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

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$80.69

  Intrinsic Value

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  Value-price divergence*

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*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 69.2

 

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
  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
  24,594
  25,259
  25,840
  26,504
  27,250
  28,076
  28,982
  29,970
  31,038
  32,189
  33,424
  34,746
  36,156
  37,658
  39,253
  40,947
  42,741
  44,640
  46,649
  48,772
  51,012
  53,377
  55,871
  58,499
  61,269
  64,185
  67,256
  70,489
  73,890
  77,469
  81,233
Variable operating expenses, $m
 
  22,851
  23,367
  23,957
  24,619
  25,353
  26,158
  27,035
  27,983
  29,006
  30,103
  30,859
  32,111
  33,445
  34,862
  36,366
  37,959
  39,646
  41,430
  43,315
  45,305
  47,405
  49,620
  51,954
  54,414
  57,004
  59,732
  62,603
  65,624
  68,802
  72,145
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
  22,851
  23,367
  23,957
  24,619
  25,353
  26,158
  27,035
  27,983
  29,006
  30,103
  30,859
  32,111
  33,445
  34,862
  36,366
  37,959
  39,646
  41,430
  43,315
  45,305
  47,405
  49,620
  51,954
  54,414
  57,004
  59,732
  62,603
  65,624
  68,802
  72,145
Operating income, $m
  3,126
  2,408
  2,473
  2,547
  2,631
  2,723
  2,825
  2,935
  3,055
  3,183
  3,321
  3,887
  4,045
  4,213
  4,392
  4,581
  4,782
  4,994
  5,219
  5,457
  5,707
  5,972
  6,251
  6,545
  6,855
  7,181
  7,525
  7,886
  8,267
  8,667
  9,088
EBITDA, $m
  4,384
  3,804
  3,891
  3,991
  4,104
  4,228
  4,365
  4,513
  4,674
  4,847
  5,033
  5,233
  5,445
  5,671
  5,911
  6,166
  6,437
  6,723
  7,025
  7,345
  7,682
  8,038
  8,414
  8,810
  9,227
  9,666
  10,128
  10,615
  11,127
  11,666
  12,233
Interest expense (income), $m
  386
  365
  392
  424
  459
  499
  544
  592
  645
  703
  765
  831
  902
  978
  1,058
  1,144
  1,235
  1,332
  1,434
  1,541
  1,655
  1,776
  1,903
  2,037
  2,178
  2,327
  2,483
  2,648
  2,822
  3,005
  3,197
Earnings before tax, $m
  3,265
  2,043
  2,081
  2,124
  2,171
  2,224
  2,281
  2,343
  2,409
  2,480
  2,557
  3,056
  3,143
  3,235
  3,333
  3,437
  3,547
  3,663
  3,786
  3,915
  4,052
  4,196
  4,348
  4,508
  4,677
  4,854
  5,041
  5,238
  5,445
  5,662
  5,891
Tax expense, $m
  744
  552
  562
  573
  586
  600
  616
  632
  650
  670
  690
  825
  849
  874
  900
  928
  958
  989
  1,022
  1,057
  1,094
  1,133
  1,174
  1,217
  1,263
  1,311
  1,361
  1,414
  1,470
  1,529
  1,591
Net income, $m
  2,513
  1,492
  1,519
  1,550
  1,585
  1,623
  1,665
  1,710
  1,759
  1,811
  1,866
  2,231
  2,294
  2,362
  2,433
  2,509
  2,589
  2,674
  2,763
  2,858
  2,958
  3,063
  3,174
  3,291
  3,414
  3,544
  3,680
  3,824
  3,975
  4,134
  4,301

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
  34,697
  35,495
  36,407
  37,431
  38,566
  39,811
  41,167
  42,635
  44,216
  45,913
  47,728
  49,665
  51,728
  53,919
  56,245
  58,710
  61,319
  64,079
  66,994
  70,072
  73,320
  76,745
  80,356
  84,160
  88,167
  92,385
  96,825
  101,498
  106,413
  111,584
Adjusted assets (=assets-cash), $m
  33,997
  34,697
  35,495
  36,407
  37,431
  38,566
  39,811
  41,167
  42,635
  44,216
  45,913
  47,728
  49,665
  51,728
  53,919
  56,245
  58,710
  61,319
  64,079
  66,994
  70,072
  73,320
  76,745
  80,356
  84,160
  88,167
  92,385
  96,825
  101,498
  106,413
  111,584
Revenue / Adjusted assets
  0.723
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
  0.728
Average production assets, $m
  13,412
  13,691
  14,005
  14,365
  14,769
  15,217
  15,709
  16,243
  16,823
  17,446
  18,116
  18,832
  19,597
  20,410
  21,275
  22,193
  23,166
  24,195
  25,284
  26,434
  27,649
  28,930
  30,282
  31,707
  33,208
  34,788
  36,453
  38,205
  40,049
  41,988
  44,028
Working capital, $m
  8,220
  2,728
  2,791
  2,862
  2,943
  3,032
  3,130
  3,237
  3,352
  3,476
  3,610
  3,753
  3,905
  4,067
  4,239
  4,422
  4,616
  4,821
  5,038
  5,267
  5,509
  5,765
  6,034
  6,318
  6,617
  6,932
  7,264
  7,613
  7,980
  8,367
  8,773
Total debt, $m
  8,536
  8,722
  9,415
  10,208
  11,098
  12,084
  13,166
  14,344
  15,619
  16,993
  18,468
  20,046
  21,729
  23,521
  25,426
  27,447
  29,589
  31,857
  34,254
  36,788
  39,463
  42,285
  45,262
  48,399
  51,705
  55,187
  58,853
  62,711
  66,772
  71,043
  75,536
Total liabilities, $m
  29,966
  30,152
  30,845
  31,638
  32,528
  33,514
  34,596
  35,774
  37,049
  38,423
  39,898
  41,476
  43,159
  44,951
  46,856
  48,877
  51,019
  53,287
  55,684
  58,218
  60,893
  63,715
  66,692
  69,829
  73,135
  76,617
  80,283
  84,141
  88,202
  92,473
  96,966
Total equity, $m
  9,998
  4,545
  4,650
  4,769
  4,903
  5,052
  5,215
  5,393
  5,585
  5,792
  6,015
  6,252
  6,506
  6,776
  7,063
  7,368
  7,691
  8,033
  8,394
  8,776
  9,179
  9,605
  10,054
  10,527
  11,025
  11,550
  12,102
  12,684
  13,296
  13,940
  14,617
Total liabilities and equity, $m
  39,964
  34,697
  35,495
  36,407
  37,431
  38,566
  39,811
  41,167
  42,634
  44,215
  45,913
  47,728
  49,665
  51,727
  53,919
  56,245
  58,710
  61,320
  64,078
  66,994
  70,072
  73,320
  76,746
  80,356
  84,160
  88,167
  92,385
  96,825
  101,498
  106,413
  111,583
Debt-to-equity ratio
  0.854
  1.920
  2.020
  2.140
  2.260
  2.390
  2.520
  2.660
  2.800
  2.930
  3.070
  3.210
  3.340
  3.470
  3.600
  3.730
  3.850
  3.970
  4.080
  4.190
  4.300
  4.400
  4.500
  4.600
  4.690
  4.780
  4.860
  4.940
  5.020
  5.100
  5.170
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
  1,492
  1,519
  1,550
  1,585
  1,623
  1,665
  1,710
  1,759
  1,811
  1,866
  2,231
  2,294
  2,362
  2,433
  2,509
  2,589
  2,674
  2,763
  2,858
  2,958
  3,063
  3,174
  3,291
  3,414
  3,544
  3,680
  3,824
  3,975
  4,134
  4,301
Depreciation, amort., depletion, $m
  1,258
  1,396
  1,418
  1,444
  1,473
  1,505
  1,540
  1,578
  1,620
  1,664
  1,712
  1,345
  1,400
  1,458
  1,520
  1,585
  1,655
  1,728
  1,806
  1,888
  1,975
  2,066
  2,163
  2,265
  2,372
  2,485
  2,604
  2,729
  2,861
  2,999
  3,145
Funds from operations, $m
  2,168
  2,887
  2,937
  2,994
  3,058
  3,128
  3,205
  3,288
  3,378
  3,475
  3,578
  3,576
  3,694
  3,820
  3,953
  4,094
  4,244
  4,402
  4,569
  4,746
  4,933
  5,130
  5,337
  5,556
  5,786
  6,029
  6,284
  6,553
  6,835
  7,133
  7,446
Change in working capital, $m
  -1,132
  53
  63
  72
  81
  89
  98
  107
  115
  124
  133
  143
  152
  162
  172
  183
  194
  205
  217
  229
  242
  255
  269
  284
  299
  315
  332
  349
  367
  386
  407
Cash from operations, $m
  3,300
  2,317
  2,874
  2,923
  2,978
  3,039
  3,107
  3,182
  3,263
  3,351
  3,445
  3,434
  3,542
  3,658
  3,781
  3,911
  4,050
  4,197
  4,352
  4,517
  4,691
  4,874
  5,068
  5,272
  5,487
  5,714
  5,952
  6,203
  6,468
  6,746
  7,039
Maintenance CAPEX, $m
  0
  -958
  -978
  -1,000
  -1,026
  -1,055
  -1,087
  -1,122
  -1,160
  -1,202
  -1,246
  -1,294
  -1,345
  -1,400
  -1,458
  -1,520
  -1,585
  -1,655
  -1,728
  -1,806
  -1,888
  -1,975
  -2,066
  -2,163
  -2,265
  -2,372
  -2,485
  -2,604
  -2,729
  -2,861
  -2,999
New CAPEX, $m
  -1,019
  -279
  -315
  -360
  -404
  -448
  -491
  -535
  -579
  -624
  -670
  -716
  -764
  -814
  -865
  -918
  -973
  -1,030
  -1,089
  -1,150
  -1,215
  -1,282
  -1,352
  -1,425
  -1,501
  -1,581
  -1,665
  -1,752
  -1,844
  -1,940
  -2,040
Cash from investing activities, $m
  -1,514
  -1,237
  -1,293
  -1,360
  -1,430
  -1,503
  -1,578
  -1,657
  -1,739
  -1,826
  -1,916
  -2,010
  -2,109
  -2,214
  -2,323
  -2,438
  -2,558
  -2,685
  -2,817
  -2,956
  -3,103
  -3,257
  -3,418
  -3,588
  -3,766
  -3,953
  -4,150
  -4,356
  -4,573
  -4,801
  -5,039
Free cash flow, $m
  1,786
  1,080
  1,582
  1,562
  1,547
  1,536
  1,529
  1,525
  1,523
  1,525
  1,529
  1,423
  1,432
  1,444
  1,458
  1,474
  1,492
  1,513
  1,536
  1,561
  1,588
  1,618
  1,650
  1,684
  1,721
  1,761
  1,803
  1,848
  1,895
  1,946
  2,000
Issuance/(repayment) of debt, $m
  -240
  615
  693
  793
  890
  986
  1,082
  1,178
  1,275
  1,374
  1,475
  1,578
  1,683
  1,792
  1,905
  2,021
  2,142
  2,267
  2,398
  2,533
  2,675
  2,823
  2,977
  3,138
  3,306
  3,482
  3,666
  3,859
  4,060
  4,272
  4,493
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
  615
  693
  793
  890
  986
  1,082
  1,178
  1,275
  1,374
  1,475
  1,578
  1,683
  1,792
  1,905
  2,021
  2,142
  2,267
  2,398
  2,533
  2,675
  2,823
  2,977
  3,138
  3,306
  3,482
  3,666
  3,859
  4,060
  4,272
  4,493
Total cash flow (excl. dividends), $m
  640
  1,695
  2,275
  2,355
  2,437
  2,522
  2,611
  2,703
  2,799
  2,899
  3,004
  3,001
  3,116
  3,236
  3,363
  3,495
  3,634
  3,780
  3,933
  4,094
  4,263
  4,440
  4,626
  4,822
  5,027
  5,242
  5,469
  5,706
  5,956
  6,218
  6,493
Retained Cash Flow (-), $m
  -5
  -85
  -105
  -120
  -134
  -149
  -163
  -178
  -192
  -207
  -222
  -238
  -254
  -270
  -287
  -305
  -323
  -342
  -361
  -382
  -403
  -425
  -449
  -473
  -498
  -525
  -553
  -582
  -612
  -644
  -677
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
 
  7,148
  2,171
  2,236
  2,303
  2,374
  2,448
  2,525
  2,607
  2,692
  2,782
  2,763
  2,862
  2,966
  3,075
  3,190
  3,311
  3,438
  3,572
  3,712
  3,860
  4,015
  4,178
  4,349
  4,529
  4,718
  4,916
  5,125
  5,344
  5,574
  5,815
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
 
  6,853
  1,987
  1,945
  1,896
  1,840
  1,776
  1,706
  1,629
  1,546
  1,458
  1,312
  1,221
  1,128
  1,032
  937
  841
  748
  658
  572
  490
  415
  347
  285
  231
  184
  143
  110
  83
  61
  44
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 27.7
Price to Sales 2.8
Price to Book 7
Price to Tangible Book
Price to Cash Flow 21.1
Price to Free Cash Flow 30.5
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 $24764 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 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 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 54.2%.

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 10.8%. 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 $69.2 billion.


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Stock chart of DD Financial statements of DD Annual reports 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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