Intrinsic value of America Movil ADR - AMX

Previous Close

$18.61

  Intrinsic Value

$42.72

stock screener

  Rating & Target

str. buy

+130%

  Value-price divergence*

+3895%

Previous close

$18.61

 
Intrinsic value

$42.72

 
Up/down potential

+130%

 
Rating

str. buy

 
Value-price divergence*

+3895%

*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 60.0

 

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, %
  9.14
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
  5.64
Revenue, $m
  49,421
  58,564
  68,608
  79,540
  91,345
  104,003
  117,494
  131,798
  146,898
  162,780
  179,433
  196,851
  215,033
  233,983
  253,711
  274,233
  295,567
  317,739
  340,779
  364,723
  389,611
  415,486
  442,398
  470,399
  499,547
  529,904
  561,535
  594,509
  628,902
  664,790
  702,257
Variable operating expenses, $m
 
  49,168
  57,467
  66,502
  76,257
  86,717
  97,865
  109,685
  122,163
  135,287
  149,048
  162,668
  177,693
  193,353
  209,655
  226,613
  244,242
  262,564
  281,604
  301,390
  321,956
  343,338
  365,576
  388,715
  412,802
  437,888
  464,026
  491,274
  519,695
  549,351
  580,312
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
  49,168
  57,467
  66,502
  76,257
  86,717
  97,865
  109,685
  122,163
  135,287
  149,048
  162,668
  177,693
  193,353
  209,655
  226,613
  244,242
  262,564
  281,604
  301,390
  321,956
  343,338
  365,576
  388,715
  412,802
  437,888
  464,026
  491,274
  519,695
  549,351
  580,312
Operating income, $m
  5,554
  9,396
  11,140
  13,039
  15,089
  17,287
  19,629
  22,113
  24,735
  27,493
  30,385
  34,183
  37,340
  40,631
  44,056
  47,620
  51,324
  55,174
  59,175
  63,333
  67,655
  72,148
  76,821
  81,683
  86,745
  92,016
  97,509
  103,235
  109,207
  115,439
  121,945
EBITDA, $m
  13,079
  14,825
  17,368
  20,135
  23,124
  26,328
  29,743
  33,364
  37,187
  41,207
  45,423
  49,832
  54,435
  59,232
  64,226
  69,421
  74,822
  80,435
  86,267
  92,329
  98,629
  105,179
  111,992
  119,080
  126,459
  134,144
  142,151
  150,498
  159,205
  168,290
  177,774
Interest expense (income), $m
  1,628
  1,575
  2,122
  2,726
  3,382
  4,091
  4,851
  5,661
  6,520
  7,427
  8,381
  9,381
  10,427
  11,519
  12,657
  13,841
  15,074
  16,355
  17,686
  19,070
  20,508
  22,002
  23,556
  25,172
  26,854
  28,604
  30,427
  32,327
  34,307
  36,372
  38,527
Earnings before tax, $m
  1,190
  7,821
  9,018
  10,313
  11,707
  13,196
  14,778
  16,452
  18,215
  20,066
  22,004
  24,802
  26,913
  29,112
  31,400
  33,778
  36,251
  38,820
  41,489
  44,263
  47,147
  50,146
  53,265
  56,511
  59,891
  63,412
  67,082
  70,908
  74,900
  79,067
  83,418
Tax expense, $m
  578
  2,112
  2,435
  2,785
  3,161
  3,563
  3,990
  4,442
  4,918
  5,418
  5,941
  6,696
  7,267
  7,860
  8,478
  9,120
  9,788
  10,481
  11,202
  11,951
  12,730
  13,539
  14,382
  15,258
  16,171
  17,121
  18,112
  19,145
  20,223
  21,348
  22,523
Net income, $m
  438
  5,709
  6,583
  7,529
  8,546
  9,633
  10,788
  12,010
  13,297
  14,648
  16,063
  18,105
  19,647
  21,252
  22,922
  24,658
  26,463
  28,338
  30,287
  32,312
  34,417
  36,606
  38,883
  41,253
  43,721
  46,291
  48,970
  51,763
  54,677
  57,719
  60,895

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,956
  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
  76,762
  89,003
  104,267
  120,882
  138,822
  158,060
  178,562
  200,301
  223,250
  247,386
  272,694
  299,165
  326,797
  355,597
  385,580
  416,767
  449,189
  482,885
  517,902
  554,291
  592,114
  631,438
  672,337
  714,892
  759,190
  805,325
  853,396
  903,510
  955,778
  1,010,320
  1,067,260
Adjusted assets (=assets-cash), $m
  72,806
  89,003
  104,267
  120,882
  138,822
  158,060
  178,562
  200,301
  223,250
  247,386
  272,694
  299,165
  326,797
  355,597
  385,580
  416,767
  449,189
  482,885
  517,902
  554,291
  592,114
  631,438
  672,337
  714,892
  759,190
  805,325
  853,396
  903,510
  955,778
  1,010,320
  1,067,260
Revenue / Adjusted assets
  0.679
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
  0.658
Average production assets, $m
  39,313
  46,558
  54,543
  63,234
  72,619
  82,683
  93,408
  104,780
  116,784
  129,410
  142,649
  156,496
  170,951
  186,017
  201,701
  218,015
  234,975
  252,602
  270,919
  289,955
  309,741
  330,311
  351,706
  373,967
  397,140
  421,274
  446,420
  472,635
  499,977
  528,508
  558,294
Working capital, $m
  -6,490
  -5,856
  -6,861
  -7,954
  -9,135
  -10,400
  -11,749
  -13,180
  -14,690
  -16,278
  -17,943
  -19,685
  -21,503
  -23,398
  -25,371
  -27,423
  -29,557
  -31,774
  -34,078
  -36,472
  -38,961
  -41,549
  -44,240
  -47,040
  -49,955
  -52,990
  -56,153
  -59,451
  -62,890
  -66,479
  -70,226
Total debt, $m
  35,862
  46,138
  59,250
  73,522
  88,933
  105,458
  123,070
  141,744
  161,457
  182,190
  203,929
  226,668
  250,404
  275,143
  300,898
  327,688
  355,539
  384,484
  414,562
  445,821
  478,311
  512,090
  547,222
  583,777
  621,829
  661,459
  702,752
  745,800
  790,698
  837,549
  886,461
Total liabilities, $m
  66,177
  76,453
  89,565
  103,837
  119,248
  135,773
  153,385
  172,059
  191,772
  212,505
  234,244
  256,983
  280,719
  305,458
  331,213
  358,003
  385,854
  414,799
  444,877
  476,136
  508,626
  542,405
  577,537
  614,092
  652,144
  691,774
  733,067
  776,115
  821,013
  867,864
  916,776
Total equity, $m
  10,585
  12,549
  14,702
  17,044
  19,574
  22,286
  25,177
  28,243
  31,478
  34,881
  38,450
  42,182
  46,078
  50,139
  54,367
  58,764
  63,336
  68,087
  73,024
  78,155
  83,488
  89,033
  94,799
  100,800
  107,046
  113,551
  120,329
  127,395
  134,765
  142,455
  150,484
Total liabilities and equity, $m
  76,762
  89,002
  104,267
  120,881
  138,822
  158,059
  178,562
  200,302
  223,250
  247,386
  272,694
  299,165
  326,797
  355,597
  385,580
  416,767
  449,190
  482,886
  517,901
  554,291
  592,114
  631,438
  672,336
  714,892
  759,190
  805,325
  853,396
  903,510
  955,778
  1,010,319
  1,067,260
Debt-to-equity ratio
  3.388
  3.680
  4.030
  4.310
  4.540
  4.730
  4.890
  5.020
  5.130
  5.220
  5.300
  5.370
  5.430
  5.490
  5.530
  5.580
  5.610
  5.650
  5.680
  5.700
  5.730
  5.750
  5.770
  5.790
  5.810
  5.830
  5.840
  5.850
  5.870
  5.880
  5.890
Adjusted equity ratio
  0.091
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141
  0.141

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  438
  5,709
  6,583
  7,529
  8,546
  9,633
  10,788
  12,010
  13,297
  14,648
  16,063
  18,105
  19,647
  21,252
  22,922
  24,658
  26,463
  28,338
  30,287
  32,312
  34,417
  36,606
  38,883
  41,253
  43,721
  46,291
  48,970
  51,763
  54,677
  57,719
  60,895
Depreciation, amort., depletion, $m
  7,525
  5,429
  6,228
  7,097
  8,035
  9,042
  10,114
  11,251
  12,452
  13,714
  15,038
  15,650
  17,095
  18,602
  20,170
  21,801
  23,498
  25,260
  27,092
  28,996
  30,974
  33,031
  35,171
  37,397
  39,714
  42,127
  44,642
  47,263
  49,998
  52,851
  55,829
Funds from operations, $m
  11,288
  11,138
  12,811
  14,625
  16,581
  18,674
  20,902
  23,261
  25,749
  28,363
  31,101
  33,755
  36,742
  39,853
  43,092
  46,460
  49,961
  53,599
  57,379
  61,308
  65,391
  69,637
  74,054
  78,650
  83,435
  88,418
  93,612
  99,027
  104,675
  110,570
  116,724
Change in working capital, $m
  -659
  -914
  -1,004
  -1,093
  -1,180
  -1,266
  -1,349
  -1,430
  -1,510
  -1,588
  -1,665
  -1,742
  -1,818
  -1,895
  -1,973
  -2,052
  -2,133
  -2,217
  -2,304
  -2,394
  -2,489
  -2,588
  -2,691
  -2,800
  -2,915
  -3,036
  -3,163
  -3,297
  -3,439
  -3,589
  -3,747
Cash from operations, $m
  11,947
  12,053
  13,815
  15,719
  17,761
  19,940
  22,251
  24,692
  27,259
  29,951
  32,766
  35,497
  38,560
  41,748
  45,065
  48,512
  52,094
  55,816
  59,683
  63,702
  67,880
  72,225
  76,745
  81,450
  86,349
  91,454
  96,775
  102,324
  108,114
  114,158
  120,471
Maintenance CAPEX, $m
  0
  -3,931
  -4,656
  -5,454
  -6,323
  -7,262
  -8,268
  -9,341
  -10,478
  -11,678
  -12,941
  -14,265
  -15,650
  -17,095
  -18,602
  -20,170
  -21,801
  -23,498
  -25,260
  -27,092
  -28,996
  -30,974
  -33,031
  -35,171
  -37,397
  -39,714
  -42,127
  -44,642
  -47,263
  -49,998
  -52,851
New CAPEX, $m
  -7,854
  -7,246
  -7,985
  -8,691
  -9,385
  -10,063
  -10,725
  -11,372
  -12,005
  -12,626
  -13,239
  -13,847
  -14,455
  -15,066
  -15,684
  -16,314
  -16,961
  -17,627
  -18,317
  -19,036
  -19,786
  -20,571
  -21,395
  -22,261
  -23,173
  -24,134
  -25,147
  -26,215
  -27,342
  -28,531
  -29,786
Cash from investing activities, $m
  -7,650
  -11,177
  -12,641
  -14,145
  -15,708
  -17,325
  -18,993
  -20,713
  -22,483
  -24,304
  -26,180
  -28,112
  -30,105
  -32,161
  -34,286
  -36,484
  -38,762
  -41,125
  -43,577
  -46,128
  -48,782
  -51,545
  -54,426
  -57,432
  -60,570
  -63,848
  -67,274
  -70,857
  -74,605
  -78,529
  -82,637
Free cash flow, $m
  4,297
  876
  1,174
  1,573
  2,053
  2,615
  3,258
  3,979
  4,776
  5,646
  6,586
  7,385
  8,456
  9,588
  10,779
  12,027
  13,332
  14,691
  16,106
  17,575
  19,099
  20,680
  22,319
  24,018
  25,780
  27,606
  29,501
  31,467
  33,509
  35,629
  37,834
Issuance/(repayment) of debt, $m
  -3,110
  11,896
  13,112
  14,272
  15,411
  16,525
  17,612
  18,674
  19,713
  20,733
  21,740
  22,738
  23,736
  24,739
  25,755
  26,790
  27,851
  28,945
  30,079
  31,258
  32,490
  33,779
  35,132
  36,555
  38,052
  39,630
  41,293
  43,048
  44,898
  46,851
  48,912
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
  11,896
  13,112
  14,272
  15,411
  16,525
  17,612
  18,674
  19,713
  20,733
  21,740
  22,738
  23,736
  24,739
  25,755
  26,790
  27,851
  28,945
  30,079
  31,258
  32,490
  33,779
  35,132
  36,555
  38,052
  39,630
  41,293
  43,048
  44,898
  46,851
  48,912
Total cash flow (excl. dividends), $m
  -412
  12,772
  14,286
  15,845
  17,464
  19,140
  20,870
  22,653
  24,489
  26,379
  28,326
  30,123
  32,192
  34,327
  36,534
  38,817
  41,183
  43,636
  46,184
  48,833
  51,589
  54,459
  57,452
  60,573
  63,832
  67,236
  70,794
  74,515
  78,407
  82,481
  86,746
Retained Cash Flow (-), $m
  -4,896
  -1,964
  -2,152
  -2,343
  -2,530
  -2,712
  -2,891
  -3,065
  -3,236
  -3,403
  -3,568
  -3,732
  -3,896
  -4,061
  -4,227
  -4,397
  -4,572
  -4,751
  -4,937
  -5,131
  -5,333
  -5,545
  -5,767
  -6,000
  -6,246
  -6,505
  -6,778
  -7,066
  -7,370
  -7,690
  -8,029
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
 
  10,807
  12,134
  13,502
  14,934
  16,427
  17,979
  19,588
  21,253
  22,976
  24,758
  26,391
  28,295
  30,266
  32,306
  34,420
  36,611
  38,885
  41,247
  43,702
  46,256
  48,915
  51,685
  54,573
  57,586
  60,731
  64,016
  67,449
  71,037
  74,790
  78,717
Discount rate, %
 
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.42
  17.24
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
  28.09
  29.49
  30.97
  32.52
PV of cash for distribution, $m
 
  10,016
  10,346
  10,510
  10,524
  10,386
  10,103
  9,684
  9,146
  8,507
  7,792
  6,969
  6,183
  5,394
  4,624
  3,891
  3,213
  2,601
  2,063
  1,601
  1,214
  899
  650
  457
  313
  209
  135
  84
  51
  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 2686
Price to Sales 23.8
Price to Book 111.1
Price to Tangible Book
Price to Cash Flow 98.5
Price to Free Cash Flow 287.4
Growth Rates
Sales Growth Rate 9.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.3%
Cap. Spend. - 3 Yr. Gr. Rate 4.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 299.3%
Total Debt to Equity 338.8%
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 50.3%
Gross Margin - 3 Yr. Avg. 52.6%
EBITDA Margin 20.9%
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 18.5% 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 7.9%, 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 4.6% 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 79.5%.

Life of production assets of 10 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 -10%. 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 3221.45 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 $60.0 billion.

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COMPANY NEWS

▶ Stocks Pare Gains; Amazon.com, Netflix Trim Losses   [01:36PM  Investor's Business Daily]
▶ Upgrade May Not Cut Off Sideways Action for America Movil   [Jul-24-17 04:30PM  TheStreet.com]
▶ [$$] América Móvil Profit Nearly Doubles   [04:49PM  The Wall Street Journal]
▶ 5 Companies Revolutionizing The Wireless Game   [Jun-19-17 07:30PM  Oilprice.com]
▶ Telefonica Leads Europe in Move to Converged Services   [Jun-16-17 07:00AM  Morningstar]
▶ [$$] 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]
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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