Intrinsic value of Credit Suisse Group ADR - CS

Previous Close

$15.25

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$15.25

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

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

We calculate the intrinsic value of CS 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -100.00
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  0
  20,729
  21,206
  21,751
  22,363
  23,041
  23,785
  24,595
  25,472
  26,416
  27,430
  28,515
  29,672
  30,904
  32,214
  33,604
  35,076
  36,635
  38,283
  40,025
  41,864
  43,805
  45,851
  48,008
  50,281
  52,675
  55,195
  57,848
  60,639
  63,576
  66,665
Variable operating expenses, $m
 
  21,122
  21,464
  21,855
  22,293
  22,779
  23,312
  23,893
  24,521
  25,198
  25,925
  20,437
  21,267
  22,150
  23,088
  24,084
  25,140
  26,257
  27,438
  28,687
  30,005
  31,396
  32,862
  34,408
  36,037
  37,753
  39,559
  41,461
  43,461
  45,566
  47,780
Fixed operating expenses, $m
 
  1,574
  1,609
  1,644
  1,680
  1,717
  1,755
  1,793
  1,833
  1,873
  1,914
  1,957
  2,000
  2,044
  2,088
  2,134
  2,181
  2,229
  2,278
  2,329
  2,380
  2,432
  2,486
  2,540
  2,596
  2,653
  2,712
  2,771
  2,832
  2,895
  2,958
Total operating expenses, $m
  0
  22,696
  23,073
  23,499
  23,973
  24,496
  25,067
  25,686
  26,354
  27,071
  27,839
  22,394
  23,267
  24,194
  25,176
  26,218
  27,321
  28,486
  29,716
  31,016
  32,385
  33,828
  35,348
  36,948
  38,633
  40,406
  42,271
  44,232
  46,293
  48,461
  50,738
Operating income, $m
  0
  -1,967
  -1,866
  -1,747
  -1,610
  -1,455
  -1,282
  -1,091
  -882
  -655
  -409
  6,121
  6,406
  6,711
  7,037
  7,385
  7,755
  8,149
  8,567
  9,010
  9,480
  9,977
  10,503
  11,060
  11,647
  12,268
  12,924
  13,616
  14,346
  15,115
  15,927
EBITDA, $m
  923
  94,297
  96,468
  98,953
  101,747
  104,845
  108,248
  111,956
  115,971
  120,300
  124,947
  129,921
  135,231
  140,886
  146,897
  153,278
  160,042
  167,203
  174,778
  182,783
  191,238
  200,160
  209,571
  219,493
  229,948
  240,962
  252,559
  264,768
  277,618
  291,138
  305,360
Interest expense (income), $m
  9,004
  32,431
  30,011
  30,418
  30,883
  31,404
  31,982
  32,617
  33,307
  34,055
  34,860
  35,725
  36,650
  37,636
  38,687
  39,803
  40,988
  42,244
  43,573
  44,979
  46,464
  48,032
  49,686
  51,431
  53,270
  55,208
  57,249
  59,398
  61,660
  64,040
  66,544
Earnings before tax, $m
  -2,233
  -34,397
  -31,878
  -32,165
  -32,493
  -32,859
  -33,265
  -33,708
  -34,190
  -34,710
  -35,269
  -29,604
  -30,244
  -30,925
  -31,650
  -32,419
  -33,233
  -34,095
  -35,006
  -35,969
  -36,984
  -38,055
  -39,183
  -40,372
  -41,623
  -42,940
  -44,325
  -45,782
  -47,314
  -48,925
  -50,617
Tax expense, $m
  435
  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
Net income, $m
  -2,671
  -34,397
  -31,878
  -32,165
  -32,493
  -32,859
  -33,265
  -33,708
  -34,190
  -34,710
  -35,269
  -29,604
  -30,244
  -30,925
  -31,650
  -32,419
  -33,233
  -34,095
  -35,006
  -35,969
  -36,984
  -38,055
  -39,183
  -40,372
  -41,623
  -42,940
  -44,325
  -45,782
  -47,314
  -48,925
  -50,617

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  808,000
  363,675
  372,039
  381,601
  392,335
  404,230
  417,280
  431,491
  446,875
  463,447
  481,233
  500,261
  520,564
  542,182
  565,157
  589,536
  615,371
  642,719
  671,639
  702,197
  734,461
  768,505
  804,408
  842,252
  882,125
  924,120
  968,336
  1,014,876
  1,063,849
  1,115,371
  1,169,564
Adjusted assets (=assets-cash), $m
  808,000
  363,675
  372,039
  381,601
  392,335
  404,230
  417,280
  431,491
  446,875
  463,447
  481,233
  500,261
  520,564
  542,182
  565,157
  589,536
  615,371
  642,719
  671,639
  702,197
  734,461
  768,505
  804,408
  842,252
  882,125
  924,120
  968,336
  1,014,876
  1,063,849
  1,115,371
  1,169,564
Revenue / Adjusted assets
  0.000
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
  0.057
Average production assets, $m
  4,812
  899,990
  920,690
  944,352
  970,916
  1,000,352
  1,032,648
  1,067,817
  1,105,886
  1,146,899
  1,190,914
  1,238,002
  1,288,247
  1,341,744
  1,398,600
  1,458,931
  1,522,866
  1,590,544
  1,662,113
  1,737,735
  1,817,579
  1,901,829
  1,990,678
  2,084,330
  2,183,005
  2,286,931
  2,396,353
  2,511,525
  2,632,720
  2,760,223
  2,894,333
Working capital, $m
  0
  -787,865
  -805,985
  -826,699
  -849,954
  -875,722
  -903,995
  -934,783
  -968,109
  -1,004,012
  -1,042,543
  -1,083,765
  -1,127,750
  -1,174,583
  -1,224,355
  -1,277,170
  -1,333,139
  -1,392,385
  -1,455,038
  -1,521,238
  -1,591,135
  -1,664,889
  -1,742,668
  -1,824,653
  -1,911,034
  -2,002,013
  -2,097,802
  -2,198,626
  -2,304,722
  -2,416,339
  -2,533,742
Total debt, $m
  218,869
  555,767
  563,295
  571,901
  581,562
  592,267
  604,012
  616,802
  630,647
  645,563
  661,570
  678,695
  696,968
  716,424
  737,101
  759,042
  782,294
  806,907
  832,935
  860,437
  889,475
  920,115
  952,427
  986,487
  1,022,372
  1,060,168
  1,099,962
  1,141,848
  1,185,924
  1,232,294
  1,281,067
Total liabilities, $m
  766,709
  327,307
  334,835
  343,441
  353,102
  363,807
  375,552
  388,342
  402,187
  417,103
  433,110
  450,235
  468,508
  487,964
  508,641
  530,582
  553,834
  578,447
  604,475
  631,977
  661,015
  691,655
  723,967
  758,027
  793,912
  831,708
  871,502
  913,388
  957,464
  1,003,834
  1,052,607
Total equity, $m
  41,291
  36,367
  37,204
  38,160
  39,234
  40,423
  41,728
  43,149
  44,687
  46,345
  48,123
  50,026
  52,056
  54,218
  56,516
  58,954
  61,537
  64,272
  67,164
  70,220
  73,446
  76,851
  80,441
  84,225
  88,212
  92,412
  96,834
  101,488
  106,385
  111,537
  116,956
Total liabilities and equity, $m
  808,000
  363,674
  372,039
  381,601
  392,336
  404,230
  417,280
  431,491
  446,874
  463,448
  481,233
  500,261
  520,564
  542,182
  565,157
  589,536
  615,371
  642,719
  671,639
  702,197
  734,461
  768,506
  804,408
  842,252
  882,124
  924,120
  968,336
  1,014,876
  1,063,849
  1,115,371
  1,169,563
Debt-to-equity ratio
  5.301
  15.280
  15.140
  14.990
  14.820
  14.650
  14.470
  14.290
  14.110
  13.930
  13.750
  13.570
  13.390
  13.210
  13.040
  12.880
  12.710
  12.550
  12.400
  12.250
  12.110
  11.970
  11.840
  11.710
  11.590
  11.470
  11.360
  11.250
  11.150
  11.050
  10.950
Adjusted equity ratio
  0.051
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -2,671
  -34,397
  -31,878
  -32,165
  -32,493
  -32,859
  -33,265
  -33,708
  -34,190
  -34,710
  -35,269
  -29,604
  -30,244
  -30,925
  -31,650
  -32,419
  -33,233
  -34,095
  -35,006
  -35,969
  -36,984
  -38,055
  -39,183
  -40,372
  -41,623
  -42,940
  -44,325
  -45,782
  -47,314
  -48,925
  -50,617
Depreciation, amort., depletion, $m
  923
  96,264
  98,334
  100,700
  103,357
  106,300
  109,530
  113,047
  116,854
  120,955
  125,357
  123,800
  128,825
  134,174
  139,860
  145,893
  152,287
  159,054
  166,211
  173,773
  181,758
  190,183
  199,068
  208,433
  218,300
  228,693
  239,635
  251,153
  263,272
  276,022
  289,433
Funds from operations, $m
  54,774
  61,867
  66,456
  68,535
  70,864
  73,441
  76,265
  79,339
  82,664
  86,245
  90,087
  94,197
  98,581
  103,249
  108,210
  113,474
  119,053
  124,959
  131,205
  137,805
  144,774
  152,128
  159,885
  168,062
  176,678
  185,753
  195,310
  205,370
  215,958
  227,098
  238,816
Change in working capital, $m
  28,386
  -15,448
  -18,121
  -20,714
  -23,255
  -25,768
  -28,273
  -30,787
  -33,326
  -35,903
  -38,531
  -41,222
  -43,985
  -46,832
  -49,772
  -52,815
  -55,970
  -59,246
  -62,653
  -66,200
  -69,897
  -73,753
  -77,779
  -81,985
  -86,381
  -90,979
  -95,789
  -100,824
  -106,096
  -111,618
  -117,403
Cash from operations, $m
  26,388
  77,315
  84,577
  89,249
  94,119
  99,209
  104,538
  110,126
  115,990
  122,148
  128,618
  135,418
  142,567
  150,081
  157,982
  166,289
  175,023
  184,205
  193,858
  204,005
  214,671
  225,882
  237,664
  250,047
  263,059
  276,732
  291,099
  306,194
  322,054
  338,715
  356,219
Maintenance CAPEX, $m
  0
  -88,235
  -89,999
  -92,069
  -94,435
  -97,092
  -100,035
  -103,265
  -106,782
  -110,589
  -114,690
  -119,091
  -123,800
  -128,825
  -134,174
  -139,860
  -145,893
  -152,287
  -159,054
  -166,211
  -173,773
  -181,758
  -190,183
  -199,068
  -208,433
  -218,300
  -228,693
  -239,635
  -251,153
  -263,272
  -276,022
New CAPEX, $m
  -1,147
  -17,637
  -20,700
  -23,662
  -26,565
  -29,435
  -32,297
  -35,169
  -38,069
  -41,013
  -44,015
  -47,088
  -50,245
  -53,497
  -56,856
  -60,331
  -63,935
  -67,678
  -71,569
  -75,621
  -79,844
  -84,250
  -88,849
  -93,653
  -98,675
  -103,926
  -109,421
  -115,173
  -121,195
  -127,503
  -134,111
Cash from investing activities, $m
  -7,838
  -105,872
  -110,699
  -115,731
  -121,000
  -126,527
  -132,332
  -138,434
  -144,851
  -151,602
  -158,705
  -166,179
  -174,045
  -182,322
  -191,030
  -200,191
  -209,828
  -219,965
  -230,623
  -241,832
  -253,617
  -266,008
  -279,032
  -292,721
  -307,108
  -322,226
  -338,114
  -354,808
  -372,348
  -390,775
  -410,133
Free cash flow, $m
  18,550
  -28,557
  -26,122
  -26,482
  -26,881
  -27,318
  -27,793
  -28,307
  -28,860
  -29,453
  -30,086
  -30,761
  -31,479
  -32,240
  -33,048
  -33,902
  -34,805
  -35,759
  -36,766
  -37,828
  -38,947
  -40,126
  -41,367
  -42,674
  -44,049
  -45,495
  -47,015
  -48,614
  -50,294
  -52,059
  -53,914
Issuance/(repayment) of debt, $m
  12,266
  -44,798
  7,528
  8,605
  9,661
  10,705
  11,746
  12,790
  13,845
  14,916
  16,007
  17,125
  18,273
  19,456
  20,677
  21,941
  23,252
  24,613
  26,028
  27,502
  29,038
  30,640
  32,312
  34,060
  35,886
  37,796
  39,794
  41,886
  44,076
  46,370
  48,773
Issuance/(repurchase) of shares, $m
  685
  87,037
  32,714
  33,121
  33,566
  34,049
  34,570
  35,129
  35,728
  36,367
  37,048
  31,506
  32,274
  33,087
  33,947
  34,857
  35,817
  36,830
  37,898
  39,024
  40,210
  41,459
  42,773
  44,156
  45,610
  47,139
  48,747
  50,436
  52,211
  54,077
  56,036
Cash from financing (excl. dividends), $m  
  9,126
  42,239
  40,242
  41,726
  43,227
  44,754
  46,316
  47,919
  49,573
  51,283
  53,055
  48,631
  50,547
  52,543
  54,624
  56,798
  59,069
  61,443
  63,926
  66,526
  69,248
  72,099
  75,085
  78,216
  81,496
  84,935
  88,541
  92,322
  96,287
  100,447
  104,809
Total cash flow (excl. dividends), $m
  28,902
  13,682
  14,121
  15,245
  16,347
  17,436
  18,522
  19,612
  20,712
  21,830
  22,969
  17,870
  19,068
  20,302
  21,577
  22,896
  24,264
  25,684
  27,161
  28,698
  30,301
  31,973
  33,718
  35,541
  37,447
  39,440
  41,526
  43,708
  45,994
  48,387
  50,895
Retained Cash Flow (-), $m
  2,449
  -87,037
  -32,714
  -33,121
  -33,566
  -34,049
  -34,570
  -35,129
  -35,728
  -36,367
  -37,048
  -31,506
  -32,274
  -33,087
  -33,947
  -34,857
  -35,817
  -36,830
  -37,898
  -39,024
  -40,210
  -41,459
  -42,773
  -44,156
  -45,610
  -47,139
  -48,747
  -50,436
  -52,211
  -54,077
  -56,036
Prev. year cash balance distribution, $m
 
  16,272
  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
 
  -57,083
  -18,593
  -17,877
  -17,220
  -16,613
  -16,048
  -15,517
  -15,016
  -14,538
  -14,079
  -13,636
  -13,206
  -12,785
  -12,370
  -11,961
  -11,553
  -11,146
  -10,738
  -10,326
  -9,909
  -9,486
  -9,055
  -8,614
  -8,163
  -7,699
  -7,221
  -6,728
  -6,218
  -5,689
  -5,141
Discount rate, %
 
  15.10
  15.86
  16.65
  17.48
  18.35
  19.27
  20.24
  21.25
  22.31
  23.43
  24.60
  25.83
  27.12
  28.47
  29.90
  31.39
  32.96
  34.61
  36.34
  38.16
  40.06
  42.07
  44.17
  46.38
  48.70
  51.13
  53.69
  56.38
  59.19
  62.15
PV of cash for distribution, $m
 
  -49,594
  -13,853
  -11,263
  -9,040
  -7,154
  -5,574
  -4,272
  -3,215
  -2,373
  -1,716
  -1,214
  -839
  -565
  -371
  -236
  -146
  -88
  -51
  -29
  -15
  -8
  -4
  -2
  -1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  26.3
  13.9
  7.4
  4.0
  2.1
  1.2
  0.6
  0.4
  0.2
  0.1
  0.1
  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
  0.0
  0.0
  0.0

Credit Suisse Group AG (Credit Suisse) is a financial services company. The Company's segments include Swiss Universal Bank, International Wealth Management, Asia Pacific, Global Markets, Investment Banking & Capital Markets, Strategic Resolution Unit and Corporate Center. It offers a range of private banking and wealth management solutions to its clients in its Swiss Universal Bank, International Wealth Management and Asia Pacific divisions. It offers a range of investment advice and discretionary asset management services. It offers a range of investment services, including macroeconomic, equity, bond, commodity and foreign-exchange analysis, as well as research on the economy. Its investment advice covers a range of services from portfolio consulting to advising on individual investments. The Company offers its clients portfolio and risk management solutions, including managed investment products.

FINANCIAL RATIOS  of  Credit Suisse Group ADR (CS)

Valuation Ratios
P/E Ratio -11.9
Price to Sales 0
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 1.2
Price to Free Cash Flow 1.3
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 5.6%
Cap. Spend. - 3 Yr. Gr. Rate 5.2%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 530.1%
Total Debt to Equity 530.1%
Interest Coverage 1
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 1%
Return On Total Capital -1%
Ret/ On T. Cap. - 3 Yr. Avg. -0.4%
Return On Equity -6.3%
Return On Equity - 3 Yr. Avg. -2.9%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate -19.5%
Eff/ Tax Rate - 3 Yr. Avg. -0.8%
Payout Ratio -18.2%

CS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CS stock intrinsic value calculation we used $20323 million for the last fiscal year's total revenue generated by Credit Suisse Group ADR. The default revenue input number comes from 2016 income statement of Credit Suisse Group 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 CS stock valuation model: a) initial revenue growth rate of 2% 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 15.1%, whose default value for CS is calculated based on our internal credit rating of Credit Suisse Group 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 Credit Suisse Group 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 CS stock the variable cost ratio is equal to 102.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1540 million in the base year in the intrinsic value calculation for CS 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 5.4% for Credit Suisse Group ADR.

Corporate tax rate of 27% is the nominal tax rate for Credit Suisse Group 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 CS 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 CS are equal to 4341.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Credit Suisse Group 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 CS is equal to -3800.7%. 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 - $0 million for Credit Suisse Group 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 1951 million for Credit Suisse Group 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 Credit Suisse Group ADR at the current share price and the inputted number of shares is $29.8 billion.

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Financial statements of CS
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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