Intrinsic value of Apollo Global Management Cl A - APO

Previous Close

$30.21

  Intrinsic Value

$2,881

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+5000%

Previous close

$30.21

 
Intrinsic value

$2,881

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+5000%

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

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

We calculate the intrinsic value of APO 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 5.7

 

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, %
  89.06
  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
  1,970
  3,152
  4,870
  7,283
  10,567
  14,909
  20,496
  27,511
  36,124
  46,483
  58,712
  72,907
  89,136
  107,438
  127,831
  150,306
  174,842
  201,403
  229,947
  260,427
  292,797
  327,016
  363,047
  400,862
  440,446
  481,791
  524,904
  569,802
  616,516
  665,088
  715,572
Variable operating expenses, $m
 
  1,133
  1,745
  2,605
  3,776
  5,324
  7,315
  9,816
  12,887
  16,579
  20,939
  25,990
  31,775
  38,300
  45,569
  53,581
  62,328
  71,797
  81,972
  92,838
  104,377
  116,575
  129,420
  142,900
  157,011
  171,750
  187,119
  203,124
  219,777
  237,092
  255,089
Fixed operating expenses, $m
 
  478
  490
  502
  514
  527
  540
  554
  568
  582
  597
  611
  627
  642
  658
  675
  692
  709
  727
  745
  764
  783
  802
  822
  843
  864
  886
  908
  930
  954
  977
Total operating expenses, $m
  1,166
  1,611
  2,235
  3,107
  4,290
  5,851
  7,855
  10,370
  13,455
  17,161
  21,536
  26,601
  32,402
  38,942
  46,227
  54,256
  63,020
  72,506
  82,699
  93,583
  105,141
  117,358
  130,222
  143,722
  157,854
  172,614
  188,005
  204,032
  220,707
  238,046
  256,066
Operating income, $m
  804
  1,542
  2,635
  4,176
  6,277
  9,058
  12,640
  17,141
  22,670
  29,322
  37,177
  46,305
  56,734
  68,496
  81,603
  96,050
  111,822
  128,898
  147,248
  166,845
  187,657
  209,658
  232,825
  257,140
  282,592
  309,177
  336,900
  365,770
  395,809
  427,042
  459,506
EBITDA, $m
  823
  1,559
  2,657
  4,204
  6,314
  9,107
  12,704
  17,224
  22,776
  29,456
  37,344
  46,502
  56,974
  68,786
  81,948
  96,456
  112,294
  129,441
  147,869
  167,548
  188,447
  210,541
  233,805
  258,222
  283,781
  310,478
  338,317
  367,309
  397,473
  428,838
  461,438
Interest expense (income), $m
  45
  75
  175
  322
  527
  807
  1,176
  1,652
  2,249
  2,982
  3,864
  4,905
  6,114
  7,496
  9,054
  10,790
  12,703
  14,792
  17,054
  19,484
  22,079
  24,834
  27,748
  30,815
  34,035
  37,404
  40,924
  44,595
  48,417
  52,394
  56,529
Earnings before tax, $m
  1,061
  1,467
  2,460
  3,854
  5,750
  8,251
  11,464
  15,489
  20,421
  26,339
  33,312
  41,400
  50,620
  61,001
  72,549
  85,260
  99,119
  114,105
  130,195
  147,361
  165,578
  184,823
  205,077
  226,325
  248,557
  271,773
  295,975
  321,175
  347,391
  374,648
  402,976
Tax expense, $m
  91
  396
  664
  1,041
  1,552
  2,228
  3,095
  4,182
  5,514
  7,112
  8,994
  11,178
  13,667
  16,470
  19,588
  23,020
  26,762
  30,808
  35,153
  39,787
  44,706
  49,902
  55,371
  61,108
  67,111
  73,379
  79,913
  86,717
  93,796
  101,155
  108,804
Net income, $m
  403
  1,071
  1,796
  2,814
  4,197
  6,023
  8,369
  11,307
  14,907
  19,228
  24,318
  30,222
  36,952
  44,530
  52,961
  62,240
  72,357
  83,297
  95,042
  107,573
  120,872
  134,921
  149,706
  165,217
  181,447
  198,394
  216,062
  234,458
  253,596
  273,493
  294,173

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  855
  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
  5,630
  8,519
  13,162
  19,683
  28,560
  40,293
  55,394
  74,355
  97,633
  125,630
  158,681
  197,046
  240,907
  290,374
  345,488
  406,233
  472,546
  544,333
  621,479
  703,857
  791,344
  883,827
  981,207
  1,083,412
  1,190,395
  1,302,139
  1,418,660
  1,540,006
  1,666,260
  1,797,534
  1,933,977
Adjusted assets (=assets-cash), $m
  4,775
  8,519
  13,162
  19,683
  28,560
  40,293
  55,394
  74,355
  97,633
  125,630
  158,681
  197,046
  240,907
  290,374
  345,488
  406,233
  472,546
  544,333
  621,479
  703,857
  791,344
  883,827
  981,207
  1,083,412
  1,190,395
  1,302,139
  1,418,660
  1,540,006
  1,666,260
  1,797,534
  1,933,977
Revenue / Adjusted assets
  0.413
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
  0.370
Average production assets, $m
  54
  85
  131
  197
  285
  403
  553
  743
  975
  1,255
  1,585
  1,968
  2,407
  2,901
  3,451
  4,058
  4,721
  5,438
  6,209
  7,032
  7,906
  8,829
  9,802
  10,823
  11,892
  13,008
  14,172
  15,385
  16,646
  17,957
  19,320
Working capital, $m
  0
  -315
  -487
  -728
  -1,057
  -1,491
  -2,050
  -2,751
  -3,612
  -4,648
  -5,871
  -7,291
  -8,914
  -10,744
  -12,783
  -15,031
  -17,484
  -20,140
  -22,995
  -26,043
  -29,280
  -32,702
  -36,305
  -40,086
  -44,045
  -48,179
  -52,490
  -56,980
  -61,652
  -66,509
  -71,557
Total debt, $m
  2,139
  5,011
  9,190
  15,059
  23,048
  33,608
  47,199
  64,264
  85,214
  110,411
  140,157
  174,685
  214,161
  258,681
  308,283
  362,953
  422,635
  487,244
  556,675
  630,815
  709,554
  792,788
  880,430
  972,415
  1,068,699
  1,169,269
  1,274,138
  1,383,350
  1,496,978
  1,615,125
  1,737,924
Total liabilities, $m
  4,794
  7,667
  11,846
  17,715
  25,704
  36,264
  49,855
  66,920
  87,870
  113,067
  142,813
  177,341
  216,817
  261,337
  310,939
  365,609
  425,291
  489,900
  559,331
  633,471
  712,210
  795,444
  883,086
  975,071
  1,071,355
  1,171,925
  1,276,794
  1,386,006
  1,499,634
  1,617,781
  1,740,580
Total equity, $m
  835
  852
  1,316
  1,968
  2,856
  4,029
  5,539
  7,436
  9,763
  12,563
  15,868
  19,705
  24,091
  29,037
  34,549
  40,623
  47,255
  54,433
  62,148
  70,386
  79,134
  88,383
  98,121
  108,341
  119,039
  130,214
  141,866
  154,001
  166,626
  179,753
  193,398
Total liabilities and equity, $m
  5,629
  8,519
  13,162
  19,683
  28,560
  40,293
  55,394
  74,356
  97,633
  125,630
  158,681
  197,046
  240,908
  290,374
  345,488
  406,232
  472,546
  544,333
  621,479
  703,857
  791,344
  883,827
  981,207
  1,083,412
  1,190,394
  1,302,139
  1,418,660
  1,540,007
  1,666,260
  1,797,534
  1,933,978
Debt-to-equity ratio
  2.562
  5.880
  6.980
  7.650
  8.070
  8.340
  8.520
  8.640
  8.730
  8.790
  8.830
  8.870
  8.890
  8.910
  8.920
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
Adjusted equity ratio
  -0.004
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  403
  1,071
  1,796
  2,814
  4,197
  6,023
  8,369
  11,307
  14,907
  19,228
  24,318
  30,222
  36,952
  44,530
  52,961
  62,240
  72,357
  83,297
  95,042
  107,573
  120,872
  134,921
  149,706
  165,217
  181,447
  198,394
  216,062
  234,458
  253,596
  273,493
  294,173
Depreciation, amort., depletion, $m
  19
  17
  22
  29
  37
  49
  64
  83
  106
  134
  167
  197
  241
  290
  345
  406
  472
  544
  621
  703
  791
  883
  980
  1,082
  1,189
  1,301
  1,417
  1,538
  1,665
  1,796
  1,932
Funds from operations, $m
  229
  1,088
  1,818
  2,842
  4,235
  6,072
  8,433
  11,390
  15,014
  19,362
  24,485
  30,419
  37,193
  44,820
  53,306
  62,645
  72,829
  83,841
  95,663
  108,277
  121,663
  135,804
  150,686
  166,299
  182,636
  199,695
  217,479
  235,997
  255,260
  275,289
  296,105
Change in working capital, $m
  -386
  -118
  -172
  -241
  -328
  -434
  -559
  -702
  -861
  -1,036
  -1,223
  -1,419
  -1,623
  -1,830
  -2,039
  -2,248
  -2,454
  -2,656
  -2,854
  -3,048
  -3,237
  -3,422
  -3,603
  -3,782
  -3,958
  -4,135
  -4,311
  -4,490
  -4,671
  -4,857
  -5,048
Cash from operations, $m
  615
  1,206
  1,990
  3,083
  4,563
  6,507
  8,992
  12,092
  15,875
  20,398
  25,708
  31,838
  38,816
  46,651
  55,345
  64,893
  75,282
  86,497
  98,517
  111,325
  124,900
  139,226
  154,290
  170,081
  186,594
  203,830
  221,790
  240,486
  259,932
  280,146
  301,153
Maintenance CAPEX, $m
  0
  -5
  -9
  -13
  -20
  -29
  -40
  -55
  -74
  -98
  -126
  -159
  -197
  -241
  -290
  -345
  -406
  -472
  -544
  -621
  -703
  -791
  -883
  -980
  -1,082
  -1,189
  -1,301
  -1,417
  -1,538
  -1,665
  -1,796
New CAPEX, $m
  -6
  -31
  -46
  -65
  -89
  -117
  -151
  -189
  -233
  -280
  -330
  -383
  -438
  -494
  -551
  -607
  -662
  -717
  -771
  -823
  -874
  -924
  -973
  -1,021
  -1,069
  -1,116
  -1,164
  -1,212
  -1,261
  -1,311
  -1,363
Cash from investing activities, $m
  -183
  -36
  -55
  -78
  -109
  -146
  -191
  -244
  -307
  -378
  -456
  -542
  -635
  -735
  -841
  -952
  -1,068
  -1,189
  -1,315
  -1,444
  -1,577
  -1,715
  -1,856
  -2,001
  -2,151
  -2,305
  -2,465
  -2,629
  -2,799
  -2,976
  -3,159
Free cash flow, $m
  432
  1,170
  1,935
  3,005
  4,455
  6,361
  8,800
  11,847
  15,568
  20,021
  25,253
  31,297
  38,181
  45,916
  54,504
  63,941
  74,214
  85,308
  97,203
  109,881
  123,323
  137,511
  152,434
  168,080
  184,443
  201,524
  219,326
  237,857
  257,132
  277,170
  297,994
Issuance/(repayment) of debt, $m
  332
  2,872
  4,179
  5,869
  7,989
  10,560
  13,591
  17,065
  20,950
  25,197
  29,746
  34,528
  39,475
  44,520
  49,602
  54,670
  59,682
  64,609
  69,431
  74,140
  78,738
  83,234
  87,642
  91,984
  96,284
  100,570
  104,869
  109,212
  113,628
  118,147
  122,799
Issuance/(repurchase) of shares, $m
  -13
  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  
  3
  2,872
  4,179
  5,869
  7,989
  10,560
  13,591
  17,065
  20,950
  25,197
  29,746
  34,528
  39,475
  44,520
  49,602
  54,670
  59,682
  64,609
  69,431
  74,140
  78,738
  83,234
  87,642
  91,984
  96,284
  100,570
  104,869
  109,212
  113,628
  118,147
  122,799
Total cash flow (excl. dividends), $m
  435
  4,042
  6,113
  8,875
  12,443
  16,921
  22,391
  28,912
  36,518
  45,218
  54,998
  65,825
  77,656
  90,436
  104,107
  118,611
  133,896
  149,916
  166,634
  184,021
  202,061
  220,745
  240,076
  260,064
  280,728
  302,094
  324,194
  347,069
  370,760
  395,317
  420,793
Retained Cash Flow (-), $m
  -185
  -317
  -464
  -652
  -888
  -1,173
  -1,510
  -1,896
  -2,328
  -2,800
  -3,305
  -3,836
  -4,386
  -4,947
  -5,511
  -6,074
  -6,631
  -7,179
  -7,715
  -8,238
  -8,749
  -9,248
  -9,738
  -10,220
  -10,698
  -11,174
  -11,652
  -12,135
  -12,625
  -13,127
  -13,644
Prev. year cash balance distribution, $m
 
  300
  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
 
  4,025
  5,649
  8,222
  11,556
  15,748
  20,881
  27,016
  34,190
  42,418
  51,693
  61,988
  73,270
  85,490
  98,595
  112,537
  127,265
  142,737
  158,919
  175,783
  193,312
  211,497
  230,338
  249,844
  270,030
  290,919
  312,542
  334,934
  358,135
  382,190
  407,149
Discount rate, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  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
  16.43
  17.25
  18.11
PV of cash for distribution, $m
 
  3,855
  5,161
  7,133
  9,473
  12,136
  15,045
  18,091
  21,144
  24,065
  26,710
  28,949
  30,675
  31,808
  32,302
  32,148
  31,369
  30,022
  28,189
  25,968
  23,471
  20,810
  18,095
  15,426
  12,887
  10,545
  8,445
  6,615
  5,064
  3,786
  2,761
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

Apollo Global Management, LLC is a publicly owned investment manager. The firm primarily provides its services to endowment and sovereign wealth funds, as well as other institutional and individual investors. It manages client focused portfolios. The firm launches and manages hedge funds and mutual funds for its clients. It also manages real estate funds and private equity funds for its clients. The firm invests in the fixed income and alternative investment markets across the globe. Its alternative investments include investment in private equity and real estate markets. The firm's private equity investments include traditional buyouts, recapitalization, distressed buyouts and debt investments in real estate, corporate partner buyouts, distressed asset, corporate carve-outs, turnaround, corporate restructuring, special situation, acquisition, and industry consolidation transactions. Its fixed income investments include income-oriented senior loans, bonds, collateralized loan obligations, structured credit, opportunistic credit, non-performing loans, distressed debt, mezzanine debt, and value oriented fixed income securities. The firm seeks to invest in chemicals, commodities, consumer and retail, oil and gas, metals, mining, agriculture, commodities, distribution and transportation, financial and business services, manufacturing and industrial, media distribution, cable, entertainment and leisure, natural resources, energy, packaging and materials, and satellite and wireless industries. It seeks to invest in companies based in across North America with a focus on United States, and Europe. The firm also makes investments outside North America, primarily in Western Europe and Asia. It employs a combination of contrarian, value, and distressed strategies to make its investments. The firm conducts an in-house research to create its investment portfolio. It seeks to acquire minority positions in its portfolio companies. The firm seeks to make investments in the range of $200 million and $1.5 billion. Apollo Global Management, LLC was founded in 1990 and is headquartered in New York City, with additional offices in New York City; Bethesda, Maryland; Chicago, Illinois; Los Angeles, California; Purchase, New York; Houston, Texas; London, United Kingdom; Frankfurt, Germany; Mumbai, India; Central, Hong Kong; Singapore; and Luxembourg.

FINANCIAL RATIOS  of  Apollo Global Management Cl A (APO)

Valuation Ratios
P/E Ratio 13.9
Price to Sales 2.8
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 9.1
Price to Free Cash Flow 9.2
Growth Rates
Sales Growth Rate 89.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate -5.6%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 256.2%
Total Debt to Equity 256.2%
Interest Coverage 25
Management Effectiveness
Return On Assets 8.7%
Ret/ On Assets - 3 Yr. Avg. 3.6%
Return On Total Capital 14.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.7%
Return On Equity 54.3%
Return On Equity - 3 Yr. Avg. 24.3%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 57.1%
EBITDA Margin - 3 Yr. Avg. 53.7%
Operating Margin 40.8%
Oper. Margin - 3 Yr. Avg. 31.7%
Pre-Tax Margin 53.9%
Pre-Tax Margin - 3 Yr. Avg. 48.8%
Net Profit Margin 20.5%
Net Profit Margin - 3 Yr. Avg. 14.7%
Effective Tax Rate 8.6%
Eff/ Tax Rate - 3 Yr. Avg. 10.7%
Payout Ratio 59.3%

APO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the APO stock intrinsic value calculation we used $1970 million for the last fiscal year's total revenue generated by Apollo Global Management Cl A. The default revenue input number comes from 2016 income statement of Apollo Global Management Cl A. 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 APO 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 4.4%, whose default value for APO is calculated based on our internal credit rating of Apollo Global Management Cl A, 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 Apollo Global Management Cl A.
    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 APO stock the variable cost ratio is equal to 36.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $466 million in the base year in the intrinsic value calculation for APO 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 Apollo Global Management Cl A.

Corporate tax rate of 27% is the nominal tax rate for Apollo Global Management Cl A. 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 APO 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 APO are equal to 2.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Apollo Global Management Cl A 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 APO 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 - $835 million for Apollo Global Management Cl A - 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 190.144 million for Apollo Global Management Cl A 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 Apollo Global Management Cl A at the current share price and the inputted number of shares is $5.7 billion.

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COMPANY NEWS

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▶ Why Apollo Global Is Buying ClubCorp for $1.1 Billion   [Jul-12-17 09:00PM  Motley Fool]
▶ ClubCorp goes private, stock surges   [10:53AM  Yahoo Finance Video]
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Stock chart of APO Financial statements of APO
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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