Intrinsic value of ONEX Corporation Subordinate Voting Shar - ONEX

Previous Close

$96.04

  Intrinsic Value

$489.00

stock screener

  Rating & Target

str. buy

+409%

  Value-price divergence*

0%

Previous close

$96.04

 
Intrinsic value

$489.00

 
Up/down potential

+409%

 
Rating

str. buy

 
Value-price divergence*

0%

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

We calculate the intrinsic value of ONEX 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 9.8

 

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, %
  14.44
  37.90
  34.61
  31.65
  28.98
  26.59
  24.43
  22.48
  20.74
  19.16
  17.75
  16.47
  15.32
  14.29
  13.36
  12.53
  11.77
  11.10
  10.49
  9.94
  9.44
  9.00
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
Revenue, $m
  30,430
  41,963
  56,486
  74,364
  95,917
  121,418
  151,077
  185,045
  223,416
  266,228
  313,473
  365,107
  421,057
  481,234
  545,540
  613,877
  686,154
  762,293
  842,233
  925,935
  1,013,383
  1,104,586
  1,199,579
  1,298,424
  1,401,206
  1,508,038
  1,619,058
  1,734,427
  1,854,330
  1,978,975
  2,108,590
Variable operating expenses, $m
 
  37,087
  49,494
  64,766
  83,179
  104,963
  130,299
  159,318
  192,097
  228,669
  269,029
  311,899
  359,695
  411,103
  466,037
  524,415
  586,159
  651,202
  719,492
  790,996
  865,700
  943,612
  1,024,761
  1,109,201
  1,197,004
  1,288,267
  1,383,108
  1,481,664
  1,584,093
  1,690,573
  1,801,299
Fixed operating expenses, $m
 
  4,029
  4,130
  4,233
  4,339
  4,448
  4,559
  4,673
  4,790
  4,909
  5,032
  5,158
  5,287
  5,419
  5,554
  5,693
  5,836
  5,981
  6,131
  6,284
  6,441
  6,602
  6,767
  6,937
  7,110
  7,288
  7,470
  7,657
  7,848
  8,044
  8,246
Total operating expenses, $m
  31,063
  41,116
  53,624
  68,999
  87,518
  109,411
  134,858
  163,991
  196,887
  233,578
  274,061
  317,057
  364,982
  416,522
  471,591
  530,108
  591,995
  657,183
  725,623
  797,280
  872,141
  950,214
  1,031,528
  1,116,138
  1,204,114
  1,295,555
  1,390,578
  1,489,321
  1,591,941
  1,698,617
  1,809,545
Operating income, $m
  -632
  847
  2,862
  5,364
  8,400
  12,007
  16,219
  21,055
  26,530
  32,649
  39,412
  48,050
  56,075
  64,713
  73,949
  83,769
  94,160
  105,110
  116,610
  128,655
  141,242
  154,372
  168,051
  182,286
  197,092
  212,483
  228,480
  245,106
  262,389
  280,357
  299,045
EBITDA, $m
  1,067
  3,445
  5,931
  9,012
  12,745
  17,178
  22,349
  28,285
  35,003
  42,508
  50,800
  59,871
  69,707
  80,293
  91,611
  103,643
  116,374
  129,789
  143,877
  158,632
  174,050
  190,133
  206,887
  224,323
  242,456
  261,305
  280,897
  301,258
  322,422
  344,426
  367,311
Interest expense (income), $m
  1,302
  1,429
  1,882
  2,983
  4,338
  5,972
  7,905
  10,153
  12,728
  15,637
  18,882
  22,464
  26,378
  30,619
  35,181
  40,056
  45,236
  50,716
  56,487
  62,547
  68,892
  75,522
  82,435
  89,636
  97,129
  104,921
  113,020
  121,436
  130,181
  139,271
  148,720
Earnings before tax, $m
  -632
  -582
  981
  2,382
  4,062
  6,036
  8,314
  10,902
  13,802
  17,012
  20,529
  25,586
  29,697
  34,093
  38,767
  43,713
  48,923
  54,394
  60,123
  66,108
  72,349
  78,850
  85,615
  92,650
  99,962
  107,562
  115,460
  123,671
  132,207
  141,086
  150,326
Tax expense, $m
  62
  0
  265
  643
  1,097
  1,630
  2,245
  2,943
  3,726
  4,593
  5,543
  6,908
  8,018
  9,205
  10,467
  11,802
  13,209
  14,686
  16,233
  17,849
  19,534
  21,290
  23,116
  25,015
  26,990
  29,042
  31,174
  33,391
  35,696
  38,093
  40,588
Net income, $m
  -176
  -582
  716
  1,739
  2,965
  4,406
  6,069
  7,958
  10,075
  12,419
  14,986
  18,678
  21,679
  24,888
  28,300
  31,910
  35,714
  39,708
  43,890
  48,259
  52,815
  57,561
  62,499
  67,634
  72,972
  78,520
  84,286
  90,279
  96,511
  102,993
  109,738

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,411
  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
  57,979
  75,202
  101,230
  133,268
  171,895
  217,594
  270,746
  331,622
  400,387
  477,111
  561,780
  654,313
  754,583
  862,427
  977,671
  1,100,139
  1,229,667
  1,366,116
  1,509,378
  1,659,382
  1,816,099
  1,979,545
  2,149,784
  2,326,924
  2,511,121
  2,702,577
  2,901,537
  3,108,292
  3,323,172
  3,546,550
  3,778,836
Adjusted assets (=assets-cash), $m
  54,568
  75,202
  101,230
  133,268
  171,895
  217,594
  270,746
  331,622
  400,387
  477,111
  561,780
  654,313
  754,583
  862,427
  977,671
  1,100,139
  1,229,667
  1,366,116
  1,509,378
  1,659,382
  1,816,099
  1,979,545
  2,149,784
  2,326,924
  2,511,121
  2,702,577
  2,901,537
  3,108,292
  3,323,172
  3,546,550
  3,778,836
Revenue / Adjusted assets
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
  0.558
Average production assets, $m
  15,777
  21,737
  29,260
  38,520
  49,685
  62,894
  78,258
  95,853
  115,730
  137,906
  162,379
  189,125
  218,108
  249,279
  282,590
  317,988
  355,428
  394,868
  436,277
  479,634
  524,932
  572,176
  621,382
  672,583
  725,824
  781,164
  838,672
  898,433
  960,543
  1,025,109
  1,092,250
Working capital, $m
  4,917
  2,895
  3,898
  5,131
  6,618
  8,378
  10,424
  12,768
  15,416
  18,370
  21,630
  25,192
  29,053
  33,205
  37,642
  42,358
  47,345
  52,598
  58,114
  63,890
  69,923
  76,216
  82,771
  89,591
  96,683
  104,055
  111,715
  119,675
  127,949
  136,549
  145,493
Total debt, $m
  30,994
  40,035
  63,460
  92,294
  127,058
  168,188
  216,025
  270,813
  332,702
  401,753
  477,955
  561,235
  651,477
  748,537
  852,257
  962,478
  1,079,053
  1,201,858
  1,330,793
  1,465,797
  1,606,842
  1,753,944
  1,907,159
  2,066,584
  2,232,362
  2,404,672
  2,583,737
  2,769,816
  2,963,208
  3,164,248
  3,373,305
Total liabilities, $m
  58,641
  67,682
  91,107
  119,941
  154,705
  195,835
  243,672
  298,460
  360,349
  429,400
  505,602
  588,882
  679,124
  776,184
  879,904
  990,125
  1,106,700
  1,229,505
  1,358,440
  1,493,444
  1,634,489
  1,781,591
  1,934,806
  2,094,231
  2,260,009
  2,432,319
  2,611,384
  2,797,463
  2,990,855
  3,191,895
  3,400,952
Total equity, $m
  -662
  7,520
  10,123
  13,327
  17,189
  21,759
  27,075
  33,162
  40,039
  47,711
  56,178
  65,431
  75,458
  86,243
  97,767
  110,014
  122,967
  136,612
  150,938
  165,938
  181,610
  197,955
  214,978
  232,692
  251,112
  270,258
  290,154
  310,829
  332,317
  354,655
  377,884
Total liabilities and equity, $m
  57,979
  75,202
  101,230
  133,268
  171,894
  217,594
  270,747
  331,622
  400,388
  477,111
  561,780
  654,313
  754,582
  862,427
  977,671
  1,100,139
  1,229,667
  1,366,117
  1,509,378
  1,659,382
  1,816,099
  1,979,546
  2,149,784
  2,326,923
  2,511,121
  2,702,577
  2,901,538
  3,108,292
  3,323,172
  3,546,550
  3,778,836
Debt-to-equity ratio
  -46.819
  5.320
  6.270
  6.930
  7.390
  7.730
  7.980
  8.170
  8.310
  8.420
  8.510
  8.580
  8.630
  8.680
  8.720
  8.750
  8.780
  8.800
  8.820
  8.830
  8.850
  8.860
  8.870
  8.880
  8.890
  8.900
  8.900
  8.910
  8.920
  8.920
  8.930
Adjusted equity ratio
  -0.075
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -176
  -582
  716
  1,739
  2,965
  4,406
  6,069
  7,958
  10,075
  12,419
  14,986
  18,678
  21,679
  24,888
  28,300
  31,910
  35,714
  39,708
  43,890
  48,259
  52,815
  57,561
  62,499
  67,634
  72,972
  78,520
  84,286
  90,279
  96,511
  102,993
  109,738
Depreciation, amort., depletion, $m
  1,699
  2,598
  3,068
  3,647
  4,345
  5,170
  6,131
  7,230
  8,473
  9,859
  11,388
  11,820
  13,632
  15,580
  17,662
  19,874
  22,214
  24,679
  27,267
  29,977
  32,808
  35,761
  38,836
  42,036
  45,364
  48,823
  52,417
  56,152
  60,034
  64,069
  68,266
Funds from operations, $m
  2,022
  2,016
  3,784
  5,386
  7,310
  9,576
  12,200
  15,189
  18,548
  22,278
  26,375
  30,498
  35,311
  40,468
  45,962
  51,785
  57,928
  64,387
  71,157
  78,236
  85,623
  93,322
  101,336
  109,671
  118,336
  127,343
  136,703
  146,432
  156,545
  167,062
  178,003
Change in working capital, $m
  -561
  796
  1,002
  1,234
  1,487
  1,760
  2,046
  2,344
  2,648
  2,954
  3,260
  3,563
  3,861
  4,152
  4,437
  4,715
  4,987
  5,254
  5,516
  5,775
  6,034
  6,293
  6,555
  6,820
  7,092
  7,371
  7,660
  7,960
  8,273
  8,600
  8,943
Cash from operations, $m
  2,583
  1,220
  2,782
  4,152
  5,823
  7,817
  10,153
  12,845
  15,900
  19,324
  23,115
  26,936
  31,450
  36,316
  41,525
  47,069
  52,941
  59,133
  65,641
  72,460
  79,589
  87,029
  94,781
  102,851
  111,244
  119,971
  129,043
  138,471
  148,272
  158,462
  169,060
Maintenance CAPEX, $m
  0
  -986
  -1,359
  -1,829
  -2,408
  -3,105
  -3,931
  -4,891
  -5,991
  -7,233
  -8,619
  -10,149
  -11,820
  -13,632
  -15,580
  -17,662
  -19,874
  -22,214
  -24,679
  -27,267
  -29,977
  -32,808
  -35,761
  -38,836
  -42,036
  -45,364
  -48,823
  -52,417
  -56,152
  -60,034
  -64,069
New CAPEX, $m
  -769
  -5,960
  -7,523
  -9,260
  -11,165
  -13,209
  -15,363
  -17,596
  -19,876
  -22,177
  -24,473
  -26,746
  -28,982
  -31,172
  -33,311
  -35,399
  -37,439
  -39,440
  -41,409
  -43,358
  -45,298
  -47,243
  -49,206
  -51,201
  -53,241
  -55,339
  -57,508
  -59,761
  -62,110
  -64,566
  -67,141
Cash from investing activities, $m
  -3,784
  -6,946
  -8,882
  -11,089
  -13,573
  -16,314
  -19,294
  -22,487
  -25,867
  -29,410
  -33,092
  -36,895
  -40,802
  -44,804
  -48,891
  -53,061
  -57,313
  -61,654
  -66,088
  -70,625
  -75,275
  -80,051
  -84,967
  -90,037
  -95,277
  -100,703
  -106,331
  -112,178
  -118,262
  -124,600
  -131,210
Free cash flow, $m
  -1,201
  -5,726
  -6,100
  -6,937
  -7,750
  -8,498
  -9,141
  -9,642
  -9,967
  -10,086
  -9,977
  -9,959
  -9,353
  -8,488
  -7,365
  -5,991
  -4,373
  -2,521
  -447
  1,835
  4,314
  6,977
  9,814
  12,813
  15,967
  19,268
  22,712
  26,293
  30,010
  33,862
  37,850
Issuance/(repayment) of debt, $m
  1,706
  9,634
  23,425
  28,834
  34,764
  41,130
  47,837
  54,788
  61,889
  69,051
  76,202
  83,280
  90,242
  97,060
  103,719
  110,221
  116,575
  122,804
  128,936
  135,003
  141,045
  147,102
  153,215
  159,426
  165,777
  172,310
  179,065
  186,079
  193,392
  201,040
  209,057
Issuance/(repurchase) of shares, $m
  -315
  11,582
  1,887
  1,465
  897
  164
  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  
  1,175
  21,216
  25,312
  30,299
  35,661
  41,294
  47,837
  54,788
  61,889
  69,051
  76,202
  83,280
  90,242
  97,060
  103,719
  110,221
  116,575
  122,804
  128,936
  135,003
  141,045
  147,102
  153,215
  159,426
  165,777
  172,310
  179,065
  186,079
  193,392
  201,040
  209,057
Total cash flow (excl. dividends), $m
  -47
  15,491
  19,212
  23,363
  27,912
  32,796
  38,696
  45,146
  51,922
  58,965
  66,225
  73,321
  80,890
  88,572
  96,354
  104,230
  112,203
  120,284
  128,488
  136,839
  145,359
  154,079
  163,028
  172,239
  181,744
  191,578
  201,776
  212,372
  223,402
  234,902
  246,907
Retained Cash Flow (-), $m
  442
  -11,582
  -2,603
  -3,204
  -3,863
  -4,570
  -5,315
  -6,088
  -6,877
  -7,672
  -8,467
  -9,253
  -10,027
  -10,784
  -11,524
  -12,247
  -12,953
  -13,645
  -14,326
  -15,000
  -15,672
  -16,345
  -17,024
  -17,714
  -18,420
  -19,146
  -19,896
  -20,675
  -21,488
  -22,338
  -23,229
Prev. year cash balance distribution, $m
 
  2,818
  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
 
  6,726
  16,609
  20,159
  24,049
  28,226
  33,381
  39,059
  45,045
  51,293
  57,758
  64,068
  70,863
  77,788
  84,830
  91,983
  99,250
  106,639
  114,162
  121,838
  129,688
  137,735
  146,004
  154,525
  163,325
  172,433
  181,880
  191,697
  201,914
  212,564
  223,678
Discount rate, %
 
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.71
  24.89
  26.14
  27.44
  28.81
  30.25
  31.77
  33.36
  35.02
  36.77
  38.61
  40.54
  42.57
  44.70
  46.93
  49.28
  51.75
  54.33
PV of cash for distribution, $m
 
  5,942
  12,812
  13,410
  13,617
  13,413
  13,116
  12,490
  11,528
  10,320
  8,965
  7,520
  6,159
  4,896
  3,777
  2,826
  2,050
  1,441
  980
  645
  410
  251
  149
  85
  46
  24
  12
  6
  3
  1
  0
Current shareholders' claim on cash, %
  100
  50.0
  40.0
  34.9
  32.7
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4
  32.4

Onex Corporation is a private equity firm specializing in acquisitions and platform acquisitions. The firm makes investments in buyouts, large- middle market, large-cap, mid-cap, and small-cap market and distressed companies. It also invests in recapitalization, growth capital, corporate carve-outs of subsidiaries and mission-critical supply divisions from multinational corporations, operational restructurings of undervalued businesses, and builds up. The firm seeks to invest in technology, electronics manufacturing services, industrial, aerospace, healthcare, retail, restaurants, industrials products, customer care services, metal services, building products, entertainment, gaming, cabinetry products, commercial vehicles, commercial and investment banking, financial services, commercial and multi-unit residential real estate. It invests in global businesses headquartered in North America, including United States and Canada, or Europe. The firm seeks to invest between $125 million and $1 billion in companies that have minimum revenues of $300 million. It does not consider size if the company is in an industry in which the firm already has presence. The firm seeks to make direct as well as co-investments through managed private equity, real estate and credit funds. It seeks to acquire a control position in its portfolio companies. Onex Corporation was founded in 1984 and is based in Toronto, Canada with additional offices in New York, New York;Englewood Cliffs, New Jersey; and London, United Kingdom.

FINANCIAL RATIOS  of  ONEX Corporation Subordinate Voting Shar (ONEX)

Valuation Ratios
P/E Ratio -56.1
Price to Sales 0.3
Price to Book -14.9
Price to Tangible Book
Price to Cash Flow 3.8
Price to Free Cash Flow 5.4
Growth Rates
Sales Growth Rate 14.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -19.1%
Cap. Spend. - 3 Yr. Gr. Rate 0.1%
Financial Strength
Quick Ratio 6
Current Ratio 0.1
LT Debt to Equity -4592.3%
Total Debt to Equity -4681.9%
Interest Coverage 1
Management Effectiveness
Return On Assets 2.4%
Ret/ On Assets - 3 Yr. Avg. 1.7%
Return On Total Capital -0.6%
Ret/ On T. Cap. - 3 Yr. Avg. -1.7%
Return On Equity 39.9%
Return On Equity - 3 Yr. Avg. -50%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 30%
Gross Margin - 3 Yr. Avg. 29.5%
EBITDA Margin 7.8%
EBITDA Margin - 3 Yr. Avg. 5.7%
Operating Margin -2.1%
Oper. Margin - 3 Yr. Avg. -3.4%
Pre-Tax Margin -2.1%
Pre-Tax Margin - 3 Yr. Avg. -3.4%
Net Profit Margin -0.6%
Net Profit Margin - 3 Yr. Avg. -1.4%
Effective Tax Rate -9.8%
Eff/ Tax Rate - 3 Yr. Avg. -11.3%
Payout Ratio -15.3%

ONEX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ONEX stock intrinsic value calculation we used $30430 million for the last fiscal year's total revenue generated by ONEX Corporation Subordinate Voting Shar. The default revenue input number comes from 2016 income statement of ONEX Corporation Subordinate Voting Shar. 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 ONEX stock valuation model: a) initial revenue growth rate of 37.9% 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 13.2%, whose default value for ONEX is calculated based on our internal credit rating of ONEX Corporation Subordinate Voting Shar, 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 ONEX Corporation Subordinate Voting Shar.
    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 ONEX stock the variable cost ratio is equal to 89.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3931 million in the base year in the intrinsic value calculation for ONEX 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 4.7% for ONEX Corporation Subordinate Voting Shar.

Corporate tax rate of 27% is the nominal tax rate for ONEX Corporation Subordinate Voting Shar. 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 ONEX 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 ONEX are equal to 51.8%.

Life of production assets of 16 years is the average useful life of capital assets used in ONEX Corporation Subordinate Voting Shar 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 ONEX is equal to 6.9%. 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 - $-662 million for ONEX Corporation Subordinate Voting Shar - 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 102.24 million for ONEX Corporation Subordinate Voting Shar 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 ONEX Corporation Subordinate Voting Shar at the current share price and the inputted number of shares is $9.8 billion.

RELATED COMPANIES Price Int.Val. Rating
IFP Interfor Corpo 17.39 2.29  str.sell
Stock chart of ONEX Financial statements of ONEX
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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