Intrinsic value of Magna International Inc. - MG

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$57.02

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$57.02

 
Intrinsic value

$164.25

 
Up/down potential

+188%

 
Rating

str. buy

 
Value-price divergence* premium content

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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 21.3

 

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
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
  5.16
  5.14
Revenue, $m
  49,240
  53,179
  57,274
  61,529
  65,952
  70,547
  75,324
  80,292
  85,458
  90,835
  96,432
  102,262
  108,338
  114,673
  121,281
  128,178
  135,378
  142,900
  150,760
  158,977
  167,570
  176,559
  185,967
  195,815
  206,126
  216,926
  228,239
  240,093
  252,517
  265,539
  279,191
Variable operating expenses, $m
 
  48,745
  52,478
  56,358
  60,389
  64,579
  68,935
  73,463
  78,174
  83,076
  88,179
  93,235
  98,775
  104,550
  110,575
  116,863
  123,428
  130,285
  137,451
  144,943
  152,777
  160,973
  169,550
  178,529
  187,930
  197,776
  208,091
  218,899
  230,226
  242,098
  254,545
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
  48,745
  52,478
  56,358
  60,389
  64,579
  68,935
  73,463
  78,174
  83,076
  88,179
  93,235
  98,775
  104,550
  110,575
  116,863
  123,428
  130,285
  137,451
  144,943
  152,777
  160,973
  169,550
  178,529
  187,930
  197,776
  208,091
  218,899
  230,226
  242,098
  254,545
Operating income, $m
  3,756
  4,435
  4,796
  5,172
  5,562
  5,968
  6,390
  6,828
  7,284
  7,759
  8,253
  9,027
  9,564
  10,123
  10,706
  11,315
  11,951
  12,615
  13,308
  14,034
  14,792
  15,586
  16,416
  17,286
  18,196
  19,149
  20,148
  21,195
  22,291
  23,441
  24,646
EBITDA, $m
  5,183
  5,778
  6,223
  6,686
  7,166
  7,666
  8,185
  8,725
  9,286
  9,870
  10,478
  11,112
  11,772
  12,460
  13,179
  13,928
  14,710
  15,528
  16,382
  17,275
  18,208
  19,185
  20,207
  21,277
  22,398
  23,571
  24,801
  26,089
  27,439
  28,854
  30,337
Interest expense (income), $m
  134
  113
  158
  206
  255
  306
  359
  414
  471
  531
  593
  658
  725
  795
  868
  945
  1,024
  1,108
  1,194
  1,285
  1,380
  1,479
  1,583
  1,692
  1,806
  1,925
  2,049
  2,180
  2,317
  2,460
  2,611
Earnings before tax, $m
  3,756
  4,321
  4,638
  4,966
  5,307
  5,662
  6,031
  6,414
  6,813
  7,228
  7,660
  8,370
  8,839
  9,328
  9,838
  10,370
  10,926
  11,507
  12,114
  12,749
  13,412
  14,107
  14,833
  15,594
  16,390
  17,225
  18,099
  19,015
  19,974
  20,980
  22,035
Tax expense, $m
  954
  1,167
  1,252
  1,341
  1,433
  1,529
  1,628
  1,732
  1,839
  1,951
  2,068
  2,260
  2,386
  2,518
  2,656
  2,800
  2,950
  3,107
  3,271
  3,442
  3,621
  3,809
  4,005
  4,210
  4,425
  4,651
  4,887
  5,134
  5,393
  5,665
  5,949
Net income, $m
  2,744
  3,155
  3,386
  3,625
  3,874
  4,133
  4,402
  4,682
  4,973
  5,276
  5,592
  6,110
  6,452
  6,809
  7,182
  7,570
  7,976
  8,400
  8,843
  9,307
  9,791
  10,298
  10,828
  11,384
  11,965
  12,574
  13,212
  13,881
  14,581
  15,316
  16,086

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
  31,504
  33,930
  36,451
  39,071
  41,793
  44,623
  47,566
  50,627
  53,812
  57,128
  60,582
  64,181
  67,934
  71,849
  75,935
  80,200
  84,656
  89,313
  94,180
  99,271
  104,597
  110,170
  116,004
  122,113
  128,510
  135,213
  142,235
  149,595
  157,310
  165,398
Adjusted assets (=assets-cash), $m
  29,172
  31,504
  33,930
  36,451
  39,071
  41,793
  44,623
  47,566
  50,627
  53,812
  57,128
  60,582
  64,181
  67,934
  71,849
  75,935
  80,200
  84,656
  89,313
  94,180
  99,271
  104,597
  110,170
  116,004
  122,113
  128,510
  135,213
  142,235
  149,595
  157,310
  165,398
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
  5,637
  6,071
  6,522
  6,991
  7,478
  7,984
  8,511
  9,059
  9,628
  10,222
  10,840
  11,484
  12,155
  12,856
  13,587
  14,350
  15,147
  15,981
  16,852
  17,762
  18,715
  19,712
  20,756
  21,849
  22,994
  24,193
  25,450
  26,767
  28,147
  29,594
Working capital, $m
  1,983
  1,808
  1,947
  2,092
  2,242
  2,399
  2,561
  2,730
  2,906
  3,088
  3,279
  3,477
  3,684
  3,899
  4,124
  4,358
  4,603
  4,859
  5,126
  5,405
  5,697
  6,003
  6,323
  6,658
  7,008
  7,375
  7,760
  8,163
  8,586
  9,028
  9,493
Total debt, $m
  4,264
  4,521
  5,872
  7,276
  8,735
  10,252
  11,828
  13,467
  15,172
  16,946
  18,793
  20,717
  22,722
  24,812
  26,993
  29,269
  31,645
  34,127
  36,720
  39,432
  42,267
  45,233
  48,338
  51,587
  54,990
  58,553
  62,286
  66,198
  70,298
  74,595
  79,100
Total liabilities, $m
  17,291
  17,548
  18,899
  20,303
  21,762
  23,279
  24,855
  26,494
  28,199
  29,973
  31,820
  33,744
  35,749
  37,839
  40,020
  42,296
  44,672
  47,154
  49,747
  52,459
  55,294
  58,260
  61,365
  64,614
  68,017
  71,580
  75,313
  79,225
  83,325
  87,622
  92,127
Total equity, $m
  13,197
  13,956
  15,031
  16,148
  17,308
  18,514
  19,768
  21,072
  22,428
  23,839
  25,308
  26,838
  28,432
  30,095
  31,829
  33,639
  35,529
  37,503
  39,566
  41,722
  43,977
  46,336
  48,805
  51,390
  54,096
  56,930
  59,899
  63,010
  66,271
  69,688
  73,271
Total liabilities and equity, $m
  30,488
  31,504
  33,930
  36,451
  39,070
  41,793
  44,623
  47,566
  50,627
  53,812
  57,128
  60,582
  64,181
  67,934
  71,849
  75,935
  80,201
  84,657
  89,313
  94,181
  99,271
  104,596
  110,170
  116,004
  122,113
  128,510
  135,212
  142,235
  149,596
  157,310
  165,398
Debt-to-equity ratio
  0.323
  0.320
  0.390
  0.450
  0.500
  0.550
  0.600
  0.640
  0.680
  0.710
  0.740
  0.770
  0.800
  0.820
  0.850
  0.870
  0.890
  0.910
  0.930
  0.950
  0.960
  0.980
  0.990
  1.000
  1.020
  1.030
  1.040
  1.050
  1.060
  1.070
  1.080
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
  3,155
  3,386
  3,625
  3,874
  4,133
  4,402
  4,682
  4,973
  5,276
  5,592
  6,110
  6,452
  6,809
  7,182
  7,570
  7,976
  8,400
  8,843
  9,307
  9,791
  10,298
  10,828
  11,384
  11,965
  12,574
  13,212
  13,881
  14,581
  15,316
  16,086
Depreciation, amort., depletion, $m
  1,427
  1,344
  1,427
  1,514
  1,604
  1,698
  1,795
  1,897
  2,002
  2,111
  2,226
  2,085
  2,208
  2,338
  2,472
  2,613
  2,760
  2,913
  3,073
  3,241
  3,416
  3,599
  3,791
  3,992
  4,202
  4,422
  4,653
  4,894
  5,147
  5,413
  5,691
Funds from operations, $m
  4,684
  4,499
  4,813
  5,139
  5,479
  5,831
  6,198
  6,579
  6,975
  7,388
  7,817
  8,194
  8,661
  9,147
  9,654
  10,183
  10,736
  11,313
  11,916
  12,547
  13,207
  13,897
  14,619
  15,375
  16,167
  16,996
  17,865
  18,775
  19,729
  20,729
  21,777
Change in working capital, $m
  109
  134
  139
  145
  150
  156
  162
  169
  176
  183
  190
  198
  207
  215
  225
  234
  245
  256
  267
  279
  292
  306
  320
  335
  351
  367
  385
  403
  422
  443
  464
Cash from operations, $m
  4,575
  9,452
  4,674
  4,995
  5,328
  5,675
  6,035
  6,410
  6,799
  7,205
  7,627
  7,996
  8,454
  8,931
  9,429
  9,949
  10,491
  11,057
  11,649
  12,268
  12,915
  13,591
  14,299
  15,040
  15,816
  16,629
  17,480
  18,372
  19,306
  20,286
  21,313
Maintenance CAPEX, $m
  0
  -1,007
  -1,084
  -1,168
  -1,254
  -1,344
  -1,438
  -1,535
  -1,637
  -1,742
  -1,852
  -1,966
  -2,085
  -2,208
  -2,338
  -2,472
  -2,613
  -2,760
  -2,913
  -3,073
  -3,241
  -3,416
  -3,599
  -3,791
  -3,992
  -4,202
  -4,422
  -4,653
  -4,894
  -5,147
  -5,413
New CAPEX, $m
  -2,441
  -398
  -434
  -451
  -469
  -487
  -506
  -527
  -548
  -570
  -593
  -618
  -644
  -671
  -700
  -731
  -763
  -797
  -833
  -871
  -911
  -953
  -997
  -1,044
  -1,093
  -1,145
  -1,199
  -1,257
  -1,317
  -1,380
  -1,447
Cash from investing activities, $m
  -5,770
  -1,405
  -1,518
  -1,619
  -1,723
  -1,831
  -1,944
  -2,062
  -2,185
  -2,312
  -2,445
  -2,584
  -2,729
  -2,879
  -3,038
  -3,203
  -3,376
  -3,557
  -3,746
  -3,944
  -4,152
  -4,369
  -4,596
  -4,835
  -5,085
  -5,347
  -5,621
  -5,910
  -6,211
  -6,527
  -6,860
Free cash flow, $m
  -1,195
  8,046
  3,156
  3,376
  3,605
  3,843
  4,091
  4,348
  4,615
  4,893
  5,182
  5,412
  5,725
  6,051
  6,391
  6,745
  7,115
  7,500
  7,903
  8,324
  8,763
  9,223
  9,703
  10,206
  10,732
  11,282
  11,859
  12,463
  13,095
  13,758
  14,453
Issuance/(repayment) of debt, $m
  339
  1,287
  1,351
  1,404
  1,459
  1,516
  1,576
  1,639
  1,705
  1,774
  1,847
  1,924
  2,005
  2,090
  2,181
  2,276
  2,376
  2,482
  2,594
  2,711
  2,836
  2,966
  3,104
  3,250
  3,403
  3,564
  3,733
  3,912
  4,099
  4,297
  4,505
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
  1,287
  1,351
  1,404
  1,459
  1,516
  1,576
  1,639
  1,705
  1,774
  1,847
  1,924
  2,005
  2,090
  2,181
  2,276
  2,376
  2,482
  2,594
  2,711
  2,836
  2,966
  3,104
  3,250
  3,403
  3,564
  3,733
  3,912
  4,099
  4,297
  4,505
Total cash flow (excl. dividends), $m
  -2,032
  9,333
  4,507
  4,780
  5,065
  5,360
  5,667
  5,987
  6,320
  6,667
  7,029
  7,336
  7,730
  8,142
  8,572
  9,021
  9,491
  9,982
  10,497
  11,035
  11,599
  12,189
  12,807
  13,455
  14,134
  14,846
  15,592
  16,374
  17,195
  18,055
  18,958
Retained Cash Flow (-), $m
  -1,083
  -1,045
  -1,075
  -1,117
  -1,161
  -1,206
  -1,254
  -1,304
  -1,356
  -1,411
  -1,469
  -1,530
  -1,595
  -1,663
  -1,734
  -1,810
  -1,890
  -1,974
  -2,063
  -2,156
  -2,255
  -2,359
  -2,469
  -2,584
  -2,706
  -2,834
  -2,969
  -3,111
  -3,260
  -3,418
  -3,583
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
 
  8,574
  3,432
  3,664
  3,904
  4,154
  4,413
  4,683
  4,964
  5,256
  5,560
  5,806
  6,136
  6,479
  6,837
  7,211
  7,601
  8,008
  8,434
  8,879
  9,343
  9,830
  10,338
  10,871
  11,428
  12,012
  12,623
  13,263
  13,934
  14,637
  15,375
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
 
  8,220
  3,142
  3,188
  3,215
  3,220
  3,203
  3,164
  3,103
  3,019
  2,915
  2,757
  2,618
  2,464
  2,295
  2,117
  1,932
  1,743
  1,553
  1,367
  1,187
  1,017
  858
  712
  582
  467
  368
  285
  216
  160
  116
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 7.9
Price to Sales 0.4
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 4.8
Price to Free Cash Flow 10.2
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 8% 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 374.065 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 $21.3 billion.


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Stock chart of MG Financial statements of MG
Valuation of Stocks

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