Intrinsic value of DST Systems - DST

Previous Close

$55.86

  Intrinsic Value

$1,382

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+1135%

Previous close

$55.86

 
Intrinsic value

$1,382

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+1135%

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

We calculate the intrinsic value of DST 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 3.3

 

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, %
  5.63
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,557
  2,491
  3,849
  5,756
  8,352
  11,783
  16,199
  21,744
  28,551
  36,738
  46,403
  57,622
  70,449
  84,915
  101,032
  118,795
  138,187
  159,180
  181,740
  205,830
  231,414
  258,459
  286,936
  316,824
  348,109
  380,786
  414,861
  450,346
  487,267
  525,656
  565,556
Variable operating expenses, $m
 
  1,860
  2,845
  4,230
  6,114
  8,604
  11,810
  15,835
  20,776
  26,718
  33,734
  41,826
  51,136
  61,636
  73,335
  86,229
  100,305
  115,542
  131,918
  149,404
  167,974
  187,605
  208,275
  229,969
  252,678
  276,397
  301,131
  326,888
  353,687
  381,552
  410,514
Fixed operating expenses, $m
 
  128
  131
  135
  138
  141
  145
  149
  152
  156
  160
  164
  168
  172
  177
  181
  186
  190
  195
  200
  205
  210
  215
  221
  226
  232
  238
  243
  250
  256
  262
Total operating expenses, $m
  1,304
  1,988
  2,976
  4,365
  6,252
  8,745
  11,955
  15,984
  20,928
  26,874
  33,894
  41,990
  51,304
  61,808
  73,512
  86,410
  100,491
  115,732
  132,113
  149,604
  168,179
  187,815
  208,490
  230,190
  252,904
  276,629
  301,369
  327,131
  353,937
  381,808
  410,776
Operating income, $m
  253
  503
  872
  1,392
  2,100
  3,037
  4,244
  5,761
  7,623
  9,864
  12,509
  15,633
  19,145
  23,106
  27,520
  32,386
  37,697
  43,448
  49,627
  56,227
  63,235
  70,644
  78,446
  86,634
  95,205
  104,157
  113,493
  123,215
  133,330
  143,848
  154,780
EBITDA, $m
  349
  608
  1,005
  1,565
  2,328
  3,338
  4,639
  6,272
  8,279
  10,692
  13,543
  16,852
  20,635
  24,902
  29,657
  34,899
  40,620
  46,815
  53,472
  60,581
  68,130
  76,111
  84,515
  93,336
  102,569
  112,212
  122,269
  132,741
  143,638
  154,967
  166,743
Interest expense (income), $m
  23
  13
  51
  106
  183
  288
  426
  604
  828
  1,103
  1,434
  1,824
  2,277
  2,794
  3,378
  4,029
  4,746
  5,529
  6,376
  7,287
  8,259
  9,292
  10,384
  11,533
  12,739
  14,002
  15,321
  16,697
  18,129
  19,620
  21,169
Earnings before tax, $m
  279
  490
  821
  1,286
  1,917
  2,749
  3,818
  5,156
  6,795
  8,761
  11,076
  13,809
  16,868
  20,312
  24,142
  28,357
  32,951
  37,919
  43,251
  48,940
  54,976
  61,352
  68,062
  75,101
  82,465
  90,155
  98,171
  106,518
  115,201
  124,228
  133,611
Tax expense, $m
  101
  132
  222
  347
  518
  742
  1,031
  1,392
  1,835
  2,365
  2,990
  3,728
  4,554
  5,484
  6,518
  7,656
  8,897
  10,238
  11,678
  13,214
  14,844
  16,565
  18,377
  20,277
  22,266
  24,342
  26,506
  28,760
  31,104
  33,542
  36,075
Net income, $m
  427
  358
  599
  939
  1,399
  2,007
  2,787
  3,764
  4,960
  6,395
  8,085
  10,081
  12,314
  14,828
  17,624
  20,700
  24,054
  27,681
  31,573
  35,726
  40,133
  44,787
  49,685
  54,823
  60,200
  65,813
  71,665
  77,758
  84,097
  90,687
  97,536

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  196
  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
  2,772
  4,125
  6,372
  9,530
  13,827
  19,508
  26,820
  36,000
  47,270
  60,825
  76,827
  95,401
  116,637
  140,587
  167,271
  196,681
  228,787
  263,543
  300,894
  340,778
  383,136
  427,912
  475,059
  524,543
  576,339
  630,441
  686,856
  745,606
  806,733
  870,291
  936,351
Adjusted assets (=assets-cash), $m
  2,576
  4,125
  6,372
  9,530
  13,827
  19,508
  26,820
  36,000
  47,270
  60,825
  76,827
  95,401
  116,637
  140,587
  167,271
  196,681
  228,787
  263,543
  300,894
  340,778
  383,136
  427,912
  475,059
  524,543
  576,339
  630,441
  686,856
  745,606
  806,733
  870,291
  936,351
Revenue / Adjusted assets
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
  0.604
Average production assets, $m
  258
  411
  635
  950
  1,378
  1,944
  2,673
  3,588
  4,711
  6,062
  7,657
  9,508
  11,624
  14,011
  16,670
  19,601
  22,801
  26,265
  29,987
  33,962
  38,183
  42,646
  47,344
  52,276
  57,438
  62,830
  68,452
  74,307
  80,399
  86,733
  93,317
Working capital, $m
  27
  65
  100
  150
  217
  306
  421
  565
  742
  955
  1,206
  1,498
  1,832
  2,208
  2,627
  3,089
  3,593
  4,139
  4,725
  5,352
  6,017
  6,720
  7,460
  8,237
  9,051
  9,900
  10,786
  11,709
  12,669
  13,667
  14,704
Total debt, $m
  508
  1,190
  2,464
  4,254
  6,691
  9,912
  14,058
  19,263
  25,653
  33,339
  42,412
  52,944
  64,984
  78,564
  93,694
  110,369
  128,573
  148,280
  169,458
  192,072
  216,089
  241,477
  268,210
  296,267
  325,635
  356,311
  388,298
  421,610
  456,269
  492,306
  529,762
Total liabilities, $m
  1,657
  2,339
  3,613
  5,403
  7,840
  11,061
  15,207
  20,412
  26,802
  34,488
  43,561
  54,093
  66,133
  79,713
  94,843
  111,518
  129,722
  149,429
  170,607
  193,221
  217,238
  242,626
  269,359
  297,416
  326,784
  357,460
  389,447
  422,759
  457,418
  493,455
  530,911
Total equity, $m
  1,115
  1,786
  2,759
  4,126
  5,987
  8,447
  11,613
  15,588
  20,468
  26,337
  33,266
  41,309
  50,504
  60,874
  72,428
  85,163
  99,065
  114,114
  130,287
  147,557
  165,898
  185,286
  205,701
  227,127
  249,555
  272,981
  297,408
  322,848
  349,315
  376,836
  405,440
Total liabilities and equity, $m
  2,772
  4,125
  6,372
  9,529
  13,827
  19,508
  26,820
  36,000
  47,270
  60,825
  76,827
  95,402
  116,637
  140,587
  167,271
  196,681
  228,787
  263,543
  300,894
  340,778
  383,136
  427,912
  475,060
  524,543
  576,339
  630,441
  686,855
  745,607
  806,733
  870,291
  936,351
Debt-to-equity ratio
  0.456
  0.670
  0.890
  1.030
  1.120
  1.170
  1.210
  1.240
  1.250
  1.270
  1.270
  1.280
  1.290
  1.290
  1.290
  1.300
  1.300
  1.300
  1.300
  1.300
  1.300
  1.300
  1.300
  1.300
  1.300
  1.310
  1.310
  1.310
  1.310
  1.310
  1.310
Adjusted equity ratio
  0.357
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433
  0.433

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  427
  358
  599
  939
  1,399
  2,007
  2,787
  3,764
  4,960
  6,395
  8,085
  10,081
  12,314
  14,828
  17,624
  20,700
  24,054
  27,681
  31,573
  35,726
  40,133
  44,787
  49,685
  54,823
  60,200
  65,813
  71,665
  77,758
  84,097
  90,687
  97,536
Depreciation, amort., depletion, $m
  96
  104
  133
  173
  228
  301
  394
  512
  656
  829
  1,033
  1,219
  1,490
  1,796
  2,137
  2,513
  2,923
  3,367
  3,844
  4,354
  4,895
  5,467
  6,070
  6,702
  7,364
  8,055
  8,776
  9,527
  10,308
  11,120
  11,964
Funds from operations, $m
  83
  462
  732
  1,112
  1,628
  2,308
  3,181
  4,276
  5,616
  7,224
  9,119
  11,299
  13,804
  16,624
  19,761
  23,213
  26,978
  31,048
  35,418
  40,080
  45,028
  50,255
  55,755
  61,526
  67,563
  73,868
  80,441
  87,285
  94,404
  101,806
  109,499
Change in working capital, $m
  -106
  24
  35
  50
  67
  89
  115
  144
  177
  213
  251
  292
  333
  376
  419
  462
  504
  546
  587
  626
  665
  703
  740
  777
  813
  850
  886
  923
  960
  998
  1,037
Cash from operations, $m
  189
  438
  697
  1,062
  1,560
  2,219
  3,067
  4,131
  5,439
  7,011
  8,867
  11,008
  13,471
  16,248
  19,342
  22,752
  26,473
  30,502
  34,831
  39,454
  44,363
  49,551
  55,015
  60,748
  66,750
  73,019
  79,555
  86,362
  93,444
  100,808
  108,462
Maintenance CAPEX, $m
  0
  -33
  -53
  -81
  -122
  -177
  -249
  -343
  -460
  -604
  -777
  -982
  -1,219
  -1,490
  -1,796
  -2,137
  -2,513
  -2,923
  -3,367
  -3,844
  -4,354
  -4,895
  -5,467
  -6,070
  -6,702
  -7,364
  -8,055
  -8,776
  -9,527
  -10,308
  -11,120
New CAPEX, $m
  -60
  -154
  -224
  -315
  -428
  -566
  -729
  -915
  -1,123
  -1,351
  -1,595
  -1,851
  -2,116
  -2,387
  -2,659
  -2,931
  -3,200
  -3,464
  -3,722
  -3,975
  -4,221
  -4,462
  -4,699
  -4,932
  -5,162
  -5,392
  -5,622
  -5,855
  -6,092
  -6,334
  -6,584
Cash from investing activities, $m
  296
  -187
  -277
  -396
  -550
  -743
  -978
  -1,258
  -1,583
  -1,955
  -2,372
  -2,833
  -3,335
  -3,877
  -4,455
  -5,068
  -5,713
  -6,387
  -7,089
  -7,819
  -8,575
  -9,357
  -10,166
  -11,002
  -11,864
  -12,756
  -13,677
  -14,631
  -15,619
  -16,642
  -17,704
Free cash flow, $m
  485
  251
  420
  666
  1,010
  1,476
  2,089
  2,874
  3,856
  5,056
  6,495
  8,175
  10,135
  12,371
  14,886
  17,683
  20,761
  24,115
  27,742
  31,634
  35,787
  40,194
  44,849
  49,747
  54,886
  60,263
  65,878
  71,731
  77,826
  84,166
  90,759
Issuance/(repayment) of debt, $m
  -53
  878
  1,275
  1,790
  2,437
  3,221
  4,145
  5,205
  6,390
  7,686
  9,073
  10,532
  12,041
  13,580
  15,130
  16,675
  18,204
  19,707
  21,178
  22,614
  24,017
  25,388
  26,733
  28,057
  29,369
  30,676
  31,987
  33,312
  34,659
  36,037
  37,456
Issuance/(repurchase) of shares, $m
  -311
  313
  374
  429
  461
  453
  379
  211
  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  
  -332
  1,191
  1,649
  2,219
  2,898
  3,674
  4,524
  5,416
  6,390
  7,686
  9,073
  10,532
  12,041
  13,580
  15,130
  16,675
  18,204
  19,707
  21,178
  22,614
  24,017
  25,388
  26,733
  28,057
  29,369
  30,676
  31,987
  33,312
  34,659
  36,037
  37,456
Total cash flow (excl. dividends), $m
  153
  1,442
  2,069
  2,885
  3,908
  5,150
  6,613
  8,290
  10,246
  12,742
  15,568
  18,707
  22,176
  25,950
  30,016
  34,359
  38,965
  43,822
  48,920
  54,249
  59,804
  65,582
  71,581
  77,804
  84,255
  90,939
  97,865
  105,043
  112,485
  120,204
  128,215
Retained Cash Flow (-), $m
  -69
  -671
  -973
  -1,367
  -1,861
  -2,460
  -3,166
  -3,975
  -4,880
  -5,869
  -6,929
  -8,043
  -9,195
  -10,370
  -11,554
  -12,735
  -13,902
  -15,050
  -16,173
  -17,270
  -18,341
  -19,388
  -20,415
  -21,426
  -22,428
  -23,426
  -24,428
  -25,439
  -26,468
  -27,521
  -28,604
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
 
  771
  1,096
  1,518
  2,047
  2,690
  3,447
  4,315
  5,366
  6,873
  8,640
  10,664
  12,981
  15,580
  18,462
  21,624
  25,063
  28,773
  32,747
  36,979
  41,463
  46,194
  51,166
  56,378
  61,827
  67,513
  73,437
  79,604
  86,017
  92,683
  99,611
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
 
  739
  1,003
  1,321
  1,686
  2,085
  2,502
  2,915
  3,354
  3,948
  4,529
  5,064
  5,539
  5,924
  6,198
  6,349
  6,369
  6,260
  6,031
  5,694
  5,269
  4,778
  4,245
  3,695
  3,149
  2,626
  2,143
  1,709
  1,331
  1,012
  750
Current shareholders' claim on cash, %
  100
  91.4
  85.4
  81.2
  78.3
  76.4
  75.2
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8
  74.8

DST Systems, Inc. (DST) is a provider of technology-based information processing and servicing solutions. The Company offers its solutions through data management, business processing and customer communications solutions to clients within the asset management, brokerage, retirement and healthcare markets. The Company operates through two segments: Financial Services and Healthcare Services. Through the Financial Services segment, DST provides investor, investment, advisor/intermediary and asset distribution services to companies within the financial services industry. The Healthcare Services segment uses the Company's software applications to provide healthcare organizations a range of medical and pharmacy benefit solutions to aid their information processing, quality of care, cost management and payment integrity needs. Its investments in equity securities, private equity investments, real estate and certain financial interests are aggregated into an Investments and Other segment.

FINANCIAL RATIOS  of  DST Systems (DST)

Valuation Ratios
P/E Ratio 8.4
Price to Sales 2.3
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 18.9
Price to Free Cash Flow 27.7
Growth Rates
Sales Growth Rate 5.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.6%
Cap. Spend. - 3 Yr. Gr. Rate -10.2%
Financial Strength
Quick Ratio 1
Current Ratio 0.6
LT Debt to Equity 26.8%
Total Debt to Equity 45.6%
Interest Coverage 13
Management Effectiveness
Return On Assets 15.8%
Ret/ On Assets - 3 Yr. Avg. 16.4%
Return On Total Capital 26.4%
Ret/ On T. Cap. - 3 Yr. Avg. 26.6%
Return On Equity 39.5%
Return On Equity - 3 Yr. Avg. 40%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 22%
Gross Margin - 3 Yr. Avg. 22.6%
EBITDA Margin 25.6%
EBITDA Margin - 3 Yr. Avg. 40.6%
Operating Margin 16.2%
Oper. Margin - 3 Yr. Avg. 18.7%
Pre-Tax Margin 17.9%
Pre-Tax Margin - 3 Yr. Avg. 32.9%
Net Profit Margin 27.4%
Net Profit Margin - 3 Yr. Avg. 30.4%
Effective Tax Rate 36.2%
Eff/ Tax Rate - 3 Yr. Avg. 31.1%
Payout Ratio 10.1%

DST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DST stock intrinsic value calculation we used $1557 million for the last fiscal year's total revenue generated by DST Systems. The default revenue input number comes from 2016 income statement of DST Systems. 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 DST stock valuation model: a) initial revenue growth rate of 60% 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 DST is calculated based on our internal credit rating of DST Systems, 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 DST Systems.
    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 DST stock the variable cost ratio is equal to 75.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $125 million in the base year in the intrinsic value calculation for DST 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 4.3% for DST Systems.

Corporate tax rate of 27% is the nominal tax rate for DST Systems. 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 DST 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 DST are equal to 16.5%.

Life of production assets of 7.8 years is the average useful life of capital assets used in DST Systems 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 DST is equal to 2.6%. 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 - $1115 million for DST Systems - 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 59.752 million for DST Systems 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 DST Systems at the current share price and the inputted number of shares is $3.3 billion.

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COMPANY NEWS

▶ DST Systems beats 3Q profit forecasts   [Oct-20-17 06:51AM  Associated Press]
▶ ETFs with exposure to DST Systems, Inc. : October 6, 2017   [Oct-06-17 10:46AM  Capital Cube]
▶ DST faces class action over profit-sharing plan   [Sep-11-17 02:35PM  American City Business Journals]
▶ DST Systems, Inc. Declares Cash Dividend   [Aug-02-17 04:15PM  PR Newswire]
▶ New Strong Sell Stocks for August 1st   [Aug-01-17 09:44AM  Zacks]
▶ DST Systems misses 2Q profit forecasts   [01:34AM  Associated Press]
▶ ETFs with exposure to DST Systems, Inc. : July 24, 2017   [Jul-24-17 03:28PM  Capital Cube]
▶ ETFs with exposure to DST Systems, Inc. : July 14, 2017   [Jul-14-17 02:01PM  Capital Cube]
▶ ETFs with exposure to DST Systems, Inc. : June 26, 2017   [Jun-26-17 03:49PM  Capital Cube]
▶ ETFs with exposure to DST Systems, Inc. : June 15, 2017   [Jun-15-17 01:44PM  Capital Cube]
▶ Two DST Systems units will add 415 jobs in KC   [May-30-17 08:00AM  American City Business Journals]
▶ New Strong Buy Stocks for May 19th   [May-19-17 09:50AM  Zacks]
▶ 5 Value Stocks To Own As Volatility Increases   [May-16-17 05:16PM  Benzinga]
▶ Top Ranked Momentum Stocks to Buy for May 3rd   [May-03-17 11:00AM  Zacks]
▶ DST Systems beats 1Q profit forecasts   [07:44AM  Associated Press]
▶ Five Stocks for the Small Cap Breakout to Highs   [Apr-20-17 08:05PM  Zacks]
▶ Top Ranked Momentum Stocks to Buy for April 7th   [Apr-07-17 11:05AM  Zacks]
▶ Which KC-area stocks had the best, worst March? Take a look   [Apr-03-17 04:50PM  at bizjournals.com]
▶ Which KC-area stocks had the best, worst March? Take a look   [04:50PM  American City Business Journals]
▶ New Strong Buy Stocks for March 31st   [Mar-31-17 09:34AM  Zacks]
Financial statements of DST
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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