Energy Development Corporation (EDC) was incorporated and registered with the Securities and Exchange Commission on March 5, 1976 to primarily engage in the business of exploring, developing and operating geothermal energy and other indigenous renewable energy projects in the Philippines, and utilizing geothermal energy and other indigenous renewable energy sources for electricity generation.

EDC became a subsidiary of Red Vulcan Holdings Corporation on November 29, 2007.

EDC’s geothermal power projects engage in two principal activities:

• The production of geothermal steam for use at EDC and its subsidiaries’ geothermal power plants;
• The generation and sale of electricity through those geothermal power plants pursuant to take-or-pay power offtake arrangements.

EDC operates commercial operations in four of its 14 geothermal service contract areas namely, Tongonan geothermal project; Southern Negros geothermal project; Bacon-Manito geothermal project; and Mt. Apo geothermal project.

EDC also operates a hydroelectric power plant through its 60%-owned subsidiary, First Gen Hydro Power Corporation. The Company likewise holds 11 wind energy service contracts covering areas in Ilocos Norte, Sorsogon, Iloilo, and Negros Occidental; and five solar energy service contracts covering areas in Ilocos Norte, Negros Occidental, North Cotabato, and Cebu.

In separate occasions in 2015, EDC received the feed-in-tariff certificate of compliance for the 150 MW Burgos wind energy project and 4 MW Burgos solar power project in Ilocos Norte.

The Company’s subsidiaries include:

• EDC Drillco Corporation
• EDC Geothermal Corp.
• EDC Chile Limitada
• EDC Holdings International Limited
• EDC Wind Energy Holdings, Inc.
• EDC Bright Solar Energy Holdings, Inc.

Sector Details:

• Sector: Industrial
• Subsector: Electricity, Energy, Power & Water

source: PSE Edge

Value Screen Scorecard

Stocks are scored based on Profitability & Growth, Financial Health, Quality, Dividends and Valuation. Each criterion in the list is scored based on financial data for a total of 100 points. Stocks are ranked from 1 to 5, 1 being the highest.

Read this post to get more information on how the value scorecard works.

Scoring Criteria:

• Rank # 1: Extremely good company
• Rank # 2: Good company
• Rank # 3: Average company
• Rank # 4: Needs further study and research to identify the company’s weaknesses
• Rank # 5: Risky company

Value Scorecard (1-25-2017 3Q2016)

Profitability & Growth

Criteria	Values	Score
Criteria # 1: Market capitalization	106,262,154,811	1
Criteria # 2: Profit margins (5-yr. Average) Gross profit margin Operating profit margin Net profit margin​	​ 60.88% 30.98% 25.51%	7
Criteria # 3: Net income consistently growing for the last 5 years		-2
Criteria # 4: Revenue consistently growing for the last 5 years		1
Criteria #5: Cash & equivalents consistently growing for the past 5 years		1
Criteria # 6: Operating cash flow consistently growing for the past 5 years		1
Criteria # 7: Earnings per share consistently growing for the past 5 years		-2
Criteria # 8: 5-yr. EPS growth rate	3.85%	1
Criteria # 9: Return on equity ​3-yr. average 5-yr. average Previous year’s ROE YoY growth​	​ 20.34% 18.23% -43.13%	4
Criteria # 10: Return on invested capital 5-yr. average	​ ​10.40%	1
TOTAL POINTS		14/30

Financial Health

Criteria	Values	Score
Criteria # 1: Debt settlement capacity Free cash flow Long-term debt ​Current ratio D/E ratio Interest coverage ratio Working capital to total debt ratio​	​ 11,669,725,997 61,247,670,453 1.33 1.29 3.28 0.10	0
Criteria # 2: Cash to current assets Current Recent​	​ 0.64 0.58	2
Criteria # 3: Inventory to current assets Current Recent​	​ 0.11 0.12	4
Criteria # 4: Accounts receivable to current assets Current Recent​	​ 0.17 0.22	4
Criteria # 5: Accounts payable to current assets Current Recent​	​ 0.35 0.31	4
TOTAL POINTS		14/25

Quality

Criteria	Values	Score
Criteria # 1: Piotroski F-Score	7	7
Criteria # 2: Altman Z-Score	1.71	3
TOTAL POINTS		7/20

Dividend Assessment

Criteria	Values	Score
Criteria # 1: Dividend payout ratio	30.43%	5
Criteria # 2: Dividend yield	2.47%	3
TOTAL POINTS		8/10

Valuation

Criteria	Values	Score
Criteria # 1: PEGY ratio	1.95	0
TOTAL POINTS		0/15

Final Score & Ranking

Stock Rating	Score
Final Score	43/100
Stock Ranking	3

Piotroski F-Score

The Piotroski F-Score is a financial metric model that’s helpful in spotting turnaround businesses. For more information, you may read about it here.

Scoring Criteria:

• 7 to 9 points: Wonderful business
• 5 to 6 points: Average business
• 1 to 4 points: Weak business

Piotroski F-Score (1-25-2017 3Q2016)

Piotroski F-Score	Values
Profitability:
1: Net income 2: Operating cash flow 3: Return on assets 4: Quality of earnings​	1 1 1 1​
Leverage:
5: Long-term debt vs. assets 6: Current ratio 7: Shares outstanding​	1 0 1
Operating efficiency:
8: Gross margin 9: Asset turnover​	1 0
Piotroski F-Score	7

Altman Z-Score

The Altman Z-Score is a bankruptcy prediction model that’s helpful in spotting low quality companies. More information about it can be found in this post here.

Scoring Criteria:

• Z > 2.99; “SAFE” Zone (Healthy business)
• Z < 1.81; “DISTRESS” Zone (Troubled business)
• 1.81 > Z > 2.99; “GREY” Zone (Warrants more investigation)

Altman Z-Score (1-25-2017 3Q2016)

Altman Z-Score	Values
X1 (Working capital / Total assets)	0.0546
X2 (Retained earnings / Total assets)	0.1945
X3 (EBIT / Total assets)	0.1073
X4 (Market capitalization / Total liabilities)	1.1702
X5 (Revenue / Total assets)	0.2487
Altman Z-Score	1.71

Estimated Growth Rates

Estimated growth rates are calculated using exponential chart trend line formula.

Estimated Growth Rates (3Q2016)

Growth Rate	3-yr. (%)	5-yr. (%)
Revenue	9.89%	6.59%
Net income	14.30%	5.06%*
Earnings per share	13.91%	3.85%**
Operating cash flow​	12.09%	14.89%

Net income for FY2011 is negative so it was not included in the growth calculation.*

Earnings per share for FY2011 is negative so it was not included in the growth calculation.**

Intrinsic Value Calculations

The figures and all other variables used in order to get the intrinsic value are listed in detail below for reference purposes so that cross-checking can be made to verify the values obtained.

Intrinsic Value Calculations (1-25-2017 3Q2016)

Weighted Average Cost Of Capital (WACC) Calculations

WACC Variables	Values
Risk free rate Stock beta​ Market risk premium Cost of equity (Re)	4.321% 0.99 8.10% 12.34%
Shares Price Market value of equity	18,741,120,778 5.67 106,262,154,811
Interest rate Tax rate Cost of debt (Rd)	6.23% 14.43% 5.33%
Debt book value Adjustment​ Market value of debt	72,720,369,817 1.20 87,264,443,780
Total capital Weighted average cost of capital (WACC)	193,526,598,592 9.18%

Discounted Cash Flow (DCF) Calculations

For more information regarding DCF analysis, you may read about it here.

DCF Variables	Values
Free cash flow	11,669,725,997
Projected growth rate	6.59%
Shares outstanding (diluted)	18,741,120,778
Discount rate (WACC)	9.18%
Perpetuity growth rate	2.60%
Margin of safety	25%
Intrinsic value per share	4.73
Adjusted intrinsic value per share	3.55

P/E Valuation Model

P/E Valuation Model Variables	Values
Input data:​
Earnings per share (TTM) P/E ratio (TTM)​ Growth rate Discount rate​	0.46 12.33 3.85% 9.18%
Calculations:
Year	EPS x Growth
1 2 3 4 ​5 6 7 8 9 10	0.46 0.48 0.50 0.52 0.54 0.56 0.58 0.60 0.62 0.65
Value in 10 years	7.97
Margin of safety	25%
Intrinsic value	3.31
Adjusted intrinsic value	2.48

We love to hear your thoughts! Share them on the comments section below. Happy investing!