Intrinsic value of Anheuser-Busch InBev ADR - BUD

Previous Close

$125.72

  Intrinsic Value

$500.43

stock screener

  Rating & Target

str. buy

+298%

  Value-price divergence*

+410%

Previous close

$125.72

 
Intrinsic value

$500.43

 
Up/down potential

+298%

 
Rating

str. buy

 
Value-price divergence*

+410%

*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 212.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  4.39
  34.10
  31.19
  28.57
  26.21
  24.09
  22.18
  20.46
  18.92
  17.53
  16.27
  15.15
  14.13
  13.22
  12.40
  11.66
  10.99
  10.39
  9.85
  9.37
  8.93
  8.54
  8.18
  7.87
  7.58
  7.32
  7.09
  6.88
  6.69
  6.52
  6.37
Revenue, $m
  45,517
  61,038
  80,076
  102,955
  129,943
  161,250
  197,020
  237,340
  282,241
  331,709
  385,691
  444,109
  506,870
  573,872
  645,014
  720,204
  799,365
  882,437
  969,384
  1,060,194
  1,154,880
  1,253,482
  1,356,068
  1,462,732
  1,573,594
  1,688,800
  1,808,521
  1,932,950
  2,062,306
  2,196,829
  2,336,781
Variable operating expenses, $m
 
  36,911
  44,165
  52,883
  63,167
  75,096
  88,726
  104,089
  121,198
  140,047
  160,617
  169,223
  193,138
  218,668
  245,776
  274,426
  304,590
  336,243
  369,374
  403,976
  440,055
  477,626
  516,716
  557,359
  599,602
  643,500
  689,118
  736,530
  785,820
  837,079
  890,406
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
  36,911
  44,165
  52,883
  63,167
  75,096
  88,726
  104,089
  121,198
  140,047
  160,617
  169,223
  193,138
  218,668
  245,776
  274,426
  304,590
  336,243
  369,374
  403,976
  440,055
  477,626
  516,716
  557,359
  599,602
  643,500
  689,118
  736,530
  785,820
  837,079
  890,406
Operating income, $m
  12,882
  24,127
  35,911
  50,072
  66,776
  86,154
  108,294
  133,251
  161,043
  191,661
  225,074
  274,886
  313,733
  355,204
  399,238
  445,778
  494,775
  546,194
  600,011
  656,218
  714,825
  775,856
  839,352
  905,373
  973,993
  1,045,300
  1,119,403
  1,196,420
  1,276,486
  1,359,750
  1,446,375
EBITDA, $m
  16,359
  40,478
  53,103
  68,275
  86,173
  106,934
  130,656
  157,395
  187,171
  219,976
  255,775
  294,516
  336,136
  380,569
  427,748
  477,611
  530,107
  585,198
  642,857
  703,079
  765,870
  831,260
  899,291
  970,026
  1,043,545
  1,119,945
  1,199,339
  1,281,856
  1,367,640
  1,456,850
  1,549,661
Interest expense (income), $m
  3,279
  4,330
  6,660
  9,499
  12,911
  16,936
  21,605
  26,940
  32,954
  39,650
  47,028
  55,078
  63,791
  73,151
  83,144
  93,754
  104,968
  116,774
  129,163
  142,130
  155,674
  169,795
  184,501
  199,800
  215,708
  232,242
  249,424
  267,279
  285,836
  305,129
  325,191
Earnings before tax, $m
  4,334
  19,797
  29,251
  40,572
  53,865
  69,218
  86,689
  106,311
  128,089
  152,011
  178,046
  219,808
  249,942
  282,053
  316,094
  352,024
  389,808
  429,420
  470,847
  514,088
  559,151
  606,061
  654,852
  705,573
  758,284
  813,058
  869,979
  929,141
  990,649
  1,054,622
  1,121,184
Tax expense, $m
  1,613
  5,345
  7,898
  10,955
  14,544
  18,689
  23,406
  28,704
  34,584
  41,043
  48,073
  59,348
  67,484
  76,154
  85,345
  95,046
  105,248
  115,943
  127,129
  138,804
  150,971
  163,636
  176,810
  190,505
  204,737
  219,526
  234,894
  250,868
  267,475
  284,748
  302,720
Net income, $m
  1,241
  14,452
  21,353
  29,618
  39,322
  50,529
  63,283
  77,607
  93,505
  110,968
  129,974
  160,460
  182,457
  205,899
  230,749
  256,978
  284,560
  313,477
  343,719
  375,284
  408,180
  442,424
  478,042
  515,068
  553,548
  593,533
  635,085
  678,273
  723,174
  769,874
  818,464

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
  328,163
  430,517
  553,520
  698,619
  866,934
  1,059,248
  1,276,022
  1,517,426
  1,783,379
  2,073,605
  2,387,685
  2,725,110
  3,085,334
  3,467,817
  3,872,066
  4,297,661
  4,744,286
  5,211,744
  5,699,967
  6,209,030
  6,739,150
  7,290,688
  7,864,150
  8,460,183
  9,079,570
  9,723,229
  10,392,204
  11,087,667
  11,810,909
  12,563,340
Adjusted assets (=assets-cash), $m
  244,143
  328,163
  430,517
  553,520
  698,619
  866,934
  1,059,248
  1,276,022
  1,517,426
  1,783,379
  2,073,605
  2,387,685
  2,725,110
  3,085,334
  3,467,817
  3,872,066
  4,297,661
  4,744,286
  5,211,744
  5,699,967
  6,209,030
  6,739,150
  7,290,688
  7,864,150
  8,460,183
  9,079,570
  9,723,229
  10,392,204
  11,087,667
  11,810,909
  12,563,340
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
  80,937
  106,181
  136,518
  172,305
  213,817
  261,249
  314,713
  374,252
  439,845
  511,426
  588,889
  672,110
  760,954
  855,289
  954,991
  1,059,958
  1,170,112
  1,285,404
  1,405,817
  1,531,370
  1,662,117
  1,798,146
  1,939,583
  2,086,586
  2,239,349
  2,398,098
  2,563,092
  2,734,618
  2,912,995
  3,098,572
Working capital, $m
  2,945
  -3,357
  -4,404
  -5,663
  -7,147
  -8,869
  -10,836
  -13,054
  -15,523
  -18,244
  -21,213
  -24,426
  -27,878
  -31,563
  -35,476
  -39,611
  -43,965
  -48,534
  -53,316
  -58,311
  -63,518
  -68,942
  -74,584
  -80,450
  -86,548
  -92,884
  -99,469
  -106,312
  -113,427
  -120,826
  -128,523
Total debt, $m
  122,743
  175,260
  249,978
  339,771
  445,693
  568,563
  708,952
  867,197
  1,043,422
  1,237,568
  1,449,433
  1,678,711
  1,925,031
  2,187,995
  2,467,207
  2,762,309
  3,072,994
  3,399,030
  3,740,274
  4,096,677
  4,468,293
  4,855,280
  5,257,903
  5,676,531
  6,111,635
  6,563,787
  7,033,658
  7,522,010
  8,029,698
  8,557,664
  9,106,939
Total liabilities, $m
  187,042
  239,559
  314,277
  404,070
  509,992
  632,862
  773,251
  931,496
  1,107,721
  1,301,867
  1,513,732
  1,743,010
  1,989,330
  2,252,294
  2,531,506
  2,826,608
  3,137,293
  3,463,329
  3,804,573
  4,160,976
  4,532,592
  4,919,579
  5,322,202
  5,740,830
  6,175,934
  6,628,086
  7,097,957
  7,586,309
  8,093,997
  8,621,963
  9,171,238
Total equity, $m
  71,339
  88,604
  116,240
  149,450
  188,627
  234,072
  285,997
  344,526
  409,705
  481,512
  559,873
  644,675
  735,780
  833,040
  936,311
  1,045,458
  1,160,368
  1,280,957
  1,407,171
  1,538,991
  1,676,438
  1,819,570
  1,968,486
  2,123,321
  2,284,249
  2,451,484
  2,625,272
  2,805,895
  2,993,670
  3,188,945
  3,392,102
Total liabilities and equity, $m
  258,381
  328,163
  430,517
  553,520
  698,619
  866,934
  1,059,248
  1,276,022
  1,517,426
  1,783,379
  2,073,605
  2,387,685
  2,725,110
  3,085,334
  3,467,817
  3,872,066
  4,297,661
  4,744,286
  5,211,744
  5,699,967
  6,209,030
  6,739,149
  7,290,688
  7,864,151
  8,460,183
  9,079,570
  9,723,229
  10,392,204
  11,087,667
  11,810,908
  12,563,340
Debt-to-equity ratio
  1.721
  1.980
  2.150
  2.270
  2.360
  2.430
  2.480
  2.520
  2.550
  2.570
  2.590
  2.600
  2.620
  2.630
  2.640
  2.640
  2.650
  2.650
  2.660
  2.660
  2.670
  2.670
  2.670
  2.670
  2.680
  2.680
  2.680
  2.680
  2.680
  2.680
  2.680
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
  14,452
  21,353
  29,618
  39,322
  50,529
  63,283
  77,607
  93,505
  110,968
  129,974
  160,460
  182,457
  205,899
  230,749
  256,978
  284,560
  313,477
  343,719
  375,284
  408,180
  442,424
  478,042
  515,068
  553,548
  593,533
  635,085
  678,273
  723,174
  769,874
  818,464
Depreciation, amort., depletion, $m
  3,477
  16,351
  17,193
  18,204
  19,397
  20,781
  22,362
  24,144
  26,128
  28,315
  30,701
  19,630
  22,404
  25,365
  28,510
  31,833
  35,332
  39,004
  42,847
  46,861
  51,046
  55,404
  59,938
  64,653
  69,553
  74,645
  79,937
  85,436
  91,154
  97,100
  103,286
Funds from operations, $m
  3,879
  30,803
  38,546
  47,822
  58,718
  71,309
  85,645
  101,751
  119,634
  139,283
  160,675
  180,089
  204,861
  231,264
  259,258
  288,811
  319,891
  352,480
  386,565
  422,145
  459,226
  497,828
  537,980
  579,721
  623,100
  668,178
  715,021
  763,709
  814,328
  866,974
  921,750
Change in working capital, $m
  -6,231
  -854
  -1,047
  -1,258
  -1,484
  -1,722
  -1,967
  -2,218
  -2,470
  -2,721
  -2,969
  -3,213
  -3,452
  -3,685
  -3,913
  -4,135
  -4,354
  -4,569
  -4,782
  -4,995
  -5,208
  -5,423
  -5,642
  -5,867
  -6,097
  -6,336
  -6,585
  -6,844
  -7,115
  -7,399
  -7,697
Cash from operations, $m
  10,110
  31,657
  39,593
  49,080
  60,203
  73,031
  87,612
  103,968
  122,103
  142,004
  163,644
  183,302
  208,313
  234,949
  263,171
  292,946
  324,245
  357,049
  391,348
  427,139
  464,434
  503,251
  543,622
  585,587
  629,198
  674,514
  721,606
  770,553
  821,443
  874,372
  929,447
Maintenance CAPEX, $m
  0
  -2,012
  -2,698
  -3,539
  -4,551
  -5,743
  -7,127
  -8,708
  -10,490
  -12,475
  -14,662
  -17,048
  -19,630
  -22,404
  -25,365
  -28,510
  -31,833
  -35,332
  -39,004
  -42,847
  -46,861
  -51,046
  -55,404
  -59,938
  -64,653
  -69,553
  -74,645
  -79,937
  -85,436
  -91,154
  -97,100
New CAPEX, $m
  -4,979
  -20,577
  -25,244
  -30,337
  -35,787
  -41,513
  -47,432
  -53,464
  -59,539
  -65,594
  -71,580
  -77,463
  -83,221
  -88,844
  -94,334
  -99,702
  -104,967
  -110,154
  -115,292
  -120,413
  -125,553
  -130,747
  -136,029
  -141,436
  -147,003
  -152,763
  -158,749
  -164,993
  -171,526
  -178,378
  -185,577
Cash from investing activities, $m
  -60,077
  -22,589
  -27,942
  -33,876
  -40,338
  -47,256
  -54,559
  -62,172
  -70,029
  -78,069
  -86,242
  -94,511
  -102,851
  -111,248
  -119,699
  -128,212
  -136,800
  -145,486
  -154,296
  -163,260
  -172,414
  -181,793
  -191,433
  -201,374
  -211,656
  -222,316
  -233,394
  -244,930
  -256,962
  -269,532
  -282,677
Free cash flow, $m
  -49,967
  9,068
  11,651
  15,204
  19,865
  25,775
  33,053
  41,795
  52,074
  63,935
  77,402
  88,791
  105,462
  123,701
  143,472
  164,734
  187,445
  211,563
  237,052
  263,879
  292,020
  321,459
  352,189
  384,213
  417,542
  452,198
  488,211
  525,623
  564,480
  604,841
  646,771
Issuance/(repayment) of debt, $m
  62,675
  61,319
  74,718
  89,792
  105,922
  122,870
  140,389
  158,245
  176,225
  194,146
  211,865
  229,278
  246,320
  262,964
  279,213
  295,101
  310,685
  326,037
  341,244
  356,403
  371,616
  386,987
  402,623
  418,628
  435,104
  452,153
  469,871
  488,352
  507,688
  527,967
  549,275
Issuance/(repurchase) of shares, $m
  0
  8,249
  6,283
  3,593
  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  
  59,181
  69,568
  81,001
  93,385
  105,922
  122,870
  140,389
  158,245
  176,225
  194,146
  211,865
  229,278
  246,320
  262,964
  279,213
  295,101
  310,685
  326,037
  341,244
  356,403
  371,616
  386,987
  402,623
  418,628
  435,104
  452,153
  469,871
  488,352
  507,688
  527,967
  549,275
Total cash flow (excl. dividends), $m
  9,935
  78,635
  92,652
  108,589
  125,788
  148,645
  173,442
  200,041
  228,299
  258,081
  289,267
  318,069
  351,782
  386,665
  422,685
  459,836
  498,130
  537,600
  578,296
  620,282
  663,636
  708,446
  754,812
  802,840
  852,646
  904,351
  958,082
  1,013,974
  1,072,168
  1,132,808
  1,196,046
Retained Cash Flow (-), $m
  -29,202
  -22,701
  -27,636
  -33,211
  -39,177
  -45,445
  -51,925
  -58,529
  -65,179
  -71,807
  -78,361
  -84,801
  -91,105
  -97,260
  -103,271
  -109,147
  -114,911
  -120,589
  -126,213
  -131,820
  -137,447
  -143,132
  -148,915
  -154,835
  -160,929
  -167,235
  -173,788
  -180,623
  -187,775
  -195,275
  -203,156
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
 
  61,371
  65,016
  75,378
  86,611
  103,200
  121,518
  141,512
  163,120
  186,273
  210,906
  233,268
  260,678
  289,404
  319,414
  350,689
  383,219
  417,011
  452,082
  488,462
  526,189
  565,314
  605,897
  648,006
  691,717
  737,116
  784,294
  833,351
  884,393
  937,532
  992,889
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
 
  56,355
  54,378
  56,924
  58,509
  61,749
  63,722
  64,306
  63,470
  61,275
  57,864
  52,615
  47,608
  42,109
  36,398
  30,735
  25,340
  20,388
  15,996
  12,229
  9,102
  6,589
  4,635
  3,164
  2,094
  1,342
  832
  498
  287
  159
  85
Current shareholders' claim on cash, %
  100
  96.0
  93.7
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8
  92.8

Anheuser Busch Inbev NV (AB InBev) is a Belgium-based company engaged in the brewers industry. The Company owns a portfolio of over 200 beer brands. The Company's brand portfolio includes global brands, such as Budweiser, Corona and Stella Artois; international brands, including Beck's, Leffe and Hoegaarden, and local champions, such as Bud Light, Skol, Brahma, Antarctica, Quilmes, Victoria, Modelo Especial, Michelob Ultra, Harbin, Sedrin, Klinskoye, Sibirskaya Korona, Chernigivske, Cass and Jupiler. The Company's soft drinks business consists of both own production and agreements with PepsiCo related to bottling and distribution arrangements between its various subsidiaries and PepsiCo. Ambev, which is a subsidiary of the Company, is a PepsiCo bottler. Brands that are distributed under these agreements are Pepsi, 7UP and Gatorade.

FINANCIAL RATIOS  of  Anheuser-Busch InBev ADR (BUD)

Valuation Ratios
P/E Ratio 33
Price to Sales 0.9
Price to Book 0.6
Price to Tangible Book
Price to Cash Flow 4.1
Price to Free Cash Flow 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 34.1% 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 1693.45 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 $212.9 billion.

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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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