Intrinsic value of Anheuser-Busch InBev ADR - BUD

Previous Close

$116.30

  Intrinsic Value

$578.01

stock screener

  Rating & Target

str. buy

+397%

  Value-price divergence*

-25%

Previous close

$116.30

 
Intrinsic value

$578.01

 
Up/down potential

+397%

 
Rating

str. buy

 
Value-price divergence*

-25%

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

We calculate the intrinsic value of BUD 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 196.8

 

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, %
  4.39
  37.50
  34.25
  31.33
  28.69
  26.32
  24.19
  22.27
  20.54
  18.99
  17.59
  16.33
  15.20
  14.18
  13.26
  12.43
  11.69
  11.02
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
Revenue, $m
  45,517
  62,586
  84,022
  110,341
  142,001
  179,380
  222,774
  272,390
  328,351
  390,706
  459,436
  534,471
  615,704
  703,005
  796,231
  895,241
  999,908
  1,110,121
  1,225,797
  1,346,882
  1,473,358
  1,605,242
  1,742,588
  1,885,489
  2,034,074
  2,188,509
  2,348,997
  2,515,772
  2,689,105
  2,869,299
  3,056,687
Variable operating expenses, $m
 
  37,501
  45,669
  55,698
  67,761
  82,004
  98,539
  117,445
  138,768
  162,528
  188,716
  203,655
  234,608
  267,873
  303,395
  341,122
  381,005
  423,000
  467,077
  513,215
  561,408
  611,661
  663,995
  718,446
  775,063
  833,909
  895,061
  958,609
  1,024,655
  1,093,316
  1,164,719
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
  32,635
  37,501
  45,669
  55,698
  67,761
  82,004
  98,539
  117,445
  138,768
  162,528
  188,716
  203,655
  234,608
  267,873
  303,395
  341,122
  381,005
  423,000
  467,077
  513,215
  561,408
  611,661
  663,995
  718,446
  775,063
  833,909
  895,061
  958,609
  1,024,655
  1,093,316
  1,164,719
Operating income, $m
  12,882
  25,085
  38,353
  54,644
  74,240
  97,376
  124,235
  154,945
  189,583
  228,178
  270,719
  330,816
  381,097
  435,132
  492,835
  554,119
  618,904
  687,121
  758,720
  833,667
  911,950
  993,581
  1,078,593
  1,167,043
  1,259,012
  1,354,601
  1,453,936
  1,557,163
  1,664,450
  1,775,983
  1,891,968
EBITDA, $m
  16,359
  41,504
  55,720
  73,174
  94,169
  118,958
  147,735
  180,638
  217,750
  259,101
  304,680
  354,440
  408,311
  466,205
  528,029
  593,689
  663,100
  736,189
  812,900
  893,199
  977,073
  1,064,533
  1,155,616
  1,250,382
  1,348,918
  1,451,333
  1,557,762
  1,668,360
  1,783,308
  1,902,806
  2,027,074
Interest expense (income), $m
  3,279
  4,330
  6,891
  10,088
  14,013
  18,735
  24,309
  30,781
  38,181
  46,527
  55,826
  66,077
  77,268
  89,383
  102,403
  116,306
  131,073
  146,683
  163,120
  180,372
  198,430
  217,293
  236,962
  257,446
  278,758
  300,918
  323,950
  347,885
  372,758
  398,609
  425,483
Earnings before tax, $m
  4,334
  20,755
  31,462
  44,556
  60,227
  78,641
  99,926
  124,164
  151,402
  181,651
  214,893
  264,740
  303,829
  345,749
  390,433
  437,813
  487,831
  540,438
  595,600
  653,295
  713,520
  776,288
  841,631
  909,597
  980,253
  1,053,683
  1,129,986
  1,209,278
  1,291,691
  1,377,373
  1,466,485
Tax expense, $m
  1,613
  5,604
  8,495
  12,030
  16,261
  21,233
  26,980
  33,524
  40,879
  49,046
  58,021
  71,480
  82,034
  93,352
  105,417
  118,209
  131,714
  145,918
  160,812
  176,390
  192,650
  209,598
  227,240
  245,591
  264,668
  284,494
  305,096
  326,505
  348,757
  371,891
  395,951
Net income, $m
  1,241
  15,151
  22,967
  32,526
  43,966
  57,408
  72,946
  90,640
  110,524
  132,605
  156,872
  193,260
  221,795
  252,397
  285,016
  319,603
  356,117
  394,520
  434,788
  476,905
  520,870
  566,690
  614,391
  664,006
  715,585
  769,188
  824,889
  882,773
  942,935
  1,005,483
  1,070,534

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  14,238
  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
  258,381
  336,483
  451,729
  593,233
  763,446
  964,410
  1,197,709
  1,464,461
  1,765,330
  2,100,569
  2,470,084
  2,873,499
  3,310,238
  3,779,595
  4,280,809
  4,813,126
  5,375,851
  5,968,394
  6,590,306
  7,241,301
  7,921,279
  8,630,332
  9,368,753
  10,137,038
  10,935,883
  11,766,180
  12,629,014
  13,525,655
  14,457,555
  15,426,338
  16,433,800
Adjusted assets (=assets-cash), $m
  244,143
  336,483
  451,729
  593,233
  763,446
  964,410
  1,197,709
  1,464,461
  1,765,330
  2,100,569
  2,470,084
  2,873,499
  3,310,238
  3,779,595
  4,280,809
  4,813,126
  5,375,851
  5,968,394
  6,590,306
  7,241,301
  7,921,279
  8,630,332
  9,368,753
  10,137,038
  10,935,883
  11,766,180
  12,629,014
  13,525,655
  14,457,555
  15,426,338
  16,433,800
Revenue / Adjusted assets
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
  0.186
Average production assets, $m
  60,360
  82,989
  111,413
  146,313
  188,293
  237,858
  295,398
  361,189
  435,394
  518,076
  609,212
  708,708
  816,424
  932,184
  1,055,802
  1,187,090
  1,325,878
  1,472,021
  1,625,407
  1,785,966
  1,953,673
  2,128,551
  2,310,672
  2,500,159
  2,697,182
  2,901,964
  3,114,769
  3,335,913
  3,565,753
  3,804,690
  4,053,167
Working capital, $m
  2,945
  -3,442
  -4,621
  -6,069
  -7,810
  -9,866
  -12,253
  -14,981
  -18,059
  -21,489
  -25,269
  -29,396
  -33,864
  -38,665
  -43,793
  -49,238
  -54,995
  -61,057
  -67,419
  -74,079
  -81,035
  -88,288
  -95,842
  -103,702
  -111,874
  -120,368
  -129,195
  -138,367
  -147,901
  -157,811
  -168,118
Total debt, $m
  122,743
  181,334
  265,463
  368,761
  493,017
  639,720
  810,029
  1,004,758
  1,224,392
  1,469,116
  1,738,862
  2,033,355
  2,352,174
  2,694,805
  3,060,692
  3,449,283
  3,860,072
  4,292,629
  4,746,624
  5,221,851
  5,718,235
  6,235,843
  6,774,891
  7,335,739
  7,918,896
  8,525,012
  9,154,881
  9,809,429
  10,489,716
  11,196,928
  11,932,375
Total liabilities, $m
  187,042
  245,633
  329,762
  433,060
  557,316
  704,019
  874,328
  1,069,057
  1,288,691
  1,533,415
  1,803,161
  2,097,654
  2,416,473
  2,759,104
  3,124,991
  3,513,582
  3,924,371
  4,356,928
  4,810,923
  5,286,150
  5,782,534
  6,300,142
  6,839,190
  7,400,038
  7,983,195
  8,589,311
  9,219,180
  9,873,728
  10,554,015
  11,261,227
  11,996,674
Total equity, $m
  71,339
  90,850
  121,967
  160,173
  206,130
  260,391
  323,382
  395,405
  476,639
  567,154
  666,923
  775,845
  893,764
  1,020,491
  1,155,819
  1,299,544
  1,451,480
  1,611,466
  1,779,383
  1,955,151
  2,138,745
  2,330,190
  2,529,563
  2,737,000
  2,952,688
  3,176,869
  3,409,834
  3,651,927
  3,903,540
  4,165,111
  4,437,126
Total liabilities and equity, $m
  258,381
  336,483
  451,729
  593,233
  763,446
  964,410
  1,197,710
  1,464,462
  1,765,330
  2,100,569
  2,470,084
  2,873,499
  3,310,237
  3,779,595
  4,280,810
  4,813,126
  5,375,851
  5,968,394
  6,590,306
  7,241,301
  7,921,279
  8,630,332
  9,368,753
  10,137,038
  10,935,883
  11,766,180
  12,629,014
  13,525,655
  14,457,555
  15,426,338
  16,433,800
Debt-to-equity ratio
  1.721
  2.000
  2.180
  2.300
  2.390
  2.460
  2.500
  2.540
  2.570
  2.590
  2.610
  2.620
  2.630
  2.640
  2.650
  2.650
  2.660
  2.660
  2.670
  2.670
  2.670
  2.680
  2.680
  2.680
  2.680
  2.680
  2.680
  2.690
  2.690
  2.690
  2.690
Adjusted equity ratio
  0.243
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270
  0.270

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,241
  15,151
  22,967
  32,526
  43,966
  57,408
  72,946
  90,640
  110,524
  132,605
  156,872
  193,260
  221,795
  252,397
  285,016
  319,603
  356,117
  394,520
  434,788
  476,905
  520,870
  566,690
  614,391
  664,006
  715,585
  769,188
  824,889
  882,773
  942,935
  1,005,483
  1,070,534
Depreciation, amort., depletion, $m
  3,477
  16,420
  17,367
  18,530
  19,930
  21,582
  23,500
  25,693
  28,166
  30,922
  33,960
  23,624
  27,214
  31,073
  35,193
  39,570
  44,196
  49,067
  54,180
  59,532
  65,122
  70,952
  77,022
  83,339
  89,906
  96,732
  103,826
  111,197
  118,858
  126,823
  135,106
Funds from operations, $m
  3,879
  31,571
  40,334
  51,056
  63,895
  78,990
  96,446
  116,333
  138,690
  163,528
  190,832
  216,883
  249,009
  283,470
  320,209
  359,173
  400,313
  443,587
  488,968
  536,438
  585,992
  637,642
  691,413
  747,345
  805,491
  865,921
  928,715
  993,970
  1,061,793
  1,132,306
  1,205,640
Change in working capital, $m
  -6,231
  -939
  -1,179
  -1,448
  -1,741
  -2,056
  -2,387
  -2,729
  -3,078
  -3,429
  -3,780
  -4,127
  -4,468
  -4,802
  -5,127
  -5,446
  -5,757
  -6,062
  -6,362
  -6,660
  -6,956
  -7,254
  -7,554
  -7,860
  -8,172
  -8,494
  -8,827
  -9,173
  -9,533
  -9,911
  -10,306
Cash from operations, $m
  10,110
  32,510
  41,513
  52,504
  65,637
  81,046
  98,832
  119,062
  141,768
  166,957
  194,612
  221,010
  253,477
  288,271
  325,337
  364,619
  406,069
  449,649
  495,330
  543,097
  592,948
  644,896
  698,967
  755,204
  813,663
  874,414
  937,542
  1,003,143
  1,071,327
  1,142,216
  1,215,946
Maintenance CAPEX, $m
  0
  -2,012
  -2,766
  -3,714
  -4,877
  -6,276
  -7,929
  -9,847
  -12,040
  -14,513
  -17,269
  -20,307
  -23,624
  -27,214
  -31,073
  -35,193
  -39,570
  -44,196
  -49,067
  -54,180
  -59,532
  -65,122
  -70,952
  -77,022
  -83,339
  -89,906
  -96,732
  -103,826
  -111,197
  -118,858
  -126,823
New CAPEX, $m
  -4,979
  -22,629
  -28,424
  -34,900
  -41,981
  -49,565
  -57,540
  -65,791
  -74,205
  -82,682
  -91,136
  -99,497
  -107,715
  -115,760
  -123,618
  -131,288
  -138,788
  -146,143
  -153,386
  -160,559
  -167,707
  -174,878
  -182,121
  -189,487
  -197,024
  -204,781
  -212,806
  -221,144
  -229,840
  -238,937
  -248,476
Cash from investing activities, $m
  -60,077
  -24,641
  -31,190
  -38,614
  -46,858
  -55,841
  -65,469
  -75,638
  -86,245
  -97,195
  -108,405
  -119,804
  -131,339
  -142,974
  -154,691
  -166,481
  -178,358
  -190,339
  -202,453
  -214,739
  -227,239
  -240,000
  -253,073
  -266,509
  -280,363
  -294,687
  -309,538
  -324,970
  -341,037
  -357,795
  -375,299
Free cash flow, $m
  -49,967
  7,868
  10,323
  13,890
  18,779
  25,205
  33,364
  43,424
  55,523
  69,762
  86,207
  101,207
  122,138
  145,297
  170,646
  198,137
  227,711
  259,311
  292,877
  328,358
  365,709
  404,895
  445,894
  488,695
  533,301
  579,727
  628,004
  678,173
  730,289
  784,421
  840,647
Issuance/(repayment) of debt, $m
  62,675
  67,393
  84,129
  103,298
  124,256
  146,704
  170,309
  194,729
  219,634
  244,725
  269,746
  294,493
  318,819
  342,631
  365,887
  388,591
  410,789
  432,557
  453,996
  475,227
  496,384
  517,609
  539,048
  560,848
  583,157
  606,117
  629,869
  654,548
  680,287
  707,212
  735,447
Issuance/(repurchase) of shares, $m
  0
  9,796
  8,149
  5,680
  1,992
  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  
  59,181
  77,189
  92,278
  108,978
  126,248
  146,704
  170,309
  194,729
  219,634
  244,725
  269,746
  294,493
  318,819
  342,631
  365,887
  388,591
  410,789
  432,557
  453,996
  475,227
  496,384
  517,609
  539,048
  560,848
  583,157
  606,117
  629,869
  654,548
  680,287
  707,212
  735,447
Total cash flow (excl. dividends), $m
  9,935
  85,057
  102,602
  122,868
  145,027
  171,908
  203,672
  238,153
  275,157
  314,487
  355,953
  395,700
  440,957
  487,928
  536,533
  586,728
  638,500
  691,867
  746,873
  803,585
  862,093
  922,504
  984,942
  1,049,543
  1,116,457
  1,185,844
  1,257,873
  1,332,721
  1,410,576
  1,491,633
  1,576,094
Retained Cash Flow (-), $m
  -29,202
  -24,947
  -31,116
  -38,206
  -45,958
  -54,260
  -62,991
  -72,023
  -81,234
  -90,515
  -99,769
  -108,922
  -117,919
  -126,726
  -135,328
  -143,726
  -151,936
  -159,987
  -167,916
  -175,769
  -183,594
  -191,444
  -199,374
  -207,437
  -215,688
  -224,180
  -232,965
  -242,093
  -251,613
  -261,572
  -272,015
Prev. year cash balance distribution, $m
 
  5,436
  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
 
  65,546
  71,485
  84,662
  99,069
  117,648
  140,681
  166,130
  193,923
  223,972
  256,184
  286,778
  323,038
  361,201
  401,205
  443,002
  486,565
  531,881
  578,957
  627,816
  678,499
  731,060
  785,568
  842,106
  900,769
  961,664
  1,024,907
  1,090,628
  1,158,963
  1,230,061
  1,304,079
Discount rate, %
 
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
 
  60,189
  59,789
  63,935
  66,925
  70,394
  73,771
  75,493
  75,456
  73,676
  70,286
  64,685
  58,997
  52,555
  45,718
  38,825
  32,174
  26,004
  20,485
  15,718
  11,737
  8,521
  6,010
  4,112
  2,727
  1,751
  1,087
  651
  376
  209
  112
Current shareholders' claim on cash, %
  100
  94.9
  91.9
  90.4
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0
  90.0

Anheuser-Busch InBev SA/NV, a brewing company, engages in the production, distribution, and sale of beer, alcoholic beverages, and soft drinks worldwide. It offers a portfolio of approximately 200 beer brands, including Budweiser, Corona, Stella Artois, Beck’s, Leffe, Hoegaarden, Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Cass, and Jupiler. The company was founded in 1366 and is headquartered in Leuven, Belgium.

FINANCIAL RATIOS  of  Anheuser-Busch InBev ADR (BUD)

Valuation Ratios
P/E Ratio 181.2
Price to Sales 4.9
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 22.2
Price to Free Cash Flow 43.8
Growth Rates
Sales Growth Rate 4.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 4.8%
Cap. Spend. - 3 Yr. Gr. Rate 5.2%
Financial Strength
Quick Ratio 2
Current Ratio 0.4
LT Debt to Equity 159.7%
Total Debt to Equity 172.1%
Interest Coverage 2
Management Effectiveness
Return On Assets 1.7%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 6.2%
Return On Equity 2.2%
Return On Equity - 3 Yr. Avg. 12.8%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 60.9%
Gross Margin - 3 Yr. Avg. 60.6%
EBITDA Margin 24.4%
EBITDA Margin - 3 Yr. Avg. 35.4%
Operating Margin 28.3%
Oper. Margin - 3 Yr. Avg. 31.1%
Pre-Tax Margin 9.5%
Pre-Tax Margin - 3 Yr. Avg. 22.5%
Net Profit Margin 2.7%
Net Profit Margin - 3 Yr. Avg. 13.8%
Effective Tax Rate 37.2%
Eff/ Tax Rate - 3 Yr. Avg. 25.4%
Payout Ratio 680.9%

BUD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BUD stock intrinsic value calculation we used $45517 million for the last fiscal year's total revenue generated by Anheuser-Busch InBev ADR. The default revenue input number comes from 2016 income statement of Anheuser-Busch InBev 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 BUD stock valuation model: a) initial revenue growth rate of 37.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8.9%, whose default value for BUD is calculated based on our internal credit rating of Anheuser-Busch InBev 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 Anheuser-Busch InBev 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 BUD stock the variable cost ratio is equal to 68.1%.

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 BUD 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 3.8% for Anheuser-Busch InBev ADR.

Corporate tax rate of 27% is the nominal tax rate for Anheuser-Busch InBev 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 BUD 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 BUD are equal to 132.6%.

Life of production assets of 46.3 years is the average useful life of capital assets used in Anheuser-Busch InBev 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 BUD is equal to -5.5%. 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 - $71339 million for Anheuser-Busch InBev 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 1692.47 million for Anheuser-Busch InBev 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 Anheuser-Busch InBev ADR at the current share price and the inputted number of shares is $196.8 billion.

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Stock chart of BUD Financial statements of BUD
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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