Intrinsic value of E.I. DuPont de Nemours - DD

Previous Close

$83.93

  Intrinsic Value

$46.21

stock screener

  Rating & Target

sell

-45%

  Value-price divergence*

-24%

Previous close

$83.93

 
Intrinsic value

$46.21

 
Up/down potential

-45%

 
Rating

sell

 
Value-price divergence*

-24%

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

We calculate the intrinsic value of DD 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 73.1

 

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, %
  -2.13
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
  5.03
  5.02
  5.02
  5.02
  5.02
  5.02
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.01
  5.00
Revenue, $m
  24,594
  25,848
  27,164
  28,544
  29,992
  31,511
  33,106
  34,779
  36,534
  38,377
  40,310
  42,340
  44,470
  46,706
  49,053
  51,517
  54,104
  56,819
  59,669
  62,662
  65,803
  69,101
  72,564
  76,199
  80,016
  84,023
  88,231
  92,648
  97,286
  102,155
  107,267
Variable operating expenses, $m
 
  23,371
  24,540
  25,765
  27,051
  28,400
  29,816
  31,301
  32,860
  34,497
  36,214
  37,598
  39,490
  41,475
  43,560
  45,747
  48,044
  50,455
  52,987
  55,644
  58,434
  61,362
  64,437
  67,665
  71,055
  74,613
  78,349
  82,272
  86,390
  90,714
  95,254
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
  21,468
  23,371
  24,540
  25,765
  27,051
  28,400
  29,816
  31,301
  32,860
  34,497
  36,214
  37,598
  39,490
  41,475
  43,560
  45,747
  48,044
  50,455
  52,987
  55,644
  58,434
  61,362
  64,437
  67,665
  71,055
  74,613
  78,349
  82,272
  86,390
  90,714
  95,254
Operating income, $m
  3,126
  2,477
  2,624
  2,779
  2,941
  3,111
  3,290
  3,477
  3,674
  3,880
  4,097
  4,742
  4,980
  5,231
  5,494
  5,770
  6,059
  6,363
  6,683
  7,018
  7,370
  7,739
  8,127
  8,534
  8,961
  9,410
  9,881
  10,376
  10,896
  11,441
  12,014
EBITDA, $m
  4,384
  3,901
  4,100
  4,308
  4,527
  4,756
  4,996
  5,249
  5,514
  5,792
  6,084
  6,390
  6,712
  7,049
  7,403
  7,775
  8,166
  8,575
  9,006
  9,457
  9,931
  10,429
  10,952
  11,500
  12,076
  12,681
  13,316
  13,983
  14,683
  15,418
  16,189
Interest expense (income), $m
  386
  365
  434
  505
  580
  658
  740
  826
  917
  1,012
  1,111
  1,216
  1,326
  1,441
  1,562
  1,689
  1,822
  1,962
  2,109
  2,263
  2,425
  2,595
  2,773
  2,960
  3,157
  3,363
  3,580
  3,808
  4,047
  4,298
  4,561
Earnings before tax, $m
  3,265
  2,112
  2,191
  2,274
  2,361
  2,453
  2,550
  2,651
  2,757
  2,868
  2,985
  3,526
  3,655
  3,790
  3,932
  4,081
  4,237
  4,402
  4,574
  4,755
  4,945
  5,144
  5,354
  5,574
  5,804
  6,047
  6,301
  6,568
  6,849
  7,143
  7,453
Tax expense, $m
  744
  570
  591
  614
  638
  662
  688
  716
  744
  774
  806
  952
  987
  1,023
  1,062
  1,102
  1,144
  1,188
  1,235
  1,284
  1,335
  1,389
  1,446
  1,505
  1,567
  1,633
  1,701
  1,773
  1,849
  1,929
  2,012
Net income, $m
  2,513
  1,542
  1,599
  1,660
  1,724
  1,791
  1,861
  1,935
  2,013
  2,094
  2,179
  2,574
  2,668
  2,767
  2,870
  2,979
  3,093
  3,213
  3,339
  3,471
  3,610
  3,755
  3,908
  4,069
  4,237
  4,414
  4,600
  4,795
  5,000
  5,215
  5,440

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,967
  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
  39,964
  35,751
  37,571
  39,480
  41,483
  43,584
  45,789
  48,103
  50,531
  53,080
  55,754
  58,561
  61,508
  64,600
  67,847
  71,255
  74,832
  78,588
  82,530
  86,669
  91,014
  95,576
  100,365
  105,393
  110,672
  116,215
  122,034
  128,143
  134,558
  141,293
  148,364
Adjusted assets (=assets-cash), $m
  33,997
  35,751
  37,571
  39,480
  41,483
  43,584
  45,789
  48,103
  50,531
  53,080
  55,754
  58,561
  61,508
  64,600
  67,847
  71,255
  74,832
  78,588
  82,530
  86,669
  91,014
  95,576
  100,365
  105,393
  110,672
  116,215
  122,034
  128,143
  134,558
  141,293
  148,364
Revenue / Adjusted assets
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
  0.723
Average production assets, $m
  13,412
  14,087
  14,804
  15,557
  16,346
  17,174
  18,043
  18,954
  19,911
  20,915
  21,969
  23,075
  24,236
  25,455
  26,734
  28,077
  29,486
  30,966
  32,520
  34,151
  35,863
  37,660
  39,547
  41,529
  43,609
  45,793
  48,086
  50,493
  53,021
  55,674
  58,461
Working capital, $m
  8,220
  2,817
  2,961
  3,111
  3,269
  3,435
  3,609
  3,791
  3,982
  4,183
  4,394
  4,615
  4,847
  5,091
  5,347
  5,615
  5,897
  6,193
  6,504
  6,830
  7,173
  7,532
  7,909
  8,306
  8,722
  9,159
  9,617
  10,099
  10,604
  11,135
  11,692
Total debt, $m
  8,536
  9,638
  11,219
  12,878
  14,619
  16,445
  18,361
  20,372
  22,482
  24,696
  27,020
  29,460
  32,020
  34,708
  37,529
  40,490
  43,599
  46,863
  50,289
  53,885
  57,661
  61,626
  65,787
  70,157
  74,744
  79,561
  84,617
  89,927
  95,501
  101,354
  107,499
Total liabilities, $m
  29,966
  31,068
  32,649
  34,308
  36,049
  37,875
  39,791
  41,802
  43,912
  46,126
  48,450
  50,890
  53,450
  56,138
  58,959
  61,920
  65,029
  68,293
  71,719
  75,315
  79,091
  83,056
  87,217
  91,587
  96,174
  100,991
  106,047
  111,357
  116,931
  122,784
  128,929
Total equity, $m
  9,998
  4,683
  4,922
  5,172
  5,434
  5,710
  5,998
  6,302
  6,620
  6,953
  7,304
  7,672
  8,058
  8,463
  8,888
  9,334
  9,803
  10,295
  10,811
  11,354
  11,923
  12,520
  13,148
  13,807
  14,498
  15,224
  15,986
  16,787
  17,627
  18,509
  19,436
Total liabilities and equity, $m
  39,964
  35,751
  37,571
  39,480
  41,483
  43,585
  45,789
  48,104
  50,532
  53,079
  55,754
  58,562
  61,508
  64,601
  67,847
  71,254
  74,832
  78,588
  82,530
  86,669
  91,014
  95,576
  100,365
  105,394
  110,672
  116,215
  122,033
  128,144
  134,558
  141,293
  148,365
Debt-to-equity ratio
  0.854
  2.060
  2.280
  2.490
  2.690
  2.880
  3.060
  3.230
  3.400
  3.550
  3.700
  3.840
  3.970
  4.100
  4.220
  4.340
  4.450
  4.550
  4.650
  4.750
  4.840
  4.920
  5.000
  5.080
  5.160
  5.230
  5.290
  5.360
  5.420
  5.480
  5.530
Adjusted equity ratio
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131
  0.131

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,513
  1,542
  1,599
  1,660
  1,724
  1,791
  1,861
  1,935
  2,013
  2,094
  2,179
  2,574
  2,668
  2,767
  2,870
  2,979
  3,093
  3,213
  3,339
  3,471
  3,610
  3,755
  3,908
  4,069
  4,237
  4,414
  4,600
  4,795
  5,000
  5,215
  5,440
Depreciation, amort., depletion, $m
  1,258
  1,424
  1,475
  1,529
  1,586
  1,645
  1,707
  1,772
  1,840
  1,912
  1,987
  1,648
  1,731
  1,818
  1,910
  2,005
  2,106
  2,212
  2,323
  2,439
  2,562
  2,690
  2,825
  2,966
  3,115
  3,271
  3,435
  3,607
  3,787
  3,977
  4,176
Funds from operations, $m
  2,168
  2,966
  3,075
  3,189
  3,309
  3,436
  3,568
  3,707
  3,853
  4,006
  4,166
  4,222
  4,399
  4,585
  4,780
  4,985
  5,199
  5,425
  5,662
  5,910
  6,171
  6,445
  6,733
  7,035
  7,352
  7,685
  8,035
  8,402
  8,787
  9,191
  9,616
Change in working capital, $m
  -1,132
  137
  143
  150
  158
  166
  174
  182
  191
  201
  211
  221
  232
  244
  256
  269
  282
  296
  311
  326
  342
  359
  377
  396
  416
  437
  459
  481
  506
  531
  557
Cash from operations, $m
  3,300
  2,829
  2,931
  3,039
  3,152
  3,270
  3,394
  3,525
  3,661
  3,805
  3,956
  4,001
  4,167
  4,341
  4,524
  4,716
  4,918
  5,129
  5,351
  5,584
  5,829
  6,086
  6,356
  6,639
  6,936
  7,248
  7,576
  7,920
  8,281
  8,661
  9,059
Maintenance CAPEX, $m
  0
  -958
  -1,006
  -1,057
  -1,111
  -1,168
  -1,227
  -1,289
  -1,354
  -1,422
  -1,494
  -1,569
  -1,648
  -1,731
  -1,818
  -1,910
  -2,005
  -2,106
  -2,212
  -2,323
  -2,439
  -2,562
  -2,690
  -2,825
  -2,966
  -3,115
  -3,271
  -3,435
  -3,607
  -3,787
  -3,977
New CAPEX, $m
  -1,019
  -676
  -717
  -752
  -789
  -828
  -869
  -912
  -957
  -1,004
  -1,054
  -1,106
  -1,161
  -1,219
  -1,279
  -1,343
  -1,410
  -1,480
  -1,553
  -1,631
  -1,712
  -1,797
  -1,887
  -1,981
  -2,080
  -2,184
  -2,293
  -2,407
  -2,528
  -2,654
  -2,786
Cash from investing activities, $m
  -1,514
  -1,634
  -1,723
  -1,809
  -1,900
  -1,996
  -2,096
  -2,201
  -2,311
  -2,426
  -2,548
  -2,675
  -2,809
  -2,950
  -3,097
  -3,253
  -3,415
  -3,586
  -3,765
  -3,954
  -4,151
  -4,359
  -4,577
  -4,806
  -5,046
  -5,299
  -5,564
  -5,842
  -6,135
  -6,441
  -6,763
Free cash flow, $m
  1,786
  1,196
  1,208
  1,229
  1,251
  1,274
  1,299
  1,324
  1,351
  1,379
  1,408
  1,326
  1,358
  1,391
  1,427
  1,464
  1,502
  1,543
  1,586
  1,631
  1,677
  1,727
  1,778
  1,833
  1,890
  1,949
  2,012
  2,078
  2,147
  2,220
  2,296
Issuance/(repayment) of debt, $m
  -240
  1,531
  1,581
  1,659
  1,740
  1,826
  1,916
  2,011
  2,110
  2,214
  2,324
  2,439
  2,560
  2,688
  2,821
  2,961
  3,109
  3,264
  3,426
  3,597
  3,776
  3,964
  4,162
  4,369
  4,587
  4,816
  5,057
  5,309
  5,574
  5,853
  6,145
Issuance/(repurchase) of shares, $m
  -735
  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  
  -993
  1,531
  1,581
  1,659
  1,740
  1,826
  1,916
  2,011
  2,110
  2,214
  2,324
  2,439
  2,560
  2,688
  2,821
  2,961
  3,109
  3,264
  3,426
  3,597
  3,776
  3,964
  4,162
  4,369
  4,587
  4,816
  5,057
  5,309
  5,574
  5,853
  6,145
Total cash flow (excl. dividends), $m
  640
  2,727
  2,789
  2,888
  2,992
  3,101
  3,215
  3,335
  3,461
  3,593
  3,732
  3,765
  3,918
  4,079
  4,248
  4,425
  4,611
  4,807
  5,012
  5,227
  5,453
  5,691
  5,940
  6,202
  6,477
  6,766
  7,069
  7,387
  7,721
  8,072
  8,441
Retained Cash Flow (-), $m
  -5
  -223
  -238
  -250
  -262
  -275
  -289
  -303
  -318
  -334
  -350
  -368
  -386
  -405
  -425
  -446
  -469
  -492
  -516
  -542
  -569
  -598
  -627
  -659
  -692
  -726
  -762
  -800
  -840
  -882
  -926
Prev. year cash balance distribution, $m
 
  5,538
  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
 
  8,041
  2,551
  2,638
  2,729
  2,825
  2,926
  3,032
  3,143
  3,259
  3,382
  3,397
  3,532
  3,674
  3,822
  3,979
  4,143
  4,315
  4,495
  4,685
  4,884
  5,093
  5,313
  5,543
  5,786
  6,040
  6,307
  6,587
  6,881
  7,190
  7,514
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  7,710
  2,335
  2,296
  2,247
  2,190
  2,124
  2,048
  1,964
  1,872
  1,773
  1,613
  1,507
  1,397
  1,283
  1,168
  1,053
  939
  828
  721
  621
  527
  441
  363
  295
  235
  184
  141
  106
  78
  57
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

E. I. du Pont de Nemours and Company is a science and technology-based company. It operates through six segments: Agriculture, Electronics & Communications (E&C), Industrial Biosciences, Nutrition & Health, Performance Materials and Protection Solutions. Its Agriculture segment includes products, such as corn hybrids and soybean varieties, herbicides, fungicides and insecticides. Its E&C segment includes products, such as printing and packaging materials, photopolymers and electronic materials. Its Industrial Biosciences segment includes products, such as enzymes, bio-based materials and process technologies. Its Nutrition & Health segment includes products, such as probiotics, cultures, emulsifiers, natural sweeteners and soy-based food ingredients. Its Performance Materials segment includes products, such as engineering polymers, packaging and industrial polymers, films and elastomers. Its Protection Solutions segment includes products, such as nonwovens, aramids and solid surfaces.

FINANCIAL RATIOS  of  E.I. DuPont de Nemours (DD)

Valuation Ratios
P/E Ratio 28.8
Price to Sales 2.9
Price to Book 7.2
Price to Tangible Book
Price to Cash Flow 21.9
Price to Free Cash Flow 31.8
Growth Rates
Sales Growth Rate -2.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -37.4%
Cap. Spend. - 3 Yr. Gr. Rate -11.5%
Financial Strength
Quick Ratio 14
Current Ratio 0
LT Debt to Equity 81.1%
Total Debt to Equity 85.4%
Interest Coverage 9
Management Effectiveness
Return On Assets 6.9%
Ret/ On Assets - 3 Yr. Avg. 6.5%
Return On Total Capital 13.5%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 25.1%
Return On Equity - 3 Yr. Avg. 22.1%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 41.3%
Gross Margin - 3 Yr. Avg. 40.5%
EBITDA Margin 20%
EBITDA Margin - 3 Yr. Avg. 19.9%
Operating Margin 12.7%
Oper. Margin - 3 Yr. Avg. 11.7%
Pre-Tax Margin 13.3%
Pre-Tax Margin - 3 Yr. Avg. 12.9%
Net Profit Margin 10.2%
Net Profit Margin - 3 Yr. Avg. 10.3%
Effective Tax Rate 22.8%
Eff/ Tax Rate - 3 Yr. Avg. 25.6%
Payout Ratio 53.1%

DD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DD stock intrinsic value calculation we used $24594 million for the last fiscal year's total revenue generated by E.I. DuPont de Nemours. The default revenue input number comes from 2016 income statement of E.I. DuPont de Nemours. 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 DD stock valuation model: a) initial revenue growth rate of 5.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for DD is calculated based on our internal credit rating of E.I. DuPont de Nemours, 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 E.I. DuPont de Nemours.
    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 DD stock the variable cost ratio is equal to 90.5%.

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 DD 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 4.5% for E.I. DuPont de Nemours.

Corporate tax rate of 27% is the nominal tax rate for E.I. DuPont de Nemours. 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 DD 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 DD are equal to 54.5%.

Life of production assets of 14 years is the average useful life of capital assets used in E.I. DuPont de Nemours 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 DD is equal to 10.9%. 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 - $9998 million for E.I. DuPont de Nemours - 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 870.675 million for E.I. DuPont de Nemours 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 E.I. DuPont de Nemours at the current share price and the inputted number of shares is $73.1 billion.

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Financial statements of DD
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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