Intrinsic value of Methanex Corporation - MX

Previous Close

$64.71

  Intrinsic Value

$661.67

stock screener

  Rating & Target

str. buy

+923%

Previous close

$64.71

 
Intrinsic value

$661.67

 
Up/down potential

+923%

 
Rating

str. buy

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 5.5

 

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
  41.10
  37.49
  34.24
  31.32
  28.69
  26.32
  24.19
  22.27
  20.54
  18.99
  17.59
  16.33
  15.20
  14.18
  13.26
  12.43
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
Revenue, $m
  2,700
  3,810
  5,238
  7,031
  9,234
  11,882
  15,009
  18,639
  22,789
  27,470
  32,686
  38,434
  44,710
  51,504
  58,806
  66,602
  74,883
  83,636
  92,853
  102,527
  112,653
  123,230
  134,259
  145,745
  157,695
  170,121
  183,036
  196,457
  210,404
  224,899
  239,969
Variable operating expenses, $m
 
  682
  938
  1,259
  1,653
  2,127
  2,687
  3,336
  4,079
  4,917
  5,851
  6,880
  8,003
  9,219
  10,526
  11,922
  13,404
  14,971
  16,621
  18,352
  20,165
  22,058
  24,032
  26,088
  28,227
  30,452
  32,763
  35,166
  37,662
  40,257
  42,954
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
  2,940
  3,253
  3,631
  4,085
  4,619
  5,242
  5,955
  6,763
  7,668
  8,671
  9,771
  10,966
  12,256
  13,639
  15,113
  16,674
  18,323
  20,057
  21,874
  23,775
  25,758
  27,825
  29,975
  32,212
  34,536
  36,949
  39,457
  42,060
  44,765
  47,575
Operating income, $m
  38
  870
  1,986
  3,400
  5,149
  7,263
  9,768
  12,684
  16,026
  19,802
  24,015
  28,664
  33,744
  39,248
  45,167
  51,490
  58,208
  65,313
  72,797
  80,653
  88,878
  97,472
  106,434
  115,769
  125,483
  135,585
  146,086
  157,000
  168,343
  180,134
  192,393
EBITDA, $m
  346
  1,303
  2,582
  4,200
  6,200
  8,615
  11,475
  14,805
  18,619
  22,927
  27,734
  33,037
  38,831
  45,108
  51,857
  59,067
  66,728
  74,828
  83,360
  92,317
  101,695
  111,491
  121,709
  132,350
  143,424
  154,940
  166,910
  179,351
  192,281
  205,721
  219,694
Interest expense (income), $m
  112
  110
  197
  309
  450
  623
  832
  1,077
  1,363
  1,689
  2,057
  2,467
  2,919
  3,412
  3,946
  4,520
  5,132
  5,783
  6,471
  7,196
  7,956
  8,752
  9,583
  10,450
  11,353
  12,292
  13,269
  14,284
  15,339
  16,435
  17,574
Earnings before tax, $m
  -51
  760
  1,789
  3,091
  4,699
  6,639
  8,936
  11,607
  14,663
  18,113
  21,958
  26,197
  30,826
  35,836
  41,221
  46,970
  53,076
  59,530
  66,325
  73,457
  80,922
  88,720
  96,851
  105,319
  114,130
  123,293
  132,817
  142,716
  153,005
  163,699
  174,819
Tax expense, $m
  -13
  205
  483
  835
  1,269
  1,793
  2,413
  3,134
  3,959
  4,891
  5,929
  7,073
  8,323
  9,676
  11,130
  12,682
  14,330
  16,073
  17,908
  19,833
  21,849
  23,954
  26,150
  28,436
  30,815
  33,289
  35,861
  38,533
  41,311
  44,199
  47,201
Net income, $m
  -17
  555
  1,306
  2,257
  3,430
  4,847
  6,523
  8,473
  10,704
  13,223
  16,030
  19,124
  22,503
  26,161
  30,091
  34,288
  38,745
  43,457
  48,417
  53,624
  59,073
  64,765
  70,701
  76,883
  83,315
  90,004
  96,957
  104,183
  111,693
  119,500
  127,618

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
  8,264
  11,362
  15,253
  20,029
  25,775
  32,558
  40,432
  49,435
  59,589
  70,902
  83,372
  96,985
  111,723
  127,561
  144,474
  162,435
  181,423
  201,417
  222,401
  244,367
  267,310
  291,235
  316,150
  342,073
  369,027
  397,042
  426,154
  456,408
  487,851
  520,539
Adjusted assets (=assets-cash), $m
  5,854
  8,264
  11,362
  15,253
  20,029
  25,775
  32,558
  40,432
  49,435
  59,589
  70,902
  83,372
  96,985
  111,723
  127,561
  144,474
  162,435
  181,423
  201,417
  222,401
  244,367
  267,310
  291,235
  316,150
  342,073
  369,027
  397,042
  426,154
  456,408
  487,851
  520,539
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
  5,981
  8,224
  11,039
  14,497
  18,655
  23,564
  29,263
  35,779
  43,128
  51,317
  60,342
  70,195
  80,862
  92,325
  104,566
  117,566
  131,309
  145,779
  160,967
  176,865
  193,471
  210,787
  228,820
  247,582
  267,090
  287,367
  308,438
  330,334
  353,092
  376,751
Working capital, $m
  566
  476
  655
  879
  1,154
  1,485
  1,876
  2,330
  2,849
  3,434
  4,086
  4,804
  5,589
  6,438
  7,351
  8,325
  9,360
  10,455
  11,607
  12,816
  14,082
  15,404
  16,782
  18,218
  19,712
  21,265
  22,880
  24,557
  26,301
  28,112
  29,996
Total debt, $m
  2,103
  3,649
  5,728
  8,339
  11,544
  15,399
  19,950
  25,234
  31,275
  38,088
  45,679
  54,047
  63,181
  73,070
  83,697
  95,046
  107,098
  119,839
  133,255
  147,335
  162,074
  177,469
  193,522
  210,241
  227,635
  245,721
  264,519
  284,054
  304,354
  325,452
  347,386
Total liabilities, $m
  3,999
  5,545
  7,624
  10,235
  13,440
  17,295
  21,846
  27,130
  33,171
  39,984
  47,575
  55,943
  65,077
  74,966
  85,593
  96,942
  108,994
  121,735
  135,151
  149,231
  163,970
  179,365
  195,418
  212,137
  229,531
  247,617
  266,415
  285,950
  306,250
  327,348
  349,282
Total equity, $m
  2,157
  2,719
  3,738
  5,018
  6,590
  8,480
  10,712
  13,302
  16,264
  19,605
  23,327
  27,429
  31,908
  36,757
  41,968
  47,532
  53,441
  59,688
  66,266
  73,170
  80,397
  87,945
  95,816
  104,013
  112,542
  121,410
  130,627
  140,205
  150,158
  160,503
  171,257
Total liabilities and equity, $m
  6,156
  8,264
  11,362
  15,253
  20,030
  25,775
  32,558
  40,432
  49,435
  59,589
  70,902
  83,372
  96,985
  111,723
  127,561
  144,474
  162,435
  181,423
  201,417
  222,401
  244,367
  267,310
  291,234
  316,150
  342,073
  369,027
  397,042
  426,155
  456,408
  487,851
  520,539
Debt-to-equity ratio
  0.975
  1.340
  1.530
  1.660
  1.750
  1.820
  1.860
  1.900
  1.920
  1.940
  1.960
  1.970
  1.980
  1.990
  1.990
  2.000
  2.000
  2.010
  2.010
  2.010
  2.020
  2.020
  2.020
  2.020
  2.020
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
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
  555
  1,306
  2,257
  3,430
  4,847
  6,523
  8,473
  10,704
  13,223
  16,030
  19,124
  22,503
  26,161
  30,091
  34,288
  38,745
  43,457
  48,417
  53,624
  59,073
  64,765
  70,701
  76,883
  83,315
  90,004
  96,957
  104,183
  111,693
  119,500
  127,618
Depreciation, amort., depletion, $m
  308
  433
  596
  800
  1,050
  1,352
  1,708
  2,121
  2,593
  3,125
  3,719
  4,373
  5,087
  5,860
  6,690
  7,577
  8,519
  9,515
  10,564
  11,664
  12,816
  14,020
  15,274
  16,581
  17,941
  19,354
  20,824
  22,351
  23,937
  25,586
  27,301
Funds from operations, $m
  276
  988
  1,902
  3,056
  4,481
  6,199
  8,231
  10,593
  13,297
  16,348
  19,748
  23,497
  27,589
  32,020
  36,781
  41,865
  47,265
  52,972
  58,981
  65,288
  71,890
  78,785
  85,976
  93,464
  101,256
  109,358
  117,780
  126,533
  135,631
  145,087
  154,918
Change in working capital, $m
  -62
  139
  179
  224
  275
  331
  391
  454
  519
  585
  652
  719
  784
  849
  913
  975
  1,035
  1,094
  1,152
  1,209
  1,266
  1,322
  1,379
  1,436
  1,494
  1,553
  1,614
  1,678
  1,743
  1,812
  1,884
Cash from operations, $m
  338
  850
  1,723
  2,832
  4,205
  5,868
  7,840
  10,140
  12,778
  15,763
  19,096
  22,778
  26,805
  31,171
  35,869
  40,891
  46,230
  51,878
  57,829
  64,079
  70,624
  77,463
  84,597
  92,028
  99,762
  107,805
  116,166
  124,856
  133,887
  143,275
  153,035
Maintenance CAPEX, $m
  0
  -307
  -433
  -596
  -800
  -1,050
  -1,352
  -1,708
  -2,121
  -2,593
  -3,125
  -3,719
  -4,373
  -5,087
  -5,860
  -6,690
  -7,577
  -8,519
  -9,515
  -10,564
  -11,664
  -12,816
  -14,020
  -15,274
  -16,581
  -17,941
  -19,354
  -20,824
  -22,351
  -23,937
  -25,586
New CAPEX, $m
  -135
  -1,741
  -2,242
  -2,816
  -3,457
  -4,158
  -4,909
  -5,699
  -6,516
  -7,349
  -8,188
  -9,025
  -9,853
  -10,667
  -11,463
  -12,241
  -13,000
  -13,743
  -14,471
  -15,188
  -15,898
  -16,606
  -17,316
  -18,033
  -18,762
  -19,508
  -20,276
  -21,071
  -21,897
  -22,758
  -23,658
Cash from investing activities, $m
  -119
  -2,048
  -2,675
  -3,412
  -4,257
  -5,208
  -6,261
  -7,407
  -8,637
  -9,942
  -11,313
  -12,744
  -14,226
  -15,754
  -17,323
  -18,931
  -20,577
  -22,262
  -23,986
  -25,752
  -27,562
  -29,422
  -31,336
  -33,307
  -35,343
  -37,449
  -39,630
  -41,895
  -44,248
  -46,695
  -49,244
Free cash flow, $m
  219
  -1,199
  -953
  -579
  -52
  659
  1,579
  2,733
  4,142
  5,821
  7,783
  10,034
  12,579
  15,418
  18,546
  21,960
  25,652
  29,616
  33,843
  38,327
  43,061
  48,041
  53,262
  58,721
  64,419
  70,356
  76,535
  82,961
  89,640
  96,580
  103,790
Issuance/(repayment) of debt, $m
  16
  1,619
  2,079
  2,611
  3,205
  3,855
  4,551
  5,284
  6,041
  6,813
  7,591
  8,367
  9,135
  9,889
  10,627
  11,348
  12,052
  12,741
  13,416
  14,081
  14,739
  15,395
  16,053
  16,718
  17,394
  18,086
  18,798
  19,535
  20,300
  21,098
  21,933
Issuance/(repurchase) of shares, $m
  2
  236
  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
  1,855
  2,079
  2,611
  3,205
  3,855
  4,551
  5,284
  6,041
  6,813
  7,591
  8,367
  9,135
  9,889
  10,627
  11,348
  12,052
  12,741
  13,416
  14,081
  14,739
  15,395
  16,053
  16,718
  17,394
  18,086
  18,798
  19,535
  20,300
  21,098
  21,933
Total cash flow (excl. dividends), $m
  91
  656
  1,126
  2,031
  3,153
  4,514
  6,130
  8,017
  10,183
  12,634
  15,374
  18,402
  21,714
  25,307
  29,173
  33,308
  37,705
  42,356
  47,259
  52,408
  57,800
  63,436
  69,315
  75,439
  81,813
  88,442
  95,333
  102,496
  109,940
  117,678
  125,724
Retained Cash Flow (-), $m
  166
  -791
  -1,019
  -1,280
  -1,572
  -1,890
  -2,232
  -2,591
  -2,962
  -3,341
  -3,722
  -4,103
  -4,479
  -4,849
  -5,211
  -5,564
  -5,909
  -6,247
  -6,578
  -6,904
  -7,227
  -7,548
  -7,871
  -8,197
  -8,529
  -8,868
  -9,217
  -9,578
  -9,953
  -10,345
  -10,754
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
 
  94
  107
  751
  1,582
  2,624
  3,899
  5,426
  7,221
  9,294
  11,652
  14,299
  17,235
  20,458
  23,963
  27,744
  31,795
  36,109
  40,681
  45,504
  50,574
  55,888
  61,444
  67,242
  73,284
  79,574
  86,116
  92,918
  99,987
  107,333
  114,969
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
 
  88
  92
  597
  1,148
  1,725
  2,301
  2,847
  3,337
  3,742
  4,041
  4,222
  4,277
  4,210
  4,032
  3,758
  3,413
  3,019
  2,602
  2,185
  1,787
  1,422
  1,101
  829
  606
  430
  296
  197
  127
  79
  48
Current shareholders' claim on cash, %
  100
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4
  95.4

Methanex Corp is a Canada-based producer and supplier of methanol to a range of international markets. The Company operates production sites in Canada, Chile, Egypt, New Zealand, the United States, as well as Trinidad and Tobago. Its global operations are supported by a global supply chain of terminals, storage facilities and a fleet of methanol ocean tankers. The Company's subsidiary, Waterfront Shipping Company Limited, operates its fleet, which is made up of over 20 vessels ranging from 3,000 to 50,000 deadweight tons of capacity. It has over three production facilities in New Zealand that supply methanol primarily to customers in Asia Pacific. The Company operates over two plants in Trinidad, Titan and Atlas, which supply methanol to markets in North America, Europe, Asia Pacific and South America. Its joint venture facility in Egypt supplies methanol to markets in Europe and Asia Pacific. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

FINANCIAL RATIOS  of  Methanex Corporation (MX)

Valuation Ratios
P/E Ratio -341.9
Price to Sales 2.2
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 17.2
Price to Free Cash Flow 28.6
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 41.1% 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 84.514 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 $5.5 billion.

RELATED COMPANIES Price Int.Val. Rating
SJ Stella-Jones I 50.79 22.31  str.sell
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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