Intrinsic value of America Movil ADR - AMX

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$15.80

  Intrinsic Value

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  Value-price divergence*

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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 50.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.14
  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
  1,139,281
  1,317,237
  1,509,000
  1,714,258
  1,932,688
  2,163,988
  2,407,891
  2,664,184
  2,932,721
  3,213,429
  3,506,313
  3,811,467
  4,129,064
  4,459,364
  4,802,711
  5,159,529
  5,530,322
  5,915,670
  6,316,227
  6,732,719
  7,165,943
  7,616,762
  8,086,110
  8,574,982
  9,084,442
  9,615,621
  10,169,712
  10,747,979
  11,351,752
  11,982,432
Variable operating expenses, $m
 
  956,711
  1,103,765
  1,262,229
  1,431,843
  1,612,344
  1,803,479
  2,005,029
  2,216,817
  2,438,723
  2,670,686
  2,897,449
  3,149,613
  3,412,060
  3,685,004
  3,968,730
  4,263,587
  4,569,992
  4,888,425
  5,219,426
  5,563,595
  5,921,591
  6,294,126
  6,681,972
  7,085,953
  7,506,947
  7,945,887
  8,403,761
  8,881,613
  9,380,542
  9,901,706
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
  956,711
  1,103,765
  1,262,229
  1,431,843
  1,612,344
  1,803,479
  2,005,029
  2,216,817
  2,438,723
  2,670,686
  2,897,449
  3,149,613
  3,412,060
  3,685,004
  3,968,730
  4,263,587
  4,569,992
  4,888,425
  5,219,426
  5,563,595
  5,921,591
  6,294,126
  6,681,972
  7,085,953
  7,506,947
  7,945,887
  8,403,761
  8,881,613
  9,380,542
  9,901,706
Operating income, $m
  5,554
  182,571
  213,472
  246,772
  282,414
  320,344
  360,509
  402,862
  447,367
  493,998
  542,742
  608,865
  661,854
  717,004
  774,360
  833,981
  895,942
  960,330
  1,027,245
  1,096,800
  1,169,124
  1,244,352
  1,322,636
  1,404,137
  1,489,029
  1,577,496
  1,669,734
  1,765,951
  1,866,366
  1,971,210
  2,080,726
EBITDA, $m
  13,079
  234,747
  271,414
  310,927
  353,219
  398,227
  445,885
  496,141
  548,950
  604,282
  662,121
  722,469
  785,345
  850,786
  918,843
  989,589
  1,063,111
  1,139,512
  1,218,912
  1,301,446
  1,387,264
  1,476,529
  1,569,419
  1,666,127
  1,766,858
  1,871,832
  1,981,280
  2,095,449
  2,214,600
  2,339,006
  2,468,957
Interest expense (income), $m
  1,628
  29,088
  38,423
  48,507
  59,373
  71,004
  83,381
  96,487
  110,308
  124,831
  140,047
  155,953
  172,549
  189,840
  207,837
  226,553
  246,008
  266,227
  287,238
  309,073
  331,771
  355,371
  379,919
  405,464
  432,060
  459,761
  488,629
  518,728
  550,125
  582,892
  617,105
Earnings before tax, $m
  1,190
  153,483
  175,049
  198,265
  223,041
  249,341
  277,128
  306,375
  337,059
  369,168
  402,695
  452,912
  489,305
  527,163
  566,523
  607,428
  649,934
  694,102
  740,007
  787,727
  837,353
  888,981
  942,717
  998,673
  1,056,969
  1,117,735
  1,181,104
  1,247,223
  1,316,240
  1,388,317
  1,463,621
Tax expense, $m
  578
  41,440
  47,263
  53,532
  60,221
  67,322
  74,825
  82,721
  91,006
  99,675
  108,728
  122,286
  132,112
  142,334
  152,961
  164,006
  175,482
  187,408
  199,802
  212,686
  226,085
  240,025
  254,534
  269,642
  285,382
  301,788
  318,898
  336,750
  355,385
  374,846
  395,178
Net income, $m
  438
  112,042
  127,786
  144,733
  162,820
  182,019
  202,304
  223,654
  246,053
  269,492
  293,968
  330,625
  357,192
  384,829
  413,562
  443,423
  474,452
  506,695
  540,205
  575,041
  611,268
  648,956
  688,183
  729,031
  771,588
  815,946
  862,206
  910,472
  960,855
  1,013,472
  1,068,444

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
  1,677,881
  1,939,966
  2,222,386
  2,524,680
  2,846,374
  3,187,022
  3,546,231
  3,923,688
  4,319,177
  4,732,590
  5,163,937
  5,613,353
  6,081,095
  6,567,546
  7,073,212
  7,598,717
  8,144,804
  8,712,326
  9,302,248
  9,915,639
  10,553,671
  11,217,618
  11,908,851
  12,628,839
  13,379,149
  14,161,444
  14,977,484
  15,829,129
  16,718,338
  17,647,175
Adjusted assets (=assets-cash), $m
  72,806
  1,677,881
  1,939,966
  2,222,386
  2,524,680
  2,846,374
  3,187,022
  3,546,231
  3,923,688
  4,319,177
  4,732,590
  5,163,937
  5,613,353
  6,081,095
  6,567,546
  7,073,212
  7,598,717
  8,144,804
  8,712,326
  9,302,248
  9,915,639
  10,553,671
  11,217,618
  11,908,851
  12,628,839
  13,379,149
  14,161,444
  14,977,484
  15,829,129
  16,718,338
  17,647,175
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
  39,313
  184,564
  213,392
  244,458
  277,710
  313,095
  350,566
  390,078
  431,598
  475,101
  520,575
  568,023
  617,458
  668,908
  722,417
  778,039
  835,844
  895,912
  958,338
  1,023,229
  1,090,700
  1,160,883
  1,233,916
  1,309,950
  1,389,147
  1,471,680
  1,557,731
  1,647,493
  1,741,173
  1,838,984
  1,941,154
Working capital, $m
  -6,490
  -131,017
  -151,482
  -173,535
  -197,140
  -222,259
  -248,859
  -276,907
  -306,381
  -337,263
  -369,544
  -403,226
  -438,319
  -474,842
  -512,827
  -552,312
  -593,346
  -635,987
  -680,302
  -726,366
  -774,263
  -824,083
  -875,928
  -929,903
  -986,123
  -1,044,711
  -1,105,796
  -1,169,517
  -1,236,018
  -1,305,451
  -1,377,980
Total debt, $m
  35,862
  853,846
  1,077,929
  1,319,398
  1,577,859
  1,852,908
  2,144,162
  2,451,286
  2,774,012
  3,112,154
  3,465,622
  3,834,424
  4,218,675
  4,618,594
  5,034,510
  5,466,854
  5,916,161
  6,383,065
  6,868,297
  7,372,680
  7,897,129
  8,442,647
  9,010,321
  9,601,325
  10,216,916
  10,858,431
  11,527,293
  12,225,007
  12,953,163
  13,713,437
  14,507,593
Total liabilities, $m
  66,177
  1,434,588
  1,658,671
  1,900,140
  2,158,601
  2,433,650
  2,724,904
  3,032,028
  3,354,754
  3,692,896
  4,046,364
  4,415,166
  4,799,417
  5,199,336
  5,615,252
  6,047,596
  6,496,903
  6,963,807
  7,449,039
  7,953,422
  8,477,871
  9,023,389
  9,591,063
  10,182,067
  10,797,658
  11,439,173
  12,108,035
  12,805,749
  13,533,905
  14,294,179
  15,088,335
Total equity, $m
  10,585
  243,293
  281,295
  322,246
  366,079
  412,724
  462,118
  514,204
  568,935
  626,281
  686,226
  748,771
  813,936
  881,759
  952,294
  1,025,616
  1,101,814
  1,180,997
  1,263,287
  1,348,826
  1,437,768
  1,530,282
  1,626,555
  1,726,783
  1,831,182
  1,939,977
  2,053,409
  2,171,735
  2,295,224
  2,424,159
  2,558,840
Total liabilities and equity, $m
  76,762
  1,677,881
  1,939,966
  2,222,386
  2,524,680
  2,846,374
  3,187,022
  3,546,232
  3,923,689
  4,319,177
  4,732,590
  5,163,937
  5,613,353
  6,081,095
  6,567,546
  7,073,212
  7,598,717
  8,144,804
  8,712,326
  9,302,248
  9,915,639
  10,553,671
  11,217,618
  11,908,850
  12,628,840
  13,379,150
  14,161,444
  14,977,484
  15,829,129
  16,718,338
  17,647,175
Debt-to-equity ratio
  3.388
  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
  0.091
  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
  112,042
  127,786
  144,733
  162,820
  182,019
  202,304
  223,654
  246,053
  269,492
  293,968
  330,625
  357,192
  384,829
  413,562
  443,423
  474,452
  506,695
  540,205
  575,041
  611,268
  648,956
  688,183
  729,031
  771,588
  815,946
  862,206
  910,472
  960,855
  1,013,472
  1,068,444
Depreciation, amort., depletion, $m
  7,525
  52,176
  57,942
  64,155
  70,805
  77,882
  85,377
  93,279
  101,583
  110,283
  119,378
  113,605
  123,492
  133,782
  144,483
  155,608
  167,169
  179,182
  191,668
  204,646
  218,140
  232,177
  246,783
  261,990
  277,829
  294,336
  311,546
  329,499
  348,235
  367,797
  388,231
Funds from operations, $m
  11,288
  164,218
  185,728
  208,888
  233,625
  259,901
  287,680
  316,933
  347,636
  379,776
  413,346
  444,230
  480,684
  518,611
  558,045
  599,031
  641,620
  685,877
  731,873
  779,687
  829,408
  881,133
  934,966
  991,021
  1,049,417
  1,110,282
  1,173,752
  1,239,971
  1,309,090
  1,381,268
  1,456,674
Change in working capital, $m
  -659
  -18,845
  -20,465
  -22,053
  -23,605
  -25,119
  -26,599
  -28,049
  -29,474
  -30,882
  -32,281
  -33,682
  -35,093
  -36,524
  -37,985
  -39,485
  -41,034
  -42,641
  -44,315
  -46,064
  -47,897
  -49,821
  -51,844
  -53,975
  -56,220
  -58,588
  -61,085
  -63,720
  -66,501
  -69,434
  -72,528
Cash from operations, $m
  11,947
  177,450
  206,193
  230,941
  257,230
  285,020
  314,280
  344,982
  377,110
  410,657
  445,627
  477,912
  515,777
  555,135
  596,030
  638,516
  682,654
  728,518
  776,187
  825,751
  877,304
  930,954
  986,811
  1,044,996
  1,105,637
  1,168,870
  1,234,838
  1,303,692
  1,375,591
  1,450,702
  1,529,203
Maintenance CAPEX, $m
  0
  -31,597
  -36,913
  -42,678
  -48,892
  -55,542
  -62,619
  -70,113
  -78,016
  -86,320
  -95,020
  -104,115
  -113,605
  -123,492
  -133,782
  -144,483
  -155,608
  -167,169
  -179,182
  -191,668
  -204,646
  -218,140
  -232,177
  -246,783
  -261,990
  -277,829
  -294,336
  -311,546
  -329,499
  -348,235
  -367,797
New CAPEX, $m
  -7,854
  -26,581
  -28,829
  -31,066
  -33,252
  -35,386
  -37,471
  -39,512
  -41,520
  -43,503
  -45,475
  -47,447
  -49,435
  -51,451
  -53,509
  -55,622
  -57,805
  -60,068
  -62,426
  -64,890
  -67,472
  -70,182
  -73,033
  -76,034
  -79,197
  -82,533
  -86,051
  -89,763
  -93,679
  -97,811
  -102,170
Cash from investing activities, $m
  -7,650
  -58,178
  -65,742
  -73,744
  -82,144
  -90,928
  -100,090
  -109,625
  -119,536
  -129,823
  -140,495
  -151,562
  -163,040
  -174,943
  -187,291
  -200,105
  -213,413
  -227,237
  -241,608
  -256,558
  -272,118
  -288,322
  -305,210
  -322,817
  -341,187
  -360,362
  -380,387
  -401,309
  -423,178
  -446,046
  -469,967
Free cash flow, $m
  4,297
  119,272
  140,451
  157,197
  175,087
  194,093
  214,190
  235,356
  257,575
  280,835
  305,133
  326,349
  352,737
  380,192
  408,739
  438,410
  469,242
  501,281
  534,579
  569,193
  605,187
  642,631
  681,601
  722,179
  764,450
  808,508
  854,451
  902,383
  952,413
  1,004,657
  1,059,236
Issuance/(repayment) of debt, $m
  -3,110
  207,445
  224,083
  241,469
  258,461
  275,049
  291,254
  307,124
  322,726
  338,143
  353,468
  368,802
  384,250
  399,919
  415,916
  432,344
  449,307
  466,904
  485,232
  504,383
  524,449
  545,517
  567,674
  591,004
  615,590
  641,515
  668,862
  697,714
  728,156
  760,274
  794,155
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
  207,445
  224,083
  241,469
  258,461
  275,049
  291,254
  307,124
  322,726
  338,143
  353,468
  368,802
  384,250
  399,919
  415,916
  432,344
  449,307
  466,904
  485,232
  504,383
  524,449
  545,517
  567,674
  591,004
  615,590
  641,515
  668,862
  697,714
  728,156
  760,274
  794,155
Total cash flow (excl. dividends), $m
  -412
  326,718
  364,534
  398,666
  433,548
  469,141
  505,444
  542,480
  580,301
  618,978
  658,600
  695,151
  736,988
  780,112
  824,655
  870,754
  918,549
  968,185
  1,019,810
  1,073,576
  1,129,636
  1,188,149
  1,249,276
  1,313,183
  1,380,040
  1,450,023
  1,523,313
  1,600,097
  1,680,569
  1,764,930
  1,853,391
Retained Cash Flow (-), $m
  -4,896
  -34,378
  -38,002
  -40,951
  -43,833
  -46,646
  -49,394
  -52,085
  -54,731
  -57,346
  -59,945
  -62,545
  -65,165
  -67,823
  -70,535
  -73,322
  -76,198
  -79,183
  -82,291
  -85,539
  -88,942
  -92,515
  -96,272
  -100,229
  -104,398
  -108,795
  -113,433
  -118,326
  -123,488
  -128,935
  -134,681
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
 
  292,340
  326,531
  357,715
  389,715
  422,496
  456,050
  490,395
  525,569
  561,632
  598,656
  632,606
  671,822
  712,289
  754,120
  797,433
  842,351
  889,003
  937,520
  988,037
  1,040,694
  1,095,634
  1,153,003
  1,212,954
  1,275,642
  1,341,228
  1,409,880
  1,481,771
  1,557,080
  1,635,995
  1,718,710
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
 
  270,685
  277,886
  277,595
  273,455
  265,652
  254,496
  240,404
  223,881
  205,489
  185,825
  164,420
  144,185
  124,381
  105,480
  87,871
  71,853
  57,622
  45,276
  34,822
  26,188
  19,236
  13,785
  9,626
  6,541
  4,319
  2,768
  1,719
  1,033
  600
  336
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 2280.4
Price to Sales 20.2
Price to Book 94.4
Price to Tangible Book
Price to Cash Flow 83.6
Price to Free Cash Flow 244
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 $975412 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 - $208915 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 $50.9 billion.


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COMPANY NEWS

▶ 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]
▶ 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]
Stock chart of AMX Financial statements of AMX Annual reports 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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