Intrinsic value of Blackstone Group - BX

Previous Close

$33.17

  Intrinsic Value

$105.06

stock screener

  Rating & Target

str. buy

+217%

  Value-price divergence*

-103%

Previous close

$33.17

 
Intrinsic value

$105.06

 
Up/down potential

+217%

 
Rating

str. buy

 
Value-price divergence*

-103%

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

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

We calculate the intrinsic value of BX 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 39.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.31
  29.90
  27.41
  25.17
  23.15
  21.34
  19.70
  18.23
  16.91
  15.72
  14.65
  13.68
  12.81
  12.03
  11.33
  10.70
  10.13
  9.61
  9.15
  8.74
  8.36
  8.03
  7.72
  7.45
  7.21
  6.99
  6.79
  6.61
  6.45
  6.30
  6.17
Revenue, $m
  5,126
  6,659
  8,484
  10,619
  13,078
  15,868
  18,995
  22,458
  26,255
  30,382
  34,832
  39,598
  44,672
  50,047
  55,717
  61,677
  67,923
  74,453
  81,267
  88,368
  95,759
  103,445
  111,436
  119,740
  128,370
  137,338
  146,660
  156,353
  166,434
  176,925
  187,846
Variable operating expenses, $m
 
  4,377
  5,529
  6,877
  8,430
  10,192
  12,166
  14,353
  16,751
  19,357
  22,167
  25,005
  28,209
  31,603
  35,184
  38,947
  42,891
  47,014
  51,317
  55,801
  60,468
  65,322
  70,368
  75,612
  81,061
  86,724
  92,611
  98,731
  105,097
  111,722
  118,618
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
  2,929
  4,377
  5,529
  6,877
  8,430
  10,192
  12,166
  14,353
  16,751
  19,357
  22,167
  25,005
  28,209
  31,603
  35,184
  38,947
  42,891
  47,014
  51,317
  55,801
  60,468
  65,322
  70,368
  75,612
  81,061
  86,724
  92,611
  98,731
  105,097
  111,722
  118,618
Operating income, $m
  2,197
  2,282
  2,955
  3,742
  4,648
  5,676
  6,828
  8,105
  9,504
  11,025
  12,665
  14,593
  16,463
  18,444
  20,534
  22,730
  25,032
  27,439
  29,950
  32,567
  35,290
  38,123
  41,068
  44,129
  47,309
  50,614
  54,049
  57,621
  61,337
  65,203
  69,228
EBITDA, $m
  2,280
  2,476
  3,154
  3,948
  4,862
  5,900
  7,062
  8,350
  9,762
  11,296
  12,951
  14,723
  16,609
  18,608
  20,716
  22,932
  25,254
  27,682
  30,216
  32,856
  35,603
  38,461
  41,432
  44,520
  47,729
  51,063
  54,529
  58,133
  61,881
  65,781
  69,842
Interest expense (income), $m
  152
  310
  516
  763
  1,052
  1,385
  1,763
  2,186
  2,655
  3,168
  3,727
  4,329
  4,974
  5,661
  6,389
  7,156
  7,963
  8,808
  9,692
  10,614
  11,575
  12,575
  13,616
  14,697
  15,821
  16,989
  18,203
  19,465
  20,776
  22,141
  23,561
Earnings before tax, $m
  2,382
  1,972
  2,438
  2,978
  3,595
  4,291
  5,066
  5,919
  6,850
  7,857
  8,938
  10,264
  11,489
  12,783
  14,145
  15,574
  17,069
  18,631
  20,258
  21,953
  23,715
  25,548
  27,452
  29,431
  31,488
  33,625
  35,846
  38,157
  40,560
  43,062
  45,667
Tax expense, $m
  132
  532
  658
  804
  971
  1,159
  1,368
  1,598
  1,849
  2,121
  2,413
  2,771
  3,102
  3,451
  3,819
  4,205
  4,609
  5,030
  5,470
  5,927
  6,403
  6,898
  7,412
  7,946
  8,502
  9,079
  9,679
  10,302
  10,951
  11,627
  12,330
Net income, $m
  1,039
  1,439
  1,780
  2,174
  2,625
  3,132
  3,698
  4,321
  5,000
  5,735
  6,525
  7,493
  8,387
  9,332
  10,326
  11,369
  12,461
  13,600
  14,788
  16,025
  17,312
  18,650
  20,040
  21,485
  22,986
  24,546
  26,168
  27,854
  29,609
  31,435
  33,337

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,842
  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
  26,403
  30,544
  38,917
  48,712
  59,989
  72,789
  87,131
  103,017
  120,437
  139,368
  159,781
  181,643
  204,918
  229,575
  255,584
  282,922
  311,573
  341,527
  372,786
  405,358
  439,260
  474,521
  511,175
  549,268
  588,853
  629,992
  672,753
  717,214
  763,459
  811,581
  861,679
Adjusted assets (=assets-cash), $m
  23,561
  30,544
  38,917
  48,712
  59,989
  72,789
  87,131
  103,017
  120,437
  139,368
  159,781
  181,643
  204,918
  229,575
  255,584
  282,922
  311,573
  341,527
  372,786
  405,358
  439,260
  474,521
  511,175
  549,268
  588,853
  629,992
  672,753
  717,214
  763,459
  811,581
  861,679
Revenue / Adjusted assets
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
  0.218
Average production assets, $m
  436
  566
  721
  903
  1,112
  1,349
  1,615
  1,909
  2,232
  2,582
  2,961
  3,366
  3,797
  4,254
  4,736
  5,243
  5,773
  6,328
  6,908
  7,511
  8,139
  8,793
  9,472
  10,178
  10,911
  11,674
  12,466
  13,290
  14,147
  15,039
  15,967
Working capital, $m
  0
  -3,596
  -4,581
  -5,734
  -7,062
  -8,569
  -10,257
  -12,127
  -14,178
  -16,406
  -18,809
  -21,383
  -24,123
  -27,026
  -30,087
  -33,306
  -36,678
  -40,205
  -43,884
  -47,719
  -51,710
  -55,861
  -60,176
  -64,660
  -69,320
  -74,163
  -79,196
  -84,430
  -89,874
  -95,539
  -101,437
Total debt, $m
  8,942
  14,749
  21,807
  30,064
  39,571
  50,361
  62,451
  75,844
  90,529
  106,487
  123,696
  142,125
  161,746
  182,532
  204,457
  227,503
  251,656
  276,907
  303,259
  330,716
  359,296
  389,021
  419,921
  452,033
  485,403
  520,083
  556,131
  593,611
  632,596
  673,163
  715,395
Total liabilities, $m
  19,942
  25,749
  32,807
  41,064
  50,571
  61,361
  73,451
  86,844
  101,529
  117,487
  134,696
  153,125
  172,746
  193,532
  215,457
  238,503
  262,656
  287,907
  314,259
  341,716
  370,296
  400,021
  430,921
  463,033
  496,403
  531,083
  567,131
  604,611
  643,596
  684,163
  726,395
Total equity, $m
  6,461
  4,795
  6,110
  7,648
  9,418
  11,428
  13,680
  16,174
  18,909
  21,881
  25,086
  28,518
  32,172
  36,043
  40,127
  44,419
  48,917
  53,620
  58,527
  63,641
  68,964
  74,500
  80,254
  86,235
  92,450
  98,909
  105,622
  112,603
  119,863
  127,418
  135,284
Total liabilities and equity, $m
  26,403
  30,544
  38,917
  48,712
  59,989
  72,789
  87,131
  103,018
  120,438
  139,368
  159,782
  181,643
  204,918
  229,575
  255,584
  282,922
  311,573
  341,527
  372,786
  405,357
  439,260
  474,521
  511,175
  549,268
  588,853
  629,992
  672,753
  717,214
  763,459
  811,581
  861,679
Debt-to-equity ratio
  1.384
  3.080
  3.570
  3.930
  4.200
  4.410
  4.570
  4.690
  4.790
  4.870
  4.930
  4.980
  5.030
  5.060
  5.100
  5.120
  5.140
  5.160
  5.180
  5.200
  5.210
  5.220
  5.230
  5.240
  5.250
  5.260
  5.270
  5.270
  5.280
  5.280
  5.290
Adjusted equity ratio
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157
  0.157

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,039
  1,439
  1,780
  2,174
  2,625
  3,132
  3,698
  4,321
  5,000
  5,735
  6,525
  7,493
  8,387
  9,332
  10,326
  11,369
  12,461
  13,600
  14,788
  16,025
  17,312
  18,650
  20,040
  21,485
  22,986
  24,546
  26,168
  27,854
  29,609
  31,435
  33,337
Depreciation, amort., depletion, $m
  83
  194
  200
  207
  215
  224
  234
  245
  258
  271
  286
  129
  146
  164
  182
  202
  222
  243
  266
  289
  313
  338
  364
  391
  420
  449
  479
  511
  544
  578
  614
Funds from operations, $m
  -2,053
  1,633
  1,980
  2,381
  2,839
  3,356
  3,932
  4,566
  5,258
  6,006
  6,810
  7,622
  8,533
  9,495
  10,508
  11,571
  12,683
  13,844
  15,054
  16,314
  17,625
  18,988
  20,405
  21,876
  23,406
  24,995
  26,647
  28,366
  30,153
  32,014
  33,951
Change in working capital, $m
  -1,512
  -828
  -986
  -1,153
  -1,328
  -1,507
  -1,688
  -1,870
  -2,051
  -2,229
  -2,403
  -2,574
  -2,740
  -2,903
  -3,062
  -3,218
  -3,373
  -3,526
  -3,680
  -3,834
  -3,991
  -4,151
  -4,315
  -4,484
  -4,660
  -4,843
  -5,034
  -5,234
  -5,444
  -5,665
  -5,897
Cash from operations, $m
  -541
  2,461
  2,965
  3,534
  4,167
  4,863
  5,620
  6,436
  7,309
  8,235
  9,213
  10,196
  11,273
  12,398
  13,570
  14,789
  16,055
  17,370
  18,734
  20,149
  21,616
  23,139
  24,720
  26,361
  28,066
  29,838
  31,681
  33,600
  35,597
  37,679
  39,849
Maintenance CAPEX, $m
  0
  -17
  -22
  -28
  -35
  -43
  -52
  -62
  -73
  -86
  -99
  -114
  -129
  -146
  -164
  -182
  -202
  -222
  -243
  -266
  -289
  -313
  -338
  -364
  -391
  -420
  -449
  -479
  -511
  -544
  -578
New CAPEX, $m
  -22
  -130
  -155
  -181
  -209
  -237
  -266
  -294
  -323
  -351
  -378
  -405
  -431
  -457
  -482
  -507
  -531
  -555
  -579
  -604
  -628
  -653
  -679
  -706
  -734
  -762
  -792
  -824
  -857
  -892
  -928
Cash from investing activities, $m
  -29
  -147
  -177
  -209
  -244
  -280
  -318
  -356
  -396
  -437
  -477
  -519
  -560
  -603
  -646
  -689
  -733
  -777
  -822
  -870
  -917
  -966
  -1,017
  -1,070
  -1,125
  -1,182
  -1,241
  -1,303
  -1,368
  -1,436
  -1,506
Free cash flow, $m
  -570
  2,313
  2,788
  3,325
  3,923
  4,583
  5,303
  6,080
  6,912
  7,798
  8,736
  9,677
  10,712
  11,795
  12,924
  14,100
  15,323
  16,593
  17,911
  19,279
  20,699
  22,173
  23,702
  25,290
  26,941
  28,656
  30,440
  32,296
  34,229
  36,243
  38,342
Issuance/(repayment) of debt, $m
  2,900
  5,882
  7,058
  8,257
  9,507
  10,790
  12,090
  13,392
  14,685
  15,959
  17,208
  18,429
  19,621
  20,786
  21,926
  23,046
  24,152
  25,252
  26,351
  27,458
  28,580
  29,725
  30,900
  32,113
  33,370
  34,680
  36,048
  37,481
  38,985
  40,567
  42,232
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  2,589
  5,882
  7,058
  8,257
  9,507
  10,790
  12,090
  13,392
  14,685
  15,959
  17,208
  18,429
  19,621
  20,786
  21,926
  23,046
  24,152
  25,252
  26,351
  27,458
  28,580
  29,725
  30,900
  32,113
  33,370
  34,680
  36,048
  37,481
  38,985
  40,567
  42,232
Total cash flow (excl. dividends), $m
  2,019
  8,195
  9,846
  11,582
  13,430
  15,373
  17,393
  19,472
  21,597
  23,757
  25,944
  28,106
  30,333
  32,581
  34,850
  37,146
  39,475
  41,845
  44,262
  46,737
  49,279
  51,897
  54,602
  57,403
  60,311
  63,336
  66,487
  69,777
  73,214
  76,810
  80,574
Retained Cash Flow (-), $m
  -191
  -1,101
  -1,314
  -1,538
  -1,771
  -2,010
  -2,252
  -2,494
  -2,735
  -2,972
  -3,205
  -3,432
  -3,654
  -3,871
  -4,083
  -4,292
  -4,498
  -4,703
  -4,908
  -5,114
  -5,323
  -5,536
  -5,755
  -5,981
  -6,215
  -6,459
  -6,713
  -6,980
  -7,261
  -7,555
  -7,865
Prev. year cash balance distribution, $m
 
  2,767
  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
 
  9,861
  8,532
  10,044
  11,660
  13,364
  15,141
  16,978
  18,862
  20,785
  22,739
  24,674
  26,679
  28,709
  30,767
  32,854
  34,977
  37,142
  39,355
  41,624
  43,956
  46,361
  48,847
  51,422
  54,096
  56,877
  59,774
  62,796
  65,953
  69,254
  72,709
Discount rate, %
 
  7.50
  7.88
  8.27
  8.68
  9.12
  9.57
  10.05
  10.55
  11.08
  11.63
  12.22
  12.83
  13.47
  14.14
  14.85
  15.59
  16.37
  17.19
  18.05
  18.95
  19.90
  20.89
  21.94
  23.04
  24.19
  25.40
  26.67
  28.00
  29.40
  30.87
PV of cash for distribution, $m
 
  9,173
  7,332
  7,914
  8,357
  8,639
  8,749
  8,684
  8,453
  8,072
  7,564
  6,944
  6,269
  5,554
  4,829
  4,118
  3,443
  2,821
  2,264
  1,779
  1,366
  1,026
  751
  537
  374
  253
  166
  106
  66
  39
  23
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

The Blackstone Group L.P. is a global alternative asset manager. The Company's alternative asset management businesses include investment vehicles focused on private equity, non-investment grade credit, secondary private equity funds of funds and multi-asset class strategies. It operates through four segments: Private Equity, Real Estate, Hedge Fund Solutions and Credit. The Private Equity segment includes its corporate private equity business, which consists of its corporate private equity funds, Blackstone Capital Partners (BCP) funds, its sector-focused corporate private equity funds, including its energy-focused funds, Blackstone Energy Partners (BEP) funds and its core private equity fund. The Blackstone Real Estate Partners funds target a range of opportunistic real estate and real estate related investments. The Hedge Fund Solutions segment consists of Blackstone Alternative Asset Management (BAAM). The Credit segment consists principally of GSO Capital Partners LP (GSO).

FINANCIAL RATIOS  of  Blackstone Group (BX)

Valuation Ratios
P/E Ratio 20.5
Price to Sales 4.2
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow -39.5
Price to Free Cash Flow -37.9
Growth Rates
Sales Growth Rate 10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -62.7%
Cap. Spend. - 3 Yr. Gr. Rate -3.3%
Financial Strength
Quick Ratio 38
Current Ratio NaN
LT Debt to Equity 137.2%
Total Debt to Equity 138.4%
Interest Coverage 17
Management Effectiveness
Return On Assets 4.8%
Ret/ On Assets - 3 Yr. Avg. 4.5%
Return On Total Capital 7.5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.3%
Return On Equity 16.3%
Return On Equity - 3 Yr. Avg. 16.9%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 83.1%
Gross Margin - 3 Yr. Avg. 84.6%
EBITDA Margin 51.1%
EBITDA Margin - 3 Yr. Avg. 50.4%
Operating Margin 42.9%
Oper. Margin - 3 Yr. Avg. 41.6%
Pre-Tax Margin 46.5%
Pre-Tax Margin - 3 Yr. Avg. 46.3%
Net Profit Margin 20.3%
Net Profit Margin - 3 Yr. Avg. 18.9%
Effective Tax Rate 5.5%
Eff/ Tax Rate - 3 Yr. Avg. 7.8%
Payout Ratio 194.3%

BX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BX stock intrinsic value calculation we used $5126 million for the last fiscal year's total revenue generated by Blackstone Group. The default revenue input number comes from 2016 income statement of Blackstone Group. 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 BX stock valuation model: a) initial revenue growth rate of 29.9% 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 7.5%, whose default value for BX is calculated based on our internal credit rating of Blackstone Group, 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 Blackstone Group.
    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 BX stock the variable cost ratio is equal to 66.5%.

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 BX 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 Blackstone Group.

Corporate tax rate of 27% is the nominal tax rate for Blackstone Group. 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 BX 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 BX are equal to 8.5%.

Life of production assets of 26 years is the average useful life of capital assets used in Blackstone Group 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 BX is equal to -54%. 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 - $6461 million for Blackstone Group - 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 1196.39 million for Blackstone Group 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 Blackstone Group at the current share price and the inputted number of shares is $39.7 billion.

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COMPANY NEWS

▶ Blackstone Prices $600 Million Senior Notes Offering   [Sep-25-17 04:05PM  Business Wire]
▶ Blackstone to Offer Senior Notes   [08:45AM  Business Wire]
▶ Blackstone Sees Relative Strength Rating Improve To 72   [03:00AM  Investor's Business Daily]
▶ Blackstone buys German measuring firm Schenck   [Sep-21-17 09:43AM  Reuters]
▶ Alternative Asset Managers and Significant Dry Powder   [Sep-20-17 07:38AM  Market Realist]
▶ One on One with Stephen Schwarzman   [06:00AM  CNBC Videos]
▶ What Led to Blackstones Premium Valuation   [Sep-18-17 10:39AM  Market Realist]
▶ A Peek at Blackstones Hedge Fund Solutions   [09:11AM  Market Realist]
▶ Insights on Blackstones Credit Division   [Sep-15-17 06:06PM  Market Realist]
▶ Investing in Venture Capital: A Step-by-Step Guide   [Sep-13-17 08:31AM  Motley Fool]
▶ Blackstone preps for a billion-dollar exit of smart-home technology   [01:35PM  American City Business Journals]
▶ [$$] Blackstone Prepares for IPO or Sale of Vivint   [12:40AM  The Wall Street Journal]
▶ [$$] Blackstone Prepares for IPO or Sale of Vivint   [11:51AM  The Wall Street Journal]
▶ [$$] Paying the Price of Ignoring Mental Health   [09:43AM  The Wall Street Journal]
▶ Blackstone Earns Relative Strength Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ [$$] Blackstone Takes Global Sources Private   [Aug-28-17 05:17PM  The Wall Street Journal]
▶ Blackstone may take auto-parts company public with $9 billion valuation   [Aug-23-17 01:55PM  American City Business Journals]
▶ Blackstone explores IPO of Gates Global: sources   [Aug-22-17 08:52PM  Reuters]
▶ Oil Prices Boosted By String Of Bullish News   [Aug-18-17 03:30PM  Oilprice.com]
▶ [$$] Trump's business exodus   [12:06AM  Financial Times]
▶ [$$] Trump Business Council Fretted for Weeks Over Its Role   [Aug-17-17 07:12PM  The Wall Street Journal]
▶ Blackstone's Lonely Energy Club   [05:00PM  Bloomberg]
▶ [$$] Why Blackstone Is Betting $7 Billion on Natural Gas   [12:28AM  The Wall Street Journal]
▶ [$$] Why Blackstone Is Betting $7 Billion on Natural Gas   [Aug-15-17 05:35PM  The Wall Street Journal]
▶ [$$] It is odd that money is not flowing to EM infrastructure   [Aug-14-17 05:15PM  Financial Times]
▶ Insights on Apollos Premium Valuation   [07:36AM  Market Realist]
▶ Apollos Dividend to Rise in 2017   [10:38AM  Market Realist]
▶ Behind Apollos Real Assets Division   [09:08AM  Market Realist]
▶ Understanding Carlyles Discounted Valuations   [07:36AM  Market Realist]
▶ Blackstone, Starwood Form Home-Rental Giant   [Aug-10-17 06:46PM  The Wall Street Journal]
▶ Blackstone acquisition creates one massive home-rental company   [04:18PM  American City Business Journals]
Financial statements of BX
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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