A Valuation of Atomic Energy of Canada Limited

Crown Corporations, Ian Madsen, Valuation

Atomic Energy of Canada Limited, ‘AECL’, is the federal Crown corporation which develops nuclear technology, mainly now in Canadian Nuclear Laboratories, which sells nuclear isotopes for medical and other purposes. Using an intrinsic value method, and discounting to the present AECL’s projected future free cash flows, as the company is today, assuming that it will remain non taxable indefinitely (owing to its legacy of huge losses), the range of estimates is negative $55B to negative $7.9B, with a tighter range of a median (midpoint of the array of values) of negative $13.8B to a mean (simple average) of minus $17.7B.

Under the market-based valuation system, i.e., evaluating AECL’s financial metrics against those of companies deemed to be comparable, the ‘as is’ current value of the company ranges from negative $7.1B to positive $940M, with a median (midpoint of the array of values) of $160M and a mean (simple average) of negative $1.99B. These estimates are based on a narrow foundation. Only three of eight possible valuation metrics (Price to Sales, ‘P/S’; Enterprise Value to Revenue, ‘EV/Rev’; and Enterprise Value to Earnings Before Interest, Taxes and Depreciation and Amortization, ‘EV/EBITDA’) were usable.

Read the entire Valuation here.