Intrinsic value of Ball - BLL

Previous Close

$40.27

  Intrinsic Value

$234.36

stock screener

  Rating & Target

str. buy

+482%

  Value-price divergence*

+829%

Previous close

$40.27

 
Intrinsic value

$234.36

 
Up/down potential

+482%

 
Rating

str. buy

 
Value-price divergence*

+829%

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

We calculate the intrinsic value of BLL stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 7.0

 

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, %
  13.30
  40.80
  37.22
  34.00
  31.10
  28.49
  26.14
  24.03
  22.12
  20.41
  18.87
  17.48
  16.23
  15.11
  14.10
  13.19
  12.37
  11.63
  10.97
  10.37
  9.84
  9.35
  8.92
  8.53
  8.17
  7.86
  7.57
  7.31
  7.08
  6.87
  6.69
Revenue, $m
  9,061
  12,758
  17,506
  23,458
  30,753
  39,514
  49,843
  61,818
  75,494
  90,903
  108,057
  126,948
  147,557
  169,854
  193,804
  219,366
  246,504
  275,181
  305,370
  337,047
  370,199
  404,822
  440,921
  478,512
  517,620
  558,282
  600,545
  644,463
  690,102
  737,537
  786,850
Variable operating expenses, $m
 
  11,772
  15,964
  21,218
  27,658
  35,392
  44,510
  55,081
  67,154
  80,756
  95,899
  112,066
  130,259
  149,942
  171,084
  193,650
  217,606
  242,922
  269,572
  297,535
  326,801
  357,365
  389,232
  422,416
  456,939
  492,835
  530,143
  568,913
  609,202
  651,076
  694,608
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
  8,727
  11,772
  15,964
  21,218
  27,658
  35,392
  44,510
  55,081
  67,154
  80,756
  95,899
  112,066
  130,259
  149,942
  171,084
  193,650
  217,606
  242,922
  269,572
  297,535
  326,801
  357,365
  389,232
  422,416
  456,939
  492,835
  530,143
  568,913
  609,202
  651,076
  694,608
Operating income, $m
  334
  986
  1,543
  2,241
  3,096
  4,123
  5,334
  6,737
  8,341
  10,147
  12,158
  14,882
  17,298
  19,912
  22,720
  25,716
  28,898
  32,260
  35,799
  39,512
  43,398
  47,457
  51,689
  56,096
  60,681
  65,447
  70,402
  75,550
  80,901
  86,461
  92,242
EBITDA, $m
  787
  1,852
  2,541
  3,405
  4,464
  5,735
  7,234
  8,972
  10,957
  13,194
  15,684
  18,425
  21,417
  24,653
  28,129
  31,839
  35,778
  39,940
  44,322
  48,920
  53,732
  58,757
  63,996
  69,452
  75,128
  81,030
  87,164
  93,539
  100,163
  107,048
  114,205
Interest expense (income), $m
  190
  256
  435
  664
  952
  1,305
  1,728
  2,228
  2,807
  3,468
  4,213
  5,042
  5,956
  6,952
  8,030
  9,188
  10,424
  11,736
  13,123
  14,583
  16,114
  17,717
  19,391
  21,137
  22,954
  24,845
  26,811
  28,854
  30,978
  33,185
  35,478
Earnings before tax, $m
  125
  730
  1,108
  1,576
  2,144
  2,818
  3,605
  4,510
  5,534
  6,679
  7,945
  9,840
  11,342
  12,960
  14,689
  16,528
  18,473
  20,523
  22,676
  24,929
  27,284
  29,740
  32,298
  34,959
  37,727
  40,602
  43,591
  46,696
  49,923
  53,277
  56,764
Tax expense, $m
  -126
  197
  299
  426
  579
  761
  973
  1,218
  1,494
  1,803
  2,145
  2,657
  3,062
  3,499
  3,966
  4,463
  4,988
  5,541
  6,122
  6,731
  7,367
  8,030
  8,720
  9,439
  10,186
  10,963
  11,770
  12,608
  13,479
  14,385
  15,326
Net income, $m
  263
  533
  809
  1,151
  1,565
  2,057
  2,632
  3,292
  4,040
  4,876
  5,800
  7,183
  8,280
  9,461
  10,723
  12,065
  13,486
  14,982
  16,553
  18,199
  19,918
  21,710
  23,578
  25,520
  27,540
  29,640
  31,821
  34,088
  36,444
  38,892
  41,438

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  597
  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
  16,173
  21,921
  30,080
  40,306
  52,841
  67,894
  85,641
  106,217
  129,716
  156,192
  185,664
  218,123
  253,534
  291,846
  332,996
  376,918
  423,546
  472,820
  524,691
  579,119
  636,082
  695,571
  757,596
  822,185
  889,381
  959,248
  1,031,864
  1,107,325
  1,185,743
  1,267,246
  1,351,977
Adjusted assets (=assets-cash), $m
  15,576
  21,921
  30,080
  40,306
  52,841
  67,894
  85,641
  106,217
  129,716
  156,192
  185,664
  218,123
  253,534
  291,846
  332,996
  376,918
  423,546
  472,820
  524,691
  579,119
  636,082
  695,571
  757,596
  822,185
  889,381
  959,248
  1,031,864
  1,107,325
  1,185,743
  1,267,246
  1,351,977
Revenue / Adjusted assets
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
  0.582
Average production assets, $m
  4,601
  6,481
  8,893
  11,917
  15,623
  20,073
  25,320
  31,404
  38,351
  46,179
  54,893
  64,489
  74,959
  86,286
  98,452
  111,438
  125,224
  139,792
  155,128
  171,220
  188,061
  205,650
  223,988
  243,084
  262,951
  283,607
  305,077
  327,387
  350,572
  374,669
  399,720
Working capital, $m
  684
  434
  595
  798
  1,046
  1,343
  1,695
  2,102
  2,567
  3,091
  3,674
  4,316
  5,017
  5,775
  6,589
  7,458
  8,381
  9,356
  10,383
  11,460
  12,587
  13,764
  14,991
  16,269
  17,599
  18,982
  20,419
  21,912
  23,463
  25,076
  26,753
Total debt, $m
  7,532
  12,418
  18,978
  27,200
  37,278
  49,381
  63,650
  80,193
  99,085
  120,372
  144,068
  170,165
  198,636
  229,438
  262,523
  297,836
  335,325
  374,942
  416,645
  460,406
  506,204
  554,033
  603,901
  655,831
  709,857
  766,029
  824,412
  885,083
  948,131
  1,013,660
  1,081,783
Total liabilities, $m
  12,738
  17,624
  24,184
  32,406
  42,484
  54,587
  68,856
  85,399
  104,291
  125,578
  149,274
  175,371
  203,842
  234,644
  267,729
  303,042
  340,531
  380,148
  421,851
  465,612
  511,410
  559,239
  609,107
  661,037
  715,063
  771,235
  829,618
  890,289
  953,337
  1,018,866
  1,086,989
Total equity, $m
  3,435
  4,296
  5,896
  7,900
  10,357
  13,307
  16,786
  20,819
  25,424
  30,614
  36,390
  42,752
  49,693
  57,202
  65,267
  73,876
  83,015
  92,673
  102,839
  113,507
  124,672
  136,332
  148,489
  161,148
  174,319
  188,013
  202,245
  217,036
  232,406
  248,380
  264,987
Total liabilities and equity, $m
  16,173
  21,920
  30,080
  40,306
  52,841
  67,894
  85,642
  106,218
  129,715
  156,192
  185,664
  218,123
  253,535
  291,846
  332,996
  376,918
  423,546
  472,821
  524,690
  579,119
  636,082
  695,571
  757,596
  822,185
  889,382
  959,248
  1,031,863
  1,107,325
  1,185,743
  1,267,246
  1,351,976
Debt-to-equity ratio
  2.193
  2.890
  3.220
  3.440
  3.600
  3.710
  3.790
  3.850
  3.900
  3.930
  3.960
  3.980
  4.000
  4.010
  4.020
  4.030
  4.040
  4.050
  4.050
  4.060
  4.060
  4.060
  4.070
  4.070
  4.070
  4.070
  4.080
  4.080
  4.080
  4.080
  4.080
Adjusted equity ratio
  0.182
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196
  0.196

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  263
  533
  809
  1,151
  1,565
  2,057
  2,632
  3,292
  4,040
  4,876
  5,800
  7,183
  8,280
  9,461
  10,723
  12,065
  13,486
  14,982
  16,553
  18,199
  19,918
  21,710
  23,578
  25,520
  27,540
  29,640
  31,821
  34,088
  36,444
  38,892
  41,438
Depreciation, amort., depletion, $m
  453
  866
  998
  1,164
  1,368
  1,612
  1,901
  2,235
  2,617
  3,047
  3,526
  3,543
  4,119
  4,741
  5,409
  6,123
  6,880
  7,681
  8,524
  9,408
  10,333
  11,299
  12,307
  13,356
  14,448
  15,583
  16,762
  17,988
  19,262
  20,586
  21,963
Funds from operations, $m
  -315
  1,399
  1,807
  2,315
  2,933
  3,670
  4,533
  5,527
  6,657
  7,923
  9,325
  10,726
  12,399
  14,202
  16,133
  18,188
  20,366
  22,663
  25,077
  27,606
  30,251
  33,010
  35,885
  38,877
  41,988
  45,223
  48,584
  52,076
  55,706
  59,478
  63,401
Change in working capital, $m
  -509
  126
  161
  202
  248
  298
  351
  407
  465
  524
  583
  642
  701
  758
  814
  869
  923
  975
  1,026
  1,077
  1,127
  1,177
  1,227
  1,278
  1,330
  1,383
  1,437
  1,493
  1,552
  1,613
  1,677
Cash from operations, $m
  194
  1,273
  1,646
  2,113
  2,685
  3,372
  4,181
  5,120
  6,192
  7,399
  8,742
  10,084
  11,698
  13,444
  15,318
  17,319
  19,443
  21,688
  24,050
  26,529
  29,123
  31,833
  34,657
  37,599
  40,659
  43,840
  47,147
  50,583
  54,154
  57,866
  61,724
Maintenance CAPEX, $m
  0
  -253
  -356
  -489
  -655
  -858
  -1,103
  -1,391
  -1,725
  -2,107
  -2,537
  -3,016
  -3,543
  -4,119
  -4,741
  -5,409
  -6,123
  -6,880
  -7,681
  -8,524
  -9,408
  -10,333
  -11,299
  -12,307
  -13,356
  -14,448
  -15,583
  -16,762
  -17,988
  -19,262
  -20,586
New CAPEX, $m
  -606
  -1,880
  -2,412
  -3,024
  -3,706
  -4,451
  -5,247
  -6,083
  -6,947
  -7,828
  -8,714
  -9,597
  -10,469
  -11,327
  -12,166
  -12,986
  -13,786
  -14,568
  -15,336
  -16,092
  -16,841
  -17,588
  -18,338
  -19,096
  -19,867
  -20,656
  -21,469
  -22,310
  -23,185
  -24,097
  -25,051
Cash from investing activities, $m
  672
  -2,133
  -2,768
  -3,513
  -4,361
  -5,309
  -6,350
  -7,474
  -8,672
  -9,935
  -11,251
  -12,613
  -14,012
  -15,446
  -16,907
  -18,395
  -19,909
  -21,448
  -23,017
  -24,616
  -26,249
  -27,921
  -29,637
  -31,403
  -33,223
  -35,104
  -37,052
  -39,072
  -41,173
  -43,359
  -45,637
Free cash flow, $m
  866
  -860
  -1,123
  -1,400
  -1,676
  -1,937
  -2,169
  -2,355
  -2,481
  -2,536
  -2,509
  -2,529
  -2,315
  -2,002
  -1,589
  -1,076
  -466
  239
  1,034
  1,914
  2,874
  3,911
  5,020
  6,195
  7,435
  8,736
  10,095
  11,510
  12,981
  14,506
  16,087
Issuance/(repayment) of debt, $m
  -231
  5,108
  6,560
  8,222
  10,078
  12,103
  14,269
  16,543
  18,893
  21,287
  23,696
  26,097
  28,470
  30,802
  33,085
  35,313
  37,489
  39,617
  41,704
  43,760
  45,798
  47,829
  49,868
  51,929
  54,026
  56,173
  58,383
  60,671
  63,048
  65,528
  68,124
Issuance/(repurchase) of shares, $m
  -59
  703
  790
  854
  892
  893
  847
  741
  566
  314
  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  
  -304
  5,811
  7,350
  9,076
  10,970
  12,996
  15,116
  17,284
  19,459
  21,601
  23,696
  26,097
  28,470
  30,802
  33,085
  35,313
  37,489
  39,617
  41,704
  43,760
  45,798
  47,829
  49,868
  51,929
  54,026
  56,173
  58,383
  60,671
  63,048
  65,528
  68,124
Total cash flow (excl. dividends), $m
  456
  4,952
  6,227
  7,676
  9,294
  11,059
  12,947
  14,929
  16,977
  19,064
  21,187
  23,568
  26,155
  28,800
  31,496
  34,237
  37,023
  39,856
  42,737
  45,674
  48,672
  51,741
  54,888
  58,125
  61,461
  64,909
  68,478
  72,181
  76,029
  80,035
  84,210
Retained Cash Flow (-), $m
  -2,184
  -1,236
  -1,599
  -2,004
  -2,457
  -2,950
  -3,478
  -4,033
  -4,606
  -5,189
  -5,777
  -6,362
  -6,941
  -7,509
  -8,065
  -8,609
  -9,139
  -9,658
  -10,167
  -10,668
  -11,165
  -11,660
  -12,157
  -12,659
  -13,171
  -13,694
  -14,233
  -14,790
  -15,370
  -15,975
  -16,607
Prev. year cash balance distribution, $m
 
  375
  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
 
  4,090
  4,628
  5,672
  6,837
  8,108
  9,468
  10,896
  12,372
  13,875
  15,411
  17,206
  19,215
  21,291
  23,430
  25,629
  27,884
  30,198
  32,571
  35,006
  37,508
  40,081
  42,731
  45,465
  48,291
  51,215
  54,245
  57,390
  60,659
  64,060
  67,603
Discount rate, %
 
  10.10
  10.61
  11.14
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.05
  20.00
  21.00
  22.05
  23.15
  24.31
  25.52
  26.80
  28.14
  29.55
  31.02
  32.57
  34.20
  35.91
  37.71
  39.59
  41.57
PV of cash for distribution, $m
 
  3,715
  3,783
  4,132
  4,393
  4,545
  4,574
  4,481
  4,273
  3,968
  3,595
  3,222
  2,839
  2,439
  2,041
  1,664
  1,321
  1,021
  767
  561
  398
  274
  183
  118
  74
  44
  26
  14
  8
  4
  2
Current shareholders' claim on cash, %
  100
  89.9
  82.5
  77.1
  73.1
  70.1
  68.0
  66.6
  65.7
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3
  65.3

Ball Corporation supplies metal packaging products to the beverage, food, personal care, and household industries worldwide. It operates in four segments: Metal Beverage Packaging, Americas and Asia; Metal Beverage Packaging, Europe; Metal Food and Household Products Packaging; and Aerospace and Technologies. The Metal Beverage Packaging, Americas and Asia segment manufactures and sells metal beverage containers to fillers of carbonated soft drinks, beer, energy drinks, and other beverages. The Metal Beverage Packaging, Europe segment manufactures and sells metal beverage containers and ends for producers of carbonated soft drinks, beer, energy drinks, and other beverages. The Metal Food and Household Products Packaging segment offers steel food, aerosol, paint, and general line and decorative specialty containers, as well as extruded aluminum beverage and aerosol containers, and aluminum slugs. The Aerospace and Technologies segment designs, develops, and manufactures aerospace systems, including spacecraft, instruments and sensors, radio frequency systems and components, data exploitation solutions, and aerospace technologies and products for civil, commercial, and national security aerospace markets. It is also involved in the design, manufacture, and testing of satellites, remote sensors, and ground station control hardware and software, as well as provides related services, such as launch vehicle integration and satellite operations. In addition, this segment provides target identification, warning, and attitude control systems and components; cryogenic systems for reactant storage, and associated sensor cooling devices; star trackers; and fast-steering mirrors, as well as technical services and products to government agencies, prime contractors, and commercial organizations for various information warfare, electronic warfare, avionics, intelligence, training, and space system needs. The company was founded in 1880 and is headquartered in Broomfield, Colorado.

FINANCIAL RATIOS  of  Ball (BLL)

Valuation Ratios
P/E Ratio 53.5
Price to Sales 1.6
Price to Book 4.1
Price to Tangible Book
Price to Cash Flow 72.6
Price to Free Cash Flow -34.2
Growth Rates
Sales Growth Rate 13.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.8%
Cap. Spend. - 3 Yr. Gr. Rate 9.9%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 212.8%
Total Debt to Equity 219.3%
Interest Coverage 2
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 6.3%
Return On Equity 11.2%
Return On Equity - 3 Yr. Avg. 25.8%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 19.5%
Gross Margin - 3 Yr. Avg. 19.4%
EBITDA Margin 8.5%
EBITDA Margin - 3 Yr. Avg. 10.3%
Operating Margin 3.7%
Oper. Margin - 3 Yr. Avg. 6.4%
Pre-Tax Margin 1.4%
Pre-Tax Margin - 3 Yr. Avg. 4.4%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 4%
Effective Tax Rate -100.8%
Eff/ Tax Rate - 3 Yr. Avg. -21.3%
Payout Ratio 31.6%

BLL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BLL stock intrinsic value calculation we used $9061 million for the last fiscal year's total revenue generated by Ball. The default revenue input number comes from 2016 income statement of Ball. 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 BLL stock valuation model: a) initial revenue growth rate of 40.8% 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 10.1%, whose default value for BLL is calculated based on our internal credit rating of Ball, 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 Ball.
    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 BLL stock the variable cost ratio is equal to 93.9%.

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 BLL 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 Ball.

Corporate tax rate of 27% is the nominal tax rate for Ball. 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 BLL 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 BLL are equal to 50.8%.

Life of production assets of 18.2 years is the average useful life of capital assets used in Ball 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 BLL is equal to 3.4%. 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 - $3435 million for Ball - 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 174.933 million for Ball 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 Ball at the current share price and the inputted number of shares is $7.0 billion.

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COMPANY NEWS

▶ Ball Corp. Value Analysis (NYSE:BLL) : August 16, 2017   [Aug-16-17 07:59PM  Capital Cube]
▶ New Strong Sell Stocks for August 15th   [Aug-15-17 10:14AM  Zacks]
▶ New Strong Sell Stocks for August 8th   [Aug-08-17 07:36AM  Zacks]
▶ Ball Announces $100 Million Accelerated Stock Repurchase   [Aug-07-17 06:00AM  PR Newswire]
▶ Ball misses 2Q profit forecasts   [02:28AM  Associated Press]
▶ ETFs with exposure to Ball Corp. : August 1, 2017   [Aug-01-17 04:18PM  Capital Cube]
▶ Ball Corporation Declares Quarterly Dividend   [Jul-26-17 04:15PM  PR Newswire]
▶ Ohio brewery producing 2M cans of water for disaster victims   [Jul-23-17 12:30PM  Associated Press]
▶ Smart Money Backing A Marijuana Boom In 2017   [Jul-18-17 07:30PM  Oilprice.com]
▶ ETFs with exposure to Ball Corp. : July 13, 2017   [Jul-13-17 03:39PM  Capital Cube]
▶ ETFs with exposure to Ball Corp. : July 3, 2017   [Jul-03-17 02:57PM  Capital Cube]
▶ Ball tops Street 1Q forecasts   [06:08AM  Associated Press]
▶ Bullish and Bearish Reversals for This Week   [May-01-17 01:15PM  TheStreet.com]
▶ Ball Corp. Value Analysis (NYSE:BLL) : April 25, 2017   [Apr-25-17 04:05PM  Capital Cube]
▶ What are Colorado's most valuable brands?   [Mar-30-17 10:37AM  at bizjournals.com]
▶ Ball to Announce First Quarter Earnings on May 4, 2017   [Mar-27-17 06:10PM  PR Newswire]
▶ [$$] Ball Corp.: The Can-Do Can Maker   [Mar-11-17 12:36AM  Barrons.com]
▶ [$$] King Of Cans   [Feb-27-17 07:00AM  at The Wall Street Journal]
▶ Ball Aerospace Awarded Spacecraft Operation Support   [Feb-13-17 07:45PM  PR Newswire]
▶ Ball Aerocan India Wins Asia CanTech Award   [Feb-08-17 09:00AM  PR Newswire]
▶ Ball Reports 2016 Results   [06:00AM  PR Newswire]
Stock chart of BLL Financial statements of BLL
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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