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

Previous Close

$82.01

  Intrinsic Value

$45.65

stock screener

  Rating & Target

sell

-44%

  Value-price divergence*

-32%

Previous close

$82.01

 
Intrinsic value

$45.65

 
Up/down potential

-44%

 
Rating

sell

 
Value-price divergence*

-32%

*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 70.3

 

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
  4.60
  4.64
  4.68
  4.71
  4.74
  4.76
  4.79
  4.81
  4.83
  4.85
  4.86
  4.87
  4.89
  4.90
  4.91
  4.92
  4.93
  4.93
  4.94
  4.95
  4.95
  4.96
  4.96
  4.96
  4.97
  4.97
  4.97
  4.98
  4.98
  4.98
Revenue, $m
  24,594
  25,725
  26,919
  28,178
  29,504
  30,902
  32,374
  33,924
  35,556
  37,272
  39,078
  40,977
  42,975
  45,075
  47,283
  49,604
  52,043
  54,607
  57,301
  60,131
  63,105
  66,230
  69,512
  72,961
  76,583
  80,387
  84,384
  88,581
  92,990
  97,620
  102,482
Variable operating expenses, $m
 
  23,262
  24,322
  25,440
  26,618
  27,859
  29,167
  30,543
  31,991
  33,516
  35,119
  36,388
  38,162
  40,027
  41,987
  44,048
  46,214
  48,491
  50,883
  53,397
  56,038
  58,812
  61,727
  64,789
  68,006
  71,384
  74,933
  78,660
  82,575
  86,687
  91,005
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
  23,262
  24,322
  25,440
  26,618
  27,859
  29,167
  30,543
  31,991
  33,516
  35,119
  36,388
  38,162
  40,027
  41,987
  44,048
  46,214
  48,491
  50,883
  53,397
  56,038
  58,812
  61,727
  64,789
  68,006
  71,384
  74,933
  78,660
  82,575
  86,687
  91,005
Operating income, $m
  3,126
  2,463
  2,597
  2,738
  2,886
  3,043
  3,208
  3,381
  3,564
  3,756
  3,959
  4,589
  4,813
  5,048
  5,295
  5,555
  5,829
  6,116
  6,417
  6,734
  7,068
  7,417
  7,785
  8,171
  8,577
  9,003
  9,451
  9,921
  10,414
  10,933
  11,478
EBITDA, $m
  4,384
  3,883
  4,063
  4,253
  4,453
  4,664
  4,886
  5,120
  5,366
  5,625
  5,898
  6,184
  6,486
  6,803
  7,136
  7,486
  7,855
  8,241
  8,648
  9,075
  9,524
  9,996
  10,491
  11,012
  11,558
  12,132
  12,736
  13,369
  14,034
  14,733
  15,467
Interest expense (income), $m
  386
  365
  427
  492
  560
  631
  707
  787
  871
  959
  1,052
  1,149
  1,252
  1,360
  1,474
  1,593
  1,719
  1,851
  1,989
  2,135
  2,288
  2,449
  2,618
  2,795
  2,982
  3,178
  3,384
  3,600
  3,827
  4,065
  4,316
Earnings before tax, $m
  3,265
  2,098
  2,170
  2,246
  2,327
  2,411
  2,501
  2,595
  2,694
  2,798
  2,907
  3,440
  3,561
  3,688
  3,822
  3,962
  4,110
  4,265
  4,428
  4,600
  4,780
  4,969
  5,167
  5,376
  5,595
  5,825
  6,067
  6,321
  6,588
  6,868
  7,162
Tax expense, $m
  744
  567
  586
  606
  628
  651
  675
  701
  727
  755
  785
  929
  961
  996
  1,032
  1,070
  1,110
  1,152
  1,196
  1,242
  1,290
  1,342
  1,395
  1,451
  1,511
  1,573
  1,638
  1,707
  1,779
  1,854
  1,934
Net income, $m
  2,513
  1,532
  1,584
  1,640
  1,698
  1,760
  1,826
  1,894
  1,966
  2,042
  2,122
  2,511
  2,600
  2,692
  2,790
  2,893
  3,000
  3,114
  3,233
  3,358
  3,489
  3,627
  3,772
  3,924
  4,084
  4,252
  4,429
  4,614
  4,809
  5,014
  5,228

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
  35,581
  37,232
  38,973
  40,808
  42,742
  44,778
  46,921
  49,178
  51,552
  54,050
  56,677
  59,440
  62,344
  65,398
  68,608
  71,982
  75,528
  79,254
  83,169
  87,283
  91,604
  96,144
  100,914
  105,924
  111,186
  116,713
  122,519
  128,616
  135,020
  141,746
Adjusted assets (=assets-cash), $m
  33,997
  35,581
  37,232
  38,973
  40,808
  42,742
  44,778
  46,921
  49,178
  51,552
  54,050
  56,677
  59,440
  62,344
  65,398
  68,608
  71,982
  75,528
  79,254
  83,169
  87,283
  91,604
  96,144
  100,914
  105,924
  111,186
  116,713
  122,519
  128,616
  135,020
  141,746
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
  14,020
  14,671
  15,357
  16,080
  16,842
  17,644
  18,489
  19,378
  20,313
  21,297
  22,333
  23,421
  24,566
  25,769
  27,034
  28,363
  29,761
  31,229
  32,772
  34,392
  36,095
  37,884
  39,764
  41,738
  43,811
  45,989
  48,277
  50,679
  53,203
  55,853
Working capital, $m
  8,220
  2,804
  2,934
  3,071
  3,216
  3,368
  3,529
  3,698
  3,876
  4,063
  4,259
  4,467
  4,684
  4,913
  5,154
  5,407
  5,673
  5,952
  6,246
  6,554
  6,878
  7,219
  7,577
  7,953
  8,348
  8,762
  9,198
  9,655
  10,136
  10,641
  11,171
Total debt, $m
  8,536
  9,490
  10,925
  12,438
  14,032
  15,713
  17,482
  19,345
  21,306
  23,369
  25,539
  27,822
  30,223
  32,747
  35,401
  38,191
  41,122
  44,204
  47,442
  50,844
  54,419
  58,174
  62,119
  66,264
  70,618
  75,191
  79,994
  85,039
  90,338
  95,903
  101,747
Total liabilities, $m
  29,966
  30,920
  32,355
  33,868
  35,462
  37,143
  38,912
  40,775
  42,736
  44,799
  46,969
  49,252
  51,653
  54,177
  56,831
  59,621
  62,552
  65,634
  68,872
  72,274
  75,849
  79,604
  83,549
  87,694
  92,048
  96,621
  101,424
  106,469
  111,768
  117,333
  123,177
Total equity, $m
  9,998
  4,661
  4,877
  5,106
  5,346
  5,599
  5,866
  6,147
  6,442
  6,753
  7,081
  7,425
  7,787
  8,167
  8,567
  8,988
  9,430
  9,894
  10,382
  10,895
  11,434
  12,000
  12,595
  13,220
  13,876
  14,565
  15,289
  16,050
  16,849
  17,688
  18,569
Total liabilities and equity, $m
  39,964
  35,581
  37,232
  38,974
  40,808
  42,742
  44,778
  46,922
  49,178
  51,552
  54,050
  56,677
  59,440
  62,344
  65,398
  68,609
  71,982
  75,528
  79,254
  83,169
  87,283
  91,604
  96,144
  100,914
  105,924
  111,186
  116,713
  122,519
  128,617
  135,021
  141,746
Debt-to-equity ratio
  0.854
  2.040
  2.240
  2.440
  2.620
  2.810
  2.980
  3.150
  3.310
  3.460
  3.610
  3.750
  3.880
  4.010
  4.130
  4.250
  4.360
  4.470
  4.570
  4.670
  4.760
  4.850
  4.930
  5.010
  5.090
  5.160
  5.230
  5.300
  5.360
  5.420
  5.480
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
  1,532
  1,584
  1,640
  1,698
  1,760
  1,826
  1,894
  1,966
  2,042
  2,122
  2,511
  2,600
  2,692
  2,790
  2,893
  3,000
  3,114
  3,233
  3,358
  3,489
  3,627
  3,772
  3,924
  4,084
  4,252
  4,429
  4,614
  4,809
  5,014
  5,228
Depreciation, amort., depletion, $m
  1,258
  1,419
  1,466
  1,515
  1,567
  1,621
  1,678
  1,739
  1,802
  1,869
  1,939
  1,595
  1,673
  1,755
  1,841
  1,931
  2,026
  2,126
  2,231
  2,341
  2,457
  2,578
  2,706
  2,840
  2,981
  3,129
  3,285
  3,448
  3,620
  3,800
  3,989
Funds from operations, $m
  2,168
  2,951
  3,050
  3,155
  3,265
  3,381
  3,504
  3,633
  3,768
  3,911
  4,061
  4,106
  4,272
  4,447
  4,631
  4,824
  5,026
  5,239
  5,463
  5,699
  5,946
  6,205
  6,478
  6,765
  7,066
  7,382
  7,714
  8,063
  8,429
  8,814
  9,218
Change in working capital, $m
  -1,132
  123
  130
  137
  145
  152
  160
  169
  178
  187
  197
  207
  218
  229
  241
  253
  266
  279
  294
  309
  324
  341
  358
  376
  395
  415
  436
  458
  481
  505
  530
Cash from operations, $m
  3,300
  2,828
  2,920
  3,017
  3,120
  3,229
  3,343
  3,464
  3,591
  3,724
  3,865
  3,899
  4,055
  4,218
  4,390
  4,571
  4,760
  4,960
  5,170
  5,390
  5,622
  5,865
  6,120
  6,389
  6,671
  6,967
  7,278
  7,605
  7,948
  8,309
  8,688
Maintenance CAPEX, $m
  0
  -958
  -1,001
  -1,048
  -1,097
  -1,149
  -1,203
  -1,260
  -1,321
  -1,384
  -1,451
  -1,521
  -1,595
  -1,673
  -1,755
  -1,841
  -1,931
  -2,026
  -2,126
  -2,231
  -2,341
  -2,457
  -2,578
  -2,706
  -2,840
  -2,981
  -3,129
  -3,285
  -3,448
  -3,620
  -3,800
New CAPEX, $m
  -1,019
  -609
  -651
  -686
  -723
  -762
  -802
  -845
  -889
  -936
  -984
  -1,035
  -1,089
  -1,145
  -1,203
  -1,265
  -1,329
  -1,397
  -1,468
  -1,543
  -1,621
  -1,703
  -1,789
  -1,879
  -1,974
  -2,074
  -2,178
  -2,288
  -2,403
  -2,523
  -2,650
Cash from investing activities, $m
  -1,514
  -1,567
  -1,652
  -1,734
  -1,820
  -1,911
  -2,005
  -2,105
  -2,210
  -2,320
  -2,435
  -2,556
  -2,684
  -2,818
  -2,958
  -3,106
  -3,260
  -3,423
  -3,594
  -3,774
  -3,962
  -4,160
  -4,367
  -4,585
  -4,814
  -5,055
  -5,307
  -5,573
  -5,851
  -6,143
  -6,450
Free cash flow, $m
  1,786
  1,261
  1,268
  1,283
  1,300
  1,319
  1,338
  1,359
  1,381
  1,404
  1,429
  1,343
  1,371
  1,401
  1,432
  1,465
  1,500
  1,537
  1,576
  1,617
  1,660
  1,705
  1,753
  1,804
  1,857
  1,912
  1,971
  2,033
  2,098
  2,166
  2,237
Issuance/(repayment) of debt, $m
  -240
  1,383
  1,435
  1,513
  1,595
  1,680
  1,769
  1,863
  1,961
  2,063
  2,171
  2,283
  2,401
  2,524
  2,654
  2,790
  2,932
  3,081
  3,238
  3,402
  3,575
  3,756
  3,945
  4,145
  4,354
  4,573
  4,803
  5,045
  5,299
  5,565
  5,845
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
  1,383
  1,435
  1,513
  1,595
  1,680
  1,769
  1,863
  1,961
  2,063
  2,171
  2,283
  2,401
  2,524
  2,654
  2,790
  2,932
  3,081
  3,238
  3,402
  3,575
  3,756
  3,945
  4,145
  4,354
  4,573
  4,803
  5,045
  5,299
  5,565
  5,845
Total cash flow (excl. dividends), $m
  640
  2,644
  2,702
  2,796
  2,895
  2,999
  3,107
  3,222
  3,342
  3,468
  3,600
  3,626
  3,772
  3,925
  4,086
  4,255
  4,432
  4,618
  4,814
  5,019
  5,234
  5,461
  5,698
  5,948
  6,210
  6,485
  6,774
  7,078
  7,396
  7,731
  8,082
Retained Cash Flow (-), $m
  -5
  -201
  -216
  -228
  -240
  -253
  -267
  -281
  -296
  -311
  -327
  -344
  -362
  -381
  -400
  -421
  -442
  -464
  -488
  -513
  -539
  -566
  -595
  -625
  -656
  -689
  -724
  -761
  -799
  -839
  -881
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
 
  7,981
  2,486
  2,568
  2,655
  2,745
  2,841
  2,941
  3,046
  3,157
  3,273
  3,282
  3,410
  3,544
  3,686
  3,834
  3,990
  4,154
  4,325
  4,506
  4,696
  4,895
  5,104
  5,323
  5,554
  5,796
  6,050
  6,317
  6,597
  6,892
  7,201
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
 
  7,652
  2,276
  2,235
  2,186
  2,128
  2,062
  1,987
  1,904
  1,813
  1,716
  1,558
  1,455
  1,348
  1,237
  1,126
  1,014
  904
  797
  694
  597
  506
  423
  349
  283
  225
  177
  136
  102
  75
  54
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 operates as a science and technology based company. The company’s Agriculture segment offers corn hybrid, soybean, canola, sunflower, wheat, rice, sorghum, inoculants, seed products, herbicides, fungicides, and insecticides, as well as offers crop protection products, such as weed control, disease control, and insect control products. Its Electronics & Communications segment provides various materials and systems for consumer electronics, photovoltaics, displays, and advanced printing. The company’s Industrial Biosciences segment develops and manufactures a portfolio of enzymes and bio-based materials. Its Nutrition & Health segment offers cultures, probiotics, emulsifiers, texturants, natural sweeteners, and soy-based food ingredients for the food industry market. The company’s Performance Materials segment offers elastomers and thermoplastic, and thermoset engineering polymers; resins and films for packaging and industrial polymer applications, sealants and adhesives, and sporting goods; and elastomers, parts, and systems and solutions for automotive and transportation, packaging for food and beverages, electrical/electronic components, material handling, healthcare, construction, semiconductor, and aerospace markets. Its Protection Solutions segment provides nonwovens, aramids, and solid surfaces for industrial, construction, consumer, military and law enforcement, automotive, aircraft, and energy markets. The company markets its products through the company’s sales force and distributors in the United States and internationally. E. I. du Pont de Nemours and Company was founded in 1802 and is headquartered in Wilmington, Delaware.

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

Valuation Ratios
P/E Ratio 28.2
Price to Sales 2.9
Price to Book 7.1
Price to Tangible Book
Price to Cash Flow 21.4
Price to Free Cash Flow 31
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 4.6% 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 857.107 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 $70.3 billion.

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Stock chart of DD 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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