Where Does Athabasca Oil (TSX:ATH) Value Sit On Cash Flow?

详细摘要

Athabasca Oil has delivered very strong gains for shareholders over the past few years, which naturally raises a question about whether the current share price lines up with the…

Athabasca Oil has delivered very strong gains for shareholders over the past few years, which naturally raises a question about whether the current share price lines up with the cash the business is expected to produce. With the stock now around C$11.65, the key issue is how that market value compares to the intrinsic value suggested by its cash flows.

The stock's next move may depend on whether Athabasca Oil's current price can be justified by the cash flows implied by a Discounted Cash Flow (DCF) intrinsic value estimate.

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The Discounted Cash Flow (DCF) model used here looks at the cash Athabasca Oil could return to shareholders over time and discounts it back to today. Based on the latest numbers, the business produced trailing twelve month free cash flow of about CA$167.2 million. Analyst projections in the DCF assume that this free cash flow grows from current levels before easing into lower growth in the later years of the forecast.

Those estimates point to a company that is expected to generate positive and sustained free cash flow in CA$, rather than one relying on a sharp one off spike. Taken together, the cash flow profile and the discounting used in this 2 Stage Free Cash Flow to Equity model suggest an intrinsic value for Athabasca Oil that sits broadly in line with the current CA$11.65 share price. Find out what Athabasca Oil could be worth using our Discounted Cash Flow (DCF) estimate.

Narratives pick up where the Athabasca Oil valuation puzzle leaves off. They spell out what would need to happen to Athabasca Oil's growth, profitability and earnings power for the shares to end up worth far more or far less than today's price, and each one ties a fair value estimate to a particular mix of potential catalysts and key risks so you can see over time which version of the story is…

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