Intrinsic value of AGNC Investment - AGNC

Previous Close

$20.31

  Intrinsic Value

$177.26

stock screener

  Rating & Target

str. buy

+773%

Previous close

$20.31

 
Intrinsic value

$177.26

 
Up/down potential

+773%

 
Rating

str. buy

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

We calculate the intrinsic value of AGNC 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 7.4

 

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, %
  64.04
  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
  1,122
  1,795
  2,774
  4,148
  6,018
  8,491
  11,673
  15,669
  20,574
  26,474
  33,439
  41,524
  50,767
  61,191
  72,805
  85,606
  99,580
  114,708
  130,965
  148,324
  166,761
  186,250
  206,771
  228,308
  250,853
  274,401
  298,956
  324,527
  351,132
  378,796
  407,549
Variable operating expenses, $m
 
  246
  380
  568
  825
  1,163
  1,599
  2,147
  2,819
  3,627
  4,581
  5,689
  6,955
  8,383
  9,974
  11,728
  13,642
  15,715
  17,942
  20,320
  22,846
  25,516
  28,328
  31,278
  34,367
  37,593
  40,957
  44,460
  48,105
  51,895
  55,834
Fixed operating expenses, $m
 
  394
  403
  414
  424
  434
  445
  456
  468
  480
  492
  504
  516
  529
  543
  556
  570
  584
  599
  614
  629
  645
  661
  678
  695
  712
  730
  748
  767
  786
  805
Total operating expenses, $m
  499
  640
  783
  982
  1,249
  1,597
  2,044
  2,603
  3,287
  4,107
  5,073
  6,193
  7,471
  8,912
  10,517
  12,284
  14,212
  16,299
  18,541
  20,934
  23,475
  26,161
  28,989
  31,956
  35,062
  38,305
  41,687
  45,208
  48,872
  52,681
  56,639
Operating income, $m
  623
  1,156
  1,990
  3,166
  4,770
  6,893
  9,629
  13,066
  17,288
  22,368
  28,366
  35,331
  43,295
  52,278
  62,288
  73,322
  85,368
  98,409
  112,424
  127,390
  143,285
  160,088
  177,782
  196,353
  215,792
  236,096
  257,269
  279,319
  302,261
  326,115
  350,909
EBITDA, $m
  625
  1,170
  2,013
  3,200
  4,820
  6,963
  9,725
  13,195
  17,457
  22,586
  28,642
  35,673
  43,713
  52,782
  62,888
  74,026
  86,187
  99,353
  113,502
  128,611
  144,658
  161,622
  179,484
  198,232
  217,857
  238,355
  259,730
  281,991
  305,152
  329,234
  354,265
Interest expense (income), $m
  332
  1,405
  2,441
  3,927
  6,015
  8,856
  12,612
  17,446
  23,515
  30,966
  39,928
  50,508
  62,788
  76,829
  92,663
  110,305
  129,749
  150,976
  173,955
  198,650
  225,019
  253,024
  282,627
  313,799
  346,515
  380,760
  416,529
  453,828
  492,671
  533,084
  575,105
Earnings before tax, $m
  623
  -249
  -451
  -761
  -1,245
  -1,963
  -2,983
  -4,380
  -6,227
  -8,599
  -11,562
  -15,177
  -19,493
  -24,550
  -30,375
  -36,983
  -44,382
  -52,568
  -61,532
  -71,260
  -81,734
  -92,935
  -104,845
  -117,446
  -130,723
  -144,664
  -159,260
  -174,509
  -190,410
  -206,969
  -224,196
Tax expense, $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
Net income, $m
  623
  -249
  -451
  -761
  -1,245
  -1,963
  -2,983
  -4,380
  -6,227
  -8,599
  -11,562
  -15,177
  -19,493
  -24,550
  -30,375
  -36,983
  -44,382
  -52,568
  -61,532
  -71,260
  -81,734
  -92,935
  -104,845
  -117,446
  -130,723
  -144,664
  -159,260
  -174,509
  -190,410
  -206,969
  -224,196

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,208
  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
  56,880
  89,760
  138,679
  207,395
  300,919
  424,554
  583,663
  783,447
  1,028,716
  1,323,707
  1,671,949
  2,076,182
  2,538,331
  3,059,543
  3,640,252
  4,280,290
  4,979,005
  5,735,396
  6,548,242
  7,416,224
  8,338,038
  9,312,481
  10,338,534
  11,415,420
  12,542,649
  13,720,047
  14,947,777
  16,226,349
  17,556,624
  18,939,807
  20,377,446
Adjusted assets (=assets-cash), $m
  55,672
  89,760
  138,679
  207,395
  300,919
  424,554
  583,663
  783,447
  1,028,716
  1,323,707
  1,671,949
  2,076,182
  2,538,331
  3,059,543
  3,640,252
  4,280,290
  4,979,005
  5,735,396
  6,548,242
  7,416,224
  8,338,038
  9,312,481
  10,338,534
  11,415,420
  12,542,649
  13,720,047
  14,947,777
  16,226,349
  17,556,624
  18,939,807
  20,377,446
Revenue / Adjusted assets
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
  0.020
Average production assets, $m
  277
  443
  685
  1,025
  1,487
  2,097
  2,883
  3,870
  5,082
  6,539
  8,259
  10,256
  12,539
  15,114
  17,983
  21,145
  24,596
  28,333
  32,348
  36,636
  41,190
  46,004
  51,072
  56,392
  61,961
  67,777
  73,842
  80,158
  86,730
  93,563
  100,665
Working capital, $m
  0
  898
  1,387
  2,074
  3,009
  4,246
  5,837
  7,834
  10,287
  13,237
  16,719
  20,762
  25,383
  30,595
  36,403
  42,803
  49,790
  57,354
  65,482
  74,162
  83,380
  93,125
  103,385
  114,154
  125,426
  137,200
  149,478
  162,263
  175,566
  189,398
  203,774
Total debt, $m
  41,355
  69,743
  112,205
  171,850
  253,029
  360,344
  498,451
  671,863
  884,756
  1,140,809
  1,443,083
  1,793,957
  2,195,103
  2,647,514
  3,151,570
  3,707,122
  4,313,607
  4,970,154
  5,675,705
  6,429,114
  7,229,248
  8,075,064
  8,965,678
  9,900,416
  10,878,850
  11,900,832
  12,966,501
  14,076,302
  15,230,980
  16,431,583
  17,679,454
Total liabilities, $m
  49,524
  77,912
  120,374
  180,019
  261,198
  368,513
  506,620
  680,032
  892,925
  1,148,978
  1,451,252
  1,802,126
  2,203,272
  2,655,683
  3,159,739
  3,715,291
  4,321,776
  4,978,323
  5,683,874
  6,437,283
  7,237,417
  8,083,233
  8,973,847
  9,908,585
  10,887,019
  11,909,001
  12,974,670
  14,084,471
  15,239,149
  16,439,752
  17,687,623
Total equity, $m
  7,356
  11,848
  18,306
  27,376
  39,721
  56,041
  77,044
  103,415
  135,790
  174,729
  220,697
  274,056
  335,060
  403,860
  480,513
  564,998
  657,229
  757,072
  864,368
  978,942
  1,100,621
  1,229,247
  1,364,686
  1,506,835
  1,655,630
  1,811,046
  1,973,107
  2,141,878
  2,317,474
  2,500,055
  2,689,823
Total liabilities and equity, $m
  56,880
  89,760
  138,680
  207,395
  300,919
  424,554
  583,664
  783,447
  1,028,715
  1,323,707
  1,671,949
  2,076,182
  2,538,332
  3,059,543
  3,640,252
  4,280,289
  4,979,005
  5,735,395
  6,548,242
  7,416,225
  8,338,038
  9,312,480
  10,338,533
  11,415,420
  12,542,649
  13,720,047
  14,947,777
  16,226,349
  17,556,623
  18,939,807
  20,377,446
Debt-to-equity ratio
  5.622
  5.890
  6.130
  6.280
  6.370
  6.430
  6.470
  6.500
  6.520
  6.530
  6.540
  6.550
  6.550
  6.560
  6.560
  6.560
  6.560
  6.560
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
  6.570
Adjusted equity ratio
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132
  0.132

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  623
  -249
  -451
  -761
  -1,245
  -1,963
  -2,983
  -4,380
  -6,227
  -8,599
  -11,562
  -15,177
  -19,493
  -24,550
  -30,375
  -36,983
  -44,382
  -52,568
  -61,532
  -71,260
  -81,734
  -92,935
  -104,845
  -117,446
  -130,723
  -144,664
  -159,260
  -174,509
  -190,410
  -206,969
  -224,196
Depreciation, amort., depletion, $m
  2
  15
  23
  34
  50
  70
  96
  129
  169
  218
  275
  342
  418
  504
  599
  705
  820
  944
  1,078
  1,221
  1,373
  1,533
  1,702
  1,880
  2,065
  2,259
  2,461
  2,672
  2,891
  3,119
  3,355
Funds from operations, $m
  1,323
  -235
  -428
  -727
  -1,195
  -1,893
  -2,887
  -4,251
  -6,058
  -8,381
  -11,287
  -14,835
  -19,075
  -24,046
  -29,775
  -36,278
  -43,562
  -51,623
  -60,453
  -70,038
  -80,361
  -91,402
  -103,143
  -115,566
  -128,658
  -142,404
  -156,799
  -171,837
  -187,519
  -203,850
  -220,841
Change in working capital, $m
  -29
  337
  489
  687
  935
  1,236
  1,591
  1,998
  2,453
  2,950
  3,482
  4,042
  4,621
  5,212
  5,807
  6,400
  6,987
  7,564
  8,128
  8,680
  9,218
  9,744
  10,261
  10,769
  11,272
  11,774
  12,277
  12,786
  13,303
  13,832
  14,376
Cash from operations, $m
  1,352
  -571
  -917
  -1,414
  -2,130
  -3,129
  -4,478
  -6,249
  -8,511
  -11,331
  -14,769
  -18,877
  -23,697
  -29,259
  -35,582
  -42,679
  -50,549
  -59,187
  -68,582
  -78,718
  -89,579
  -101,146
  -113,403
  -126,335
  -139,930
  -154,178
  -169,076
  -184,623
  -200,822
  -217,682
  -235,217
Maintenance CAPEX, $m
  0
  -9
  -15
  -23
  -34
  -50
  -70
  -96
  -129
  -169
  -218
  -275
  -342
  -418
  -504
  -599
  -705
  -820
  -944
  -1,078
  -1,221
  -1,373
  -1,533
  -1,702
  -1,880
  -2,065
  -2,259
  -2,461
  -2,672
  -2,891
  -3,119
New CAPEX, $m
  0
  -166
  -242
  -339
  -462
  -611
  -786
  -987
  -1,212
  -1,457
  -1,720
  -1,997
  -2,283
  -2,575
  -2,869
  -3,162
  -3,452
  -3,737
  -4,015
  -4,288
  -4,554
  -4,814
  -5,069
  -5,320
  -5,569
  -5,816
  -6,065
  -6,316
  -6,572
  -6,833
  -7,102
Cash from investing activities, $m
  4,445
  -175
  -257
  -362
  -496
  -661
  -856
  -1,083
  -1,341
  -1,626
  -1,938
  -2,272
  -2,625
  -2,993
  -3,373
  -3,761
  -4,157
  -4,557
  -4,959
  -5,366
  -5,775
  -6,187
  -6,602
  -7,022
  -7,449
  -7,881
  -8,324
  -8,777
  -9,244
  -9,724
  -10,221
Free cash flow, $m
  5,797
  -747
  -1,174
  -1,776
  -2,627
  -3,789
  -5,334
  -7,332
  -9,851
  -12,957
  -16,707
  -21,150
  -26,322
  -32,251
  -38,955
  -46,440
  -54,705
  -63,744
  -73,542
  -84,084
  -95,354
  -107,333
  -120,006
  -133,358
  -147,378
  -162,060
  -177,400
  -193,400
  -210,065
  -227,406
  -245,438
Issuance/(repayment) of debt, $m
  -4,068
  29,596
  42,462
  59,645
  81,179
  107,315
  138,107
  173,412
  212,893
  256,052
  302,274
  350,874
  401,146
  452,412
  504,056
  555,553
  606,485
  656,547
  705,550
  753,409
  800,134
  845,816
  890,614
  934,737
  978,435
  1,021,981
  1,065,670
  1,109,801
  1,154,678
  1,200,603
  1,247,871
Issuance/(repurchase) of shares, $m
  -116
  4,742
  6,908
  9,832
  13,590
  18,282
  23,986
  30,751
  38,603
  47,538
  57,530
  68,536
  80,497
  93,350
  107,028
  121,468
  136,612
  152,411
  168,827
  185,833
  203,413
  221,562
  240,284
  259,595
  279,517
  300,080
  321,321
  343,280
  366,006
  389,549
  413,965
Cash from financing (excl. dividends), $m  
  -4,900
  34,338
  49,370
  69,477
  94,769
  125,597
  162,093
  204,163
  251,496
  303,590
  359,804
  419,410
  481,643
  545,762
  611,084
  677,021
  743,097
  808,958
  874,377
  939,242
  1,003,547
  1,067,378
  1,130,898
  1,194,332
  1,257,952
  1,322,061
  1,386,991
  1,453,081
  1,520,684
  1,590,152
  1,661,836
Total cash flow (excl. dividends), $m
  897
  33,591
  48,196
  67,700
  92,143
  121,808
  156,759
  196,832
  241,645
  290,633
  343,097
  398,260
  455,321
  513,510
  572,129
  630,581
  688,391
  745,215
  800,836
  855,158
  908,193
  960,045
  1,010,893
  1,060,975
  1,110,574
  1,160,001
  1,209,590
  1,259,681
  1,310,619
  1,362,746
  1,416,398
Retained Cash Flow (-), $m
  615
  -4,742
  -6,908
  -9,832
  -13,590
  -18,282
  -23,986
  -30,751
  -38,603
  -47,538
  -57,530
  -68,536
  -80,497
  -93,350
  -107,028
  -121,468
  -136,612
  -152,411
  -168,827
  -185,833
  -203,413
  -221,562
  -240,284
  -259,595
  -279,517
  -300,080
  -321,321
  -343,280
  -366,006
  -389,549
  -413,965
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
 
  28,849
  41,288
  57,869
  78,553
  103,525
  132,773
  166,080
  203,042
  243,095
  285,567
  329,724
  374,824
  420,160
  465,101
  509,113
  551,779
  592,804
  632,009
  669,325
  704,780
  738,483
  770,609
  801,380
  831,057
  859,921
  888,269
  916,401
  944,613
  973,197
  1,002,433
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
 
  25,485
  31,848
  38,497
  44,477
  49,195
  52,168
  53,108
  51,961
  48,909
  44,325
  38,704
  32,579
  26,446
  20,708
  15,641
  11,397
  8,008
  5,426
  3,542
  2,228
  1,348
  785
  439
  236
  121
  60
  28
  13
  5
  2
Current shareholders' claim on cash, %
  100
  60.9
  38.5
  25.1
  16.8
  11.5
  8.0
  5.8
  4.2
  3.1
  2.3
  1.8
  1.4
  1.1
  0.9
  0.7
  0.5
  0.4
  0.4
  0.3
  0.2
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0

AGNC Investment Corp., formerly American Capital Agency Corp., is a real estate investment trust. The Company invests in agency residential mortgage-backed securities on a leveraged basis. Its investments consist of residential mortgage pass-through securities and collateralized mortgage obligations (CMOs) for which the principal and interest payments are guaranteed by a government-sponsored enterprise, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), or by the United States Government agency, such as the Government National Mortgage Association (Ginnie Mae) (collectively, GSEs). Its agency securities include agency residential mortgage-backed securities (Agency RMBS) and to-be-announced forward contracts (TBAs). Its Non-Agency Securities include credit risk transfer securities (CRT), non-agency residential mortgage-backed securities (Non-Agency RMBS) and commercial mortgage-backed securities (CMBS).

FINANCIAL RATIOS  of  AGNC Investment (AGNC)

Valuation Ratios
P/E Ratio 10.8
Price to Sales 6
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow 5
Growth Rates
Sales Growth Rate 64%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 6.3%
Total Debt to Equity 562.2%
Interest Coverage 3
Management Effectiveness
Return On Assets 1.7%
Ret/ On Assets - 3 Yr. Avg. 0.8%
Return On Total Capital 1.2%
Ret/ On T. Cap. - 3 Yr. Avg. 0.4%
Return On Equity 8.1%
Return On Equity - 3 Yr. Avg. 2.7%
Asset Turnover 0
Profitability Ratios
Gross Margin 60.2%
Gross Margin - 3 Yr. Avg. 6.6%
EBITDA Margin 85.3%
EBITDA Margin - 3 Yr. Avg. 47.5%
Operating Margin 55.5%
Oper. Margin - 3 Yr. Avg. 1.2%
Pre-Tax Margin 55.5%
Pre-Tax Margin - 3 Yr. Avg. 1.2%
Net Profit Margin 55.5%
Net Profit Margin - 3 Yr. Avg. 1.2%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 128.3%

AGNC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGNC stock intrinsic value calculation we used $1122 million for the last fiscal year's total revenue generated by AGNC Investment. The default revenue input number comes from 2016 income statement of AGNC Investment. 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 AGNC 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 13.2%, whose default value for AGNC is calculated based on our internal credit rating of AGNC Investment, 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 AGNC Investment.
    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 AGNC stock the variable cost ratio is equal to 13.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $384 million in the base year in the intrinsic value calculation for AGNC 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 AGNC Investment.

Corporate tax rate of 27% is the nominal tax rate for AGNC Investment. 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 AGNC 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 AGNC are equal to 24.7%.

Life of production assets of 138.5 years is the average useful life of capital assets used in AGNC Investment 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 AGNC is equal to 50%. 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 - $7356 million for AGNC Investment - 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 363.011 million for AGNC Investment 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 AGNC Investment at the current share price and the inputted number of shares is $7.4 billion.

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COMPANY NEWS

▶ What Does AGNC Investment Corps (AGNC) Share Price Indicate?   [Nov-25-17 11:05AM  Simply Wall St.]
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▶ AGNC Investment misses 3Q profit forecasts   [Oct-25-17 05:13PM  Associated Press]
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Financial statements of AGNC
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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