Intrinsic value of Magna International Inc. - MG

Previous Close

$69.87

  Intrinsic Value

$118.42

stock screener

  Rating & Target

str. buy

+69%

Previous close

$69.87

 
Intrinsic value

$118.42

 
Up/down potential

+69%

 
Rating

str. buy

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

We calculate the intrinsic value of MG 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 25.9

 

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, %
  13.41
  2.60
  2.84
  3.06
  3.25
  3.43
  3.58
  3.72
  3.85
  3.97
  4.07
  4.16
  4.25
  4.32
  4.39
  4.45
  4.51
  4.56
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.84
  4.86
  4.87
  4.89
Revenue, $m
  49,240
  50,520
  51,955
  53,543
  55,283
  57,177
  59,225
  61,431
  63,798
  66,328
  69,028
  71,902
  74,955
  78,195
  81,628
  85,261
  89,103
  93,162
  97,447
  101,968
  106,736
  111,761
  117,056
  122,632
  128,503
  134,682
  141,184
  148,024
  155,219
  162,785
  170,740
Variable operating expenses, $m
 
  46,320
  47,628
  49,076
  50,663
  52,389
  54,257
  56,268
  58,426
  60,733
  63,194
  65,555
  68,339
  71,292
  74,422
  77,734
  81,237
  84,938
  88,845
  92,967
  97,314
  101,895
  106,723
  111,806
  117,159
  122,793
  128,721
  134,957
  141,517
  148,415
  155,668
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
  45,484
  46,320
  47,628
  49,076
  50,663
  52,389
  54,257
  56,268
  58,426
  60,733
  63,194
  65,555
  68,339
  71,292
  74,422
  77,734
  81,237
  84,938
  88,845
  92,967
  97,314
  101,895
  106,723
  111,806
  117,159
  122,793
  128,721
  134,957
  141,517
  148,415
  155,668
Operating income, $m
  3,756
  4,200
  4,327
  4,467
  4,620
  4,788
  4,968
  5,163
  5,372
  5,595
  5,834
  6,347
  6,617
  6,903
  7,206
  7,527
  7,866
  8,224
  8,602
  9,001
  9,422
  9,866
  10,333
  10,825
  11,344
  11,889
  12,463
  13,067
  13,702
  14,370
  15,072
EBITDA, $m
  5,183
  5,490
  5,645
  5,818
  6,007
  6,213
  6,435
  6,675
  6,932
  7,207
  7,501
  7,813
  8,145
  8,497
  8,870
  9,265
  9,682
  10,123
  10,589
  11,080
  11,598
  12,144
  12,719
  13,325
  13,963
  14,635
  15,341
  16,084
  16,866
  17,688
  18,553
Interest expense (income), $m
  134
  113
  128
  144
  162
  183
  204
  228
  254
  281
  310
  341
  374
  410
  447
  487
  529
  573
  620
  669
  722
  777
  835
  896
  960
  1,028
  1,100
  1,175
  1,254
  1,337
  1,424
Earnings before tax, $m
  3,756
  4,087
  4,199
  4,323
  4,458
  4,605
  4,764
  4,935
  5,118
  5,315
  5,524
  6,006
  6,242
  6,493
  6,759
  7,040
  7,337
  7,651
  7,982
  8,332
  8,701
  9,089
  9,498
  9,930
  10,383
  10,861
  11,364
  11,892
  12,449
  13,033
  13,648
Tax expense, $m
  954
  1,103
  1,134
  1,167
  1,204
  1,243
  1,286
  1,332
  1,382
  1,435
  1,491
  1,622
  1,685
  1,753
  1,825
  1,901
  1,981
  2,066
  2,155
  2,250
  2,349
  2,454
  2,565
  2,681
  2,804
  2,932
  3,068
  3,211
  3,361
  3,519
  3,685
Net income, $m
  2,744
  2,983
  3,065
  3,156
  3,254
  3,362
  3,478
  3,603
  3,736
  3,880
  4,032
  4,384
  4,557
  4,740
  4,934
  5,139
  5,356
  5,585
  5,827
  6,082
  6,351
  6,635
  6,934
  7,249
  7,580
  7,929
  8,295
  8,681
  9,087
  9,514
  9,963

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,316
  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
  30,488
  29,929
  30,779
  31,720
  32,751
  33,872
  35,086
  36,393
  37,795
  39,294
  40,893
  42,596
  44,405
  46,324
  48,358
  50,510
  52,786
  55,191
  57,729
  60,408
  63,232
  66,209
  69,346
  72,649
  76,127
  79,788
  83,640
  87,692
  91,954
  96,436
  101,149
Adjusted assets (=assets-cash), $m
  29,172
  29,929
  30,779
  31,720
  32,751
  33,872
  35,086
  36,393
  37,795
  39,294
  40,893
  42,596
  44,405
  46,324
  48,358
  50,510
  52,786
  55,191
  57,729
  60,408
  63,232
  66,209
  69,346
  72,649
  76,127
  79,788
  83,640
  87,692
  91,954
  96,436
  101,149
Revenue / Adjusted assets
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
  1.688
Average production assets, $m
  5,239
  5,355
  5,507
  5,676
  5,860
  6,061
  6,278
  6,512
  6,763
  7,031
  7,317
  7,622
  7,945
  8,289
  8,653
  9,038
  9,445
  9,875
  10,329
  10,809
  11,314
  11,847
  12,408
  12,999
  13,621
  14,276
  14,965
  15,691
  16,453
  17,255
  18,098
Working capital, $m
  1,983
  1,718
  1,766
  1,820
  1,880
  1,944
  2,014
  2,089
  2,169
  2,255
  2,347
  2,445
  2,548
  2,659
  2,775
  2,899
  3,029
  3,167
  3,313
  3,467
  3,629
  3,800
  3,980
  4,169
  4,369
  4,579
  4,800
  5,033
  5,277
  5,535
  5,805
Total debt, $m
  4,264
  3,643
  4,117
  4,641
  5,215
  5,840
  6,516
  7,244
  8,025
  8,860
  9,751
  10,699
  11,706
  12,776
  13,908
  15,107
  16,375
  17,714
  19,128
  20,620
  22,193
  23,852
  25,599
  27,439
  29,376
  31,415
  33,560
  35,817
  38,192
  40,688
  43,313
Total liabilities, $m
  17,291
  16,670
  17,144
  17,668
  18,242
  18,867
  19,543
  20,271
  21,052
  21,887
  22,778
  23,726
  24,733
  25,803
  26,935
  28,134
  29,402
  30,741
  32,155
  33,647
  35,220
  36,879
  38,626
  40,466
  42,403
  44,442
  46,587
  48,844
  51,219
  53,715
  56,340
Total equity, $m
  13,197
  13,259
  13,635
  14,052
  14,509
  15,006
  15,543
  16,122
  16,743
  17,407
  18,116
  18,870
  19,671
  20,522
  21,422
  22,376
  23,384
  24,449
  25,574
  26,761
  28,012
  29,331
  30,720
  32,184
  33,724
  35,346
  37,052
  38,848
  40,736
  42,721
  44,809
Total liabilities and equity, $m
  30,488
  29,929
  30,779
  31,720
  32,751
  33,873
  35,086
  36,393
  37,795
  39,294
  40,894
  42,596
  44,404
  46,325
  48,357
  50,510
  52,786
  55,190
  57,729
  60,408
  63,232
  66,210
  69,346
  72,650
  76,127
  79,788
  83,639
  87,692
  91,955
  96,436
  101,149
Debt-to-equity ratio
  0.323
  0.270
  0.300
  0.330
  0.360
  0.390
  0.420
  0.450
  0.480
  0.510
  0.540
  0.570
  0.600
  0.620
  0.650
  0.680
  0.700
  0.720
  0.750
  0.770
  0.790
  0.810
  0.830
  0.850
  0.870
  0.890
  0.910
  0.920
  0.940
  0.950
  0.970
Adjusted equity ratio
  0.436
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443
  0.443

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,744
  2,983
  3,065
  3,156
  3,254
  3,362
  3,478
  3,603
  3,736
  3,880
  4,032
  4,384
  4,557
  4,740
  4,934
  5,139
  5,356
  5,585
  5,827
  6,082
  6,351
  6,635
  6,934
  7,249
  7,580
  7,929
  8,295
  8,681
  9,087
  9,514
  9,963
Depreciation, amort., depletion, $m
  1,427
  1,290
  1,319
  1,351
  1,387
  1,425
  1,467
  1,512
  1,560
  1,612
  1,667
  1,466
  1,528
  1,594
  1,664
  1,738
  1,816
  1,899
  1,986
  2,079
  2,176
  2,278
  2,386
  2,500
  2,619
  2,745
  2,878
  3,017
  3,164
  3,318
  3,480
Funds from operations, $m
  4,684
  4,273
  4,384
  4,507
  4,641
  4,787
  4,945
  5,115
  5,297
  5,491
  5,699
  5,850
  6,085
  6,334
  6,598
  6,877
  7,172
  7,484
  7,813
  8,161
  8,527
  8,913
  9,320
  9,748
  10,199
  10,674
  11,173
  11,699
  12,251
  12,833
  13,444
Change in working capital, $m
  109
  44
  49
  54
  59
  64
  70
  75
  80
  86
  92
  98
  104
  110
  117
  124
  131
  138
  146
  154
  162
  171
  180
  190
  200
  210
  221
  233
  245
  257
  270
Cash from operations, $m
  4,575
  4,229
  4,335
  4,453
  4,582
  4,723
  4,875
  5,040
  5,216
  5,405
  5,607
  5,752
  5,981
  6,224
  6,481
  6,753
  7,042
  7,346
  7,668
  8,007
  8,365
  8,742
  9,140
  9,559
  10,000
  10,464
  10,952
  11,466
  12,007
  12,575
  13,173
Maintenance CAPEX, $m
  0
  -1,007
  -1,030
  -1,059
  -1,091
  -1,127
  -1,166
  -1,207
  -1,252
  -1,300
  -1,352
  -1,407
  -1,466
  -1,528
  -1,594
  -1,664
  -1,738
  -1,816
  -1,899
  -1,986
  -2,079
  -2,176
  -2,278
  -2,386
  -2,500
  -2,619
  -2,745
  -2,878
  -3,017
  -3,164
  -3,318
New CAPEX, $m
  -2,441
  -117
  -152
  -168
  -184
  -201
  -217
  -234
  -251
  -268
  -286
  -305
  -324
  -343
  -364
  -385
  -407
  -430
  -454
  -479
  -505
  -533
  -561
  -591
  -622
  -655
  -689
  -725
  -763
  -802
  -843
Cash from investing activities, $m
  -5,770
  -1,124
  -1,182
  -1,227
  -1,275
  -1,328
  -1,383
  -1,441
  -1,503
  -1,568
  -1,638
  -1,712
  -1,790
  -1,871
  -1,958
  -2,049
  -2,145
  -2,246
  -2,353
  -2,465
  -2,584
  -2,709
  -2,839
  -2,977
  -3,122
  -3,274
  -3,434
  -3,603
  -3,780
  -3,966
  -4,161
Free cash flow, $m
  -1,195
  3,105
  3,153
  3,225
  3,306
  3,395
  3,492
  3,599
  3,713
  3,837
  3,969
  4,041
  4,192
  4,352
  4,523
  4,704
  4,896
  5,100
  5,314
  5,541
  5,781
  6,034
  6,301
  6,582
  6,878
  7,189
  7,518
  7,863
  8,227
  8,609
  9,012
Issuance/(repayment) of debt, $m
  339
  409
  473
  524
  574
  625
  676
  728
  781
  835
  891
  948
  1,008
  1,069
  1,133
  1,199
  1,268
  1,339
  1,414
  1,492
  1,573
  1,658
  1,747
  1,840
  1,937
  2,039
  2,146
  2,257
  2,374
  2,497
  2,625
Issuance/(repurchase) of shares, $m
  -1,189
  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 from financing (excl. dividends), $m  
  -858
  409
  473
  524
  574
  625
  676
  728
  781
  835
  891
  948
  1,008
  1,069
  1,133
  1,199
  1,268
  1,339
  1,414
  1,492
  1,573
  1,658
  1,747
  1,840
  1,937
  2,039
  2,146
  2,257
  2,374
  2,497
  2,625
Total cash flow (excl. dividends), $m
  -2,032
  3,515
  3,627
  3,749
  3,880
  4,020
  4,168
  4,326
  4,494
  4,672
  4,860
  4,989
  5,199
  5,421
  5,656
  5,903
  6,164
  6,439
  6,728
  7,033
  7,354
  7,692
  8,048
  8,422
  8,815
  9,228
  9,663
  10,120
  10,601
  11,106
  11,637
Retained Cash Flow (-), $m
  -1,083
  -348
  -377
  -417
  -457
  -497
  -538
  -579
  -621
  -664
  -709
  -754
  -801
  -850
  -901
  -954
  -1,008
  -1,065
  -1,125
  -1,187
  -1,251
  -1,319
  -1,390
  -1,463
  -1,541
  -1,622
  -1,706
  -1,795
  -1,888
  -1,986
  -2,088
Prev. year cash balance distribution, $m
 
  286
  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
 
  3,453
  3,250
  3,333
  3,423
  3,523
  3,631
  3,748
  3,873
  4,008
  4,151
  4,235
  4,398
  4,571
  4,755
  4,950
  5,156
  5,374
  5,604
  5,847
  6,103
  6,373
  6,658
  6,958
  7,274
  7,607
  7,957
  8,325
  8,713
  9,120
  9,549
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
 
  3,311
  2,976
  2,900
  2,819
  2,731
  2,635
  2,532
  2,421
  2,302
  2,176
  2,011
  1,877
  1,738
  1,596
  1,453
  1,310
  1,169
  1,032
  900
  776
  659
  552
  456
  370
  296
  232
  179
  135
  100
  72
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Magna International Inc. (Magna) is a global automotive supplier. The Company's segments are North America, Europe, Asia, Rest of World, and Corporate and Other. The Company's product capabilities include producing body, chassis, exterior, seating, powertrain, electronic, active driver assistance, vision, closure, and roof systems and modules, as well as vehicle engineering and contract manufacturing. The Company has over 320 manufacturing operations and approximately 100 product development, engineering and sales centers in over 30 countries. It provides a range of body, chassis and engineering solutions to its original equipment manufacturer (OEM) customers. It has capabilities in powertrain design, development, testing and manufacturing. It offers bumper fascia systems, exterior trim and modular systems. It offers exterior and interior mirror systems. It offers sealing, trim, engineered glass and module systems. It offers softtops, retractable hardtops, modular tops and hardtops.

FINANCIAL RATIOS  of  Magna International Inc. (MG)

Valuation Ratios
P/E Ratio 9.7
Price to Sales 0.5
Price to Book 2
Price to Tangible Book
Price to Cash Flow 5.8
Price to Free Cash Flow 12.5
Growth Rates
Sales Growth Rate 13.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.5%
Cap. Spend. - 3 Yr. Gr. Rate 9.1%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 24.5%
Total Debt to Equity 32.3%
Interest Coverage 29
Management Effectiveness
Return On Assets 10%
Ret/ On Assets - 3 Yr. Avg. 10.5%
Return On Total Capital 16.6%
Ret/ On T. Cap. - 3 Yr. Avg. 18.2%
Return On Equity 21.7%
Return On Equity - 3 Yr. Avg. 21.7%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 14.6%
Gross Margin - 3 Yr. Avg. 14.4%
EBITDA Margin 10.8%
EBITDA Margin - 3 Yr. Avg. 10.6%
Operating Margin 7.6%
Oper. Margin - 3 Yr. Avg. 7.8%
Pre-Tax Margin 7.6%
Pre-Tax Margin - 3 Yr. Avg. 7.8%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 25.4%
Eff/ Tax Rate - 3 Yr. Avg. 26.1%
Payout Ratio 19%

MG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MG stock intrinsic value calculation we used $49240 million for the last fiscal year's total revenue generated by Magna International Inc.. The default revenue input number comes from 2016 income statement of Magna International Inc.. 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 MG stock valuation model: a) initial revenue growth rate of 2.6% 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 MG is calculated based on our internal credit rating of Magna International Inc., 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 Magna International Inc..
    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 MG stock the variable cost ratio is equal to 91.7%.

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 MG 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 3.5% for Magna International Inc..

Corporate tax rate of 27% is the nominal tax rate for Magna International Inc.. 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 MG 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 MG are equal to 10.6%.

Life of production assets of 5.2 years is the average useful life of capital assets used in Magna International Inc. 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 MG is equal to 3.4%. 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 - $13197 million for Magna International Inc. - 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 370.408 million for Magna International Inc. 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 Magna International Inc. at the current share price and the inputted number of shares is $25.9 billion.

RELATED COMPANIES Price Int.Val. Rating
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Financial statements of MG
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.

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