Intrinsic value of Aegon ADR - AEG

Previous Close

$5.62

  Intrinsic Value

$12.88

stock screener

  Rating & Target

str. buy

+129%

  Value-price divergence*

-32%

Previous close

$5.62

 
Intrinsic value

$12.88

 
Up/down potential

+129%

 
Rating

str. buy

 
Value-price divergence*

-32%

Our model is not good at valuating stocks of financial companies, such as AEG.

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

We calculate the intrinsic value of AEG 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 11.6

 

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, %
  41.81
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  0
  54,294
  55,542
  56,970
  58,572
  60,348
  62,296
  64,418
  66,715
  69,189
  71,844
  74,685
  77,716
  80,943
  84,373
  88,013
  91,870
  95,953
  100,270
  104,832
  109,649
  114,731
  120,091
  125,741
  131,694
  137,963
  144,564
  151,512
  158,824
  166,516
  174,606
Variable operating expenses, $m
 
  49,299
  50,432
  51,729
  53,184
  54,796
  56,565
  58,492
  60,577
  62,823
  65,234
  67,814
  70,566
  73,496
  76,611
  79,916
  83,418
  87,125
  91,045
  95,188
  99,561
  104,176
  109,043
  114,173
  119,578
  125,271
  131,264
  137,573
  144,212
  151,196
  158,542
Fixed operating expenses, $m
 
  4,472
  4,584
  4,698
  4,816
  4,936
  5,060
  5,186
  5,316
  5,449
  5,585
  5,725
  5,868
  6,014
  6,165
  6,319
  6,477
  6,639
  6,805
  6,975
  7,149
  7,328
  7,511
  7,699
  7,891
  8,089
  8,291
  8,498
  8,711
  8,928
  9,152
Total operating expenses, $m
  55,359
  53,771
  55,016
  56,427
  58,000
  59,732
  61,625
  63,678
  65,893
  68,272
  70,819
  73,539
  76,434
  79,510
  82,776
  86,235
  89,895
  93,764
  97,850
  102,163
  106,710
  111,504
  116,554
  121,872
  127,469
  133,360
  139,555
  146,071
  152,923
  160,124
  167,694
Operating income, $m
  703
  523
  526
  543
  573
  616
  672
  740
  822
  917
  1,025
  1,146
  1,282
  1,432
  1,598
  1,778
  1,975
  2,189
  2,420
  2,670
  2,938
  3,227
  3,537
  3,869
  4,224
  4,604
  5,009
  5,441
  5,901
  6,391
  6,912
EBITDA, $m
  1,978
  697
  704
  725
  760
  809
  871
  946
  1,035
  1,138
  1,255
  1,385
  1,531
  1,691
  1,868
  2,060
  2,269
  2,496
  2,741
  3,005
  3,289
  3,594
  3,921
  4,272
  4,646
  5,045
  5,472
  5,926
  6,409
  6,924
  7,471
Interest expense (income), $m
  317
  493
  132
  447
  806
  1,210
  1,658
  2,149
  2,683
  3,262
  3,886
  4,555
  5,271
  6,034
  6,848
  7,712
  8,629
  9,601
  10,630
  11,718
  12,868
  14,082
  15,362
  16,713
  18,137
  19,637
  21,217
  22,880
  24,631
  26,474
  28,412
Earnings before tax, $m
  850
  30
  394
  96
  -234
  -595
  -986
  -1,409
  -1,862
  -2,346
  -2,861
  -3,408
  -3,989
  -4,602
  -5,250
  -5,934
  -6,654
  -7,412
  -8,210
  -9,048
  -9,929
  -10,854
  -11,825
  -12,844
  -13,912
  -15,033
  -16,208
  -17,439
  -18,730
  -20,083
  -21,500
Tax expense, $m
  232
  8
  106
  26
  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
  618
  22
  288
  70
  -234
  -595
  -986
  -1,409
  -1,862
  -2,346
  -2,861
  -3,408
  -3,989
  -4,602
  -5,250
  -5,934
  -6,654
  -7,412
  -8,210
  -9,048
  -9,929
  -10,854
  -11,825
  -12,844
  -13,912
  -15,033
  -16,208
  -17,439
  -18,730
  -20,083
  -21,500

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  449,541
  434,349
  444,339
  455,758
  468,579
  482,785
  498,371
  515,344
  533,717
  553,510
  574,753
  597,478
  621,727
  647,546
  674,985
  704,102
  734,958
  767,620
  802,161
  838,657
  877,191
  917,851
  960,731
  1,005,929
  1,053,551
  1,103,707
  1,156,515
  1,212,099
  1,270,590
  1,332,124
  1,396,848
Adjusted assets (=assets-cash), $m
  449,541
  434,349
  444,339
  455,758
  468,579
  482,785
  498,371
  515,344
  533,717
  553,510
  574,753
  597,478
  621,727
  647,546
  674,985
  704,102
  734,958
  767,620
  802,161
  838,657
  877,191
  917,851
  960,731
  1,005,929
  1,053,551
  1,103,707
  1,156,515
  1,212,099
  1,270,590
  1,332,124
  1,396,848
Revenue / Adjusted assets
  0.000
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
  0.125
Average production assets, $m
  2,257
  1,737
  1,777
  1,823
  1,874
  1,931
  1,993
  2,061
  2,135
  2,214
  2,299
  2,390
  2,487
  2,590
  2,700
  2,816
  2,940
  3,070
  3,209
  3,355
  3,509
  3,671
  3,843
  4,024
  4,214
  4,415
  4,626
  4,848
  5,082
  5,328
  5,587
Working capital, $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
  0
Total debt, $m
  14,992
  3,773
  12,764
  23,041
  34,580
  47,365
  61,393
  76,669
  93,204
  111,018
  130,136
  150,589
  172,413
  195,650
  220,346
  246,551
  274,321
  303,717
  334,804
  367,650
  402,331
  438,925
  477,516
  518,195
  561,055
  606,195
  653,723
  703,748
  756,390
  811,771
  870,022
Total liabilities, $m
  423,461
  390,914
  399,905
  410,182
  421,721
  434,506
  448,534
  463,810
  480,345
  498,159
  517,277
  537,730
  559,554
  582,791
  607,487
  633,692
  661,462
  690,858
  721,945
  754,791
  789,472
  826,066
  864,657
  905,336
  948,196
  993,336
  1,040,864
  1,090,889
  1,143,531
  1,198,912
  1,257,163
Total equity, $m
  26,081
  43,435
  44,434
  45,576
  46,858
  48,278
  49,837
  51,534
  53,372
  55,351
  57,475
  59,748
  62,173
  64,755
  67,499
  70,410
  73,496
  76,762
  80,216
  83,866
  87,719
  91,785
  96,073
  100,593
  105,355
  110,371
  115,652
  121,210
  127,059
  133,212
  139,685
Total liabilities and equity, $m
  449,542
  434,349
  444,339
  455,758
  468,579
  482,784
  498,371
  515,344
  533,717
  553,510
  574,752
  597,478
  621,727
  647,546
  674,986
  704,102
  734,958
  767,620
  802,161
  838,657
  877,191
  917,851
  960,730
  1,005,929
  1,053,551
  1,103,707
  1,156,516
  1,212,099
  1,270,590
  1,332,124
  1,396,848
Debt-to-equity ratio
  0.575
  0.090
  0.290
  0.510
  0.740
  0.980
  1.230
  1.490
  1.750
  2.010
  2.260
  2.520
  2.770
  3.020
  3.260
  3.500
  3.730
  3.960
  4.170
  4.380
  4.590
  4.780
  4.970
  5.150
  5.330
  5.490
  5.650
  5.810
  5.950
  6.090
  6.230
Adjusted equity ratio
  0.058
  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
  618
  22
  288
  70
  -234
  -595
  -986
  -1,409
  -1,862
  -2,346
  -2,861
  -3,408
  -3,989
  -4,602
  -5,250
  -5,934
  -6,654
  -7,412
  -8,210
  -9,048
  -9,929
  -10,854
  -11,825
  -12,844
  -13,912
  -15,033
  -16,208
  -17,439
  -18,730
  -20,083
  -21,500
Depreciation, amort., depletion, $m
  1,275
  174
  178
  182
  187
  193
  199
  206
  213
  221
  230
  239
  249
  259
  270
  282
  294
  307
  321
  335
  351
  367
  384
  402
  421
  441
  463
  485
  508
  533
  559
Funds from operations, $m
  -1,119
  196
  465
  252
  -46
  -401
  -787
  -1,202
  -1,648
  -2,124
  -2,631
  -3,169
  -3,740
  -4,343
  -4,980
  -5,652
  -6,360
  -7,105
  -7,889
  -8,713
  -9,578
  -10,487
  -11,441
  -12,442
  -13,491
  -14,592
  -15,745
  -16,955
  -18,222
  -19,550
  -20,941
Change in working capital, $m
  -4,622
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from operations, $m
  3,503
  305
  465
  252
  -46
  -401
  -787
  -1,202
  -1,648
  -2,124
  -2,631
  -3,169
  -3,740
  -4,343
  -4,980
  -5,652
  -6,360
  -7,105
  -7,889
  -8,713
  -9,578
  -10,487
  -11,441
  -12,442
  -13,491
  -14,592
  -15,745
  -16,955
  -18,222
  -19,550
  -20,941
Maintenance CAPEX, $m
  0
  -171
  -174
  -178
  -182
  -187
  -193
  -199
  -206
  -213
  -221
  -230
  -239
  -249
  -259
  -270
  -282
  -294
  -307
  -321
  -335
  -351
  -367
  -384
  -402
  -421
  -441
  -463
  -485
  -508
  -533
New CAPEX, $m
  -73
  -26
  -40
  -46
  -51
  -57
  -62
  -68
  -73
  -79
  -85
  -91
  -97
  -103
  -110
  -116
  -123
  -131
  -138
  -146
  -154
  -163
  -172
  -181
  -190
  -201
  -211
  -222
  -234
  -246
  -259
Cash from investing activities, $m
  -1,138
  -197
  -214
  -224
  -233
  -244
  -255
  -267
  -279
  -292
  -306
  -321
  -336
  -352
  -369
  -386
  -405
  -425
  -445
  -467
  -489
  -514
  -539
  -565
  -592
  -622
  -652
  -685
  -719
  -754
  -792
Free cash flow, $m
  2,365
  107
  252
  29
  -280
  -646
  -1,042
  -1,470
  -1,928
  -2,417
  -2,937
  -3,490
  -4,076
  -4,695
  -5,349
  -6,039
  -6,765
  -7,530
  -8,334
  -9,180
  -10,068
  -11,001
  -11,980
  -13,007
  -14,084
  -15,214
  -16,398
  -17,640
  -18,941
  -20,304
  -21,733
Issuance/(repayment) of debt, $m
  677
  -10,303
  8,991
  10,278
  11,538
  12,785
  14,028
  15,276
  16,535
  17,814
  19,118
  20,453
  21,824
  23,237
  24,695
  26,205
  27,770
  29,396
  31,086
  32,846
  34,681
  36,594
  38,592
  40,678
  42,860
  45,141
  47,527
  50,026
  52,641
  55,381
  58,251
Issuance/(repurchase) of shares, $m
  -658
  28,913
  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  
  -168
  18,610
  8,991
  10,278
  11,538
  12,785
  14,028
  15,276
  16,535
  17,814
  19,118
  20,453
  21,824
  23,237
  24,695
  26,205
  27,770
  29,396
  31,086
  32,846
  34,681
  36,594
  38,592
  40,678
  42,860
  45,141
  47,527
  50,026
  52,641
  55,381
  58,251
Total cash flow (excl. dividends), $m
  2,173
  -10,196
  9,243
  10,307
  11,259
  12,140
  12,986
  13,806
  14,608
  15,397
  16,181
  16,963
  17,748
  18,542
  19,346
  20,166
  21,005
  21,866
  22,752
  23,667
  24,613
  25,593
  26,612
  27,672
  28,776
  29,927
  31,129
  32,386
  33,701
  35,077
  36,519
Retained Cash Flow (-), $m
  1,872
  -18,717
  -999
  -1,142
  -1,282
  -1,421
  -1,559
  -1,697
  -1,837
  -1,979
  -2,124
  -2,273
  -2,425
  -2,582
  -2,744
  -2,912
  -3,086
  -3,266
  -3,454
  -3,650
  -3,853
  -4,066
  -4,288
  -4,520
  -4,762
  -5,016
  -5,281
  -5,558
  -5,849
  -6,153
  -6,472
Prev. year cash balance 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
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
  8,244
  9,165
  9,976
  10,719
  11,427
  12,109
  12,770
  13,418
  14,056
  14,690
  15,323
  15,960
  16,602
  17,255
  17,920
  18,600
  19,298
  20,017
  20,759
  21,527
  22,324
  23,152
  24,014
  24,912
  25,849
  26,828
  27,852
  28,923
  30,046
Discount rate, %
 
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
 
  0
  6,948
  7,005
  6,854
  6,556
  6,160
  5,691
  5,172
  4,627
  4,073
  3,528
  3,006
  2,518
  2,072
  1,674
  1,326
  1,030
  784
  583
  424
  301
  208
  140
  92
  58
  36
  21
  12
  7
  4
Current shareholders' claim on cash, %
  100
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4
  37.4

Aegon N.V. provides life insurance, pensions, and asset management services. It offers life and protection products, such as traditional and universal life insurance products, as well as employer, endowment, term, and whole life insurance products; and supplemental health, accidental death and dismemberment insurance, critical illness, cancer treatment, credit/disability, income protection, travel, and long-term care insurance products. The company also provides investments and retirement products and services, such as variable and fixed annuities, retirement plans, mutual funds, and stable value solutions; individual and group pensions sponsored by or obtained through an employer; and mortgages, as well as banking products, including saving deposits. In addition, it offers general insurance products consisting of automotive, liability, disability, household insurance, and fire protection. The company markets its products through various sales and distribution channels, including affinity groups, banks, benefit consulting firms, direct to consumer, independent and career agents, independent marketing organizations, institutional partners, registered representatives of regional and independent broker-dealers, registered investment advisers, third party administrators, wirehouses, worksites, the Internet, and financial planners. It has operations in the United States, Mexico, and Brazil; the Netherlands; the United Kingdom; the Czech Republic, Hungary, Poland, Romania, Slovakia, Turkey, Ukraine, Spain, Portugal, and France; and Asia. Aegon N.V. was founded in 1983 and is headquartered in The Hague, the Netherlands.

FINANCIAL RATIOS  of  Aegon ADR (AEG)

Valuation Ratios
P/E Ratio 18.6
Price to Sales 0.2
Price to Book 0.4
Price to Tangible Book
Price to Cash Flow 3.3
Price to Free Cash Flow 3.3
Growth Rates
Sales Growth Rate 41.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -23.2%
Cap. Spend. - 3 Yr. Gr. Rate 0.8%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 49.3%
Total Debt to Equity 57.5%
Interest Coverage 4
Management Effectiveness
Return On Assets 0.2%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital 1.5%
Ret/ On T. Cap. - 3 Yr. Avg. 1.1%
Return On Equity 2.3%
Return On Equity - 3 Yr. Avg. 1.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 4.4%
EBITDA Margin - 3 Yr. Avg. 4.5%
Operating Margin 1.3%
Oper. Margin - 3 Yr. Avg. 0.7%
Pre-Tax Margin 1.5%
Pre-Tax Margin - 3 Yr. Avg. 1%
Net Profit Margin 1.1%
Net Profit Margin - 3 Yr. Avg. 0.8%
Effective Tax Rate 27.3%
Eff/ Tax Rate - 3 Yr. Avg. 21.3%
Payout Ratio 52.3%

AEG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AEG stock intrinsic value calculation we used $53229 million for the last fiscal year's total revenue generated by Aegon ADR. The default revenue input number comes from 2016 income statement of Aegon ADR. 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 AEG stock valuation model: a) initial revenue growth rate of 2% 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 8.5%, whose default value for AEG is calculated based on our internal credit rating of Aegon ADR, 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 Aegon ADR.
    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 AEG stock the variable cost ratio is equal to 90.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4363 million in the base year in the intrinsic value calculation for AEG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Aegon ADR.

Corporate tax rate of 27% is the nominal tax rate for Aegon ADR. 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 AEG 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 AEG are equal to 3.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Aegon ADR 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 AEG is equal to 0%. 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 - $24718 million for Aegon ADR - 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 2062.04 million for Aegon ADR 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 Aegon ADR at the current share price and the inputted number of shares is $11.6 billion.

RELATED COMPANIES Price Int.Val. Rating
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MET MetLife 53.93 130.13  str.buy
MFC Manulife Finan 18.34 6,708.86  str.buy
PRU Prudential Fin 111.77 242.62  str.buy

COMPANY NEWS

▶ Aegon sells some U.S. operations to boost solvency   [May-22-17 02:22AM  Reuters]
▶ Annual Meeting of Shareholders Adopts All Resolutions   [May-19-17 09:10AM  PR Newswire]
▶ ETFs with exposure to AEGON NV : April 17, 2017   [Apr-17-17 12:45PM  Capital Cube]
▶ Aegon Publishes Agenda for 2017 Annual General Meeting   [Apr-07-17 02:00AM  PR Newswire]
▶ ETFs with exposure to AEGON NV : April 5, 2017   [Apr-05-17 04:14PM  Capital Cube]
▶ Aegon Publishes 2016 Annual Report and Review   [Mar-24-17 03:00AM  PR Newswire]
▶ Ackman's winners and losers   [Mar-14-17 12:05PM  CNBC Videos]
▶ Aegon Responds to Inaccurate Information   [Feb-17-17 08:56AM  PR Newswire]
▶ Aegon Announces Management Changes   [Dec-15-16 07:33AM  PR Newswire]
▶ Should You Buy AEGON N.V. (ADR) (AEG)?   [Dec-13-16 03:06AM  Insider Monkey]
▶ Aegon to Appoint Matthew Rider as CFO   [Nov-28-16 11:00AM  PR Newswire]
▶ Aegon Completes Share Buyback Program   [Nov-11-16 01:19PM  PR Newswire]
▶ CFO Darryl Button to Leave Aegon   [Sep-06-16 02:00AM  PR Newswire]
▶ Aegon Completes Share Buyback Program   [Aug-15-16 02:00AM  PR Newswire]
▶ Aegon Provides Update on UK Annuity Book Divestments   [Jul-12-16 02:00AM  PR Newswire]
▶ Aegon Completes Share Buyback Program of EUR 400 Million   [May-19-16 01:37PM  PR Newswire]
▶ Aegon's Q1 2016 Results Impacted by Volatile Markets   [May-12-16 01:30AM  PR Newswire]
▶ A.M. Best Affirms Ratings of Aegon N.V.s U.S. Subsidiaries   [Apr-15-16 11:33AM  Business Wire]
▶ Aegon Publishes Agenda for 2016 Annual General Meeting   [Apr-08-16 02:00AM  PR Newswire]
▶ The Changing Role of the Supervisory Board   [Mar-25-16 12:11PM  at noodls]
▶ Stronger going forward   [12:11PM  at noodls]
▶ Why Are Investors Diving Headlong Into These 4 Stocks Today?   [Jan-13-16 11:20AM  at Insider Monkey]
▶ Aegon Reports Third Quarter 2015 Results   [01:30AM  PR Newswire]
Stock chart of AEG Financial statements of AEG Annual reports of AEG
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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