Intrinsic value of Methanex Corporation - MX

Previous Close

$63.69

  Intrinsic Value

$722.90

stock screener

  Rating & Target

str. buy

+999%

Previous close

$63.69

 
Intrinsic value

$722.90

 
Up/down potential

+999%

 
Rating

str. buy

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

We calculate the intrinsic value of MX 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 5.5

 

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, %
  -10.21
  43.00
  39.20
  35.78
  32.70
  29.93
  27.44
  25.19
  23.18
  21.36
  19.72
  18.25
  16.92
  15.73
  14.66
  13.69
  12.82
  12.04
  11.34
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
Revenue, $m
  2,700
  3,861
  5,375
  7,298
  9,684
  12,583
  16,035
  20,075
  24,727
  30,009
  35,927
  42,484
  49,674
  57,489
  65,916
  74,942
  84,552
  94,734
  105,474
  116,763
  128,595
  140,966
  153,876
  167,328
  181,330
  195,892
  211,031
  226,764
  243,113
  260,103
  277,764
Variable operating expenses, $m
 
  691
  962
  1,306
  1,733
  2,252
  2,870
  3,593
  4,426
  5,372
  6,431
  7,605
  8,892
  10,290
  11,799
  13,415
  15,135
  16,957
  18,880
  20,901
  23,019
  25,233
  27,544
  29,952
  32,458
  35,065
  37,775
  40,591
  43,517
  46,558
  49,720
Fixed operating expenses, $m
 
  2,258
  2,315
  2,372
  2,432
  2,492
  2,555
  2,619
  2,684
  2,751
  2,820
  2,891
  2,963
  3,037
  3,113
  3,191
  3,270
  3,352
  3,436
  3,522
  3,610
  3,700
  3,793
  3,887
  3,985
  4,084
  4,186
  4,291
  4,398
  4,508
  4,621
Total operating expenses, $m
  2,662
  2,949
  3,277
  3,678
  4,165
  4,744
  5,425
  6,212
  7,110
  8,123
  9,251
  10,496
  11,855
  13,327
  14,912
  16,606
  18,405
  20,309
  22,316
  24,423
  26,629
  28,933
  31,337
  33,839
  36,443
  39,149
  41,961
  44,882
  47,915
  51,066
  54,341
Operating income, $m
  38
  912
  2,098
  3,619
  5,519
  7,838
  10,610
  13,863
  17,617
  21,886
  26,676
  31,988
  37,819
  44,161
  51,004
  58,337
  66,147
  74,424
  83,158
  92,341
  101,967
  112,033
  122,539
  133,489
  144,887
  156,743
  169,070
  181,882
  195,197
  209,036
  223,423
EBITDA, $m
  346
  1,351
  2,709
  4,449
  6,621
  9,269
  12,434
  16,147
  20,430
  25,300
  30,763
  36,822
  43,471
  50,702
  58,503
  66,863
  75,766
  85,202
  95,158
  105,625
  116,597
  128,070
  140,045
  152,525
  165,516
  179,030
  193,079
  207,680
  222,856
  238,628
  255,024
Interest expense (income), $m
  112
  110
  201
  320
  471
  659
  887
  1,158
  1,475
  1,841
  2,256
  2,721
  3,237
  3,802
  4,416
  5,079
  5,788
  6,543
  7,344
  8,188
  9,075
  10,005
  10,977
  11,992
  13,049
  14,150
  15,294
  16,484
  17,721
  19,006
  20,341
Earnings before tax, $m
  -51
  802
  1,897
  3,299
  5,048
  7,179
  9,723
  12,705
  16,142
  20,045
  24,420
  29,267
  34,583
  40,359
  46,588
  53,258
  60,359
  67,881
  75,815
  84,153
  92,892
  102,028
  111,562
  121,497
  131,838
  142,593
  153,776
  165,398
  177,476
  190,030
  203,082
Tax expense, $m
  -13
  217
  512
  891
  1,363
  1,938
  2,625
  3,430
  4,358
  5,412
  6,593
  7,902
  9,337
  10,897
  12,579
  14,380
  16,297
  18,328
  20,470
  22,721
  25,081
  27,548
  30,122
  32,804
  35,596
  38,500
  41,519
  44,657
  47,919
  51,308
  54,832
Net income, $m
  -17
  586
  1,385
  2,408
  3,685
  5,241
  7,098
  9,275
  11,783
  14,633
  17,826
  21,365
  25,245
  29,462
  34,009
  38,878
  44,062
  49,553
  55,345
  61,432
  67,811
  74,480
  81,440
  88,692
  96,241
  104,093
  112,256
  120,740
  129,558
  138,722
  148,250

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  302
  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
  6,156
  8,375
  11,658
  15,830
  21,006
  27,294
  34,783
  43,547
  53,639
  65,095
  77,933
  92,155
  107,752
  124,704
  142,985
  162,564
  183,411
  205,496
  228,794
  253,283
  278,949
  305,783
  333,787
  362,967
  393,340
  424,929
  457,768
  491,895
  527,359
  564,215
  602,524
Adjusted assets (=assets-cash), $m
  5,854
  8,375
  11,658
  15,830
  21,006
  27,294
  34,783
  43,547
  53,639
  65,095
  77,933
  92,155
  107,752
  124,704
  142,985
  162,564
  183,411
  205,496
  228,794
  253,283
  278,949
  305,783
  333,787
  362,967
  393,340
  424,929
  457,768
  491,895
  527,359
  564,215
  602,524
Revenue / Adjusted assets
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
Average production assets, $m
  4,240
  6,062
  8,438
  11,457
  15,204
  19,755
  25,175
  31,518
  38,822
  47,114
  56,405
  66,699
  77,988
  90,257
  103,488
  117,659
  132,747
  148,732
  165,594
  183,319
  201,895
  221,317
  241,585
  262,704
  284,687
  307,551
  331,319
  356,019
  381,687
  408,362
  436,089
Working capital, $m
  566
  483
  672
  912
  1,210
  1,573
  2,004
  2,509
  3,091
  3,751
  4,491
  5,310
  6,209
  7,186
  8,239
  9,368
  10,569
  11,842
  13,184
  14,595
  16,074
  17,621
  19,234
  20,916
  22,666
  24,487
  26,379
  28,345
  30,389
  32,513
  34,720
Total debt, $m
  2,103
  3,724
  5,927
  8,726
  12,199
  16,418
  21,443
  27,324
  34,096
  41,782
  50,397
  59,940
  70,406
  81,780
  94,047
  107,184
  121,173
  135,992
  151,625
  168,057
  185,279
  203,285
  222,075
  241,655
  262,035
  283,231
  305,266
  328,166
  351,962
  376,692
  402,398
Total liabilities, $m
  3,999
  5,620
  7,823
  10,622
  14,095
  18,314
  23,339
  29,220
  35,992
  43,678
  52,293
  61,836
  72,302
  83,676
  95,943
  109,080
  123,069
  137,888
  153,521
  169,953
  187,175
  205,181
  223,971
  243,551
  263,931
  285,127
  307,162
  330,062
  353,858
  378,588
  404,294
Total equity, $m
  2,157
  2,755
  3,836
  5,208
  6,911
  8,980
  11,444
  14,327
  17,647
  21,416
  25,640
  30,319
  35,450
  41,028
  47,042
  53,483
  60,342
  67,608
  75,273
  83,330
  91,774
  100,603
  109,816
  119,416
  129,409
  139,802
  150,606
  161,834
  173,501
  185,627
  198,231
Total liabilities and equity, $m
  6,156
  8,375
  11,659
  15,830
  21,006
  27,294
  34,783
  43,547
  53,639
  65,094
  77,933
  92,155
  107,752
  124,704
  142,985
  162,563
  183,411
  205,496
  228,794
  253,283
  278,949
  305,784
  333,787
  362,967
  393,340
  424,929
  457,768
  491,896
  527,359
  564,215
  602,525
Debt-to-equity ratio
  0.975
  1.350
  1.550
  1.680
  1.770
  1.830
  1.870
  1.910
  1.930
  1.950
  1.970
  1.980
  1.990
  1.990
  2.000
  2.000
  2.010
  2.010
  2.010
  2.020
  2.020
  2.020
  2.020
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
Adjusted equity ratio
  0.317
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -17
  586
  1,385
  2,408
  3,685
  5,241
  7,098
  9,275
  11,783
  14,633
  17,826
  21,365
  25,245
  29,462
  34,009
  38,878
  44,062
  49,553
  55,345
  61,432
  67,811
  74,480
  81,440
  88,692
  96,241
  104,093
  112,256
  120,740
  129,558
  138,722
  148,250
Depreciation, amort., depletion, $m
  308
  439
  611
  830
  1,102
  1,431
  1,824
  2,284
  2,813
  3,414
  4,087
  4,833
  5,651
  6,540
  7,499
  8,526
  9,619
  10,778
  12,000
  13,284
  14,630
  16,037
  17,506
  19,037
  20,630
  22,286
  24,009
  25,798
  27,658
  29,591
  31,601
Funds from operations, $m
  276
  1,025
  1,996
  3,238
  4,786
  6,672
  8,922
  11,558
  14,597
  18,047
  21,914
  26,198
  30,897
  36,003
  41,508
  47,404
  53,682
  60,331
  67,344
  74,716
  82,441
  90,518
  98,946
  107,729
  116,871
  126,380
  136,265
  146,539
  157,216
  168,314
  179,850
Change in working capital, $m
  -62
  145
  189
  240
  298
  362
  432
  505
  582
  660
  740
  820
  899
  977
  1,053
  1,128
  1,201
  1,273
  1,343
  1,411
  1,479
  1,546
  1,614
  1,682
  1,750
  1,820
  1,892
  1,967
  2,044
  2,124
  2,208
Cash from operations, $m
  338
  880
  1,807
  2,998
  4,488
  6,310
  8,491
  11,053
  14,015
  17,386
  21,174
  25,379
  29,998
  35,026
  40,455
  46,276
  52,480
  59,058
  66,002
  73,305
  80,962
  88,972
  97,333
  106,048
  115,121
  124,559
  134,372
  144,572
  155,173
  166,190
  177,643
Maintenance CAPEX, $m
  0
  -307
  -439
  -611
  -830
  -1,102
  -1,431
  -1,824
  -2,284
  -2,813
  -3,414
  -4,087
  -4,833
  -5,651
  -6,540
  -7,499
  -8,526
  -9,619
  -10,778
  -12,000
  -13,284
  -14,630
  -16,037
  -17,506
  -19,037
  -20,630
  -22,286
  -24,009
  -25,798
  -27,658
  -29,591
New CAPEX, $m
  -135
  -1,822
  -2,376
  -3,019
  -3,747
  -4,551
  -5,420
  -6,343
  -7,304
  -8,292
  -9,292
  -10,294
  -11,289
  -12,269
  -13,231
  -14,171
  -15,088
  -15,985
  -16,862
  -17,725
  -18,576
  -19,422
  -20,268
  -21,120
  -21,983
  -22,864
  -23,768
  -24,700
  -25,668
  -26,675
  -27,727
Cash from investing activities, $m
  -119
  -2,129
  -2,815
  -3,630
  -4,577
  -5,653
  -6,851
  -8,167
  -9,588
  -11,105
  -12,706
  -14,381
  -16,122
  -17,920
  -19,771
  -21,670
  -23,614
  -25,604
  -27,640
  -29,725
  -31,860
  -34,052
  -36,305
  -38,626
  -41,020
  -43,494
  -46,054
  -48,709
  -51,466
  -54,333
  -57,318
Free cash flow, $m
  219
  -1,249
  -1,009
  -633
  -89
  657
  1,639
  2,886
  4,427
  6,282
  8,468
  10,997
  13,876
  17,105
  20,684
  24,606
  28,866
  33,454
  38,362
  43,581
  49,102
  54,919
  61,027
  67,422
  74,101
  81,066
  88,319
  95,863
  103,706
  111,856
  120,324
Issuance/(repayment) of debt, $m
  23
  1,694
  2,203
  2,799
  3,474
  4,219
  5,025
  5,880
  6,772
  7,687
  8,614
  9,543
  10,466
  11,375
  12,266
  13,138
  13,988
  14,819
  15,633
  16,432
  17,222
  18,006
  18,790
  19,580
  20,380
  21,197
  22,035
  22,900
  23,796
  24,730
  25,706
Issuance/(repurchase) of shares, $m
  2
  242
  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  
  -127
  1,936
  2,203
  2,799
  3,474
  4,219
  5,025
  5,880
  6,772
  7,687
  8,614
  9,543
  10,466
  11,375
  12,266
  13,138
  13,988
  14,819
  15,633
  16,432
  17,222
  18,006
  18,790
  19,580
  20,380
  21,197
  22,035
  22,900
  23,796
  24,730
  25,706
Total cash flow (excl. dividends), $m
  91
  686
  1,194
  2,166
  3,385
  4,876
  6,664
  8,767
  11,199
  13,969
  17,082
  20,541
  24,341
  28,480
  32,950
  37,744
  42,854
  48,273
  53,995
  60,013
  66,324
  72,925
  79,817
  87,002
  94,481
  102,263
  110,353
  118,763
  127,503
  136,587
  146,030
Retained Cash Flow (-), $m
  166
  -827
  -1,080
  -1,372
  -1,703
  -2,069
  -2,464
  -2,883
  -3,320
  -3,769
  -4,224
  -4,679
  -5,131
  -5,577
  -6,014
  -6,442
  -6,859
  -7,266
  -7,665
  -8,057
  -8,444
  -8,829
  -9,213
  -9,600
  -9,993
  -10,393
  -10,804
  -11,228
  -11,668
  -12,126
  -12,604
Prev. year cash balance distribution, $m
 
  229
  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
 
  88
  114
  794
  1,682
  2,808
  4,200
  5,884
  7,878
  10,200
  12,859
  15,862
  19,210
  22,903
  26,936
  31,302
  35,995
  41,007
  46,330
  51,956
  57,880
  64,097
  70,604
  77,401
  84,489
  91,870
  99,549
  107,535
  115,835
  124,461
  133,426
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  82
  99
  631
  1,221
  1,846
  2,478
  3,088
  3,640
  4,106
  4,460
  4,683
  4,768
  4,714
  4,532
  4,241
  3,864
  3,429
  2,964
  2,495
  2,045
  1,631
  1,265
  954
  699
  497
  342
  228
  147
  92
  55
Current shareholders' claim on cash, %
  100
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3
  95.3

Methanex Corp is a Canada-based producer and supplier of methanol to a range of international markets. The Company operates production sites in Canada, Chile, Egypt, New Zealand, the United States, as well as Trinidad and Tobago. Its global operations are supported by a global supply chain of terminals, storage facilities and a fleet of methanol ocean tankers. The Company's subsidiary, Waterfront Shipping Company Limited, operates its fleet, which is made up of over 20 vessels ranging from 3,000 to 50,000 deadweight tons of capacity. It has over three production facilities in New Zealand that supply methanol primarily to customers in Asia Pacific. The Company operates over two plants in Trinidad, Titan and Atlas, which supply methanol to markets in North America, Europe, Asia Pacific and South America. Its joint venture facility in Egypt supplies methanol to markets in Europe and Asia Pacific. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

FINANCIAL RATIOS  of  Methanex Corporation (MX)

Valuation Ratios
P/E Ratio -336.5
Price to Sales 2.1
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 16.9
Price to Free Cash Flow 28.2
Growth Rates
Sales Growth Rate -10.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -76.5%
Cap. Spend. - 3 Yr. Gr. Rate -29.6%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 94.1%
Total Debt to Equity 97.5%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital -0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.6%
Return On Equity -0.8%
Return On Equity - 3 Yr. Avg. 12.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 25.3%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin 13.7%
EBITDA Margin - 3 Yr. Avg. 20.8%
Operating Margin 1.4%
Oper. Margin - 3 Yr. Avg. 11.2%
Pre-Tax Margin -1.9%
Pre-Tax Margin - 3 Yr. Avg. 9.4%
Net Profit Margin -0.6%
Net Profit Margin - 3 Yr. Avg. 7.5%
Effective Tax Rate 25.5%
Eff/ Tax Rate - 3 Yr. Avg. 18.1%
Payout Ratio -782.4%

MX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MX stock intrinsic value calculation we used $2700 million for the last fiscal year's total revenue generated by Methanex Corporation. The default revenue input number comes from 2016 income statement of Methanex Corporation. 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 MX stock valuation model: a) initial revenue growth rate of 43% 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 7.2%, whose default value for MX is calculated based on our internal credit rating of Methanex Corporation, 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 Methanex Corporation.
    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 MX stock the variable cost ratio is equal to 17.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2203 million in the base year in the intrinsic value calculation for MX 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 5.4% for Methanex Corporation.

Corporate tax rate of 27% is the nominal tax rate for Methanex Corporation. 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 MX 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 MX are equal to 157%.

Life of production assets of 13.8 years is the average useful life of capital assets used in Methanex Corporation 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 MX is equal to 12.5%. 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 - $2157 million for Methanex Corporation - 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 86.171 million for Methanex Corporation 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 Methanex Corporation at the current share price and the inputted number of shares is $5.5 billion.

RELATED COMPANIES Price Int.Val. Rating
SJ Stella-Jones I 49.11 22.27  str.sell
Financial statements of MX
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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