Intrinsic value of Tahoe Resources Inc. - THO

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$12.37

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$12.37

 
Intrinsic value

$2.66

 
Up/down potential

-78%

 
Rating

str. sell

 
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 THO 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 3.9

 

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, %
  51.00
  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
  1,060
  1,696
  2,620
  3,919
  5,686
  8,022
  11,028
  14,803
  19,437
  25,011
  31,591
  39,229
  47,961
  57,810
  68,782
  80,875
  94,077
  108,369
  123,728
  140,128
  157,546
  175,958
  195,345
  215,692
  236,991
  259,238
  282,436
  306,594
  331,729
  357,864
  385,028
Variable operating expenses, $m
 
  1,948
  3,002
  4,481
  6,496
  9,158
  12,585
  16,887
  22,169
  28,522
  36,021
  44,712
  54,664
  65,889
  78,395
  92,178
  107,225
  123,514
  141,019
  159,712
  179,564
  200,549
  222,645
  245,836
  270,112
  295,468
  321,907
  349,442
  378,090
  407,878
  438,838
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
  776
  1,948
  3,002
  4,481
  6,496
  9,158
  12,585
  16,887
  22,169
  28,522
  36,021
  44,712
  54,664
  65,889
  78,395
  92,178
  107,225
  123,514
  141,019
  159,712
  179,564
  200,549
  222,645
  245,836
  270,112
  295,468
  321,907
  349,442
  378,090
  407,878
  438,838
Operating income, $m
  284
  -252
  -381
  -563
  -810
  -1,136
  -1,556
  -2,084
  -2,732
  -3,511
  -4,430
  -5,482
  -6,703
  -8,079
  -9,613
  -11,303
  -13,148
  -15,145
  -17,292
  -19,584
  -22,018
  -24,591
  -27,300
  -30,144
  -33,121
  -36,230
  -39,472
  -42,848
  -46,361
  -50,013
  -53,810
EBITDA, $m
  457
  29
  45
  67
  97
  137
  188
  252
  331
  426
  539
  669
  818
  986
  1,173
  1,379
  1,604
  1,847
  2,109
  2,389
  2,686
  3,000
  3,330
  3,677
  4,040
  4,419
  4,815
  5,227
  5,655
  6,101
  6,564
Interest expense (income), $m
  4
  3
  27
  61
  109
  174
  260
  372
  511
  682
  888
  1,131
  1,413
  1,735
  2,099
  2,504
  2,951
  3,438
  3,966
  4,533
  5,139
  5,782
  6,462
  7,178
  7,930
  8,716
  9,538
  10,394
  11,287
  12,215
  13,180
Earnings before tax, $m
  282
  -255
  -408
  -624
  -919
  -1,310
  -1,817
  -2,455
  -3,242
  -4,193
  -5,318
  -6,613
  -8,116
  -9,815
  -11,712
  -13,807
  -16,099
  -18,584
  -21,258
  -24,117
  -27,157
  -30,373
  -33,763
  -37,322
  -41,050
  -44,946
  -49,010
  -53,242
  -57,647
  -62,228
  -66,990
Tax expense, $m
  123
  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
Net income, $m
  159
  -255
  -408
  -624
  -919
  -1,310
  -1,817
  -2,455
  -3,242
  -4,193
  -5,318
  -6,613
  -8,116
  -9,815
  -11,712
  -13,807
  -16,099
  -18,584
  -21,258
  -24,117
  -27,157
  -30,373
  -33,763
  -37,322
  -41,050
  -44,946
  -49,010
  -53,242
  -57,647
  -62,228
  -66,990

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  221
  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
  4,150
  6,281
  9,705
  14,514
  21,059
  29,711
  40,845
  54,826
  71,990
  92,634
  117,004
  145,293
  177,635
  214,109
  254,748
  299,538
  348,435
  401,368
  458,252
  518,994
  583,503
  651,695
  723,499
  798,861
  877,745
  960,141
  1,046,058
  1,135,534
  1,228,628
  1,325,424
  1,426,031
Adjusted assets (=assets-cash), $m
  3,929
  6,281
  9,705
  14,514
  21,059
  29,711
  40,845
  54,826
  71,990
  92,634
  117,004
  145,293
  177,635
  214,109
  254,748
  299,538
  348,435
  401,368
  458,252
  518,994
  583,503
  651,695
  723,499
  798,861
  877,745
  960,141
  1,046,058
  1,135,534
  1,228,628
  1,325,424
  1,426,031
Revenue / Adjusted assets
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
Average production assets, $m
  2,859
  4,574
  7,067
  10,569
  15,335
  21,635
  29,743
  39,924
  52,423
  67,455
  85,201
  105,801
  129,352
  155,912
  185,505
  218,121
  253,727
  292,272
  333,694
  377,926
  424,901
  474,558
  526,845
  581,722
  639,165
  699,165
  761,729
  826,884
  894,674
  965,160
  1,038,422
Working capital, $m
  283
  119
  183
  274
  398
  562
  772
  1,036
  1,361
  1,751
  2,211
  2,746
  3,357
  4,047
  4,815
  5,661
  6,585
  7,586
  8,661
  9,809
  11,028
  12,317
  13,674
  15,098
  16,589
  18,147
  19,771
  21,462
  23,221
  25,051
  26,952
Total debt, $m
  69
  456
  1,034
  1,847
  2,953
  4,415
  6,297
  8,660
  11,560
  15,049
  19,168
  23,949
  29,414
  35,578
  42,446
  50,016
  58,280
  67,225
  76,839
  87,104
  98,006
  109,531
  121,665
  134,401
  147,733
  161,658
  176,178
  191,299
  207,032
  223,391
  240,393
Total liabilities, $m
  674
  1,062
  1,640
  2,453
  3,559
  5,021
  6,903
  9,266
  12,166
  15,655
  19,774
  24,555
  30,020
  36,184
  43,052
  50,622
  58,886
  67,831
  77,445
  87,710
  98,612
  110,137
  122,271
  135,007
  148,339
  162,264
  176,784
  191,905
  207,638
  223,997
  240,999
Total equity, $m
  3,475
  5,220
  8,065
  12,061
  17,500
  24,690
  33,942
  45,561
  59,824
  76,979
  97,231
  120,738
  147,614
  177,925
  211,696
  248,916
  289,549
  333,537
  380,807
  431,284
  484,891
  541,559
  601,228
  663,853
  729,406
  797,877
  869,274
  943,629
  1,020,989
  1,101,427
  1,185,032
Total liabilities and equity, $m
  4,149
  6,282
  9,705
  14,514
  21,059
  29,711
  40,845
  54,827
  71,990
  92,634
  117,005
  145,293
  177,634
  214,109
  254,748
  299,538
  348,435
  401,368
  458,252
  518,994
  583,503
  651,696
  723,499
  798,860
  877,745
  960,141
  1,046,058
  1,135,534
  1,228,627
  1,325,424
  1,426,031
Debt-to-equity ratio
  0.020
  0.090
  0.130
  0.150
  0.170
  0.180
  0.190
  0.190
  0.190
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
  0.200
Adjusted equity ratio
  0.828
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831
  0.831

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  159
  -255
  -408
  -624
  -919
  -1,310
  -1,817
  -2,455
  -3,242
  -4,193
  -5,318
  -6,613
  -8,116
  -9,815
  -11,712
  -13,807
  -16,099
  -18,584
  -21,258
  -24,117
  -27,157
  -30,373
  -33,763
  -37,322
  -41,050
  -44,946
  -49,010
  -53,242
  -57,647
  -62,228
  -66,990
Depreciation, amort., depletion, $m
  173
  281
  426
  630
  907
  1,273
  1,744
  2,336
  3,063
  3,937
  4,969
  6,151
  7,520
  9,065
  10,785
  12,681
  14,752
  16,993
  19,401
  21,972
  24,704
  27,591
  30,631
  33,821
  37,161
  40,649
  44,287
  48,075
  52,016
  56,114
  60,373
Funds from operations, $m
  153
  26
  18
  6
  -12
  -37
  -72
  -119
  -180
  -256
  -349
  -462
  -595
  -750
  -927
  -1,126
  -1,347
  -1,591
  -1,857
  -2,145
  -2,453
  -2,783
  -3,132
  -3,501
  -3,890
  -4,297
  -4,723
  -5,168
  -5,631
  -6,114
  -6,616
Change in working capital, $m
  -184
  45
  65
  91
  124
  164
  210
  264
  324
  390
  461
  535
  611
  689
  768
  847
  924
  1,000
  1,075
  1,148
  1,219
  1,289
  1,357
  1,424
  1,491
  1,557
  1,624
  1,691
  1,759
  1,829
  1,901
Cash from operations, $m
  337
  577
  -47
  -85
  -136
  -201
  -283
  -383
  -504
  -646
  -810
  -997
  -1,207
  -1,439
  -1,695
  -1,972
  -2,271
  -2,591
  -2,932
  -3,293
  -3,673
  -4,072
  -4,489
  -4,926
  -5,380
  -5,854
  -6,347
  -6,859
  -7,391
  -7,944
  -8,518
Maintenance CAPEX, $m
  0
  -166
  -266
  -411
  -614
  -892
  -1,258
  -1,729
  -2,321
  -3,048
  -3,922
  -4,954
  -6,151
  -7,520
  -9,065
  -10,785
  -12,681
  -14,752
  -16,993
  -19,401
  -21,972
  -24,704
  -27,591
  -30,631
  -33,821
  -37,161
  -40,649
  -44,287
  -48,075
  -52,016
  -56,114
New CAPEX, $m
  -258
  -1,716
  -2,493
  -3,502
  -4,766
  -6,300
  -8,108
  -10,181
  -12,499
  -15,033
  -17,746
  -20,599
  -23,551
  -26,561
  -29,593
  -32,616
  -35,606
  -38,545
  -41,422
  -44,232
  -46,975
  -49,657
  -52,287
  -54,877
  -57,443
  -59,999
  -62,564
  -65,155
  -67,790
  -70,486
  -73,261
Cash from investing activities, $m
  -163
  -1,882
  -2,759
  -3,913
  -5,380
  -7,192
  -9,366
  -11,910
  -14,820
  -18,081
  -21,668
  -25,553
  -29,702
  -34,081
  -38,658
  -43,401
  -48,287
  -53,297
  -58,415
  -63,633
  -68,947
  -74,361
  -79,878
  -85,508
  -91,264
  -97,160
  -103,213
  -109,442
  -115,865
  -122,502
  -129,375
Free cash flow, $m
  174
  -1,305
  -2,806
  -3,998
  -5,516
  -7,393
  -9,649
  -12,293
  -15,324
  -18,726
  -22,478
  -26,550
  -30,909
  -35,520
  -40,352
  -45,373
  -50,559
  -55,888
  -61,347
  -66,925
  -72,620
  -78,432
  -84,367
  -90,434
  -96,644
  -103,014
  -109,560
  -116,301
  -123,256
  -130,446
  -137,893
Issuance/(repayment) of debt, $m
  -30
  399
  579
  813
  1,106
  1,462
  1,882
  2,363
  2,901
  3,489
  4,119
  4,781
  5,466
  6,164
  6,868
  7,570
  8,264
  8,946
  9,613
  10,265
  10,902
  11,525
  12,135
  12,736
  13,331
  13,925
  14,520
  15,121
  15,733
  16,359
  17,003
Issuance/(repurchase) of shares, $m
  27
  2,652
  5,072
  7,181
  9,849
  13,121
  17,020
  21,549
  26,686
  32,392
  38,611
  45,277
  52,319
  59,667
  67,255
  75,024
  82,928
  90,930
  99,004
  107,137
  115,325
  123,575
  131,901
  140,323
  148,866
  157,560
  166,438
  175,534
  184,884
  194,525
  204,495
Cash from financing (excl. dividends), $m  
  -8
  3,051
  5,651
  7,994
  10,955
  14,583
  18,902
  23,912
  29,587
  35,881
  42,730
  50,058
  57,785
  65,831
  74,123
  82,594
  91,192
  99,876
  108,617
  117,402
  126,227
  135,100
  144,036
  153,059
  162,197
  171,485
  180,958
  190,655
  200,617
  210,884
  221,498
Total cash flow (excl. dividends), $m
  165
  -907
  -2,227
  -3,185
  -4,410
  -5,931
  -7,767
  -9,931
  -12,423
  -15,237
  -18,359
  -21,769
  -25,443
  -29,356
  -33,484
  -37,804
  -42,295
  -46,943
  -51,733
  -56,660
  -61,718
  -66,908
  -72,232
  -77,697
  -83,313
  -89,090
  -95,040
  -101,179
  -107,523
  -114,087
  -120,890
Retained Cash Flow (-), $m
  -1,227
  -1,954
  -2,845
  -3,996
  -5,439
  -7,190
  -9,253
  -11,618
  -14,263
  -17,155
  -20,252
  -23,508
  -26,876
  -30,311
  -33,771
  -37,221
  -40,633
  -43,987
  -47,270
  -50,477
  -53,607
  -56,668
  -59,669
  -62,625
  -65,553
  -68,470
  -71,398
  -74,354
  -77,361
  -80,438
  -83,605
Prev. year cash balance distribution, $m
 
  209
  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
 
  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
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
 
  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
Current shareholders' claim on cash, %
  100
  57.8
  30.8
  17.1
  9.9
  5.9
  3.6
  2.3
  1.5
  1.0
  0.7
  0.5
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Tahoe Resources Inc., together with its subsidiaries, explores, develops, and operates mines in the Americas. The company primarily produces copper, gold, silver, lead/zinc, and natural gas and petroleum. It holds interest in the Escobal mine property comprising 29.1 million tons of proven and probable mineral reserves located in southeast Guatemala; La Arena mine property, which consist of 80.3 million tons of proven and probable mineral reserves located in northern PerĂº; and Shahuindo mine comprising 111.9 million tons of proven and probable mineral reserves located in northern PerĂº. The company was formerly known as CKM Resources Inc. and changed its name to Tahoe Resources Inc. in January 2010. Tahoe Resources Inc. was incorporated in 2009 and is headquartered in Reno, Nevada.

FINANCIAL RATIOS  of  Tahoe Resources Inc. (THO)

Valuation Ratios
P/E Ratio 24.2
Price to Sales 3.6
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 11.4
Price to Free Cash Flow 48.8
Growth Rates
Sales Growth Rate 51%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 56.4%
Cap. Spend. - 3 Yr. Gr. Rate 5.7%
Financial Strength
Quick Ratio 18
Current Ratio 0
LT Debt to Equity 1.6%
Total Debt to Equity 2%
Interest Coverage 72
Management Effectiveness
Return On Assets 4.7%
Ret/ On Assets - 3 Yr. Avg. 3.4%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. 3.5%
Return On Equity 5.6%
Return On Equity - 3 Yr. Avg. 3.6%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 38.8%
Gross Margin - 3 Yr. Avg. 40%
EBITDA Margin 43.3%
EBITDA Margin - 3 Yr. Avg. 30%
Operating Margin 26.8%
Oper. Margin - 3 Yr. Avg. 15.5%
Pre-Tax Margin 26.6%
Pre-Tax Margin - 3 Yr. Avg. 14.2%
Net Profit Margin 15%
Net Profit Margin - 3 Yr. Avg. 9.1%
Effective Tax Rate 43.6%
Eff/ Tax Rate - 3 Yr. Avg. 27.8%
Payout Ratio 57.2%

THO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the THO stock intrinsic value calculation we used $1060 million for the last fiscal year's total revenue generated by Tahoe Resources Inc.. The default revenue input number comes from 2016 income statement of Tahoe Resources 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 THO 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 4.3%, whose default value for THO is calculated based on our internal credit rating of Tahoe Resources 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 Tahoe Resources 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 THO stock the variable cost ratio is equal to 115.4%.

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 THO 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 5.9% for Tahoe Resources Inc..

Corporate tax rate of 27% is the nominal tax rate for Tahoe Resources 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 THO 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 THO are equal to 269.7%.

Life of production assets of 17.2 years is the average useful life of capital assets used in Tahoe Resources 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 THO is equal to 7%. 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 - $3475 million for Tahoe Resources 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 312.298 million for Tahoe Resources 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 Tahoe Resources Inc. at the current share price and the inputted number of shares is $3.9 billion.


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Stock chart of THO Financial statements of THO
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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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