Intrinsic value of Alimentation Couche-Tard Inc. Class B Su - ATD-B

Previous Close

$61.54

  Intrinsic Value

$100.20

stock screener

  Rating & Target

str. buy

+63%

  Value-price divergence*

+48%

Previous close

$61.54

 
Intrinsic value

$100.20

 
Up/down potential

+63%

 
Rating

str. buy

 
Value-price divergence*

+48%

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

We calculate the intrinsic value of ATD-B 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 35.2

 

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, %
  -1.12
  22.30
  20.57
  19.01
  17.61
  16.35
  15.22
  14.19
  13.27
  12.45
  11.70
  11.03
  10.43
  9.89
  9.40
  8.96
  8.56
  8.21
  7.89
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.81
Revenue, $m
  46,132
  56,419
  68,025
  80,958
  95,217
  110,785
  127,642
  145,759
  165,108
  185,659
  207,385
  230,264
  254,278
  279,417
  305,674
  333,056
  361,572
  391,241
  422,091
  454,156
  487,477
  522,104
  558,093
  595,505
  634,411
  674,887
  717,013
  760,878
  806,576
  854,208
  903,878
Variable operating expenses, $m
 
  54,222
  65,326
  77,701
  91,343
  106,239
  122,368
  139,703
  158,216
  177,879
  198,667
  220,318
  243,295
  267,347
  292,471
  318,670
  345,954
  374,342
  403,860
  434,539
  466,421
  499,553
  533,987
  569,783
  607,009
  645,736
  686,042
  728,013
  771,737
  817,311
  864,837
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
  43,876
  54,222
  65,326
  77,701
  91,343
  106,239
  122,368
  139,703
  158,216
  177,879
  198,667
  220,318
  243,295
  267,347
  292,471
  318,670
  345,954
  374,342
  403,860
  434,539
  466,421
  499,553
  533,987
  569,783
  607,009
  645,736
  686,042
  728,013
  771,737
  817,311
  864,837
Operating income, $m
  2,256
  2,197
  2,699
  3,257
  3,873
  4,546
  5,274
  6,056
  6,892
  7,780
  8,718
  9,946
  10,983
  12,069
  13,203
  14,386
  15,618
  16,899
  18,232
  19,617
  21,056
  22,552
  24,106
  25,722
  27,403
  29,151
  30,970
  32,865
  34,839
  36,896
  39,042
EBITDA, $m
  3,073
  3,113
  3,753
  4,467
  5,253
  6,112
  7,042
  8,042
  9,109
  10,243
  11,442
  12,704
  14,029
  15,416
  16,864
  18,375
  19,948
  21,585
  23,287
  25,056
  26,894
  28,805
  30,790
  32,854
  35,001
  37,234
  39,558
  41,978
  44,499
  47,127
  49,867
Interest expense (income), $m
  114
  143
  219
  305
  400
  506
  620
  745
  878
  1,021
  1,173
  1,333
  1,502
  1,679
  1,865
  2,058
  2,260
  2,471
  2,690
  2,917
  3,154
  3,400
  3,655
  3,921
  4,197
  4,484
  4,782
  5,093
  5,417
  5,754
  6,105
Earnings before tax, $m
  2,151
  2,054
  2,479
  2,952
  3,473
  4,040
  4,653
  5,311
  6,014
  6,758
  7,545
  8,613
  9,481
  10,390
  11,339
  12,328
  13,357
  14,428
  15,542
  16,700
  17,902
  19,152
  20,451
  21,802
  23,206
  24,667
  26,188
  27,772
  29,422
  31,143
  32,937
Tax expense, $m
  538
  555
  669
  797
  938
  1,091
  1,256
  1,434
  1,624
  1,825
  2,037
  2,325
  2,560
  2,805
  3,061
  3,328
  3,606
  3,896
  4,196
  4,509
  4,834
  5,171
  5,522
  5,886
  6,266
  6,660
  7,071
  7,498
  7,944
  8,408
  8,893
Net income, $m
  1,613
  1,499
  1,810
  2,155
  2,535
  2,949
  3,397
  3,877
  4,390
  4,934
  5,508
  6,287
  6,921
  7,585
  8,277
  8,999
  9,751
  10,533
  11,346
  12,191
  13,069
  13,981
  14,929
  15,915
  16,940
  18,007
  19,117
  20,274
  21,478
  22,734
  24,044

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  810
  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
  16,571
  19,276
  23,240
  27,659
  32,530
  37,849
  43,608
  49,798
  56,409
  63,430
  70,853
  78,669
  86,873
  95,462
  104,433
  113,787
  123,530
  133,666
  144,206
  155,161
  166,545
  178,375
  190,671
  203,452
  216,745
  230,573
  244,965
  259,951
  275,564
  291,837
  308,807
Adjusted assets (=assets-cash), $m
  15,761
  19,276
  23,240
  27,659
  32,530
  37,849
  43,608
  49,798
  56,409
  63,430
  70,853
  78,669
  86,873
  95,462
  104,433
  113,787
  123,530
  133,666
  144,206
  155,161
  166,545
  178,375
  190,671
  203,452
  216,745
  230,573
  244,965
  259,951
  275,564
  291,837
  308,807
Revenue / Adjusted assets
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
  2.927
Average production assets, $m
  4,764
  5,811
  7,007
  8,339
  9,807
  11,411
  13,147
  15,013
  17,006
  19,123
  21,361
  23,717
  26,191
  28,780
  31,484
  34,305
  37,242
  40,298
  43,475
  46,778
  50,210
  53,777
  57,484
  61,337
  65,344
  69,513
  73,852
  78,370
  83,077
  87,983
  93,099
Working capital, $m
  300
  -564
  -680
  -810
  -952
  -1,108
  -1,276
  -1,458
  -1,651
  -1,857
  -2,074
  -2,303
  -2,543
  -2,794
  -3,057
  -3,331
  -3,616
  -3,912
  -4,221
  -4,542
  -4,875
  -5,221
  -5,581
  -5,955
  -6,344
  -6,749
  -7,170
  -7,609
  -8,066
  -8,542
  -9,039
Total debt, $m
  4,134
  6,267
  8,713
  11,440
  14,445
  17,727
  21,280
  25,099
  29,178
  33,510
  38,090
  42,913
  47,975
  53,274
  58,809
  64,581
  70,592
  76,846
  83,349
  90,108
  97,132
  104,432
  112,018
  119,904
  128,105
  136,637
  145,517
  154,764
  164,397
  174,438
  184,908
Total liabilities, $m
  9,760
  11,893
  14,339
  17,066
  20,071
  23,353
  26,906
  30,725
  34,804
  39,136
  43,716
  48,539
  53,601
  58,900
  64,435
  70,207
  76,218
  82,472
  88,975
  95,734
  102,758
  110,058
  117,644
  125,530
  133,731
  142,263
  151,143
  160,390
  170,023
  180,064
  190,534
Total equity, $m
  6,811
  7,383
  8,901
  10,593
  12,459
  14,496
  16,702
  19,073
  21,604
  24,294
  27,137
  30,130
  33,273
  36,562
  39,998
  43,581
  47,312
  51,194
  55,231
  59,427
  63,787
  68,318
  73,027
  77,922
  83,013
  88,309
  93,822
  99,561
  105,541
  111,774
  118,273
Total liabilities and equity, $m
  16,571
  19,276
  23,240
  27,659
  32,530
  37,849
  43,608
  49,798
  56,408
  63,430
  70,853
  78,669
  86,874
  95,462
  104,433
  113,788
  123,530
  133,666
  144,206
  155,161
  166,545
  178,376
  190,671
  203,452
  216,744
  230,572
  244,965
  259,951
  275,564
  291,838
  308,807
Debt-to-equity ratio
  0.607
  0.850
  0.980
  1.080
  1.160
  1.220
  1.270
  1.320
  1.350
  1.380
  1.400
  1.420
  1.440
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.520
  1.520
  1.530
  1.530
  1.540
  1.540
  1.550
  1.550
  1.550
  1.560
  1.560
  1.560
Adjusted equity ratio
  0.381
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,613
  1,499
  1,810
  2,155
  2,535
  2,949
  3,397
  3,877
  4,390
  4,934
  5,508
  6,287
  6,921
  7,585
  8,277
  8,999
  9,751
  10,533
  11,346
  12,191
  13,069
  13,981
  14,929
  15,915
  16,940
  18,007
  19,117
  20,274
  21,478
  22,734
  24,044
Depreciation, amort., depletion, $m
  817
  915
  1,054
  1,209
  1,380
  1,566
  1,768
  1,985
  2,217
  2,463
  2,723
  2,758
  3,045
  3,346
  3,661
  3,989
  4,330
  4,686
  5,055
  5,439
  5,838
  6,253
  6,684
  7,132
  7,598
  8,083
  8,587
  9,113
  9,660
  10,231
  10,826
Funds from operations, $m
  2,672
  2,415
  2,864
  3,364
  3,915
  4,516
  5,165
  5,863
  6,607
  7,397
  8,231
  9,045
  9,967
  10,931
  11,938
  12,988
  14,081
  15,219
  16,401
  17,630
  18,907
  20,234
  21,613
  23,047
  24,539
  26,090
  27,705
  29,386
  31,138
  32,965
  34,869
Change in working capital, $m
  121
  -103
  -116
  -129
  -143
  -156
  -169
  -181
  -193
  -206
  -217
  -229
  -240
  -251
  -263
  -274
  -285
  -297
  -308
  -321
  -333
  -346
  -360
  -374
  -389
  -405
  -421
  -439
  -457
  -476
  -497
Cash from operations, $m
  2,551
  2,518
  2,980
  3,494
  4,058
  4,671
  5,334
  6,044
  6,800
  7,602
  8,449
  9,274
  10,207
  11,183
  12,201
  13,262
  14,366
  15,515
  16,710
  17,951
  19,240
  20,580
  21,973
  23,421
  24,928
  26,495
  28,126
  29,825
  31,595
  33,441
  35,366
Maintenance CAPEX, $m
  0
  -554
  -676
  -815
  -970
  -1,140
  -1,327
  -1,529
  -1,746
  -1,977
  -2,224
  -2,484
  -2,758
  -3,045
  -3,346
  -3,661
  -3,989
  -4,330
  -4,686
  -5,055
  -5,439
  -5,838
  -6,253
  -6,684
  -7,132
  -7,598
  -8,083
  -8,587
  -9,113
  -9,660
  -10,231
New CAPEX, $m
  -1,224
  -1,047
  -1,195
  -1,332
  -1,469
  -1,604
  -1,736
  -1,866
  -1,993
  -2,117
  -2,238
  -2,357
  -2,473
  -2,589
  -2,705
  -2,820
  -2,937
  -3,056
  -3,178
  -3,303
  -3,432
  -3,567
  -3,707
  -3,853
  -4,007
  -4,169
  -4,339
  -4,518
  -4,707
  -4,906
  -5,116
Cash from investing activities, $m
  -1,596
  -1,601
  -1,871
  -2,147
  -2,439
  -2,744
  -3,063
  -3,395
  -3,739
  -4,094
  -4,462
  -4,841
  -5,231
  -5,634
  -6,051
  -6,481
  -6,926
  -7,386
  -7,864
  -8,358
  -8,871
  -9,405
  -9,960
  -10,537
  -11,139
  -11,767
  -12,422
  -13,105
  -13,820
  -14,566
  -15,347
Free cash flow, $m
  955
  916
  1,109
  1,347
  1,619
  1,927
  2,271
  2,649
  3,062
  3,508
  3,987
  4,434
  4,976
  5,548
  6,150
  6,781
  7,440
  8,129
  8,846
  9,593
  10,369
  11,175
  12,013
  12,884
  13,788
  14,728
  15,704
  16,720
  17,776
  18,875
  20,019
Issuance/(repayment) of debt, $m
  422
  2,172
  2,446
  2,726
  3,006
  3,282
  3,553
  3,819
  4,079
  4,332
  4,580
  4,823
  5,062
  5,299
  5,535
  5,772
  6,011
  6,254
  6,503
  6,759
  7,024
  7,299
  7,586
  7,886
  8,201
  8,532
  8,880
  9,247
  9,633
  10,041
  10,470
Issuance/(repurchase) of shares, $m
  1
  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  
  -808
  2,172
  2,446
  2,726
  3,006
  3,282
  3,553
  3,819
  4,079
  4,332
  4,580
  4,823
  5,062
  5,299
  5,535
  5,772
  6,011
  6,254
  6,503
  6,759
  7,024
  7,299
  7,586
  7,886
  8,201
  8,532
  8,880
  9,247
  9,633
  10,041
  10,470
Total cash flow (excl. dividends), $m
  173
  3,088
  3,556
  4,073
  4,625
  5,209
  5,824
  6,468
  7,140
  7,840
  8,567
  9,256
  10,038
  10,847
  11,685
  12,553
  13,451
  14,383
  15,349
  16,352
  17,393
  18,475
  19,600
  20,770
  21,989
  23,260
  24,584
  25,966
  27,409
  28,915
  30,490
Retained Cash Flow (-), $m
  -1,557
  -1,343
  -1,519
  -1,692
  -1,866
  -2,037
  -2,206
  -2,371
  -2,532
  -2,689
  -2,843
  -2,994
  -3,142
  -3,289
  -3,436
  -3,583
  -3,731
  -3,882
  -4,037
  -4,196
  -4,360
  -4,531
  -4,709
  -4,895
  -5,091
  -5,296
  -5,512
  -5,740
  -5,980
  -6,233
  -6,499
Prev. year cash balance distribution, $m
 
  771
  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
 
  2,517
  2,037
  2,381
  2,759
  3,172
  3,618
  4,097
  4,609
  5,151
  5,724
  6,263
  6,895
  7,558
  8,249
  8,970
  9,720
  10,501
  11,312
  12,156
  13,033
  13,944
  14,890
  15,875
  16,898
  17,963
  19,072
  20,226
  21,429
  22,683
  23,990
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
 
  2,413
  1,865
  2,072
  2,272
  2,459
  2,626
  2,768
  2,881
  2,959
  3,001
  2,974
  2,943
  2,874
  2,769
  2,633
  2,470
  2,285
  2,083
  1,872
  1,656
  1,442
  1,236
  1,040
  861
  699
  556
  434
  332
  248
  181
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

Alimentation Couche-Tard Inc. operates and licenses convenience stores. The company’s convenience stores sell tobacco products, grocery items, beverages, and fresh food offerings, as well as offer other retail products and services, road transportation fuel, stationary energy, marine fuel, and chemicals. It operates its convenience store and road transportation fuel retailing chain under various banners, including Circle K, Couche-Tard, Mac’s, Kangaroo Express, Statoil, Ingo, Topaz, and Re.Store. The company is also involved in the sale of lottery tickets, calling cards, gift cards, postage stamps, and bus tickets; and issuance of money orders and cashing cheques, as well as automatic teller machines and car wash services. As of April 24, 2016, it operated and licensed 10,547 convenience stores, which include 7,929 company-operated stores located in North America, Ireland, Scandinavia, Poland, the Baltics, and Russia, as well as 1,500 stores, which are operated by independent operators under the Circle K banner in China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Malaysia, Mexico, the Philippines, the United Arab Emirates, and Vietnam. The company was formerly known as Actidev Inc. and changed its name to Alimentation Couche-Tard Inc. in December 1994. Alimentation Couche-Tard Inc. was founded in 1980 and is headquartered in Laval, Canada.

FINANCIAL RATIOS  of  Alimentation Couche-Tard Inc. Class B Su (ATD-B)

Valuation Ratios
P/E Ratio 21.7
Price to Sales 0.8
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 13.7
Price to Free Cash Flow 26.3
Growth Rates
Sales Growth Rate -1.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 42.8%
Cap. Spend. - 3 Yr. Gr. Rate 11%
Financial Strength
Quick Ratio 21
Current Ratio 0
LT Debt to Equity 60.1%
Total Debt to Equity 60.7%
Interest Coverage 20
Management Effectiveness
Return On Assets 10.8%
Ret/ On Assets - 3 Yr. Avg. 9.4%
Return On Total Capital 15.7%
Ret/ On T. Cap. - 3 Yr. Avg. 13.7%
Return On Equity 26.7%
Return On Equity - 3 Yr. Avg. 24.3%
Asset Turnover 2.9
Profitability Ratios
Gross Margin 17.8%
Gross Margin - 3 Yr. Avg. 15.4%
EBITDA Margin 6.7%
EBITDA Margin - 3 Yr. Avg. 5.3%
Operating Margin 4.9%
Oper. Margin - 3 Yr. Avg. 3.8%
Pre-Tax Margin 4.7%
Pre-Tax Margin - 3 Yr. Avg. 3.6%
Net Profit Margin 3.5%
Net Profit Margin - 3 Yr. Avg. 2.8%
Effective Tax Rate 25%
Eff/ Tax Rate - 3 Yr. Avg. 21.3%
Payout Ratio 8.7%

ATD-B stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ATD-B stock intrinsic value calculation we used $46132 million for the last fiscal year's total revenue generated by Alimentation Couche-Tard Inc. Class B Su. The default revenue input number comes from 2016 income statement of Alimentation Couche-Tard Inc. Class B Su. 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 ATD-B stock valuation model: a) initial revenue growth rate of 22.3% 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 ATD-B is calculated based on our internal credit rating of Alimentation Couche-Tard Inc. Class B Su, 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 Alimentation Couche-Tard Inc. Class B Su.
    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 ATD-B stock the variable cost ratio is equal to 96.2%.

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 ATD-B 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 Alimentation Couche-Tard Inc. Class B Su.

Corporate tax rate of 27% is the nominal tax rate for Alimentation Couche-Tard Inc. Class B Su. 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 ATD-B 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 ATD-B are equal to 10.3%.

Life of production assets of 8.6 years is the average useful life of capital assets used in Alimentation Couche-Tard Inc. Class B Su 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 ATD-B is equal to -1%. 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 - $6811 million for Alimentation Couche-Tard Inc. Class B Su - 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 571.684 million for Alimentation Couche-Tard Inc. Class B Su 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 Alimentation Couche-Tard Inc. Class B Su at the current share price and the inputted number of shares is $35.2 billion.

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Stock chart of ATD-B Financial statements of ATD-B
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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