Intrinsic value of Methanex Corporation - MX

Previous Close

$57.73

  Intrinsic Value

$1,774

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

-98%

Previous close

$57.73

 
Intrinsic value

$1,774

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

-98%

*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 5.0

 

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
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  2,700
  4,320
  6,674
  9,982
  14,483
  20,433
  28,091
  37,706
  49,510
  63,708
  80,468
  99,923
  122,166
  147,251
  175,199
  206,003
  239,631
  276,035
  315,156
  356,931
  401,296
  448,194
  497,576
  549,405
  603,657
  660,323
  719,412
  780,947
  844,971
  911,542
  980,733
Variable operating expenses, $m
 
  773
  1,195
  1,787
  2,592
  3,658
  5,028
  6,749
  8,862
  11,404
  14,404
  17,886
  21,868
  26,358
  31,361
  36,875
  42,894
  49,410
  56,413
  63,891
  71,832
  80,227
  89,066
  98,344
  108,055
  118,198
  128,775
  139,790
  151,250
  163,166
  175,551
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
  3,031
  3,510
  4,159
  5,024
  6,150
  7,583
  9,368
  11,546
  14,155
  17,224
  20,777
  24,831
  29,395
  34,474
  40,066
  46,164
  52,762
  59,849
  67,413
  75,442
  83,927
  92,859
  102,231
  112,040
  122,282
  132,961
  144,081
  155,648
  167,674
  180,172
Operating income, $m
  38
  1,289
  3,165
  5,822
  9,459
  14,283
  20,508
  28,338
  37,964
  49,553
  63,244
  79,146
  97,335
  117,856
  140,726
  165,938
  193,467
  223,273
  255,307
  289,518
  325,854
  364,267
  404,718
  447,174
  491,618
  538,041
  586,451
  636,867
  689,323
  743,867
  800,561
EBITDA, $m
  346
  1,780
  3,924
  6,958
  11,106
  16,608
  23,704
  32,628
  43,597
  56,801
  72,399
  90,514
  111,234
  134,608
  160,658
  189,375
  220,729
  254,677
  291,162
  330,126
  371,509
  415,258
  461,326
  509,679
  560,295
  613,165
  668,297
  725,714
  785,454
  847,572
  912,137
Interest expense (income), $m
  112
  110
  237
  422
  682
  1,036
  1,504
  2,106
  2,861
  3,789
  4,905
  6,222
  7,751
  9,500
  11,471
  13,668
  16,089
  18,732
  21,594
  24,668
  27,952
  31,439
  35,125
  39,006
  43,080
  47,344
  51,798
  56,442
  61,279
  66,311
  71,544
Earnings before tax, $m
  -51
  1,179
  2,928
  5,400
  8,776
  13,247
  19,004
  26,232
  35,103
  45,764
  58,339
  72,924
  89,584
  108,356
  129,255
  152,270
  177,378
  204,540
  233,714
  264,850
  297,902
  332,828
  369,593
  408,168
  448,538
  490,697
  534,653
  580,424
  628,044
  677,556
  729,017
Tax expense, $m
  -13
  318
  791
  1,458
  2,370
  3,577
  5,131
  7,083
  9,478
  12,356
  15,752
  19,690
  24,188
  29,256
  34,899
  41,113
  47,892
  55,226
  63,103
  71,509
  80,434
  89,864
  99,790
  110,205
  121,105
  132,488
  144,356
  156,715
  169,572
  182,940
  196,835
Net income, $m
  -17
  861
  2,137
  3,942
  6,407
  9,670
  13,873
  19,150
  25,625
  33,408
  42,588
  53,235
  65,396
  79,100
  94,356
  111,157
  129,486
  149,314
  170,611
  193,340
  217,469
  242,965
  269,803
  297,962
  327,432
  358,209
  390,296
  423,710
  458,472
  494,616
  532,182

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
  9,371
  14,478
  21,652
  31,416
  44,323
  60,934
  81,792
  107,398
  138,195
  174,551
  216,753
  265,001
  319,416
  380,042
  446,862
  519,807
  598,775
  683,636
  774,253
  870,490
  972,222
  1,079,342
  1,191,768
  1,309,451
  1,432,371
  1,560,546
  1,694,029
  1,832,909
  1,977,313
  2,127,403
Adjusted assets (=assets-cash), $m
  5,854
  9,371
  14,478
  21,652
  31,416
  44,323
  60,934
  81,792
  107,398
  138,195
  174,551
  216,753
  265,001
  319,416
  380,042
  446,862
  519,807
  598,775
  683,636
  774,253
  870,490
  972,222
  1,079,342
  1,191,768
  1,309,451
  1,432,371
  1,560,546
  1,694,029
  1,832,909
  1,977,313
  2,127,403
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
  6,782
  10,479
  15,671
  22,738
  32,080
  44,102
  59,198
  77,731
  100,021
  126,335
  156,879
  191,800
  231,184
  275,063
  323,425
  376,221
  433,375
  494,795
  560,381
  630,035
  703,665
  781,195
  862,566
  947,741
  1,036,707
  1,129,476
  1,226,087
  1,326,605
  1,431,120
  1,539,750
Working capital, $m
  566
  540
  834
  1,248
  1,810
  2,554
  3,511
  4,713
  6,189
  7,963
  10,059
  12,490
  15,271
  18,406
  21,900
  25,750
  29,954
  34,504
  39,395
  44,616
  50,162
  56,024
  62,197
  68,676
  75,457
  82,540
  89,926
  97,618
  105,621
  113,943
  122,592
Total debt, $m
  2,103
  4,392
  7,819
  12,632
  19,184
  27,845
  38,991
  52,986
  70,168
  90,833
  115,228
  143,545
  175,920
  212,432
  253,112
  297,948
  346,895
  399,882
  456,823
  517,628
  582,203
  650,465
  722,342
  797,781
  876,746
  959,225
  1,045,230
  1,134,797
  1,227,986
  1,324,881
  1,425,591
Total liabilities, $m
  3,999
  6,288
  9,715
  14,528
  21,080
  29,741
  40,887
  54,882
  72,064
  92,729
  117,124
  145,441
  177,816
  214,328
  255,008
  299,844
  348,791
  401,778
  458,719
  519,524
  584,099
  652,361
  724,238
  799,677
  878,642
  961,121
  1,047,126
  1,136,693
  1,229,882
  1,326,777
  1,427,487
Total equity, $m
  2,157
  3,083
  4,763
  7,124
  10,336
  14,582
  20,047
  26,909
  35,334
  45,466
  57,427
  71,312
  87,185
  105,088
  125,034
  147,017
  171,017
  196,997
  224,916
  254,729
  286,391
  319,861
  355,103
  392,092
  430,809
  471,250
  513,420
  557,335
  603,027
  650,536
  699,916
Total liabilities and equity, $m
  6,156
  9,371
  14,478
  21,652
  31,416
  44,323
  60,934
  81,791
  107,398
  138,195
  174,551
  216,753
  265,001
  319,416
  380,042
  446,861
  519,808
  598,775
  683,635
  774,253
  870,490
  972,222
  1,079,341
  1,191,769
  1,309,451
  1,432,371
  1,560,546
  1,694,028
  1,832,909
  1,977,313
  2,127,403
Debt-to-equity ratio
  0.975
  1.420
  1.640
  1.770
  1.860
  1.910
  1.940
  1.970
  1.990
  2.000
  2.010
  2.010
  2.020
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
  2.040
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
  861
  2,137
  3,942
  6,407
  9,670
  13,873
  19,150
  25,625
  33,408
  42,588
  53,235
  65,396
  79,100
  94,356
  111,157
  129,486
  149,314
  170,611
  193,340
  217,469
  242,965
  269,803
  297,962
  327,432
  358,209
  390,296
  423,710
  458,472
  494,616
  532,182
Depreciation, amort., depletion, $m
  308
  491
  759
  1,136
  1,648
  2,325
  3,196
  4,290
  5,633
  7,248
  9,155
  11,368
  13,899
  16,752
  19,932
  23,437
  27,262
  31,404
  35,855
  40,607
  45,655
  50,990
  56,608
  62,505
  68,677
  75,124
  81,846
  88,847
  96,131
  103,704
  111,576
Funds from operations, $m
  276
  1,352
  2,897
  5,078
  8,055
  11,995
  17,069
  23,439
  31,258
  40,655
  51,742
  64,603
  79,295
  95,853
  114,288
  134,594
  156,748
  180,718
  206,466
  233,948
  263,123
  293,955
  326,411
  360,467
  396,109
  433,332
  472,142
  512,557
  554,603
  598,320
  643,759
Change in working capital, $m
  -62
  203
  294
  413
  563
  744
  957
  1,202
  1,476
  1,775
  2,095
  2,432
  2,780
  3,136
  3,494
  3,850
  4,203
  4,550
  4,890
  5,222
  5,546
  5,862
  6,173
  6,479
  6,781
  7,083
  7,386
  7,692
  8,003
  8,321
  8,649
Cash from operations, $m
  338
  1,150
  2,602
  4,664
  7,492
  11,251
  16,112
  22,238
  29,782
  38,881
  49,647
  62,171
  76,514
  92,717
  110,794
  130,743
  152,545
  176,168
  201,575
  228,726
  257,578
  288,093
  320,238
  353,989
  389,328
  426,249
  464,756
  504,865
  546,600
  589,999
  635,110
Maintenance CAPEX, $m
  0
  -307
  -491
  -759
  -1,136
  -1,648
  -2,325
  -3,196
  -4,290
  -5,633
  -7,248
  -9,155
  -11,368
  -13,899
  -16,752
  -19,932
  -23,437
  -27,262
  -31,404
  -35,855
  -40,607
  -45,655
  -50,990
  -56,608
  -62,505
  -68,677
  -75,124
  -81,846
  -88,847
  -96,131
  -103,704
New CAPEX, $m
  -135
  -2,542
  -3,696
  -5,192
  -7,067
  -9,342
  -12,023
  -15,096
  -18,533
  -22,290
  -26,314
  -30,544
  -34,921
  -39,384
  -43,879
  -48,362
  -52,796
  -57,154
  -61,420
  -65,586
  -69,654
  -73,630
  -77,530
  -81,371
  -85,175
  -88,966
  -92,769
  -96,611
  -100,518
  -104,515
  -108,630
Cash from investing activities, $m
  -119
  -2,849
  -4,187
  -5,951
  -8,203
  -10,990
  -14,348
  -18,292
  -22,823
  -27,923
  -33,562
  -39,699
  -46,289
  -53,283
  -60,631
  -68,294
  -76,233
  -84,416
  -92,824
  -101,441
  -110,261
  -119,285
  -128,520
  -137,979
  -147,680
  -157,643
  -167,893
  -178,457
  -189,365
  -200,646
  -212,334
Free cash flow, $m
  219
  -1,700
  -1,585
  -1,287
  -711
  262
  1,764
  3,946
  6,959
  10,958
  16,086
  22,472
  30,226
  39,435
  50,163
  62,449
  76,312
  91,752
  108,752
  127,285
  147,317
  168,808
  191,718
  216,009
  241,648
  268,606
  296,864
  326,408
  357,236
  389,353
  422,775
Issuance/(repayment) of debt, $m
  23
  2,362
  3,427
  4,814
  6,552
  8,661
  11,146
  13,995
  17,182
  20,665
  24,395
  28,317
  32,375
  36,512
  40,680
  44,836
  48,947
  52,987
  56,942
  60,804
  64,575
  68,262
  71,877
  75,438
  78,965
  82,479
  86,005
  89,567
  93,189
  96,895
  100,710
Issuance/(repurchase) of shares, $m
  2
  294
  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
  2,656
  3,427
  4,814
  6,552
  8,661
  11,146
  13,995
  17,182
  20,665
  24,395
  28,317
  32,375
  36,512
  40,680
  44,836
  48,947
  52,987
  56,942
  60,804
  64,575
  68,262
  71,877
  75,438
  78,965
  82,479
  86,005
  89,567
  93,189
  96,895
  100,710
Total cash flow (excl. dividends), $m
  91
  956
  1,841
  3,526
  5,841
  8,922
  12,910
  17,941
  24,141
  31,623
  40,481
  50,789
  62,600
  75,947
  90,843
  107,285
  125,259
  144,738
  165,693
  188,089
  211,892
  237,070
  263,595
  291,448
  320,613
  351,086
  382,869
  415,975
  450,424
  486,248
  523,485
Retained Cash Flow (-), $m
  166
  -1,155
  -1,680
  -2,360
  -3,212
  -4,247
  -5,465
  -6,862
  -8,424
  -10,132
  -11,961
  -13,884
  -15,874
  -17,902
  -19,946
  -21,984
  -23,999
  -25,980
  -27,919
  -29,813
  -31,662
  -33,470
  -35,242
  -36,988
  -38,718
  -40,441
  -42,170
  -43,916
  -45,692
  -47,509
  -49,379
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
 
  30
  161
  1,166
  2,629
  4,676
  7,445
  11,079
  15,717
  21,491
  28,520
  36,905
  46,727
  58,045
  70,897
  85,301
  101,259
  118,758
  137,774
  158,276
  180,230
  203,600
  228,353
  254,459
  281,895
  310,645
  340,699
  372,059
  404,733
  438,739
  474,106
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
 
  28
  139
  927
  1,908
  3,074
  4,393
  5,814
  7,262
  8,652
  9,892
  10,897
  11,597
  11,946
  11,928
  11,556
  10,869
  9,930
  8,813
  7,600
  6,367
  5,180
  4,092
  3,137
  2,331
  1,679
  1,171
  790
  515
  324
  197
Current shareholders' claim on cash, %
  100
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8
  93.8

Methanex Corporation produces and supplies methanol in the Asia Pacific, North America, Europe, and South America. It also purchases methanol produced by others under methanol offtake contracts and on the spot market. The company was founded in 1968 and is headquartered in Vancouver, Canada.

FINANCIAL RATIOS  of  Methanex Corporation (MX)

Valuation Ratios
P/E Ratio -305
Price to Sales 1.9
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 15.3
Price to Free Cash Flow 25.5
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 60% 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 86.315 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 $5.0 billion.

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Stock chart of MX 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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