Intrinsic value of CST Brands - CST

Previous Close

$48.53

  Intrinsic Value

$27.80

stock screener

  Rating & Target

sell

-43%

  Value-price divergence*

-39%

Previous close

$48.53

 
Intrinsic value

$27.80

 
Up/down potential

-43%

 
Rating

sell

 
Value-price divergence*

-39%

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

We calculate the intrinsic value of CST 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 3.6

 

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, %
  -2.95
  17.90
  16.61
  15.45
  14.40
  13.46
  12.62
  11.86
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.66
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.68
  5.61
Revenue, $m
  11,106
  13,094
  15,269
  17,628
  20,167
  22,882
  25,769
  28,824
  32,044
  35,426
  38,967
  42,668
  46,529
  50,551
  54,736
  59,088
  63,612
  68,313
  73,198
  78,275
  83,553
  89,041
  94,750
  100,691
  106,877
  113,321
  120,036
  127,039
  134,344
  141,968
  149,929
Variable operating expenses, $m
 
  12,782
  14,894
  17,186
  19,653
  22,290
  25,095
  28,063
  31,190
  34,475
  37,916
  41,449
  45,200
  49,106
  53,172
  57,400
  61,794
  66,361
  71,107
  76,039
  81,166
  86,497
  92,043
  97,814
  103,823
  110,083
  116,606
  123,409
  130,505
  137,911
  145,645
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
  10,570
  12,782
  14,894
  17,186
  19,653
  22,290
  25,095
  28,063
  31,190
  34,475
  37,916
  41,449
  45,200
  49,106
  53,172
  57,400
  61,794
  66,361
  71,107
  76,039
  81,166
  86,497
  92,043
  97,814
  103,823
  110,083
  116,606
  123,409
  130,505
  137,911
  145,645
Operating income, $m
  536
  312
  374
  442
  514
  592
  674
  762
  854
  950
  1,052
  1,219
  1,330
  1,444
  1,564
  1,688
  1,818
  1,952
  2,092
  2,237
  2,387
  2,544
  2,707
  2,877
  3,054
  3,238
  3,430
  3,630
  3,839
  4,057
  4,284
EBITDA, $m
  793
  629
  733
  847
  969
  1,099
  1,238
  1,384
  1,539
  1,702
  1,872
  2,049
  2,235
  2,428
  2,629
  2,838
  3,055
  3,281
  3,516
  3,760
  4,013
  4,277
  4,551
  4,836
  5,133
  5,443
  5,765
  6,102
  6,453
  6,819
  7,201
Interest expense (income), $m
  61
  59
  81
  105
  132
  161
  191
  224
  258
  295
  333
  373
  414
  458
  503
  550
  599
  650
  703
  758
  816
  875
  937
  1,001
  1,068
  1,138
  1,211
  1,286
  1,365
  1,448
  1,533
Earnings before tax, $m
  480
  254
  293
  336
  382
  431
  483
  538
  595
  656
  719
  847
  915
  987
  1,061
  1,138
  1,218
  1,302
  1,388
  1,478
  1,572
  1,669
  1,770
  1,876
  1,986
  2,100
  2,219
  2,344
  2,473
  2,609
  2,751
Tax expense, $m
  176
  69
  79
  91
  103
  116
  130
  145
  161
  177
  194
  229
  247
  266
  286
  307
  329
  351
  375
  399
  424
  451
  478
  506
  536
  567
  599
  633
  668
  704
  743
Net income, $m
  324
  185
  214
  246
  279
  315
  353
  393
  435
  479
  525
  618
  668
  720
  774
  831
  889
  950
  1,013
  1,079
  1,147
  1,218
  1,292
  1,369
  1,450
  1,533
  1,620
  1,711
  1,806
  1,905
  2,008

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  137
  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
  4,360
  4,979
  5,806
  6,703
  7,668
  8,700
  9,798
  10,960
  12,184
  13,470
  14,816
  16,224
  17,692
  19,221
  20,812
  22,467
  24,187
  25,975
  27,832
  29,763
  31,769
  33,856
  36,027
  38,286
  40,638
  43,088
  45,641
  48,304
  51,081
  53,980
  57,007
Adjusted assets (=assets-cash), $m
  4,223
  4,979
  5,806
  6,703
  7,668
  8,700
  9,798
  10,960
  12,184
  13,470
  14,816
  16,224
  17,692
  19,221
  20,812
  22,467
  24,187
  25,975
  27,832
  29,763
  31,769
  33,856
  36,027
  38,286
  40,638
  43,088
  45,641
  48,304
  51,081
  53,980
  57,007
Revenue / Adjusted assets
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
  2.630
Average production assets, $m
  2,791
  3,287
  3,832
  4,425
  5,062
  5,743
  6,468
  7,235
  8,043
  8,892
  9,781
  10,710
  11,679
  12,688
  13,739
  14,831
  15,967
  17,147
  18,373
  19,647
  20,972
  22,349
  23,782
  25,274
  26,826
  28,444
  30,129
  31,887
  33,720
  35,634
  37,632
Working capital, $m
  12
  -52
  -61
  -71
  -81
  -92
  -103
  -115
  -128
  -142
  -156
  -171
  -186
  -202
  -219
  -236
  -254
  -273
  -293
  -313
  -334
  -356
  -379
  -403
  -428
  -453
  -480
  -508
  -537
  -568
  -600
Total debt, $m
  1,505
  1,974
  2,571
  3,220
  3,918
  4,664
  5,458
  6,298
  7,183
  8,113
  9,086
  10,104
  11,165
  12,271
  13,421
  14,618
  15,861
  17,154
  18,497
  19,892
  21,343
  22,852
  24,421
  26,055
  27,755
  29,526
  31,373
  33,298
  35,306
  37,402
  39,590
Total liabilities, $m
  3,131
  3,600
  4,197
  4,846
  5,544
  6,290
  7,084
  7,924
  8,809
  9,739
  10,712
  11,730
  12,791
  13,897
  15,047
  16,244
  17,487
  18,780
  20,123
  21,518
  22,969
  24,478
  26,047
  27,681
  29,381
  31,152
  32,999
  34,924
  36,932
  39,028
  41,216
Total equity, $m
  1,229
  1,379
  1,608
  1,857
  2,124
  2,410
  2,714
  3,036
  3,375
  3,731
  4,104
  4,494
  4,901
  5,324
  5,765
  6,223
  6,700
  7,195
  7,709
  8,244
  8,800
  9,378
  9,979
  10,605
  11,257
  11,935
  12,643
  13,380
  14,149
  14,952
  15,791
Total liabilities and equity, $m
  4,360
  4,979
  5,805
  6,703
  7,668
  8,700
  9,798
  10,960
  12,184
  13,470
  14,816
  16,224
  17,692
  19,221
  20,812
  22,467
  24,187
  25,975
  27,832
  29,762
  31,769
  33,856
  36,026
  38,286
  40,638
  43,087
  45,642
  48,304
  51,081
  53,980
  57,007
Debt-to-equity ratio
  1.225
  1.430
  1.600
  1.730
  1.840
  1.940
  2.010
  2.070
  2.130
  2.170
  2.210
  2.250
  2.280
  2.300
  2.330
  2.350
  2.370
  2.380
  2.400
  2.410
  2.430
  2.440
  2.450
  2.460
  2.470
  2.470
  2.480
  2.490
  2.500
  2.500
  2.510
Adjusted equity ratio
  0.259
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  324
  185
  214
  246
  279
  315
  353
  393
  435
  479
  525
  618
  668
  720
  774
  831
  889
  950
  1,013
  1,079
  1,147
  1,218
  1,292
  1,369
  1,450
  1,533
  1,620
  1,711
  1,806
  1,905
  2,008
Depreciation, amort., depletion, $m
  257
  317
  359
  405
  454
  507
  563
  623
  685
  751
  820
  830
  905
  984
  1,065
  1,150
  1,238
  1,329
  1,424
  1,523
  1,626
  1,733
  1,844
  1,959
  2,080
  2,205
  2,336
  2,472
  2,614
  2,762
  2,917
Funds from operations, $m
  269
  502
  573
  650
  733
  822
  916
  1,015
  1,120
  1,230
  1,345
  1,448
  1,573
  1,704
  1,839
  1,981
  2,127
  2,279
  2,438
  2,602
  2,773
  2,951
  3,136
  3,329
  3,529
  3,738
  3,956
  4,183
  4,420
  4,667
  4,925
Change in working capital, $m
  -18
  -8
  -9
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
Cash from operations, $m
  287
  510
  582
  660
  744
  833
  928
  1,028
  1,133
  1,243
  1,359
  1,463
  1,589
  1,720
  1,856
  1,998
  2,145
  2,298
  2,457
  2,622
  2,794
  2,973
  3,159
  3,352
  3,554
  3,764
  3,983
  4,211
  4,449
  4,697
  4,957
Maintenance CAPEX, $m
  0
  -216
  -255
  -297
  -343
  -392
  -445
  -501
  -561
  -623
  -689
  -758
  -830
  -905
  -984
  -1,065
  -1,150
  -1,238
  -1,329
  -1,424
  -1,523
  -1,626
  -1,733
  -1,844
  -1,959
  -2,080
  -2,205
  -2,336
  -2,472
  -2,614
  -2,762
New CAPEX, $m
  -370
  -496
  -546
  -592
  -637
  -682
  -725
  -767
  -808
  -849
  -889
  -929
  -969
  -1,009
  -1,050
  -1,092
  -1,135
  -1,180
  -1,226
  -1,274
  -1,325
  -1,378
  -1,433
  -1,491
  -1,553
  -1,617
  -1,686
  -1,758
  -1,834
  -1,914
  -1,998
Cash from investing activities, $m
  -508
  -712
  -801
  -889
  -980
  -1,074
  -1,170
  -1,268
  -1,369
  -1,472
  -1,578
  -1,687
  -1,799
  -1,914
  -2,034
  -2,157
  -2,285
  -2,418
  -2,555
  -2,698
  -2,848
  -3,004
  -3,166
  -3,335
  -3,512
  -3,697
  -3,891
  -4,094
  -4,306
  -4,528
  -4,760
Free cash flow, $m
  -221
  -202
  -219
  -229
  -237
  -241
  -242
  -241
  -236
  -229
  -219
  -224
  -210
  -195
  -178
  -159
  -140
  -120
  -98
  -76
  -53
  -30
  -7
  17
  42
  67
  92
  118
  143
  170
  196
Issuance/(repayment) of debt, $m
  97
  547
  598
  648
  698
  746
  794
  840
  885
  930
  974
  1,017
  1,061
  1,106
  1,151
  1,196
  1,244
  1,292
  1,343
  1,396
  1,451
  1,509
  1,569
  1,633
  1,701
  1,771
  1,846
  1,925
  2,008
  2,096
  2,189
Issuance/(repurchase) of shares, $m
  -3
  24
  15
  3
  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  
  119
  571
  613
  651
  698
  746
  794
  840
  885
  930
  974
  1,017
  1,061
  1,106
  1,151
  1,196
  1,244
  1,292
  1,343
  1,396
  1,451
  1,509
  1,569
  1,633
  1,701
  1,771
  1,846
  1,925
  2,008
  2,096
  2,189
Total cash flow (excl. dividends), $m
  -98
  368
  394
  422
  461
  505
  551
  599
  649
  701
  754
  793
  851
  911
  973
  1,037
  1,104
  1,173
  1,245
  1,320
  1,397
  1,478
  1,563
  1,651
  1,742
  1,838
  1,938
  2,043
  2,152
  2,266
  2,385
Retained Cash Flow (-), $m
  -319
  -209
  -229
  -248
  -267
  -286
  -304
  -322
  -339
  -356
  -373
  -390
  -407
  -424
  -441
  -458
  -476
  -495
  -515
  -535
  -556
  -578
  -601
  -626
  -652
  -679
  -707
  -738
  -769
  -803
  -838
Prev. year cash balance distribution, $m
 
  59
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
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
 
  218
  165
  174
  194
  219
  247
  278
  310
  345
  381
  404
  444
  487
  532
  579
  627
  678
  730
  785
  842
  900
  962
  1,025
  1,091
  1,160
  1,231
  1,305
  1,382
  1,463
  1,546
Discount rate, %
 
  7.80
  8.19
  8.60
  9.03
  9.48
  9.95
  10.45
  10.98
  11.52
  12.10
  12.71
  13.34
  14.01
  14.71
  15.44
  16.22
  17.03
  17.88
  18.77
  19.71
  20.70
  21.73
  22.82
  23.96
  25.16
  26.41
  27.73
  29.12
  30.58
  32.11
PV of cash for distribution, $m
 
  202
  141
  136
  137
  139
  140
  138
  135
  129
  122
  108
  99
  89
  78
  67
  57
  47
  38
  30
  23
  17
  13
  9
  6
  4
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  100
  99.3
  99.0
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9
  98.9

CST Brands, Inc., through its subsidiaries, operates as an independent retailer of motor fuel and convenience merchandise items in the United States and eastern Canada. The company’s retail operations include sale of motor fuel at convenience stores, commission agents, and cardlocks; food, merchandise items, and services at convenience stores; and heating oil to residential customers, as well as heating oil and motor fuel to small commercial customers. As of December 31, 2015, it owned and operated 1,049 convenience stores located in Arkansas, Arizona, California, Colorado, Louisiana, New Mexico, New York, Oklahoma, Texas, and Wyoming; and 869 retail sites located in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Québec, which consisted of 303 company operated convenience stores, 494 commission agents, and 72 cardlocks; and 1,075 retail sites located in Pennsylvania, New Jersey, Ohio, New York, Massachusetts, Kentucky, New Hampshire, Maine, Florida, Georgia, North Carolina, Maryland, Delaware, Tennessee, Virginia, Illinois, West Virginia, Minnesota, Michigan, Wisconsin, South Dakota, Indiana, Rhode Island, Colorado, and Texas. The company also provides other products and services, including car wash, lottery, money orders, air/water/vacuum services, video and game rentals, and access to automated teller machines. CST Brands, Inc. offers its products under the Cibolo Mountain, Corner Store, Fresh Choices, Flavors2Go, U Force, Ultramart, Dépanneur du Coin, Valero, Diamond Shamrock, Ultramar, Nice N Easy Grocery Shoppe, Mama Mia’s Classic Pizza, Easy Street Eatery, and Transit Café names. The company is headquartered in San Antonio, Texas.

FINANCIAL RATIOS  of  CST Brands (CST)

Valuation Ratios
P/E Ratio 11.3
Price to Sales 0.3
Price to Book 3
Price to Tangible Book
Price to Cash Flow 12.8
Price to Free Cash Flow -44.3
Growth Rates
Sales Growth Rate -3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.9%
Cap. Spend. - 3 Yr. Gr. Rate 12.3%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 116.1%
Total Debt to Equity 122.5%
Interest Coverage 9
Management Effectiveness
Return On Assets 8.8%
Ret/ On Assets - 3 Yr. Avg. 7.1%
Return On Total Capital 12.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10%
Return On Equity 30.3%
Return On Equity - 3 Yr. Avg. 25.1%
Asset Turnover 2.7
Profitability Ratios
Gross Margin 13%
Gross Margin - 3 Yr. Avg. 11.7%
EBITDA Margin 7.2%
EBITDA Margin - 3 Yr. Avg. 5.1%
Operating Margin 4.8%
Oper. Margin - 3 Yr. Avg. 3.2%
Pre-Tax Margin 4.3%
Pre-Tax Margin - 3 Yr. Avg. 2.9%
Net Profit Margin 2.9%
Net Profit Margin - 3 Yr. Avg. 1.9%
Effective Tax Rate 36.7%
Eff/ Tax Rate - 3 Yr. Avg. 37.7%
Payout Ratio 24.4%

CST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CST stock intrinsic value calculation we used $11106 million for the last fiscal year's total revenue generated by CST Brands. The default revenue input number comes from 2016 income statement of CST Brands. 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 CST stock valuation model: a) initial revenue growth rate of 17.9% 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 7.8%, whose default value for CST is calculated based on our internal credit rating of CST Brands, 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 CST Brands.
    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 CST stock the variable cost ratio is equal to 97.7%.

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 CST 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 4.1% for CST Brands.

Corporate tax rate of 27% is the nominal tax rate for CST Brands. 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 CST 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 CST are equal to 25.1%.

Life of production assets of 12.9 years is the average useful life of capital assets used in CST Brands 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 CST is equal to -0.4%. 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 - $1229 million for CST Brands - 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 75.124 million for CST Brands 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 CST Brands at the current share price and the inputted number of shares is $3.6 billion.

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Stock chart of CST Financial statements of CST
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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