Intrinsic value of First Quantum Minerals Ltd. - FM

Previous Close

$15.07

  Intrinsic Value

$4.39

stock screener

  Rating & Target

str. sell

-71%

Previous close

$15.07

 
Intrinsic value

$4.39

 
Up/down potential

-71%

 
Rating

str. sell

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

We calculate the intrinsic value of FM 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 10.4

 

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, %
  6.42
  18.80
  17.42
  16.18
  15.06
  14.05
  13.15
  12.33
  11.60
  10.94
  10.35
  9.81
  9.33
  8.90
  8.51
  8.16
  7.84
  7.56
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
Revenue, $m
  3,611
  4,290
  5,037
  5,852
  6,733
  7,680
  8,690
  9,761
  10,894
  12,085
  13,336
  14,644
  16,011
  17,435
  18,919
  20,462
  22,066
  23,734
  25,467
  27,268
  29,139
  31,085
  33,109
  35,214
  37,406
  39,688
  42,065
  44,544
  47,128
  49,825
  52,640
Variable operating expenses, $m
 
  4,413
  5,176
  6,008
  6,908
  7,874
  8,905
  10,000
  11,156
  12,373
  13,650
  14,954
  16,349
  17,804
  19,319
  20,894
  22,533
  24,236
  26,005
  27,844
  29,755
  31,742
  33,809
  35,959
  38,196
  40,527
  42,954
  45,485
  48,124
  50,878
  53,753
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
  3,233
  4,413
  5,176
  6,008
  6,908
  7,874
  8,905
  10,000
  11,156
  12,373
  13,650
  14,954
  16,349
  17,804
  19,319
  20,894
  22,533
  24,236
  26,005
  27,844
  29,755
  31,742
  33,809
  35,959
  38,196
  40,527
  42,954
  45,485
  48,124
  50,878
  53,753
Operating income, $m
  378
  -123
  -138
  -156
  -174
  -194
  -216
  -238
  -262
  -287
  -314
  -310
  -338
  -369
  -400
  -433
  -466
  -502
  -538
  -576
  -616
  -657
  -700
  -744
  -791
  -839
  -889
  -942
  -996
  -1,053
  -1,113
EBITDA, $m
  1,305
  993
  1,166
  1,355
  1,559
  1,778
  2,012
  2,260
  2,522
  2,798
  3,087
  3,390
  3,706
  4,036
  4,380
  4,737
  5,108
  5,494
  5,896
  6,312
  6,746
  7,196
  7,665
  8,152
  8,659
  9,188
  9,738
  10,312
  10,910
  11,535
  12,186
Interest expense (income), $m
  481
  376
  518
  672
  840
  1,021
  1,216
  1,424
  1,645
  1,879
  2,124
  2,382
  2,652
  2,933
  3,227
  3,532
  3,850
  4,181
  4,525
  4,882
  5,253
  5,639
  6,040
  6,457
  6,891
  7,342
  7,813
  8,303
  8,813
  9,346
  9,902
Earnings before tax, $m
  361
  -499
  -656
  -827
  -1,014
  -1,216
  -1,432
  -1,663
  -1,908
  -2,166
  -2,438
  -2,692
  -2,990
  -3,302
  -3,627
  -3,965
  -4,317
  -4,683
  -5,063
  -5,458
  -5,869
  -6,296
  -6,740
  -7,201
  -7,681
  -8,181
  -8,702
  -9,244
  -9,810
  -10,399
  -11,014
Tax expense, $m
  26
  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
Net income, $m
  -61
  -499
  -656
  -827
  -1,014
  -1,216
  -1,432
  -1,663
  -1,908
  -2,166
  -2,438
  -2,692
  -2,990
  -3,302
  -3,627
  -3,965
  -4,317
  -4,683
  -5,063
  -5,458
  -5,869
  -6,296
  -6,740
  -7,201
  -7,681
  -8,181
  -8,702
  -9,244
  -9,810
  -10,399
  -11,014

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,977
  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
  26,323
  28,986
  34,035
  39,541
  45,496
  51,890
  58,713
  65,955
  73,606
  81,658
  90,107
  98,948
  108,181
  117,806
  127,829
  138,256
  149,097
  160,364
  172,073
  184,241
  196,888
  210,035
  223,709
  237,934
  252,741
  268,160
  284,225
  300,970
  318,434
  336,656
  355,677
Adjusted assets (=assets-cash), $m
  24,346
  28,986
  34,035
  39,541
  45,496
  51,890
  58,713
  65,955
  73,606
  81,658
  90,107
  98,948
  108,181
  117,806
  127,829
  138,256
  149,097
  160,364
  172,073
  184,241
  196,888
  210,035
  223,709
  237,934
  252,741
  268,160
  284,225
  300,970
  318,434
  336,656
  355,677
Revenue / Adjusted assets
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
  0.148
Average production assets, $m
  21,438
  25,469
  29,906
  34,744
  39,976
  45,595
  51,590
  57,953
  64,676
  71,751
  79,175
  86,943
  95,056
  103,513
  112,320
  121,482
  131,008
  140,908
  151,197
  161,888
  173,001
  184,553
  196,567
  209,067
  222,078
  235,626
  249,742
  264,456
  279,800
  295,811
  312,525
Working capital, $m
  1,147
  1,072
  1,259
  1,463
  1,683
  1,920
  2,172
  2,440
  2,723
  3,021
  3,334
  3,661
  4,003
  4,359
  4,730
  5,115
  5,517
  5,933
  6,367
  6,817
  7,285
  7,771
  8,277
  8,804
  9,351
  9,922
  10,516
  11,136
  11,782
  12,456
  13,160
Total debt, $m
  7,896
  8,488
  11,012
  13,766
  16,743
  19,940
  23,352
  26,972
  30,798
  34,824
  39,049
  43,469
  48,085
  52,898
  57,909
  63,123
  68,543
  74,177
  80,032
  86,116
  92,439
  99,013
  105,849
  112,962
  120,366
  128,075
  136,107
  144,480
  153,212
  162,323
  171,833
Total liabilities, $m
  13,901
  14,493
  17,017
  19,771
  22,748
  25,945
  29,357
  32,977
  36,803
  40,829
  45,054
  49,474
  54,090
  58,903
  63,914
  69,128
  74,548
  80,182
  86,037
  92,121
  98,444
  105,018
  111,854
  118,967
  126,371
  134,080
  142,112
  150,485
  159,217
  168,328
  177,838
Total equity, $m
  12,422
  14,493
  17,017
  19,771
  22,748
  25,945
  29,357
  32,977
  36,803
  40,829
  45,054
  49,474
  54,090
  58,903
  63,914
  69,128
  74,548
  80,182
  86,037
  92,121
  98,444
  105,018
  111,854
  118,967
  126,371
  134,080
  142,112
  150,485
  159,217
  168,328
  177,838
Total liabilities and equity, $m
  26,323
  28,986
  34,034
  39,542
  45,496
  51,890
  58,714
  65,954
  73,606
  81,658
  90,108
  98,948
  108,180
  117,806
  127,828
  138,256
  149,096
  160,364
  172,074
  184,242
  196,888
  210,036
  223,708
  237,934
  252,742
  268,160
  284,224
  300,970
  318,434
  336,656
  355,676
Debt-to-equity ratio
  0.636
  0.590
  0.650
  0.700
  0.740
  0.770
  0.800
  0.820
  0.840
  0.850
  0.870
  0.880
  0.890
  0.900
  0.910
  0.910
  0.920
  0.930
  0.930
  0.930
  0.940
  0.940
  0.950
  0.950
  0.950
  0.960
  0.960
  0.960
  0.960
  0.960
  0.970
Adjusted equity ratio
  0.479
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -61
  -499
  -656
  -827
  -1,014
  -1,216
  -1,432
  -1,663
  -1,908
  -2,166
  -2,438
  -2,692
  -2,990
  -3,302
  -3,627
  -3,965
  -4,317
  -4,683
  -5,063
  -5,458
  -5,869
  -6,296
  -6,740
  -7,201
  -7,681
  -8,181
  -8,702
  -9,244
  -9,810
  -10,399
  -11,014
Depreciation, amort., depletion, $m
  927
  1,116
  1,305
  1,510
  1,733
  1,972
  2,227
  2,498
  2,784
  3,085
  3,401
  3,700
  4,045
  4,405
  4,780
  5,169
  5,575
  5,996
  6,434
  6,889
  7,362
  7,853
  8,365
  8,896
  9,450
  10,027
  10,627
  11,253
  11,906
  12,588
  13,299
Funds from operations, $m
  1,028
  617
  648
  683
  719
  757
  795
  835
  877
  919
  963
  1,008
  1,055
  1,103
  1,153
  1,204
  1,258
  1,313
  1,371
  1,431
  1,493
  1,557
  1,625
  1,695
  1,769
  1,845
  1,926
  2,009
  2,097
  2,189
  2,285
Change in working capital, $m
  -219
  170
  187
  204
  220
  237
  252
  268
  283
  298
  313
  327
  342
  356
  371
  386
  401
  417
  433
  450
  468
  486
  506
  526
  548
  571
  594
  620
  646
  674
  704
Cash from operations, $m
  1,247
  447
  462
  479
  499
  520
  543
  567
  593
  621
  650
  681
  713
  747
  782
  819
  857
  896
  938
  980
  1,025
  1,071
  1,119
  1,169
  1,221
  1,275
  1,331
  1,390
  1,451
  1,514
  1,581
Maintenance CAPEX, $m
  0
  -912
  -1,084
  -1,273
  -1,478
  -1,701
  -1,940
  -2,195
  -2,466
  -2,752
  -3,053
  -3,369
  -3,700
  -4,045
  -4,405
  -4,780
  -5,169
  -5,575
  -5,996
  -6,434
  -6,889
  -7,362
  -7,853
  -8,365
  -8,896
  -9,450
  -10,027
  -10,627
  -11,253
  -11,906
  -12,588
New CAPEX, $m
  -1,542
  -4,031
  -4,437
  -4,838
  -5,232
  -5,618
  -5,995
  -6,363
  -6,723
  -7,076
  -7,424
  -7,768
  -8,112
  -8,458
  -8,807
  -9,162
  -9,526
  -9,900
  -10,288
  -10,692
  -11,112
  -11,553
  -12,014
  -12,500
  -13,010
  -13,548
  -14,116
  -14,714
  -15,345
  -16,011
  -16,713
Cash from investing activities, $m
  -962
  -4,943
  -5,521
  -6,111
  -6,710
  -7,319
  -7,935
  -8,558
  -9,189
  -9,828
  -10,477
  -11,137
  -11,812
  -12,503
  -13,212
  -13,942
  -14,695
  -15,475
  -16,284
  -17,126
  -18,001
  -18,915
  -19,867
  -20,865
  -21,906
  -22,998
  -24,143
  -25,341
  -26,598
  -27,917
  -29,301
Free cash flow, $m
  285
  -4,496
  -5,059
  -5,631
  -6,212
  -6,799
  -7,392
  -7,991
  -8,595
  -9,207
  -9,827
  -10,457
  -11,099
  -11,756
  -12,429
  -13,123
  -13,838
  -14,579
  -15,347
  -16,145
  -16,976
  -17,843
  -18,749
  -19,695
  -20,686
  -21,724
  -22,811
  -23,951
  -25,148
  -26,403
  -27,720
Issuance/(repayment) of debt, $m
  30
  2,325
  2,525
  2,753
  2,977
  3,197
  3,411
  3,621
  3,826
  4,026
  4,224
  4,421
  4,616
  4,813
  5,011
  5,213
  5,421
  5,634
  5,854
  6,084
  6,323
  6,574
  6,837
  7,113
  7,403
  7,710
  8,032
  8,373
  8,732
  9,111
  9,511
Issuance/(repurchase) of shares, $m
  0
  2,813
  3,181
  3,581
  3,992
  4,413
  4,843
  5,284
  5,733
  6,193
  6,663
  7,112
  7,606
  8,114
  8,638
  9,178
  9,737
  10,317
  10,918
  11,542
  12,192
  12,870
  13,576
  14,314
  15,085
  15,891
  16,734
  17,617
  18,541
  19,510
  20,525
Cash from financing (excl. dividends), $m  
  16
  5,138
  5,706
  6,334
  6,969
  7,610
  8,254
  8,905
  9,559
  10,219
  10,887
  11,533
  12,222
  12,927
  13,649
  14,391
  15,158
  15,951
  16,772
  17,626
  18,515
  19,444
  20,413
  21,427
  22,488
  23,601
  24,766
  25,990
  27,273
  28,621
  30,036
Total cash flow (excl. dividends), $m
  279
  642
  647
  702
  757
  810
  862
  913
  963
  1,012
  1,060
  1,076
  1,124
  1,172
  1,220
  1,269
  1,320
  1,371
  1,425
  1,481
  1,539
  1,600
  1,664
  1,731
  1,802
  1,877
  1,955
  2,038
  2,126
  2,218
  2,315
Retained Cash Flow (-), $m
  505
  -2,813
  -3,181
  -3,581
  -3,992
  -4,413
  -4,843
  -5,284
  -5,733
  -6,193
  -6,663
  -7,112
  -7,606
  -8,114
  -8,638
  -9,178
  -9,737
  -10,317
  -10,918
  -11,542
  -12,192
  -12,870
  -13,576
  -14,314
  -15,085
  -15,891
  -16,734
  -17,617
  -18,541
  -19,510
  -20,525
Prev. year cash balance distribution, $m
 
  244
  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
 
  -1,927
  -2,534
  -2,878
  -3,235
  -3,602
  -3,981
  -4,370
  -4,770
  -5,180
  -5,602
  -6,036
  -6,483
  -6,943
  -7,418
  -7,909
  -8,418
  -8,945
  -9,492
  -10,061
  -10,653
  -11,269
  -11,912
  -12,583
  -13,283
  -14,014
  -14,779
  -15,579
  -16,416
  -17,292
  -18,210
Discount rate, %
 
  6.10
  6.41
  6.73
  7.06
  7.41
  7.79
  8.17
  8.58
  9.01
  9.46
  9.94
  10.43
  10.95
  11.50
  12.08
  12.68
  13.32
  13.98
  14.68
  15.41
  16.19
  16.99
  17.84
  18.74
  19.67
  20.66
  21.69
  22.77
  23.91
  25.11
PV of cash for distribution, $m
 
  -1,817
  -2,238
  -2,368
  -2,462
  -2,519
  -2,539
  -2,521
  -2,468
  -2,383
  -2,268
  -2,129
  -1,970
  -1,797
  -1,616
  -1,430
  -1,246
  -1,068
  -900
  -745
  -606
  -483
  -377
  -288
  -215
  -157
  -112
  -78
  -53
  -34
  -22
Current shareholders' claim on cash, %
  100
  78.4
  62.1
  49.6
  39.9
  32.4
  26.5
  21.8
  18.1
  15.0
  12.6
  10.6
  8.9
  7.6
  6.4
  5.5
  4.7
  4.0
  3.5
  3.0
  2.6
  2.2
  1.9
  1.7
  1.5
  1.3
  1.1
  1.0
  0.8
  0.7
  0.6

First Quantum Minerals Ltd. is engaged in the production of copper, nickel, gold, zinc and acid, and related activities, including exploration and development. The Company's segments include individual mine development projects or mine operations and the Corporate & other segment. The Corporate & other segment is responsible for the evaluation and acquisition of mineral properties, regulatory reporting, treasury and finance and corporate administration. It also includes its metal marketing division. Its mines are located in Zambia, Australia, Finland, Turkey, Spain and Mauritania. It operates six mines, namely the Kansanshi copper-gold mine, the Guelb Moghrein copper-gold mine, the Las Cruces copper mine, the Pyhasalmi copper-zinc mine, the Ravensthorpe nickel-cobalt mine and the Cayeli copper-zinc mine. It is developing the Cobre Panama copper project in Panama, exploring the Haquira copper deposit in Peru and the Taca Taca copper-gold-molybdenum deposit in Argentina.

FINANCIAL RATIOS  of  First Quantum Minerals Ltd. (FM)

Valuation Ratios
P/E Ratio -170.3
Price to Sales 2.9
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow -35.2
Growth Rates
Sales Growth Rate 6.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -24.3%
Cap. Spend. - 3 Yr. Gr. Rate -15.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 49.6%
Total Debt to Equity 63.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.5%
Ret/ On Assets - 3 Yr. Avg. 6%
Return On Total Capital -0.3%
Ret/ On T. Cap. - 3 Yr. Avg. 0.9%
Return On Equity -0.5%
Return On Equity - 3 Yr. Avg. 1.3%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 12.7%
Gross Margin - 3 Yr. Avg. 17.4%
EBITDA Margin 49%
EBITDA Margin - 3 Yr. Avg. 42%
Operating Margin 10.5%
Oper. Margin - 3 Yr. Avg. 10.4%
Pre-Tax Margin 10%
Pre-Tax Margin - 3 Yr. Avg. 10.2%
Net Profit Margin -1.7%
Net Profit Margin - 3 Yr. Avg. 0.7%
Effective Tax Rate 7.2%
Eff/ Tax Rate - 3 Yr. Avg. -214.9%
Payout Ratio -14.8%

FM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FM stock intrinsic value calculation we used $3611 million for the last fiscal year's total revenue generated by First Quantum Minerals Ltd.. The default revenue input number comes from 2016 income statement of First Quantum Minerals Ltd.. 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 FM stock valuation model: a) initial revenue growth rate of 18.8% 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 6.1%, whose default value for FM is calculated based on our internal credit rating of First Quantum Minerals Ltd., 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 First Quantum Minerals Ltd..
    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 FM stock the variable cost ratio is equal to 103%.

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 FM 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 6.1% for First Quantum Minerals Ltd..

Corporate tax rate of 27% is the nominal tax rate for First Quantum Minerals Ltd.. 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 FM 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 FM are equal to 593.7%.

Life of production assets of 23.5 years is the average useful life of capital assets used in First Quantum Minerals Ltd. 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 FM is equal to 25%. 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 - $12422 million for First Quantum Minerals Ltd. - 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 689.32 million for First Quantum Minerals Ltd. 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 First Quantum Minerals Ltd. at the current share price and the inputted number of shares is $10.4 billion.

RELATED COMPANIES Price Int.Val. Rating
FNV Franco-Nevada 100.58 7.55  str.sell
HBM Hudbay Mineral 9.90 2.51  str.sell
LUN Lundin Mining 9.97 1.42  str.sell
TRQ Turquoise Hill 4.01 1.47  str.sell
NSU Nevsun Resourc 2.98 1.04  str.sell
Financial statements of FM
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.