238
  33,175
  36,243
  39,440
  42,770
  46,234
  49,835
  53,578
  57,467
  61,508
  65,708
  70,074
  74,614
  79,337
Depreciation, amort., depletion, $m
  2,955
  3,913
  5,076
  6,461
  8,080
  9,945
  12,061
  14,431
  17,056
  19,935
  23,044
  26,416
  30,027
  33,872
  37,944
  42,240
  46,755
  51,486
  56,433
  61,595
  66,974
  72,572
  78,395
  84,448
  90,738
  97,275
  104,068
  111,129
  118,471
  126,108
Funds from operations, $m
  5,436
  7,032
  8,965
  11,259
  13,934
  17,006
  20,484
  24,371
  28,668
  33,371
  38,469
  43,963
  49,839
  56,088
  62,701
  69,672
  76,993
  84,662
  92,676
  101,036
  109,744
  118,806
  128,230
  138,025
  148,205
  158,783
  169,776
  181,203
  193,085
  205,445
Change in working capital, $m
  95
  117
  142
  169
  198
  228
  259
  290
  321
  352
  383
  413
  442
  471
  498
  526
  553
  579
  605
  632
  658
  685
  713
  741
  770
  800
  831
  864
  899
  935
Cash from operations, $m
  5,341
  6,915
  8,823
  11,089
  13,736
  16,778
  20,225
  24,081
  28,347
  33,019
  38,086
  43,550
  49,397
  55,617
  62,203
  69,146
  76,441
  84,083
  92,070
  100,404
  109,086
  118,121
  127,517
  137,285
  147,435
  157,983
  168,944
  180,339
  192,187
  204,511
Maintenance CAPEX, $m
  -2,164
  -2,936
  -3,894
  -5,057
  -6,442
  -8,062
  -9,926
  -12,042
  -14,412
  -17,038
  -19,916
  -23,044
  -26,416
  -30,027
  -33,872
  -37,944
  -42,240
  -46,755
  -51,486
  -56,433
  -61,595
  -66,974
  -72,572
  -78,395
  -84,448
  -90,738
  -97,275
  -104,068
  -111,129
  -118,471
New CAPEX, $m
  -12,658
  -15,713
  -19,075
  -22,710
  -26,563
  -30,578
  -34,699
  -38,874
  -43,055
  -47,205
  -51,294
  -55,305
  -59,224
  -63,051
  -66,789
  -70,448
  -74,045
  -77,597
  -81,127
  -84,657
  -88,211
  -91,815
  -95,492
  -99,266
  -103,162
  -107,202
  -111,409
  -115,804
  -120,408
  -125,242
Cash from investing activities, $m
  -14,822
  -18,649
  -22,969
  -27,767
  -33,005
  -38,640
  -44,625
  -50,916
  -57,467
  -64,243
  -71,210
  -78,349
  -85,640
  -93,078
  -100,661
  -108,392
  -116,285
  -124,352
  -132,613
  -141,090
  -149,806
  -158,789
  -168,064
  -177,661
  -187,610
  -197,940
  -208,684
  -219,872
  -231,537
  -243,713
Free cash flow, $m
  -9,481
  -11,734
  -14,147
  -16,678
  -19,269
  -21,862
  -24,401
  -26,835
  -29,120
  -31,223
  -33,125
  -34,798
  -36,244
  -37,461
  -38,458
  -39,247
  -39,844
  -40,269
  -40,543
  -40,686
  -40,721
  -40,668
  -40,547
  -40,377
  -40,175
  -39,958
  -39,740
  -39,534
  -39,351
  -39,202
Issuance/(repayment) of debt, $m
  6,158
  7,611
  9,239
  11,000
  12,866
  14,811
  16,808
  18,829
  20,855
  22,865
  24,846
  26,788
  28,687
  30,540
  32,351
  34,123
  35,866
  37,586
  39,296
  41,006
  42,728
  44,473
  46,254
  48,082
  49,969
  51,926
  53,964
  56,093
  58,323
  60,664
Issuance/(repurchase) of shares, $m
  6,235
  7,698
  9,243
  10,836
  12,433
  13,990
  15,466
  16,822
  18,029
  19,061
  19,889
  20,528
  20,961
  21,191
  21,224
  21,068
  20,738
  20,246
  19,609
  18,842
  17,959
  16,976
  15,906
  14,762
  13,555
  12,296
  10,992
  9,652
  8,281
  6,885
Cash from financing (excl. dividends), $m  
  12,393
  15,309
  18,482
  21,836
  25,299
  28,801
  32,274
  35,651
  38,884
  41,926
  44,735
  47,316
  49,648
  51,731
  53,575
  55,191
  56,604
  57,832
  58,905
  59,848
  60,687
  61,449
  62,160
  62,844
  63,524
  64,222
  64,956
  65,745
  66,604
  67,549
Total cash flow (excl. dividends), $m
  2,913
  3,575
  4,336
  5,159
  6,031
  6,940
  7,872
  8,817
  9,764
  10,703
  11,610
  12,518
  13,405
  14,271
  15,117
  15,945
  16,759
  17,563
  18,362
  19,161
  19,966
  20,781
  21,613
  22,468
  23,350
  24,264
  25,216
  26,211
  27,253
  28,347
Retained Cash Flow (-), $m
  -8,716
  -10,817
  -13,132
  -15,634
  -18,287
  -21,052
  -23,889
  -26,762
  -29,641
  -32,498
  -35,314
  -38,074
  -40,773
  -43,407
  -45,980
  -48,500
  -50,976
  -53,422
  -55,852
  -58,282
  -60,729
  -63,210
  -65,741
  -68,340
  -71,022
  -73,803
  -76,700
  -79,725
  -82,895
  -86,222
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
  -5,803
  -7,242
  -8,796
  -10,476
  -12,256
  -14,112
  -16,016
  -17,945
  -19,877
  -21,795
  -23,704
  -25,557
  -27,368
  -29,136
  -30,864
  -32,555
  -34,217
  -35,859
  -37,490
  -39,121
  -40,763
  -42,429
  -44,128
  -45,872
  -47,672
  -49,539
  -51,483
  -53,514
  -55,642
  -57,875
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
  -5,564
  -6,630
  -7,655
  -8,626
  -9,500
  -10,242
  -10,820
  -11,216
  -11,419
  -11,426
  -11,257
  -10,906
  -10,406
  -9,782
  -9,061
  -8,273
  -7,445
  -6,604
  -5,772
  -4,971
  -4,216
  -3,520
  -2,892
  -2,336
  -1,855
  -1,445
  -1,105
  -828
  -607
  -436
Current shareholders' claim on cash, %
  80.4
  65.8
  54.8
  46.4
  39.9
  34.8
  30.7
  27.5
  24.9
  22.7
  20.9
  19.5
  18.3
  17.2
  16.4
  15.6
  15.0
  14.5
  14.0
  13.6
  13.3
  13.0
  12.8
  12.6
  12.4
  12.3
  12.2
  12.1
  12.0
  11.9

Imperial Oil Limited is an integrated oil company. The Company is engaged in all the phases of the petroleum industry in Canada, including exploration for, and production and sale of, crude oil and natural gas. Its operations are conducted in three segments: Upstream, Downstream and Chemical. The Upstream operations include the exploration for, and production of, crude oil, natural gas, synthetic oil and bitumen. It holds an interest in the Kearl oil sands project. The Downstream operations consist of the transportation and refining of crude oil, blending of refined products and the distribution and marketing of those products. The Chemical operations consist of the manufacturing and marketing of various petrochemicals. The Company is involved in the exploration for and development of crude oil and natural gas in Canada. The Company transports its crude oil production and third-party crude oil required to supply refineries by contracted pipelines, common carrier pipelines and rail.

FINANCIAL RATIOS  of  Imperial Oil (IMO)

Valuation Ratios
P/E Ratio 16.9
Price to Sales 1.4
Price to Book 1.5
Price to Tangible Book
Price to Cash Flow 18.1
Price to Free Cash Flow 38.8
Growth Rates
Sales Growth Rate -5.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -64.2%
Cap. Spend. - 3 Yr. Gr. Rate -29.8%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 20.1%
Total Debt to Equity 20.9%
Interest Coverage 35
Management Effectiveness
Return On Assets 5.3%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital 7%
Ret/ On T. Cap. - 3 Yr. Avg. 8.1%
Return On Equity 8.9%
Return On Equity - 3 Yr. Avg. 10.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 13.6%
Gross Margin - 3 Yr. Avg. 16.3%
EBITDA Margin 16.3%
EBITDA Margin - 3 Yr. Avg. 15.4%
Operating Margin 2.4%
Oper. Margin - 3 Yr. Avg. 7.2%
Pre-Tax Margin 9.6%
Pre-Tax Margin - 3 Yr. Avg. 10.2%
Net Profit Margin 8.5%
Net Profit Margin - 3 Yr. Avg. 7.7%
Effective Tax Rate 11.4%
Eff/ Tax Rate - 3 Yr. Avg. 25.9%
Payout Ratio 22.7%

IMO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IMO stock intrinsic value calculation we used $29424 million for the last fiscal year's total revenue generated by Imperial Oil. The default revenue input number comes from 0001 income statement of Imperial Oil. 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 IMO stock valuation model: a) initial revenue growth rate of 35.7% 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 IMO is calculated based on our internal credit rating of Imperial Oil, 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 Imperial Oil.
    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 IMO stock the variable cost ratio is equal to 90.8%.

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 IMO 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 Imperial Oil.

Corporate tax rate of 27% is the nominal tax rate for Imperial Oil. 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 IMO 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 IMO are equal to 120.6%.

Life of production assets of 16.4 years is the average useful life of capital assets used in Imperial Oil 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 IMO is equal to 0.9%. 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 - $24435 million for Imperial Oil - 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 803 million for Imperial Oil 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 Imperial Oil at the current share price and the inputted number of shares is $25.6 billion.

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COMPANY NEWS

▶ [$$] Canadas oil producers look beyond Keystone XL pipeline   [Nov-14-18 12:02AM  Financial Times]
▶ Oil Prices Fall To One-Year Lows   [Nov-13-18 03:00PM  Oilprice.com]
▶ Imperial Oil: 3Q Earnings Snapshot   [Nov-02-18 09:36AM  Associated Press]
▶ Stocks Surge As Nasdaq, S&P 500 Today Regain These Critical Levels   [Oct-16-18 01:30PM  Investor's Business Daily]
▶ Imperial Oil (IMO) Q2 Earnings Lag Estimates   [Jul-27-18 09:50AM  Zacks]
▶ 5 Energy Stocks Set to Explode Higher   [Jul-11-18 09:13AM  Zacks]
▶ Imperial Oil: 1Q Earnings Snapshot   [08:31AM  Associated Press]
▶ Is There Now An Opportunity In Imperial Oil Limited (TSE:IMO)?   [Mar-12-18 05:02PM  Simply Wall St.]
▶ Imperial provides update on avgas fuel quality issue   [Mar-07-18 06:17PM  CNW Group]
▶ Best Growth Stocks To Buy Now   [Feb-05-18 11:02AM  Simply Wall St.]
▶ Imperial Oil reports 4Q loss   [Feb-02-18 09:51AM  Associated Press]
▶ Which Integrated Energy Stocks Are Losing this Week?   [Dec-14-17 04:00PM  Market Realist]
▶ Integrated Energy Losers Last Week: CVE, IMO   [07:34AM  Market Realist]
▶ Imperial Oil misses 3Q profit forecasts   [Oct-27-17 08:17AM  Associated Press]
▶ Fourth quarter dividend declaration   [07:56AM  CNW Group]
▶ Imperial to hold 2017 Update Call   [Oct-18-17 04:30PM  CNW Group]
▶ These Integrated Energy Stocks Are Losing This Week   [Oct-05-17 01:07PM  Market Realist]
▶ Russia's Gazprom knocks US ExxonMobil to #9   [Sep-25-17 01:53PM  Yahoo Finance Video]
▶ Imperial Oil reports 2Q loss   [Jul-28-17 11:45PM  Associated Press]
▶ Third quarter dividend declaration   [07:56AM  CNW Group]
▶ Canada's Imperial Oil Posts Unexpected 2Q Loss   [Jul-27-17 08:00PM  Rigzone.com]
▶ ETFs with exposure to Imperial Oil Ltd. : June 1, 2017   [Jun-01-17 01:53PM  Capital Cube]
▶ These 3 Big Energy Stocks Could Be Turning Toxic   [May-26-17 11:29AM  TheStreet.com]
▶ ETFs with exposure to Imperial Oil Ltd. : May 18, 2017   [May-18-17 01:47PM  Capital Cube]
▶ Imperial provides update on Syncrude incident response   [Mar-27-17 07:55AM  PR Newswire]

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