Intrinsic value of Ball - BLL

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$41.67

  Intrinsic Value

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  Value-price divergence*

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$41.67

 
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*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 7.3

 

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
  39.40
  35.96
  32.86
  30.08
  27.57
  25.31
  23.28
  21.45
  19.81
  18.33
  16.99
  15.80
  14.72
  13.74
  12.87
  12.08
  11.37
  10.74
  10.16
  9.65
  9.18
  8.76
  8.39
  8.05
  7.74
  7.47
  7.22
  7.00
  6.80
  6.62
Revenue, $m
  9,061
  12,708
  17,277
  22,955
  29,860
  38,092
  47,734
  58,848
  71,473
  85,630
  101,324
  118,543
  137,267
  157,467
  179,109
  202,160
  226,586
  252,359
  279,454
  307,856
  337,554
  368,549
  400,849
  434,471
  469,441
  505,794
  543,575
  582,835
  623,636
  666,045
  710,139
Variable operating expenses, $m
 
  11,732
  15,767
  20,782
  26,879
  34,149
  42,664
  52,478
  63,628
  76,130
  89,989
  104,686
  121,222
  139,060
  158,173
  178,529
  200,100
  222,860
  246,789
  271,870
  298,097
  325,469
  353,994
  383,685
  414,567
  446,671
  480,036
  514,707
  550,738
  588,190
  627,130
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
  11,732
  15,767
  20,782
  26,879
  34,149
  42,664
  52,478
  63,628
  76,130
  89,989
  104,686
  121,222
  139,060
  158,173
  178,529
  200,100
  222,860
  246,789
  271,870
  298,097
  325,469
  353,994
  383,685
  414,567
  446,671
  480,036
  514,707
  550,738
  588,190
  627,130
Operating income, $m
  334
  976
  1,510
  2,174
  2,981
  3,943
  5,070
  6,369
  7,845
  9,500
  11,334
  13,857
  16,045
  18,406
  20,936
  23,631
  26,486
  29,498
  32,666
  35,985
  39,457
  43,080
  46,856
  50,786
  54,873
  59,123
  63,539
  68,128
  72,897
  77,854
  83,009
EBITDA, $m
  787
  1,644
  2,236
  2,970
  3,864
  4,929
  6,177
  7,615
  9,249
  11,081
  13,112
  15,340
  17,763
  20,377
  23,177
  26,160
  29,321
  32,656
  36,162
  39,837
  43,680
  47,691
  51,871
  56,222
  60,747
  65,451
  70,340
  75,420
  80,700
  86,188
  91,894
Interest expense (income), $m
  190
  256
  430
  652
  928
  1,263
  1,663
  2,131
  2,671
  3,284
  3,971
  4,734
  5,570
  6,479
  7,460
  8,511
  9,631
  10,817
  12,069
  13,384
  14,764
  16,206
  17,711
  19,280
  20,913
  22,611
  24,376
  26,211
  28,118
  30,099
  32,159
Earnings before tax, $m
  125
  720
  1,080
  1,522
  2,053
  2,680
  3,407
  4,238
  5,174
  6,216
  7,363
  9,123
  10,475
  11,927
  13,476
  15,119
  16,855
  18,682
  20,597
  22,601
  24,693
  26,874
  29,144
  31,506
  33,961
  36,512
  39,163
  41,917
  44,779
  47,755
  50,850
Tax expense, $m
  -126
  194
  292
  411
  554
  724
  920
  1,144
  1,397
  1,678
  1,988
  2,463
  2,828
  3,220
  3,639
  4,082
  4,551
  5,044
  5,561
  6,102
  6,667
  7,256
  7,869
  8,507
  9,169
  9,858
  10,574
  11,318
  12,090
  12,894
  13,729
Net income, $m
  263
  526
  788
  1,111
  1,499
  1,956
  2,487
  3,094
  3,777
  4,538
  5,375
  6,660
  7,647
  8,707
  9,837
  11,037
  12,304
  13,637
  15,036
  16,499
  18,026
  19,618
  21,275
  22,999
  24,791
  26,654
  28,589
  30,599
  32,689
  34,861
  37,120

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
  21,986
  29,892
  39,715
  51,661
  65,903
  82,586
  101,813
  123,655
  148,149
  175,300
  205,092
  237,486
  272,434
  309,877
  349,757
  392,017
  436,606
  483,485
  532,622
  584,004
  637,629
  693,511
  751,680
  812,181
  875,076
  940,441
  1,008,365
  1,078,954
  1,152,326
  1,228,614
Adjusted assets (=assets-cash), $m
  15,576
  21,986
  29,892
  39,715
  51,661
  65,903
  82,586
  101,813
  123,655
  148,149
  175,300
  205,092
  237,486
  272,434
  309,877
  349,757
  392,017
  436,606
  483,485
  532,622
  584,004
  637,629
  693,511
  751,680
  812,181
  875,076
  940,441
  1,008,365
  1,078,954
  1,152,326
  1,228,614
Revenue / Adjusted assets
  0.582
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
  0.578
Average production assets, $m
  4,601
  3,355
  4,561
  6,060
  7,883
  10,056
  12,602
  15,536
  18,869
  22,606
  26,749
  31,295
  36,238
  41,571
  47,285
  53,370
  59,819
  66,623
  73,776
  81,274
  89,114
  97,297
  105,824
  114,700
  123,932
  133,530
  143,504
  153,868
  164,640
  175,836
  187,477
Working capital, $m
  684
  394
  536
  712
  926
  1,181
  1,480
  1,824
  2,216
  2,655
  3,141
  3,675
  4,255
  4,881
  5,552
  6,267
  7,024
  7,823
  8,663
  9,544
  10,464
  11,425
  12,426
  13,469
  14,553
  15,680
  16,851
  18,068
  19,333
  20,647
  22,014
Total debt, $m
  7,532
  12,288
  18,629
  26,508
  36,088
  47,511
  60,890
  76,310
  93,827
  113,471
  135,247
  159,140
  185,120
  213,148
  243,177
  275,161
  309,054
  344,814
  382,411
  421,819
  463,027
  506,034
  550,852
  597,503
  646,025
  696,467
  748,889
  803,365
  859,977
  918,822
  980,004
Total liabilities, $m
  12,738
  17,632
  23,973
  31,852
  41,432
  52,855
  66,234
  81,654
  99,171
  118,815
  140,591
  164,484
  190,464
  218,492
  248,521
  280,505
  314,398
  350,158
  387,755
  427,163
  468,371
  511,378
  556,196
  602,847
  651,369
  701,811
  754,233
  808,709
  865,321
  924,166
  985,348
Total equity, $m
  3,435
  4,353
  5,919
  7,864
  10,229
  13,049
  16,352
  20,159
  24,484
  29,333
  34,709
  40,608
  47,022
  53,942
  61,356
  69,252
  77,619
  86,448
  95,730
  105,459
  115,633
  126,251
  137,315
  148,833
  160,812
  173,265
  186,207
  199,656
  213,633
  228,161
  243,266
Total liabilities and equity, $m
  16,173
  21,985
  29,892
  39,716
  51,661
  65,904
  82,586
  101,813
  123,655
  148,148
  175,300
  205,092
  237,486
  272,434
  309,877
  349,757
  392,017
  436,606
  483,485
  532,622
  584,004
  637,629
  693,511
  751,680
  812,181
  875,076
  940,440
  1,008,365
  1,078,954
  1,152,327
  1,228,614
Debt-to-equity ratio
  2.193
  2.820
  3.150
  3.370
  3.530
  3.640
  3.720
  3.790
  3.830
  3.870
  3.900
  3.920
  3.940
  3.950
  3.960
  3.970
  3.980
  3.990
  3.990
  4.000
  4.000
  4.010
  4.010
  4.010
  4.020
  4.020
  4.020
  4.020
  4.030
  4.030
  4.030
Adjusted equity ratio
  0.182
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  263
  526
  788
  1,111
  1,499
  1,956
  2,487
  3,094
  3,777
  4,538
  5,375
  6,660
  7,647
  8,707
  9,837
  11,037
  12,304
  13,637
  15,036
  16,499
  18,026
  19,618
  21,275
  22,999
  24,791
  26,654
  28,589
  30,599
  32,689
  34,861
  37,120
Depreciation, amort., depletion, $m
  453
  668
  726
  797
  883
  986
  1,107
  1,246
  1,404
  1,581
  1,777
  1,483
  1,717
  1,970
  2,241
  2,529
  2,835
  3,157
  3,496
  3,852
  4,223
  4,611
  5,015
  5,436
  5,874
  6,328
  6,801
  7,292
  7,803
  8,333
  8,885
Funds from operations, $m
  -315
  1,194
  1,514
  1,908
  2,382
  2,943
  3,594
  4,340
  5,181
  6,118
  7,152
  8,143
  9,364
  10,677
  12,078
  13,567
  15,139
  16,795
  18,532
  20,351
  22,250
  24,229
  26,291
  28,435
  30,665
  32,982
  35,390
  37,892
  40,492
  43,195
  46,006
Change in working capital, $m
  -509
  111
  142
  176
  214
  255
  299
  345
  391
  439
  487
  534
  580
  626
  671
  715
  757
  799
  840
  880
  921
  961
  1,001
  1,042
  1,084
  1,127
  1,171
  1,217
  1,265
  1,315
  1,367
Cash from operations, $m
  194
  609
  1,372
  1,732
  2,168
  2,687
  3,295
  3,995
  4,790
  5,680
  6,666
  7,609
  8,784
  10,051
  11,408
  12,852
  14,382
  15,996
  17,692
  19,470
  21,329
  23,268
  25,289
  27,393
  29,581
  31,855
  34,219
  36,675
  39,227
  41,880
  44,639
Maintenance CAPEX, $m
  0
  -114
  -159
  -216
  -287
  -374
  -477
  -597
  -736
  -894
  -1,071
  -1,268
  -1,483
  -1,717
  -1,970
  -2,241
  -2,529
  -2,835
  -3,157
  -3,496
  -3,852
  -4,223
  -4,611
  -5,015
  -5,436
  -5,874
  -6,328
  -6,801
  -7,292
  -7,803
  -8,333
New CAPEX, $m
  -606
  -947
  -1,206
  -1,499
  -1,823
  -2,173
  -2,546
  -2,934
  -3,333
  -3,738
  -4,143
  -4,546
  -4,943
  -5,333
  -5,714
  -6,085
  -6,449
  -6,804
  -7,153
  -7,498
  -7,840
  -8,183
  -8,527
  -8,876
  -9,232
  -9,597
  -9,974
  -10,365
  -10,771
  -11,196
  -11,641
Cash from investing activities, $m
  672
  -1,061
  -1,365
  -1,715
  -2,110
  -2,547
  -3,023
  -3,531
  -4,069
  -4,632
  -5,214
  -5,814
  -6,426
  -7,050
  -7,684
  -8,326
  -8,978
  -9,639
  -10,310
  -10,994
  -11,692
  -12,406
  -13,138
  -13,891
  -14,668
  -15,471
  -16,302
  -17,166
  -18,063
  -18,999
  -19,974
Free cash flow, $m
  866
  -452
  7
  16
  58
  140
  273
  464
  720
  1,048
  1,451
  1,795
  2,358
  3,001
  3,724
  4,526
  5,404
  6,357
  7,382
  8,476
  9,637
  10,862
  12,151
  13,502
  14,913
  16,384
  17,916
  19,509
  21,163
  22,881
  24,664
Issuance/(repayment) of debt, $m
  -231
  4,978
  6,341
  7,879
  9,580
  11,423
  13,379
  15,420
  17,518
  19,644
  21,776
  23,893
  25,980
  28,028
  30,030
  31,984
  33,892
  35,761
  37,596
  39,409
  41,208
  43,007
  44,817
  46,652
  48,522
  50,442
  52,422
  54,475
  56,612
  58,845
  61,182
Issuance/(repurchase) of shares, $m
  -59
  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  
  -304
  4,978
  6,341
  7,879
  9,580
  11,423
  13,379
  15,420
  17,518
  19,644
  21,776
  23,893
  25,980
  28,028
  30,030
  31,984
  33,892
  35,761
  37,596
  39,409
  41,208
  43,007
  44,817
  46,652
  48,522
  50,442
  52,422
  54,475
  56,612
  58,845
  61,182
Total cash flow (excl. dividends), $m
  456
  4,526
  6,348
  7,895
  9,638
  11,563
  13,652
  15,884
  18,238
  20,692
  23,227
  25,688
  28,338
  31,029
  33,753
  36,509
  39,297
  42,118
  44,978
  47,884
  50,845
  53,869
  56,968
  60,153
  63,435
  66,826
  70,338
  73,984
  77,776
  81,726
  85,847
Retained Cash Flow (-), $m
  -2,184
  -1,226
  -1,565
  -1,945
  -2,365
  -2,820
  -3,303
  -3,807
  -4,325
  -4,850
  -5,376
  -5,899
  -6,414
  -6,920
  -7,414
  -7,896
  -8,367
  -8,829
  -9,282
  -9,729
  -10,174
  -10,618
  -11,065
  -11,517
  -11,979
  -12,453
  -12,942
  -13,449
  -13,977
  -14,528
  -15,105
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
 
  3,675
  4,782
  5,950
  7,273
  8,743
  10,349
  12,077
  13,913
  15,842
  17,851
  19,790
  21,924
  24,109
  26,340
  28,613
  30,929
  33,289
  35,696
  38,155
  40,671
  43,252
  45,904
  48,636
  51,456
  54,373
  57,396
  60,535
  63,799
  67,198
  70,742
Discount rate, %
 
  9.90
  10.40
  10.91
  11.46
  12.03
  12.64
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.83
  25.02
  26.27
  27.58
  28.96
  30.41
  31.93
  33.52
  35.20
  36.96
  38.81
  40.75
PV of cash for distribution, $m
 
  3,344
  3,924
  4,361
  4,712
  4,954
  5,068
  5,049
  4,901
  4,637
  4,277
  3,821
  3,355
  2,873
  2,399
  1,952
  1,548
  1,196
  899
  658
  468
  323
  216
  140
  88
  53
  31
  18
  10
  5
  2
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

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 55.4
Price to Sales 1.6
Price to Book 4.2
Price to Tangible Book
Price to Cash Flow 75.1
Price to Free Cash Flow -35.4
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 $9116 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 39.4% 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 9.9%, 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 26.4%.

Life of production assets of 21.1 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 3.1%. 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 - $3502 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 $7.3 billion.


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COMPANY NEWS

▶ 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]
▶ Ball Corporation Declares Quarterly Dividend   [Jan-25-17 04:15PM  PR Newswire]
▶ Ball to Announce Fourth Quarter Earnings on Feb. 2, 2017   [Dec-29-16 04:10PM  PR Newswire]
▶ Ball Corporation (BLL): Are Hedge Funds Right About This Stock?   [Dec-07-16 06:11AM  at Insider Monkey]
Stock chart of BLL Financial statements of BLL Annual reports 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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