Intrinsic value of Cemex ADR - CX

Previous Close

$10.10

  Intrinsic Value

$18.59

stock screener

  Rating & Target

str. buy

+84%

  Value-price divergence*

+3315%

Previous close

$10.10

 
Intrinsic value

$18.59

 
Up/down potential

+84%

 
Rating

str. buy

 
Value-price divergence*

+3315%

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

We calculate the intrinsic value of CX 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 13.6

 

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, %
  13.89
  12.30
  11.57
  10.91
  10.32
  9.79
  9.31
  8.88
  8.49
  8.14
  7.83
  7.55
  7.29
  7.06
  6.86
  6.67
  6.50
  6.35
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
  5.38
  5.34
Revenue, $m
  12,713
  14,277
  15,929
  17,667
  19,490
  21,398
  23,391
  25,468
  27,630
  29,880
  32,219
  34,650
  37,176
  39,802
  42,530
  45,367
  48,317
  51,387
  54,582
  57,909
  61,375
  64,989
  68,757
  72,689
  76,794
  81,081
  85,560
  90,242
  95,137
  100,257
  105,615
Variable operating expenses, $m
 
  9,394
  10,361
  11,377
  12,444
  13,560
  14,726
  15,941
  17,206
  18,522
  19,890
  20,269
  21,747
  23,283
  24,879
  26,538
  28,264
  30,059
  31,928
  33,875
  35,902
  38,016
  40,221
  42,521
  44,922
  47,430
  50,050
  52,788
  55,652
  58,647
  61,781
Fixed operating expenses, $m
 
  2,656
  2,722
  2,790
  2,860
  2,931
  3,005
  3,080
  3,157
  3,236
  3,317
  3,400
  3,485
  3,572
  3,661
  3,753
  3,846
  3,943
  4,041
  4,142
  4,246
  4,352
  4,461
  4,572
  4,686
  4,804
  4,924
  5,047
  5,173
  5,302
  5,435
Total operating expenses, $m
  11,009
  12,050
  13,083
  14,167
  15,304
  16,491
  17,731
  19,021
  20,363
  21,758
  23,207
  23,669
  25,232
  26,855
  28,540
  30,291
  32,110
  34,002
  35,969
  38,017
  40,148
  42,368
  44,682
  47,093
  49,608
  52,234
  54,974
  57,835
  60,825
  63,949
  67,216
Operating income, $m
  1,703
  2,227
  2,846
  3,499
  4,186
  4,907
  5,660
  6,447
  7,268
  8,122
  9,012
  10,981
  11,945
  12,947
  13,990
  15,076
  16,207
  17,385
  18,612
  19,892
  21,227
  22,621
  24,076
  25,596
  27,186
  28,848
  30,587
  32,407
  34,312
  36,308
  38,399
EBITDA, $m
  2,521
  3,795
  4,475
  5,192
  5,946
  6,737
  7,564
  8,427
  9,327
  10,265
  11,241
  12,256
  13,313
  14,412
  15,555
  16,746
  17,985
  19,276
  20,621
  22,023
  23,486
  25,012
  26,606
  28,271
  30,012
  31,831
  33,735
  35,727
  37,813
  39,997
  42,285
Interest expense (income), $m
  919
  843
  1,025
  1,219
  1,423
  1,636
  1,860
  2,093
  2,337
  2,590
  2,854
  3,128
  3,413
  3,709
  4,017
  4,337
  4,669
  5,015
  5,375
  5,749
  6,139
  6,546
  6,969
  7,411
  7,872
  8,353
  8,855
  9,380
  9,929
  10,503
  11,103
Earnings before tax, $m
  875
  1,384
  1,821
  2,280
  2,764
  3,270
  3,800
  4,354
  4,931
  5,532
  6,158
  7,853
  8,532
  9,238
  9,973
  10,739
  11,538
  12,370
  13,237
  14,143
  15,088
  16,075
  17,107
  18,185
  19,314
  20,495
  21,731
  23,026
  24,383
  25,805
  27,296
Tax expense, $m
  156
  374
  492
  616
  746
  883
  1,026
  1,176
  1,331
  1,494
  1,663
  2,120
  2,304
  2,494
  2,693
  2,900
  3,115
  3,340
  3,574
  3,818
  4,074
  4,340
  4,619
  4,910
  5,215
  5,534
  5,867
  6,217
  6,583
  6,967
  7,370
Net income, $m
  711
  1,010
  1,329
  1,665
  2,018
  2,387
  2,774
  3,178
  3,600
  4,038
  4,496
  5,733
  6,228
  6,744
  7,281
  7,840
  8,422
  9,030
  9,663
  10,324
  11,014
  11,735
  12,488
  13,275
  14,099
  14,961
  15,864
  16,809
  17,799
  18,838
  19,926

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  585
  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
  30,386
  33,435
  37,303
  41,374
  45,645
  50,113
  54,779
  59,643
  64,708
  69,976
  75,454
  81,148
  87,064
  93,212
  99,602
  106,246
  113,155
  120,344
  127,826
  135,618
  143,736
  152,198
  161,024
  170,233
  179,846
  189,885
  200,375
  211,339
  222,803
  234,794
  247,341
Adjusted assets (=assets-cash), $m
  29,801
  33,435
  37,303
  41,374
  45,645
  50,113
  54,779
  59,643
  64,708
  69,976
  75,454
  81,148
  87,064
  93,212
  99,602
  106,246
  113,155
  120,344
  127,826
  135,618
  143,736
  152,198
  161,024
  170,233
  179,846
  189,885
  200,375
  211,339
  222,803
  234,794
  247,341
Revenue / Adjusted assets
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
Average production assets, $m
  13,149
  14,762
  16,470
  18,267
  20,153
  22,126
  24,186
  26,333
  28,570
  30,896
  33,314
  35,828
  38,440
  41,155
  43,976
  46,909
  49,960
  53,134
  56,437
  59,878
  63,462
  67,198
  71,095
  75,161
  79,405
  83,838
  88,469
  93,310
  98,371
  103,666
  109,205
Working capital, $m
  502
  642
  717
  795
  877
  963
  1,053
  1,146
  1,243
  1,345
  1,450
  1,559
  1,673
  1,791
  1,914
  2,042
  2,174
  2,312
  2,456
  2,606
  2,762
  2,924
  3,094
  3,271
  3,456
  3,649
  3,850
  4,061
  4,281
  4,512
  4,753
Total debt, $m
  12,625
  14,645
  17,411
  20,322
  23,375
  26,570
  29,906
  33,384
  37,005
  40,772
  44,689
  48,760
  52,990
  57,386
  61,955
  66,705
  71,645
  76,785
  82,134
  87,706
  93,510
  99,561
  105,871
  112,455
  119,329
  126,507
  134,007
  141,846
  150,043
  158,617
  167,588
Total liabilities, $m
  21,885
  23,906
  26,672
  29,583
  32,636
  35,831
  39,167
  42,645
  46,266
  50,033
  53,950
  58,021
  62,251
  66,647
  71,216
  75,966
  80,906
  86,046
  91,395
  96,967
  102,771
  108,822
  115,132
  121,716
  128,590
  135,768
  143,268
  151,107
  159,304
  167,878
  176,849
Total equity, $m
  8,500
  9,529
  10,631
  11,792
  13,009
  14,282
  15,612
  16,998
  18,442
  19,943
  21,504
  23,127
  24,813
  26,565
  28,387
  30,280
  32,249
  34,298
  36,430
  38,651
  40,965
  43,377
  45,892
  48,516
  51,256
  54,117
  57,107
  60,231
  63,499
  66,916
  70,492
Total liabilities and equity, $m
  30,385
  33,435
  37,303
  41,375
  45,645
  50,113
  54,779
  59,643
  64,708
  69,976
  75,454
  81,148
  87,064
  93,212
  99,603
  106,246
  113,155
  120,344
  127,825
  135,618
  143,736
  152,199
  161,024
  170,232
  179,846
  189,885
  200,375
  211,338
  222,803
  234,794
  247,341
Debt-to-equity ratio
  1.485
  1.540
  1.640
  1.720
  1.800
  1.860
  1.920
  1.960
  2.010
  2.040
  2.080
  2.110
  2.140
  2.160
  2.180
  2.200
  2.220
  2.240
  2.250
  2.270
  2.280
  2.300
  2.310
  2.320
  2.330
  2.340
  2.350
  2.360
  2.360
  2.370
  2.380
Adjusted equity ratio
  0.266
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285
  0.285

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  711
  1,010
  1,329
  1,665
  2,018
  2,387
  2,774
  3,178
  3,600
  4,038
  4,496
  5,733
  6,228
  6,744
  7,281
  7,840
  8,422
  9,030
  9,663
  10,324
  11,014
  11,735
  12,488
  13,275
  14,099
  14,961
  15,864
  16,809
  17,799
  18,838
  19,926
Depreciation, amort., depletion, $m
  818
  1,568
  1,629
  1,693
  1,760
  1,830
  1,904
  1,980
  2,060
  2,142
  2,228
  1,275
  1,368
  1,465
  1,565
  1,669
  1,778
  1,891
  2,008
  2,131
  2,258
  2,391
  2,530
  2,675
  2,826
  2,984
  3,148
  3,321
  3,501
  3,689
  3,886
Funds from operations, $m
  2,220
  2,578
  2,958
  3,358
  3,778
  4,218
  4,678
  5,158
  5,659
  6,181
  6,724
  7,008
  7,596
  8,208
  8,846
  9,509
  10,200
  10,921
  11,672
  12,455
  13,273
  14,126
  15,018
  15,950
  16,925
  17,945
  19,012
  20,130
  21,300
  22,527
  23,812
Change in working capital, $m
  240
  70
  74
  78
  82
  86
  90
  93
  97
  101
  105
  109
  114
  118
  123
  128
  133
  138
  144
  150
  156
  163
  170
  177
  185
  193
  202
  211
  220
  230
  241
Cash from operations, $m
  1,980
  2,508
  2,884
  3,279
  3,696
  4,132
  4,588
  5,065
  5,562
  6,080
  6,619
  6,898
  7,482
  8,090
  8,723
  9,382
  10,068
  10,783
  11,528
  12,305
  13,117
  13,964
  14,848
  15,773
  16,740
  17,752
  18,811
  19,919
  21,080
  22,296
  23,571
Maintenance CAPEX, $m
  0
  -468
  -525
  -586
  -650
  -717
  -787
  -861
  -937
  -1,017
  -1,099
  -1,186
  -1,275
  -1,368
  -1,465
  -1,565
  -1,669
  -1,778
  -1,891
  -2,008
  -2,131
  -2,258
  -2,391
  -2,530
  -2,675
  -2,826
  -2,984
  -3,148
  -3,321
  -3,501
  -3,689
New CAPEX, $m
  -274
  -1,614
  -1,708
  -1,797
  -1,886
  -1,973
  -2,060
  -2,148
  -2,236
  -2,326
  -2,419
  -2,514
  -2,612
  -2,715
  -2,821
  -2,933
  -3,051
  -3,174
  -3,304
  -3,440
  -3,584
  -3,736
  -3,897
  -4,066
  -4,244
  -4,433
  -4,631
  -4,841
  -5,062
  -5,294
  -5,540
Cash from investing activities, $m
  -274
  -2,082
  -2,233
  -2,383
  -2,536
  -2,690
  -2,847
  -3,009
  -3,173
  -3,343
  -3,518
  -3,700
  -3,887
  -4,083
  -4,286
  -4,498
  -4,720
  -4,952
  -5,195
  -5,448
  -5,715
  -5,994
  -6,288
  -6,596
  -6,919
  -7,259
  -7,615
  -7,989
  -8,383
  -8,795
  -9,229
Free cash flow, $m
  1,706
  427
  650
  896
  1,160
  1,442
  1,741
  2,056
  2,389
  2,737
  3,101
  3,199
  3,595
  4,008
  4,437
  4,883
  5,348
  5,831
  6,333
  6,857
  7,401
  7,969
  8,560
  9,177
  9,821
  10,493
  11,196
  11,930
  12,698
  13,501
  14,342
Issuance/(repayment) of debt, $m
  -2,452
  2,605
  2,766
  2,911
  3,053
  3,195
  3,336
  3,478
  3,621
  3,767
  3,917
  4,071
  4,230
  4,396
  4,569
  4,750
  4,940
  5,140
  5,350
  5,571
  5,805
  6,051
  6,310
  6,584
  6,873
  7,178
  7,500
  7,839
  8,197
  8,574
  8,971
Issuance/(repurchase) of shares, $m
  495
  19
  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  
  -2,007
  2,624
  2,766
  2,911
  3,053
  3,195
  3,336
  3,478
  3,621
  3,767
  3,917
  4,071
  4,230
  4,396
  4,569
  4,750
  4,940
  5,140
  5,350
  5,571
  5,805
  6,051
  6,310
  6,584
  6,873
  7,178
  7,500
  7,839
  8,197
  8,574
  8,971
Total cash flow (excl. dividends), $m
  -189
  3,050
  3,416
  3,807
  4,213
  4,637
  5,077
  5,534
  6,010
  6,504
  7,017
  7,270
  7,825
  8,404
  9,006
  9,633
  10,288
  10,971
  11,683
  12,428
  13,206
  14,019
  14,871
  15,762
  16,694
  17,672
  18,696
  19,769
  20,895
  22,075
  23,313
Retained Cash Flow (-), $m
  -1,230
  -1,029
  -1,102
  -1,160
  -1,217
  -1,273
  -1,330
  -1,386
  -1,443
  -1,502
  -1,561
  -1,623
  -1,686
  -1,752
  -1,821
  -1,893
  -1,969
  -2,049
  -2,132
  -2,221
  -2,314
  -2,412
  -2,515
  -2,624
  -2,740
  -2,861
  -2,989
  -3,125
  -3,267
  -3,418
  -3,576
Prev. year cash balance distribution, $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 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
 
  2,021
  2,314
  2,646
  2,996
  3,363
  3,747
  4,148
  4,566
  5,002
  5,456
  5,647
  6,139
  6,651
  7,185
  7,740
  8,319
  8,922
  9,551
  10,207
  10,892
  11,608
  12,355
  13,137
  13,955
  14,810
  15,706
  16,644
  17,627
  18,657
  19,737
Discount rate, %
 
  9.10
  9.56
  10.03
  10.53
  11.06
  11.61
  12.19
  12.80
  13.44
  14.12
  14.82
  15.56
  16.34
  17.16
  18.02
  18.92
  19.86
  20.86
  21.90
  23.00
  24.15
  25.35
  26.62
  27.95
  29.35
  30.82
  32.36
  33.97
  35.67
  37.46
PV of cash for distribution, $m
 
  1,853
  1,928
  1,987
  2,007
  1,990
  1,938
  1,854
  1,742
  1,607
  1,457
  1,235
  1,082
  930
  783
  645
  520
  410
  316
  237
  174
  124
  86
  58
  38
  24
  15
  9
  5
  3
  1
Current shareholders' claim on cash, %
  100
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9

CEMEX, S.A.B. de C.V. produces, markets, distributes, and sells cement, ready-mix concrete, aggregates, and other construction materials in Mexico and internationally. The company also offers various complementary construction products, including asphalt products; concrete blocks and roof tiles; architectural products; concrete pipes for storm and sanitary sewers applications; and other precast products comprising rail products, concrete floors, box culverts, bridges, drainage basins, barriers, and parking curbs. In addition, it provides building solutions for housing projects, pavement projects, and green building consultancy services; and information technology solutions and services. The company has operations in Mexico, the United States, Northern Europe, the Mediterranean, South America, the Caribbean, and Asia. CEMEX, S.A.B. de C.V. was founded in 1906 and is based in San Pedro Garza GarcĂ­a, Mexico.

FINANCIAL RATIOS  of  Cemex ADR (CX)

Valuation Ratios
P/E Ratio 1869.6
Price to Sales 104.6
Price to Book 156.4
Price to Tangible Book
Price to Cash Flow 671.3
Price to Free Cash Flow 779.2
Growth Rates
Sales Growth Rate 13.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -43.9%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 140.8%
Total Debt to Equity 148.5%
Interest Coverage 2
Management Effectiveness
Return On Assets 5.1%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 3.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.6%
Return On Equity 9%
Return On Equity - 3 Yr. Avg. 1.6%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 35.5%
Gross Margin - 3 Yr. Avg. 33.9%
EBITDA Margin 20.5%
EBITDA Margin - 3 Yr. Avg. 17.1%
Operating Margin 13.4%
Oper. Margin - 3 Yr. Avg. 10.8%
Pre-Tax Margin 6.9%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 0.9%
Effective Tax Rate 17.8%
Eff/ Tax Rate - 3 Yr. Avg. -39.8%
Payout Ratio 0%

CX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CX stock intrinsic value calculation we used $12713 million for the last fiscal year's total revenue generated by Cemex ADR. The default revenue input number comes from 2016 income statement of Cemex 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 CX stock valuation model: a) initial revenue growth rate of 12.3% 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 9.1%, whose default value for CX is calculated based on our internal credit rating of Cemex 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 Cemex 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 CX stock the variable cost ratio is equal to 66.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2591 million in the base year in the intrinsic value calculation for CX 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 7% for Cemex ADR.

Corporate tax rate of 27% is the nominal tax rate for Cemex 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 CX 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 CX are equal to 103.4%.

Life of production assets of 28.1 years is the average useful life of capital assets used in Cemex 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 CX is equal to 4.5%. 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 - $8500 million for Cemex 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 1345.73 million for Cemex 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 Cemex ADR at the current share price and the inputted number of shares is $13.6 billion.

RELATED COMPANIES Price Int.Val. Rating
CRH CRH ADR 35.31 97.28  str.buy
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Stock chart of CX Financial statements of CX Annual reports of CX
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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