Intrinsic value of America Movil ADR - AMX

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$15.39

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$15.39

 
Intrinsic value

$53.27

 
Up/down potential

+246%

 
Rating

str. buy

 
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 AMX 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 49.7

 

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, %
  9.08
  16.80
  15.62
  14.56
  13.60
  12.74
  11.97
  11.27
  10.64
  10.08
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.05
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
Revenue, $m
  49,421
  57,724
  66,740
  76,456
  86,856
  97,923
  109,642
  122,000
  134,986
  148,592
  162,814
  177,654
  193,115
  209,206
  225,942
  243,338
  261,417
  280,204
  299,728
  320,023
  341,125
  363,075
  385,917
  409,697
  434,467
  460,280
  487,193
  515,267
  544,566
  575,157
  607,111
Variable operating expenses, $m
 
  48,473
  55,924
  63,953
  72,547
  81,692
  91,377
  101,588
  112,319
  123,562
  135,315
  146,805
  159,581
  172,878
  186,708
  201,083
  216,023
  231,547
  247,681
  264,452
  281,890
  300,028
  318,904
  338,554
  359,023
  380,353
  402,593
  425,792
  450,003
  475,283
  501,688
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
  43,867
  48,473
  55,924
  63,953
  72,547
  81,692
  91,377
  101,588
  112,319
  123,562
  135,315
  146,805
  159,581
  172,878
  186,708
  201,083
  216,023
  231,547
  247,681
  264,452
  281,890
  300,028
  318,904
  338,554
  359,023
  380,353
  402,593
  425,792
  450,003
  475,283
  501,688
Operating income, $m
  5,554
  9,250
  10,816
  12,503
  14,309
  16,231
  18,266
  20,412
  22,667
  25,029
  27,499
  30,849
  33,534
  36,328
  39,234
  42,255
  45,394
  48,657
  52,047
  55,571
  59,235
  63,047
  67,013
  71,143
  75,444
  79,926
  84,600
  89,475
  94,562
  99,874
  105,423
EBITDA, $m
  12,977
  11,894
  13,752
  15,754
  17,896
  20,177
  22,591
  25,138
  27,813
  30,617
  33,547
  36,605
  39,791
  43,106
  46,555
  50,139
  53,864
  57,735
  61,758
  65,940
  70,288
  74,811
  79,517
  84,417
  89,521
  94,839
  100,385
  106,169
  112,206
  118,509
  125,094
Interest expense (income), $m
  1,628
  1,474
  1,947
  2,458
  3,008
  3,598
  4,225
  4,889
  5,589
  6,325
  7,096
  7,902
  8,743
  9,619
  10,530
  11,479
  12,464
  13,489
  14,553
  15,660
  16,810
  18,006
  19,249
  20,544
  21,891
  23,295
  24,757
  26,282
  27,873
  29,533
  31,267
Earnings before tax, $m
  1,190
  7,776
  8,869
  10,045
  11,301
  12,633
  14,041
  15,523
  17,078
  18,704
  20,403
  22,947
  24,791
  26,709
  28,704
  30,776
  32,930
  35,168
  37,493
  39,911
  42,426
  45,042
  47,764
  50,599
  53,553
  56,632
  59,842
  63,192
  66,689
  70,341
  74,156
Tax expense, $m
  578
  2,100
  2,395
  2,712
  3,051
  3,411
  3,791
  4,191
  4,611
  5,050
  5,509
  6,196
  6,694
  7,212
  7,750
  8,310
  8,891
  9,495
  10,123
  10,776
  11,455
  12,161
  12,896
  13,662
  14,459
  15,291
  16,157
  17,062
  18,006
  18,992
  20,022
Net income, $m
  438
  5,677
  6,474
  7,333
  8,250
  9,222
  10,250
  11,332
  12,467
  13,654
  14,894
  16,752
  18,098
  19,498
  20,954
  22,467
  24,039
  25,672
  27,370
  29,135
  30,971
  32,880
  34,868
  36,937
  39,094
  41,341
  43,685
  46,130
  48,683
  51,349
  54,134

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,045
  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
  76,805
  85,013
  98,292
  112,601
  127,917
  144,217
  161,476
  179,676
  198,801
  218,839
  239,785
  261,640
  284,411
  308,110
  332,757
  358,377
  385,003
  412,671
  441,426
  471,315
  502,394
  534,721
  568,361
  603,383
  639,863
  677,879
  717,515
  758,861
  802,011
  847,065
  894,126
Adjusted assets (=assets-cash), $m
  72,760
  85,013
  98,292
  112,601
  127,917
  144,217
  161,476
  179,676
  198,801
  218,839
  239,785
  261,640
  284,411
  308,110
  332,757
  358,377
  385,003
  412,671
  441,426
  471,315
  502,394
  534,721
  568,361
  603,383
  639,863
  677,879
  717,515
  758,861
  802,011
  847,065
  894,126
Revenue / Adjusted assets
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
  0.679
Average production assets, $m
  8,004
  9,351
  10,812
  12,386
  14,071
  15,864
  17,762
  19,764
  21,868
  24,072
  26,376
  28,780
  31,285
  33,891
  36,603
  39,421
  42,350
  45,393
  48,556
  51,844
  55,262
  58,818
  62,519
  66,371
  70,384
  74,565
  78,925
  83,473
  88,220
  93,175
  98,352
Working capital, $m
  -6,593
  -6,638
  -7,675
  -8,792
  -9,988
  -11,261
  -12,609
  -14,030
  -15,523
  -17,088
  -18,724
  -20,430
  -22,208
  -24,059
  -25,983
  -27,984
  -30,063
  -32,223
  -34,469
  -36,803
  -39,229
  -41,754
  -44,380
  -47,115
  -49,964
  -52,932
  -56,027
  -59,256
  -62,625
  -66,143
  -69,818
Total debt, $m
  36,796
  43,262
  54,616
  66,850
  79,945
  93,881
  108,638
  124,199
  140,551
  157,683
  175,592
  194,278
  213,747
  234,010
  255,083
  276,988
  299,753
  323,410
  347,995
  373,550
  400,123
  427,762
  456,524
  486,469
  517,659
  550,162
  584,051
  619,402
  656,296
  694,816
  735,054
Total liabilities, $m
  66,220
  72,686
  84,040
  96,274
  109,369
  123,305
  138,062
  153,623
  169,975
  187,107
  205,016
  223,702
  243,171
  263,434
  284,507
  306,412
  329,177
  352,834
  377,419
  402,974
  429,547
  457,186
  485,948
  515,893
  547,083
  579,586
  613,475
  648,826
  685,720
  724,240
  764,478
Total equity, $m
  10,585
  12,327
  14,252
  16,327
  18,548
  20,911
  23,414
  26,053
  28,826
  31,732
  34,769
  37,938
  41,240
  44,676
  48,250
  51,965
  55,825
  59,837
  64,007
  68,341
  72,847
  77,535
  82,412
  87,491
  92,780
  98,292
  104,040
  110,035
  116,292
  122,824
  129,648
Total liabilities and equity, $m
  76,805
  85,013
  98,292
  112,601
  127,917
  144,216
  161,476
  179,676
  198,801
  218,839
  239,785
  261,640
  284,411
  308,110
  332,757
  358,377
  385,002
  412,671
  441,426
  471,315
  502,394
  534,721
  568,360
  603,384
  639,863
  677,878
  717,515
  758,861
  802,012
  847,064
  894,126
Debt-to-equity ratio
  3.476
  3.510
  3.830
  4.090
  4.310
  4.490
  4.640
  4.770
  4.880
  4.970
  5.050
  5.120
  5.180
  5.240
  5.290
  5.330
  5.370
  5.400
  5.440
  5.470
  5.490
  5.520
  5.540
  5.560
  5.580
  5.600
  5.610
  5.630
  5.640
  5.660
  5.670
Adjusted equity ratio
  0.090
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145
  0.145

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  438
  5,677
  6,474
  7,333
  8,250
  9,222
  10,250
  11,332
  12,467
  13,654
  14,894
  16,752
  18,098
  19,498
  20,954
  22,467
  24,039
  25,672
  27,370
  29,135
  30,971
  32,880
  34,868
  36,937
  39,094
  41,341
  43,685
  46,130
  48,683
  51,349
  54,134
Depreciation, amort., depletion, $m
  7,423
  2,644
  2,936
  3,250
  3,587
  3,946
  4,326
  4,726
  5,147
  5,588
  6,048
  5,756
  6,257
  6,778
  7,321
  7,884
  8,470
  9,079
  9,711
  10,369
  11,052
  11,764
  12,504
  13,274
  14,077
  14,913
  15,785
  16,695
  17,644
  18,635
  19,670
Funds from operations, $m
  11,539
  8,320
  9,410
  10,584
  11,837
  13,168
  14,576
  16,058
  17,614
  19,242
  20,943
  22,508
  24,355
  26,276
  28,274
  30,351
  32,509
  34,751
  37,081
  39,504
  42,023
  44,644
  47,371
  50,212
  53,170
  56,254
  59,470
  62,825
  66,327
  69,984
  73,805
Change in working capital, $m
  -566
  -955
  -1,037
  -1,117
  -1,196
  -1,273
  -1,348
  -1,421
  -1,493
  -1,565
  -1,636
  -1,707
  -1,778
  -1,851
  -1,925
  -2,001
  -2,079
  -2,160
  -2,245
  -2,334
  -2,427
  -2,524
  -2,627
  -2,735
  -2,849
  -2,968
  -3,095
  -3,229
  -3,369
  -3,518
  -3,675
Cash from operations, $m
  12,105
  8,991
  10,447
  11,701
  13,033
  14,441
  15,923
  17,479
  19,107
  20,807
  22,578
  24,214
  26,133
  28,127
  30,199
  32,351
  34,588
  36,912
  39,327
  41,838
  44,450
  47,168
  49,998
  52,946
  56,019
  59,223
  62,565
  66,054
  69,696
  73,502
  77,479
Maintenance CAPEX, $m
  0
  -1,601
  -1,870
  -2,162
  -2,477
  -2,814
  -3,173
  -3,552
  -3,953
  -4,374
  -4,814
  -5,275
  -5,756
  -6,257
  -6,778
  -7,321
  -7,884
  -8,470
  -9,079
  -9,711
  -10,369
  -11,052
  -11,764
  -12,504
  -13,274
  -14,077
  -14,913
  -15,785
  -16,695
  -17,644
  -18,635
New CAPEX, $m
  -8,012
  -1,347
  -1,461
  -1,574
  -1,685
  -1,793
  -1,899
  -2,002
  -2,104
  -2,204
  -2,304
  -2,404
  -2,505
  -2,607
  -2,711
  -2,818
  -2,929
  -3,043
  -3,163
  -3,288
  -3,419
  -3,556
  -3,700
  -3,852
  -4,013
  -4,182
  -4,360
  -4,548
  -4,746
  -4,956
  -5,177
Cash from investing activities, $m
  -7,808
  -2,948
  -3,331
  -3,736
  -4,162
  -4,607
  -5,072
  -5,554
  -6,057
  -6,578
  -7,118
  -7,679
  -8,261
  -8,864
  -9,489
  -10,139
  -10,813
  -11,513
  -12,242
  -12,999
  -13,788
  -14,608
  -15,464
  -16,356
  -17,287
  -18,259
  -19,273
  -20,333
  -21,441
  -22,600
  -23,812
Free cash flow, $m
  4,297
  6,043
  7,116
  7,965
  8,871
  9,834
  10,852
  11,925
  13,050
  14,229
  15,460
  16,535
  17,872
  19,263
  20,709
  22,213
  23,775
  25,398
  27,085
  28,839
  30,663
  32,560
  34,534
  36,590
  38,732
  40,964
  43,292
  45,721
  48,255
  50,902
  53,668
Issuance/(repayment) of debt, $m
  -3,110
  10,511
  11,354
  12,234
  13,095
  13,936
  14,757
  15,561
  16,351
  17,133
  17,909
  18,686
  19,469
  20,263
  21,073
  21,905
  22,765
  23,657
  24,585
  25,555
  26,572
  27,640
  28,762
  29,944
  31,190
  32,504
  33,889
  35,351
  36,893
  38,521
  40,237
Issuance/(repurchase) of shares, $m
  -356
  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 financing (excl. dividends), $m  
  -4,907
  10,511
  11,354
  12,234
  13,095
  13,936
  14,757
  15,561
  16,351
  17,133
  17,909
  18,686
  19,469
  20,263
  21,073
  21,905
  22,765
  23,657
  24,585
  25,555
  26,572
  27,640
  28,762
  29,944
  31,190
  32,504
  33,889
  35,351
  36,893
  38,521
  40,237
Total cash flow (excl. dividends), $m
  -412
  16,554
  18,470
  20,199
  21,966
  23,770
  25,609
  27,486
  29,402
  31,362
  33,369
  35,221
  37,341
  39,526
  41,782
  44,118
  46,540
  49,055
  51,670
  54,394
  57,235
  60,199
  63,297
  66,534
  69,922
  73,468
  77,181
  81,071
  85,149
  89,423
  93,905
Retained Cash Flow (-), $m
  -4,896
  -1,742
  -1,925
  -2,075
  -2,221
  -2,363
  -2,503
  -2,639
  -2,773
  -2,906
  -3,037
  -3,169
  -3,302
  -3,436
  -3,574
  -3,715
  -3,861
  -4,012
  -4,169
  -4,334
  -4,506
  -4,687
  -4,878
  -5,078
  -5,290
  -5,512
  -5,747
  -5,995
  -6,257
  -6,533
  -6,824
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
 
  14,812
  16,544
  18,124
  19,746
  21,406
  23,106
  24,847
  26,629
  28,456
  30,332
  32,052
  34,039
  36,089
  38,209
  40,403
  42,679
  45,043
  47,501
  50,060
  52,728
  55,512
  58,419
  61,456
  64,632
  67,955
  71,434
  75,076
  78,892
  82,890
  87,081
Discount rate, %
 
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
 
  13,715
  14,080
  14,065
  13,855
  13,460
  12,894
  12,180
  11,343
  10,411
  9,415
  8,331
  7,305
  6,302
  5,344
  4,452
  3,641
  2,919
  2,294
  1,764
  1,327
  975
  698
  488
  331
  219
  140
  87
  52
  30
  17
Current shareholders' claim on cash, %
  100
  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
  100.0

América Móvil, S.A.B. de C.V. provides telecommunications services in Mexico and internationally. It offers wireless and fixed voice services, including airtime, local, domestic, and international long-distance services, as well as network interconnection and public telephony services. The company also provides data services, such as Internet access, messaging, and other wireless entertainment and corporate services; and data transmission, email services, instant messaging, content streaming, and interactive applications, as well as data center, data administration, and hosting services to residential and corporate clients. In addition, it offers satellite pay television (TV) services through direct-to-home technology through ClaroTV brand, as well as cable TV through Net Serviços brand. Further, the company offers handsets, computers, accessories, and other equipment; telephone directories, call center services, and publishing services; and wireless security services, mobile payment solutions, machine-to-machine services, mobile banking, virtual private network services, video calls, and personal communications services. Additionally, it sells video, audio, and other media content through the Internet directly from the content provider to the viewer or end user. The company markets its products and services through distributors and retail chains. America Movil S.A.B. de C.V. was founded in 2000 and is based in Mexico City, Mexico.

FINANCIAL RATIOS  of  America Movil ADR (AMX)

Valuation Ratios
P/E Ratio 725
Price to Sales 6.4
Price to Book 30
Price to Tangible Book
Price to Cash Flow 26.2
Price to Free Cash Flow 77.6
Growth Rates
Sales Growth Rate 9.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.3%
Cap. Spend. - 3 Yr. Gr. Rate 5.4%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 300.9%
Total Debt to Equity 347.6%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.8%
Ret/ On Assets - 3 Yr. Avg. 3.9%
Return On Total Capital 1%
Ret/ On T. Cap. - 3 Yr. Avg. 3.9%
Return On Equity 5.4%
Return On Equity - 3 Yr. Avg. 17.6%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 35%
Gross Margin - 3 Yr. Avg. 47.6%
EBITDA Margin 20.7%
EBITDA Margin - 3 Yr. Avg. 24.2%
Operating Margin 11.2%
Oper. Margin - 3 Yr. Avg. 15.2%
Pre-Tax Margin 2.4%
Pre-Tax Margin - 3 Yr. Avg. 6.3%
Net Profit Margin 0.9%
Net Profit Margin - 3 Yr. Avg. 3.4%
Effective Tax Rate 48.6%
Eff/ Tax Rate - 3 Yr. Avg. 42.7%
Payout Ratio 159.8%

AMX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AMX stock intrinsic value calculation we used $49421 million for the last fiscal year's total revenue generated by America Movil ADR. The default revenue input number comes from 2016 income statement of America Movil 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 AMX stock valuation model: a) initial revenue growth rate of 16.8% 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%, whose default value for AMX is calculated based on our internal credit rating of America Movil 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 America Movil 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 AMX stock the variable cost ratio is equal to 84.2%.

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 AMX 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 4.5% for America Movil ADR.

Corporate tax rate of 27% is the nominal tax rate for America Movil 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 AMX 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 AMX are equal to 16.2%.

Life of production assets of 2.1 years is the average useful life of capital assets used in America Movil 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 AMX is equal to -11.5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $10585 million for America Movil 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 3231.48 million for America Movil 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 America Movil ADR at the current share price and the inputted number of shares is $49.7 billion.


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COMPANY NEWS

▶ [$$] América Móvil Says Wireless Price War Has Eased   [01:15PM  The Wall Street Journal]
▶ Mexico America Movil profit surges on forex gains   [Apr-25-17 07:15PM  Reuters]
▶ América Móvil Informs the Market   [10:40AM  Business Wire]
▶ Is There Opportunity in Mexico's Uncertainty?   [Apr-09-17 06:00AM  Morningstar]
▶ Mexico Investments' Big Rally May Be Over   [Mar-21-17 11:32AM  Barrons.com]
▶ America Movil Stock Slides On Antitrust Worries Amid AT&T Push   [Mar-09-17 04:50PM  Investor's Business Daily]
▶ Mexico Telecom America Movil Sinks On Earnings   [Feb-03-17 03:55PM  at Barrons.com]
▶ America Movils Stock Recommendations: The Word on the Street   [Jan-25-17 10:36AM  at Market Realist]
▶ What Analysts Expect from America Movils 4Q16 Earnings   [Jan-23-17 04:49PM  at Market Realist]
▶ Trump Called Out the Wrong Car Makers   [Jan-12-17 12:40PM  at The Wall Street Journal]
▶ Technology: This Firm Is the Newest Software Empire   [Dec-29-16 07:00AM  at Morningstar]
▶ FedEx Corporation (FDX) Is Attracting More Smart Money   [Nov-23-16 02:05PM  at Insider Monkey]
▶ Why America Movil SAB de CV (ADR) Stock Jumped   [Oct-28-16 04:15PM  at Motley Fool]
Stock chart of AMX Financial statements of AMX
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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