Intrinsic value of Magna International Inc. - MG

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$59.77

  Intrinsic Value

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  Value-price divergence*

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$59.77

 
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*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 22.8

 

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
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
Revenue, $m
  49,240
  51,850
  54,582
  57,444
  60,442
  63,583
  66,875
  70,325
  73,942
  77,735
  81,712
  85,883
  90,258
  94,847
  99,662
  104,713
  110,014
  115,576
  121,412
  127,537
  133,966
  140,713
  147,795
  155,228
  163,031
  171,222
  179,820
  188,846
  198,321
  208,268
  218,711
Variable operating expenses, $m
 
  47,532
  50,024
  52,633
  55,366
  58,230
  61,231
  64,377
  67,675
  71,132
  74,758
  78,301
  82,290
  86,474
  90,864
  95,470
  100,302
  105,373
  110,694
  116,279
  122,140
  128,292
  134,748
  141,525
  148,639
  156,107
  163,946
  172,175
  180,814
  189,883
  199,404
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
  47,532
  50,024
  52,633
  55,366
  58,230
  61,231
  64,377
  67,675
  71,132
  74,758
  78,301
  82,290
  86,474
  90,864
  95,470
  100,302
  105,373
  110,694
  116,279
  122,140
  128,292
  134,748
  141,525
  148,639
  156,107
  163,946
  172,175
  180,814
  189,883
  199,404
Operating income, $m
  3,756
  4,317
  4,559
  4,811
  5,076
  5,353
  5,644
  5,948
  6,268
  6,602
  6,953
  7,581
  7,968
  8,373
  8,798
  9,244
  9,712
  10,203
  10,718
  11,259
  11,826
  12,422
  13,047
  13,703
  14,392
  15,115
  15,874
  16,671
  17,507
  18,385
  19,307
EBITDA, $m
  5,183
  5,634
  5,931
  6,242
  6,568
  6,909
  7,267
  7,642
  8,035
  8,447
  8,879
  9,332
  9,807
  10,306
  10,829
  11,378
  11,954
  12,559
  13,193
  13,858
  14,557
  15,290
  16,060
  16,867
  17,715
  18,605
  19,539
  20,520
  21,550
  22,631
  23,765
Interest expense (income), $m
  134
  113
  143
  174
  207
  242
  278
  316
  356
  398
  442
  488
  536
  586
  639
  695
  753
  815
  879
  946
  1,017
  1,091
  1,169
  1,251
  1,337
  1,427
  1,522
  1,621
  1,725
  1,834
  1,949
Earnings before tax, $m
  3,756
  4,204
  4,416
  4,637
  4,868
  5,111
  5,365
  5,632
  5,911
  6,204
  6,512
  7,094
  7,432
  7,786
  8,158
  8,549
  8,958
  9,388
  9,839
  10,312
  10,809
  11,330
  11,878
  12,452
  13,055
  13,688
  14,352
  15,050
  15,782
  16,551
  17,358
Tax expense, $m
  954
  1,135
  1,192
  1,252
  1,314
  1,380
  1,449
  1,521
  1,596
  1,675
  1,758
  1,915
  2,007
  2,102
  2,203
  2,308
  2,419
  2,535
  2,657
  2,784
  2,918
  3,059
  3,207
  3,362
  3,525
  3,696
  3,875
  4,063
  4,261
  4,469
  4,687
Net income, $m
  2,744
  3,069
  3,223
  3,385
  3,554
  3,731
  3,917
  4,111
  4,315
  4,529
  4,753
  5,178
  5,425
  5,684
  5,956
  6,241
  6,539
  6,853
  7,182
  7,528
  7,891
  8,271
  8,671
  9,090
  9,530
  9,992
  10,477
  10,986
  11,521
  12,082
  12,671

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
  30,717
  32,335
  34,031
  35,807
  37,668
  39,618
  41,662
  43,805
  46,051
  48,407
  50,878
  53,470
  56,189
  59,041
  62,034
  65,174
  68,469
  71,927
  75,555
  79,364
  83,361
  87,556
  91,960
  96,582
  101,435
  106,528
  111,875
  117,489
  123,381
  129,568
Adjusted assets (=assets-cash), $m
  29,172
  30,717
  32,335
  34,031
  35,807
  37,668
  39,618
  41,662
  43,805
  46,051
  48,407
  50,878
  53,470
  56,189
  59,041
  62,034
  65,174
  68,469
  71,927
  75,555
  79,364
  83,361
  87,556
  91,960
  96,582
  101,435
  106,528
  111,875
  117,489
  123,381
  129,568
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
  5,496
  5,786
  6,089
  6,407
  6,740
  7,089
  7,454
  7,838
  8,240
  8,661
  9,104
  9,567
  10,054
  10,564
  11,100
  11,661
  12,251
  12,870
  13,519
  14,200
  14,916
  15,666
  16,454
  17,281
  18,150
  19,061
  20,018
  21,022
  22,076
  23,183
Working capital, $m
  1,983
  1,763
  1,856
  1,953
  2,055
  2,162
  2,274
  2,391
  2,514
  2,643
  2,778
  2,920
  3,069
  3,225
  3,389
  3,560
  3,740
  3,930
  4,128
  4,336
  4,555
  4,784
  5,025
  5,278
  5,543
  5,822
  6,114
  6,421
  6,743
  7,081
  7,436
Total debt, $m
  4,264
  4,082
  4,984
  5,928
  6,917
  7,954
  9,040
  10,179
  11,372
  12,624
  13,936
  15,312
  16,756
  18,270
  19,859
  21,526
  23,275
  25,110
  27,036
  29,057
  31,179
  33,405
  35,742
  38,195
  40,769
  43,472
  46,309
  49,288
  52,414
  55,696
  59,142
Total liabilities, $m
  17,291
  17,109
  18,011
  18,955
  19,944
  20,981
  22,067
  23,206
  24,399
  25,651
  26,963
  28,339
  29,783
  31,297
  32,886
  34,553
  36,302
  38,137
  40,063
  42,084
  44,206
  46,432
  48,769
  51,222
  53,796
  56,499
  59,336
  62,315
  65,441
  68,723
  72,169
Total equity, $m
  13,197
  13,607
  14,325
  15,076
  15,862
  16,687
  17,551
  18,456
  19,405
  20,401
  21,445
  22,539
  23,687
  24,892
  26,155
  27,481
  28,872
  30,332
  31,864
  33,471
  35,158
  36,929
  38,787
  40,738
  42,786
  44,936
  47,192
  49,561
  52,047
  54,658
  57,399
Total liabilities and equity, $m
  30,488
  30,716
  32,336
  34,031
  35,806
  37,668
  39,618
  41,662
  43,804
  46,052
  48,408
  50,878
  53,470
  56,189
  59,041
  62,034
  65,174
  68,469
  71,927
  75,555
  79,364
  83,361
  87,556
  91,960
  96,582
  101,435
  106,528
  111,876
  117,488
  123,381
  129,568
Debt-to-equity ratio
  0.323
  0.300
  0.350
  0.390
  0.440
  0.480
  0.520
  0.550
  0.590
  0.620
  0.650
  0.680
  0.710
  0.730
  0.760
  0.780
  0.810
  0.830
  0.850
  0.870
  0.890
  0.900
  0.920
  0.940
  0.950
  0.970
  0.980
  0.990
  1.010
  1.020
  1.030
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
  3,069
  3,223
  3,385
  3,554
  3,731
  3,917
  4,111
  4,315
  4,529
  4,753
  5,178
  5,425
  5,684
  5,956
  6,241
  6,539
  6,853
  7,182
  7,528
  7,891
  8,271
  8,671
  9,090
  9,530
  9,992
  10,477
  10,986
  11,521
  12,082
  12,671
Depreciation, amort., depletion, $m
  1,427
  1,317
  1,372
  1,431
  1,492
  1,556
  1,623
  1,693
  1,767
  1,844
  1,925
  1,751
  1,840
  1,933
  2,032
  2,135
  2,243
  2,356
  2,475
  2,600
  2,731
  2,868
  3,013
  3,164
  3,323
  3,490
  3,666
  3,850
  4,043
  4,245
  4,458
Funds from operations, $m
  4,684
  4,386
  4,596
  4,816
  5,046
  5,287
  5,540
  5,805
  6,082
  6,374
  6,679
  6,929
  7,265
  7,617
  7,987
  8,375
  8,782
  9,209
  9,657
  10,128
  10,621
  11,140
  11,683
  12,254
  12,853
  13,482
  14,143
  14,836
  15,564
  16,327
  17,129
Change in working capital, $m
  109
  89
  93
  97
  102
  107
  112
  117
  123
  129
  135
  142
  149
  156
  164
  172
  180
  189
  198
  208
  219
  229
  241
  253
  265
  278
  292
  307
  322
  338
  355
Cash from operations, $m
  4,575
  9,385
  4,503
  4,718
  4,944
  5,180
  5,428
  5,687
  5,959
  6,245
  6,544
  6,787
  7,116
  7,461
  7,823
  8,203
  8,602
  9,020
  9,459
  9,919
  10,403
  10,910
  11,443
  12,002
  12,588
  13,204
  13,850
  14,529
  15,241
  15,989
  16,774
Maintenance CAPEX, $m
  0
  -1,007
  -1,057
  -1,113
  -1,171
  -1,232
  -1,296
  -1,363
  -1,434
  -1,507
  -1,585
  -1,666
  -1,751
  -1,840
  -1,933
  -2,032
  -2,135
  -2,243
  -2,356
  -2,475
  -2,600
  -2,731
  -2,868
  -3,013
  -3,164
  -3,323
  -3,490
  -3,666
  -3,850
  -4,043
  -4,245
New CAPEX, $m
  -2,441
  -258
  -290
  -303
  -318
  -333
  -349
  -366
  -383
  -402
  -422
  -442
  -464
  -486
  -510
  -535
  -562
  -590
  -619
  -649
  -681
  -715
  -751
  -788
  -827
  -868
  -911
  -957
  -1,004
  -1,054
  -1,107
Cash from investing activities, $m
  -5,770
  -1,265
  -1,347
  -1,416
  -1,489
  -1,565
  -1,645
  -1,729
  -1,817
  -1,909
  -2,007
  -2,108
  -2,215
  -2,326
  -2,443
  -2,567
  -2,697
  -2,833
  -2,975
  -3,124
  -3,281
  -3,446
  -3,619
  -3,801
  -3,991
  -4,191
  -4,401
  -4,623
  -4,854
  -5,097
  -5,352
Free cash flow, $m
  -1,195
  8,120
  3,156
  3,302
  3,455
  3,615
  3,783
  3,958
  4,142
  4,335
  4,538
  4,679
  4,902
  5,135
  5,380
  5,636
  5,905
  6,188
  6,484
  6,795
  7,122
  7,464
  7,824
  8,201
  8,597
  9,012
  9,449
  9,907
  10,387
  10,892
  11,422
Issuance/(repayment) of debt, $m
  339
  848
  902
  944
  989
  1,036
  1,086
  1,139
  1,194
  1,251
  1,312
  1,376
  1,444
  1,514
  1,589
  1,667
  1,749
  1,835
  1,926
  2,021
  2,121
  2,226
  2,337
  2,453
  2,575
  2,703
  2,837
  2,978
  3,127
  3,282
  3,446
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
  848
  902
  944
  989
  1,036
  1,086
  1,139
  1,194
  1,251
  1,312
  1,376
  1,444
  1,514
  1,589
  1,667
  1,749
  1,835
  1,926
  2,021
  2,121
  2,226
  2,337
  2,453
  2,575
  2,703
  2,837
  2,978
  3,127
  3,282
  3,446
Total cash flow (excl. dividends), $m
  -2,032
  8,968
  4,058
  4,247
  4,444
  4,652
  4,869
  5,097
  5,336
  5,587
  5,850
  6,056
  6,345
  6,649
  6,968
  7,303
  7,654
  8,023
  8,410
  8,816
  9,243
  9,691
  10,160
  10,654
  11,171
  11,715
  12,286
  12,885
  13,514
  14,174
  14,868
Retained Cash Flow (-), $m
  -1,083
  -696
  -717
  -751
  -787
  -824
  -864
  -906
  -949
  -995
  -1,044
  -1,095
  -1,148
  -1,204
  -1,264
  -1,326
  -1,391
  -1,460
  -1,532
  -1,608
  -1,687
  -1,771
  -1,859
  -1,951
  -2,048
  -2,150
  -2,256
  -2,369
  -2,487
  -2,611
  -2,741
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
 
  8,557
  3,341
  3,496
  3,658
  3,827
  4,005
  4,191
  4,387
  4,591
  4,806
  4,961
  5,197
  5,445
  5,705
  5,977
  6,263
  6,564
  6,878
  7,209
  7,556
  7,920
  8,302
  8,703
  9,124
  9,566
  10,029
  10,516
  11,027
  11,564
  12,127
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
 
  8,204
  3,058
  3,042
  3,012
  2,967
  2,907
  2,832
  2,742
  2,638
  2,520
  2,356
  2,218
  2,070
  1,915
  1,755
  1,592
  1,428
  1,267
  1,110
  960
  819
  689
  570
  465
  372
  293
  226
  171
  126
  91
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. develops, manufactures, engineers, supplies, and sells automotive products. It operates through North America, Europe, Asia, and Rest of World segments. The company offers body and chassis systems, and related engineering services; seating systems, including complete seating systems, seat structures and mechanisms, and foam and trim products; and powertrain systems, such as transmissions, driveline systems, fluid pressure and controls, metal forming solutions, and engineering services. It also provides vision systems comprising interior and exterior mirrors, actuators, door handle illumination products, headlamps and tail lamps, and small lighting products; and closure systems comprising door modules, power closure systems, engineered glass products, window systems, running boards and roof racks, latching systems, lighting systems, sealing systems, electronic features, handle assemblies, composite components, and hinges and rods. In addition, the company provides electronic systems, including driver assistance systems, secure connectivity products, head-up displays, and electronic controllers; exterior systems, such as fascia and trim products, front end modules, liftgate and exterior modules, active aerodynamics, and lightweight composites; and roof systems, including sliding folding and modular roofs, retractable hard tops, and soft tops. Further, it offers vehicle engineering and contract vehicle assembly services; fuel systems; engineering support services; and tooling and other products. The company was founded in 1957 and is headquartered in Aurora, Canada.

FINANCIAL RATIOS  of  Magna International Inc. (MG)

Valuation Ratios
P/E Ratio 8.3
Price to Sales 0.5
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow 10.7
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 5.3% 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 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 381.182 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 $22.8 billion.


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Stock chart of MG Financial statements of MG
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