Intrinsic value of Franco-Nevada Corporation - FNV

Previous Close

$98.14

  Intrinsic Value

$7.82

stock screener

  Rating & Target

str. sell

-92%

  Value-price divergence*

-77%

Previous close

$98.14

 
Intrinsic value

$7.82

 
Up/down potential

-92%

 
Rating

str. sell

 
Value-price divergence*

-77%

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

We calculate the intrinsic value of FNV 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 17.6

 

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, %
  37.56
  30.90
  28.31
  25.98
  23.88
  21.99
  20.29
  18.76
  17.39
  16.15
  15.03
  14.03
  13.13
  12.31
  11.58
  10.93
  10.33
  9.80
  9.32
  8.89
  8.50
  8.15
  7.83
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
Revenue, $m
  824
  1,079
  1,384
  1,744
  2,160
  2,635
  3,170
  3,764
  4,419
  5,133
  5,904
  6,733
  7,616
  8,554
  9,545
  10,588
  11,682
  12,827
  14,022
  15,269
  16,566
  17,916
  19,320
  20,778
  22,294
  23,870
  25,507
  27,209
  28,979
  30,821
  32,738
Variable operating expenses, $m
 
  403
  518
  652
  808
  985
  1,185
  1,408
  1,653
  1,920
  2,208
  2,518
  2,849
  3,199
  3,570
  3,960
  4,369
  4,797
  5,244
  5,710
  6,196
  6,701
  7,226
  7,771
  8,338
  8,927
  9,540
  10,176
  10,838
  11,527
  12,244
Fixed operating expenses, $m
 
  322
  330
  338
  347
  355
  364
  373
  383
  392
  402
  412
  422
  433
  444
  455
  466
  478
  490
  502
  515
  527
  541
  554
  568
  582
  597
  612
  627
  643
  659
Total operating expenses, $m
  614
  725
  848
  990
  1,155
  1,340
  1,549
  1,781
  2,036
  2,312
  2,610
  2,930
  3,271
  3,632
  4,014
  4,415
  4,835
  5,275
  5,734
  6,212
  6,711
  7,228
  7,767
  8,325
  8,906
  9,509
  10,137
  10,788
  11,465
  12,170
  12,903
Operating income, $m
  210
  353
  536
  753
  1,005
  1,294
  1,620
  1,983
  2,384
  2,821
  3,294
  3,803
  4,346
  4,922
  5,532
  6,173
  6,847
  7,552
  8,288
  9,056
  9,856
  10,688
  11,554
  12,453
  13,388
  14,360
  15,371
  16,421
  17,514
  18,651
  19,835
EBITDA, $m
  580
  839
  1,160
  1,539
  1,979
  2,482
  3,048
  3,680
  4,375
  5,134
  5,955
  6,837
  7,778
  8,777
  9,833
  10,945
  12,111
  13,332
  14,607
  15,937
  17,321
  18,762
  20,260
  21,817
  23,435
  25,117
  26,865
  28,683
  30,573
  32,540
  34,588
Interest expense (income), $m
  4
  0
  1
  2
  4
  6
  8
  10
  13
  16
  19
  22
  26
  29
  33
  38
  42
  47
  52
  57
  62
  68
  74
  80
  86
  93
  100
  107
  114
  122
  130
Earnings before tax, $m
  227
  353
  535
  751
  1,002
  1,288
  1,612
  1,973
  2,371
  2,805
  3,275
  3,781
  4,320
  4,893
  5,498
  6,136
  6,805
  7,505
  8,236
  8,999
  9,794
  10,620
  11,480
  12,373
  13,302
  14,268
  15,271
  16,315
  17,400
  18,530
  19,706
Tax expense, $m
  62
  95
  145
  203
  270
  348
  435
  533
  640
  757
  884
  1,021
  1,166
  1,321
  1,485
  1,657
  1,837
  2,026
  2,224
  2,430
  2,644
  2,867
  3,100
  3,341
  3,592
  3,852
  4,123
  4,405
  4,698
  5,003
  5,321
Net income, $m
  165
  258
  391
  548
  731
  941
  1,177
  1,440
  1,731
  2,048
  2,391
  2,760
  3,154
  3,572
  4,014
  4,479
  4,967
  5,479
  6,013
  6,569
  7,149
  7,753
  8,380
  9,033
  9,711
  10,415
  11,148
  11,910
  12,702
  13,527
  14,385

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  342
  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
  5,704
  7,004
  8,987
  11,322
  14,025
  17,110
  20,582
  24,444
  28,694
  33,328
  38,339
  43,718
  49,457
  55,548
  61,982
  68,754
  75,858
  83,292
  91,054
  99,146
  107,572
  116,338
  125,452
  134,924
  144,768
  154,997
  165,629
  176,682
  188,177
  200,137
  212,585
Adjusted assets (=assets-cash), $m
  5,362
  7,004
  8,987
  11,322
  14,025
  17,110
  20,582
  24,444
  28,694
  33,328
  38,339
  43,718
  49,457
  55,548
  61,982
  68,754
  75,858
  83,292
  91,054
  99,146
  107,572
  116,338
  125,452
  134,924
  144,768
  154,997
  165,629
  176,682
  188,177
  200,137
  212,585
Revenue / Adjusted assets
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
  0.154
Average production assets, $m
  4,679
  6,124
  7,858
  9,900
  12,264
  14,961
  17,997
  21,374
  25,091
  29,143
  33,524
  38,228
  43,246
  48,572
  54,198
  60,119
  66,331
  72,831
  79,619
  86,695
  94,063
  101,728
  109,697
  117,980
  126,587
  135,531
  144,828
  154,493
  164,544
  175,002
  185,887
Working capital, $m
  437
  124
  159
  201
  248
  303
  365
  433
  508
  590
  679
  774
  876
  984
  1,098
  1,218
  1,343
  1,475
  1,613
  1,756
  1,905
  2,060
  2,222
  2,390
  2,564
  2,745
  2,933
  3,129
  3,333
  3,544
  3,765
Total debt, $m
  0
  31
  69
  113
  164
  223
  289
  362
  443
  531
  626
  729
  838
  953
  1,076
  1,204
  1,339
  1,481
  1,628
  1,782
  1,942
  2,108
  2,282
  2,462
  2,649
  2,843
  3,045
  3,255
  3,473
  3,701
  3,937
Total liabilities, $m
  101
  133
  171
  215
  266
  325
  391
  464
  545
  633
  728
  831
  940
  1,055
  1,178
  1,306
  1,441
  1,583
  1,730
  1,884
  2,044
  2,210
  2,384
  2,564
  2,751
  2,945
  3,147
  3,357
  3,575
  3,803
  4,039
Total equity, $m
  5,602
  6,871
  8,816
  11,106
  13,759
  16,785
  20,191
  23,980
  28,149
  32,695
  37,610
  42,887
  48,518
  54,493
  60,805
  67,448
  74,417
  81,709
  89,324
  97,262
  105,528
  114,128
  123,069
  132,361
  142,017
  152,052
  162,482
  173,325
  184,602
  196,334
  208,546
Total liabilities and equity, $m
  5,703
  7,004
  8,987
  11,321
  14,025
  17,110
  20,582
  24,444
  28,694
  33,328
  38,338
  43,718
  49,458
  55,548
  61,983
  68,754
  75,858
  83,292
  91,054
  99,146
  107,572
  116,338
  125,453
  134,925
  144,768
  154,997
  165,629
  176,682
  188,177
  200,137
  212,585
Debt-to-equity ratio
  0.000
  0.000
  0.010
  0.010
  0.010
  0.010
  0.010
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
Adjusted equity ratio
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981
  0.981

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  165
  258
  391
  548
  731
  941
  1,177
  1,440
  1,731
  2,048
  2,391
  2,760
  3,154
  3,572
  4,014
  4,479
  4,967
  5,479
  6,013
  6,569
  7,149
  7,753
  8,380
  9,033
  9,711
  10,415
  11,148
  11,910
  12,702
  13,527
  14,385
Depreciation, amort., depletion, $m
  370
  486
  624
  786
  973
  1,187
  1,428
  1,696
  1,991
  2,313
  2,661
  3,034
  3,432
  3,855
  4,301
  4,771
  5,264
  5,780
  6,319
  6,881
  7,465
  8,074
  8,706
  9,363
  10,047
  10,756
  11,494
  12,261
  13,059
  13,889
  14,753
Funds from operations, $m
  645
  744
  1,014
  1,334
  1,704
  2,128
  2,605
  3,137
  3,722
  4,361
  5,052
  5,794
  6,586
  7,427
  8,315
  9,250
  10,232
  11,259
  12,332
  13,450
  14,615
  15,826
  17,086
  18,396
  19,757
  21,172
  22,642
  24,171
  25,761
  27,416
  29,138
Change in working capital, $m
  9
  29
  35
  41
  48
  55
  61
  68
  75
  82
  89
  95
  102
  108
  114
  120
  126
  132
  137
  143
  149
  155
  161
  168
  174
  181
  188
  196
  204
  212
  220
Cash from operations, $m
  636
  715
  979
  1,292
  1,657
  2,073
  2,544
  3,068
  3,647
  4,279
  4,963
  5,699
  6,484
  7,319
  8,201
  9,131
  10,106
  11,127
  12,194
  13,307
  14,465
  15,671
  16,925
  18,228
  19,583
  20,991
  22,454
  23,975
  25,558
  27,204
  28,918
Maintenance CAPEX, $m
  0
  -371
  -486
  -624
  -786
  -973
  -1,187
  -1,428
  -1,696
  -1,991
  -2,313
  -2,661
  -3,034
  -3,432
  -3,855
  -4,301
  -4,771
  -5,264
  -5,780
  -6,319
  -6,881
  -7,465
  -8,074
  -8,706
  -9,363
  -10,047
  -10,756
  -11,494
  -12,261
  -13,059
  -13,889
New CAPEX, $m
  -1,009
  -1,445
  -1,734
  -2,041
  -2,364
  -2,697
  -3,036
  -3,377
  -3,717
  -4,052
  -4,381
  -4,704
  -5,018
  -5,326
  -5,626
  -5,921
  -6,212
  -6,500
  -6,787
  -7,076
  -7,368
  -7,665
  -7,969
  -8,283
  -8,607
  -8,945
  -9,297
  -9,665
  -10,051
  -10,458
  -10,885
Cash from investing activities, $m
  -932
  -1,816
  -2,220
  -2,665
  -3,150
  -3,670
  -4,223
  -4,805
  -5,413
  -6,043
  -6,694
  -7,365
  -8,052
  -8,758
  -9,481
  -10,222
  -10,983
  -11,764
  -12,567
  -13,395
  -14,249
  -15,130
  -16,043
  -16,989
  -17,970
  -18,992
  -20,053
  -21,159
  -22,312
  -23,517
  -24,774
Free cash flow, $m
  -296
  -1,102
  -1,240
  -1,373
  -1,493
  -1,597
  -1,680
  -1,737
  -1,766
  -1,765
  -1,731
  -1,666
  -1,568
  -1,439
  -1,280
  -1,092
  -877
  -637
  -374
  -88
  217
  541
  882
  1,239
  1,612
  1,999
  2,401
  2,816
  3,245
  3,687
  4,144
Issuance/(repayment) of debt, $m
  -621
  31
  38
  44
  51
  59
  66
  73
  81
  88
  95
  102
  109
  116
  122
  129
  135
  141
  147
  154
  160
  167
  173
  180
  187
  194
  202
  210
  218
  227
  237
Issuance/(repurchase) of shares, $m
  1,216
  1,353
  1,554
  1,742
  1,921
  2,085
  2,229
  2,348
  2,439
  2,498
  2,524
  2,517
  2,476
  2,403
  2,298
  2,164
  2,002
  1,814
  1,602
  1,369
  1,117
  847
  561
  260
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  595
  1,384
  1,592
  1,786
  1,972
  2,144
  2,295
  2,421
  2,520
  2,586
  2,619
  2,619
  2,585
  2,519
  2,420
  2,293
  2,137
  1,955
  1,749
  1,523
  1,277
  1,014
  734
  440
  187
  194
  202
  210
  218
  227
  237
Total cash flow (excl. dividends), $m
  300
  282
  352
  414
  479
  547
  616
  685
  753
  821
  888
  954
  1,017
  1,080
  1,141
  1,200
  1,259
  1,318
  1,376
  1,435
  1,494
  1,554
  1,616
  1,679
  1,799
  2,194
  2,603
  3,026
  3,463
  3,915
  4,380
Retained Cash Flow (-), $m
  -1,329
  -1,611
  -1,945
  -2,290
  -2,652
  -3,026
  -3,406
  -3,789
  -4,170
  -4,546
  -4,915
  -5,277
  -5,630
  -5,975
  -6,312
  -6,643
  -6,969
  -7,292
  -7,615
  -7,939
  -8,266
  -8,599
  -8,941
  -9,292
  -9,656
  -10,035
  -10,430
  -10,843
  -11,277
  -11,732
  -12,212
Prev. year cash balance distribution, $m
 
  342
  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
 
  -987
  -1,594
  -1,876
  -2,173
  -2,479
  -2,791
  -3,104
  -3,416
  -3,724
  -4,027
  -4,323
  -4,613
  -4,895
  -5,171
  -5,443
  -5,710
  -5,975
  -6,239
  -6,504
  -6,772
  -7,045
  -7,325
  -7,613
  -7,857
  -7,841
  -7,827
  -7,817
  -7,813
  -7,818
  -7,832
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
 
  -946
  -1,459
  -1,633
  -1,789
  -1,922
  -2,025
  -2,097
  -2,135
  -2,139
  -2,111
  -2,053
  -1,968
  -1,861
  -1,736
  -1,598
  -1,451
  -1,300
  -1,149
  -1,001
  -861
  -729
  -608
  -499
  -400
  -305
  -228
  -168
  -121
  -85
  -59
Current shareholders' claim on cash, %
  100
  92.4
  86.2
  81.1
  76.9
  73.3
  70.3
  67.8
  65.7
  63.9
  62.4
  61.1
  60.0
  59.0
  58.2
  57.6
  57.1
  56.6
  56.3
  56.0
  55.8
  55.6
  55.6
  55.5
  55.5
  55.5
  55.5
  55.5
  55.5
  55.5
  55.5

Franco-Nevada Corporation operates as a gold-focused royalty and stream company in the United States, Canada, Mexico, Peru, Chile, and Africa. It also has interests in silver ores; platinum group metals, including palladium; other minerals comprising base metals, iron ore, coal, and industrial and miscellaneous minerals; and oil and gas properties. As of March 10, 2016, the company had 262 mineral assets and 78 oil and gas assets. Franco-Nevada Corporation was incorporated in 2007 and is headquartered in Toronto, Canada.

FINANCIAL RATIOS  of  Franco-Nevada Corporation (FNV)

Valuation Ratios
P/E Ratio 106.2
Price to Sales 21.3
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 27.5
Price to Free Cash Flow -47
Growth Rates
Sales Growth Rate 37.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -26.8%
Cap. Spend. - 3 Yr. Gr. Rate 39.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0.3
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 58
Management Effectiveness
Return On Assets 3.1%
Ret/ On Assets - 3 Yr. Avg. 2.4%
Return On Total Capital 3.1%
Ret/ On T. Cap. - 3 Yr. Avg. 2.4%
Return On Equity 3.3%
Return On Equity - 3 Yr. Avg. 2.5%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 37.9%
Gross Margin - 3 Yr. Avg. 66.8%
EBITDA Margin 72.9%
EBITDA Margin - 3 Yr. Avg. 68.6%
Operating Margin 25.5%
Oper. Margin - 3 Yr. Avg. 24.1%
Pre-Tax Margin 27.5%
Pre-Tax Margin - 3 Yr. Avg. 24.7%
Net Profit Margin 20%
Net Profit Margin - 3 Yr. Avg. 16.5%
Effective Tax Rate 27.3%
Eff/ Tax Rate - 3 Yr. Avg. 36.5%
Payout Ratio 97%

FNV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FNV stock intrinsic value calculation we used $824 million for the last fiscal year's total revenue generated by Franco-Nevada Corporation. The default revenue input number comes from 2016 income statement of Franco-Nevada 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 FNV stock valuation model: a) initial revenue growth rate of 30.9% 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 FNV is calculated based on our internal credit rating of Franco-Nevada 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 Franco-Nevada 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 FNV stock the variable cost ratio is equal to 37.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $314 million in the base year in the intrinsic value calculation for FNV 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 Franco-Nevada Corporation.

Corporate tax rate of 27% is the nominal tax rate for Franco-Nevada 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 FNV 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 FNV are equal to 567.8%.

Life of production assets of 12.6 years is the average useful life of capital assets used in Franco-Nevada 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 FNV is equal to 11.5%. 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 - $5602 million for Franco-Nevada 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 179.15 million for Franco-Nevada 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 Franco-Nevada Corporation at the current share price and the inputted number of shares is $17.6 billion.

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Stock chart of FNV Financial statements of FNV
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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