Intrinsic value of DowDuPont - DWDP

Previous Close

$54.35

  Intrinsic Value

$83.25

stock screener

  Rating & Target

str. buy

+53%

Previous close

$54.35

 
Intrinsic value

$83.25

 
Up/down potential

+53%

 
Rating

str. buy

We calculate the intrinsic value of DWDP 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2015(a)
   2016
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -100.00
  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
  73,836
  99,974
  154,460
  230,996
  335,163
  472,866
  650,082
  872,601
  1,145,780
  1,474,340
  1,862,212
  2,312,445
  2,827,185
  3,407,709
  4,054,501
  4,767,373
  5,545,599
  6,388,065
  7,293,410
  8,260,167
  9,286,880
  10,372,211
  11,515,026
  12,714,458
  13,969,962
  15,281,344
  16,648,786
  18,072,856
  19,554,511
  21,095,096
  22,696,334
Variable operating expenses, $m
 
  84,409
  125,354
  182,869
  261,149
  364,630
  497,804
  665,022
  870,311
  1,117,218
  1,408,696
  1,737,757
  2,124,574
  2,560,826
  3,046,878
  3,582,587
  4,167,409
  4,800,506
  5,480,855
  6,207,353
  6,978,908
  7,794,513
  8,653,316
  9,554,666
  10,498,153
  11,483,630
  12,511,236
  13,581,397
  14,694,831
  15,852,551
  17,055,850
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
  61,722
  84,409
  125,354
  182,869
  261,149
  364,630
  497,804
  665,022
  870,311
  1,117,218
  1,408,696
  1,737,757
  2,124,574
  2,560,826
  3,046,878
  3,582,587
  4,167,409
  4,800,506
  5,480,855
  6,207,353
  6,978,908
  7,794,513
  8,653,316
  9,554,666
  10,498,153
  11,483,630
  12,511,236
  13,581,397
  14,694,831
  15,852,551
  17,055,850
Operating income, $m
  12,114
  15,566
  29,106
  48,127
  74,014
  108,237
  152,278
  207,578
  275,469
  357,122
  453,516
  574,688
  702,611
  846,883
  1,007,623
  1,184,786
  1,378,190
  1,587,560
  1,812,556
  2,052,814
  2,307,972
  2,577,698
  2,861,710
  3,159,792
  3,471,810
  3,797,714
  4,137,550
  4,491,459
  4,859,680
  5,242,545
  5,640,484
EBITDA, $m
  12,114
  29,109
  44,974
  67,259
  97,589
  137,684
  189,283
  254,073
  333,615
  429,281
  542,217
  673,310
  823,186
  992,216
  1,180,541
  1,388,107
  1,614,701
  1,860,000
  2,123,608
  2,405,096
  2,704,042
  3,020,056
  3,352,807
  3,702,044
  4,067,606
  4,449,439
  4,847,594
  5,262,238
  5,693,648
  6,142,217
  6,608,447
Interest expense (income), $m
  0
  1,840
  4,821
  9,148
  15,227
  23,500
  34,437
  48,511
  66,184
  87,880
  113,975
  144,781
  180,539
  221,420
  267,526
  318,895
  375,513
  437,321
  504,231
  576,135
  652,916
  734,459
  820,658
  911,422
  1,006,683
  1,106,397
  1,210,549
  1,319,153
  1,432,255
  1,549,930
  1,672,286
Earnings before tax, $m
  11,671
  13,726
  24,285
  38,979
  58,788
  84,737
  117,842
  159,067
  209,285
  269,242
  339,541
  429,907
  522,072
  625,462
  740,097
  865,890
  1,002,677
  1,150,239
  1,308,325
  1,476,679
  1,655,056
  1,843,239
  2,041,052
  2,248,371
  2,465,127
  2,691,317
  2,927,001
  3,172,306
  3,427,425
  3,692,615
  3,968,199
Tax expense, $m
  2,631
  3,706
  6,557
  10,524
  15,873
  22,879
  31,817
  42,948
  56,507
  72,695
  91,676
  116,075
  140,960
  168,875
  199,826
  233,790
  270,723
  310,564
  353,248
  398,703
  446,865
  497,674
  551,084
  607,060
  665,584
  726,656
  790,290
  856,523
  925,405
  997,006
  1,071,414
Net income, $m
  8,926
  10,020
  17,728
  28,454
  42,915
  61,858
  86,024
  116,119
  152,778
  196,547
  247,865
  313,832
  381,113
  456,587
  540,271
  632,100
  731,954
  839,674
  955,077
  1,077,976
  1,208,191
  1,345,564
  1,489,968
  1,641,310
  1,799,543
  1,964,662
  2,136,711
  2,315,784
  2,502,020
  2,695,609
  2,896,785

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,806
  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
  157,634
  307,614
  475,263
  710,756
  1,031,271
  1,454,974
  2,000,254
  2,684,926
  3,525,477
  4,536,432
  5,729,883
  7,115,214
  8,699,031
  10,485,258
  12,475,387
  14,668,839
  17,063,382
  19,655,585
  22,441,263
  25,415,898
  28,575,014
  31,914,495
  35,430,848
  39,121,411
  42,984,500
  47,019,521
  51,227,034
  55,608,787
  60,167,727
  64,907,988
  69,834,875
Adjusted assets (=assets-cash), $m
  144,828
  307,614
  475,263
  710,756
  1,031,271
  1,454,974
  2,000,254
  2,684,926
  3,525,477
  4,536,432
  5,729,883
  7,115,214
  8,699,031
  10,485,258
  12,475,387
  14,668,839
  17,063,382
  19,655,585
  22,441,263
  25,415,898
  28,575,014
  31,914,495
  35,430,848
  39,121,411
  42,984,500
  47,019,521
  51,227,034
  55,608,787
  60,167,727
  64,907,988
  69,834,875
Revenue / Adjusted assets
  0.510
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
Average production assets, $m
  11,484
  93,376
  144,266
  215,750
  313,042
  441,657
  607,177
  815,009
  1,070,159
  1,377,034
  1,739,306
  2,159,823
  2,640,591
  3,182,800
  3,786,904
  4,452,726
  5,179,590
  5,966,453
  6,812,045
  7,714,996
  8,673,946
  9,687,645
  10,755,034
  11,875,304
  13,047,945
  14,272,776
  15,549,966
  16,880,047
  18,263,913
  19,702,820
  21,198,376
Working capital, $m
  23,466
  21,395
  33,055
  49,433
  71,725
  101,193
  139,118
  186,737
  245,197
  315,509
  398,513
  494,863
  605,018
  729,250
  867,663
  1,020,218
  1,186,758
  1,367,046
  1,560,790
  1,767,676
  1,987,392
  2,219,653
  2,464,216
  2,720,894
  2,989,572
  3,270,208
  3,562,840
  3,867,591
  4,184,665
  4,514,351
  4,857,016
Total debt, $m
  26,322
  89,276
  169,413
  281,978
  435,185
  637,714
  898,358
  1,225,631
  1,627,415
  2,110,652
  2,681,121
  3,343,309
  4,100,374
  4,954,190
  5,905,472
  6,953,942
  8,098,534
  9,337,607
  10,669,161
  12,091,036
  13,601,094
  15,197,366
  16,878,183
  18,642,271
  20,488,828
  22,417,568
  24,428,759
  26,523,237
  28,702,410
  30,968,255
  33,323,307
Total liabilities, $m
  78,847
  147,039
  227,176
  339,741
  492,948
  695,477
  956,121
  1,283,394
  1,685,178
  2,168,415
  2,738,884
  3,401,072
  4,158,137
  5,011,953
  5,963,235
  7,011,705
  8,156,297
  9,395,370
  10,726,924
  12,148,799
  13,658,857
  15,255,129
  16,935,946
  18,700,034
  20,546,591
  22,475,331
  24,486,522
  26,581,000
  28,760,173
  31,026,018
  33,381,070
Total equity, $m
  78,787
  160,574
  248,087
  371,014
  538,323
  759,496
  1,044,132
  1,401,531
  1,840,299
  2,368,018
  2,990,999
  3,714,142
  4,540,894
  5,473,305
  6,512,152
  7,657,134
  8,907,086
  10,260,215
  11,714,339
  13,267,099
  14,916,158
  16,659,367
  18,494,903
  20,421,376
  22,437,909
  24,544,190
  26,740,512
  29,027,787
  31,407,553
  33,881,970
  36,453,805
Total liabilities and equity, $m
  157,634
  307,613
  475,263
  710,755
  1,031,271
  1,454,973
  2,000,253
  2,684,925
  3,525,477
  4,536,433
  5,729,883
  7,115,214
  8,699,031
  10,485,258
  12,475,387
  14,668,839
  17,063,383
  19,655,585
  22,441,263
  25,415,898
  28,575,015
  31,914,496
  35,430,849
  39,121,410
  42,984,500
  47,019,521
  51,227,034
  55,608,787
  60,167,726
  64,907,988
  69,834,875
Debt-to-equity ratio
  0.334
  0.560
  0.680
  0.760
  0.810
  0.840
  0.860
  0.870
  0.880
  0.890
  0.900
  0.900
  0.900
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
  0.910
Adjusted equity ratio
  0.459
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522
  0.522

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  8,926
  10,020
  17,728
  28,454
  42,915
  61,858
  86,024
  116,119
  152,778
  196,547
  247,865
  313,832
  381,113
  456,587
  540,271
  632,100
  731,954
  839,674
  955,077
  1,077,976
  1,208,191
  1,345,564
  1,489,968
  1,641,310
  1,799,543
  1,964,662
  2,136,711
  2,315,784
  2,502,020
  2,695,609
  2,896,785
Depreciation, amort., depletion, $m
  0
  13,544
  15,868
  19,132
  23,574
  29,447
  37,005
  46,495
  58,146
  72,158
  88,700
  98,622
  120,575
  145,333
  172,918
  203,321
  236,511
  272,441
  311,052
  352,283
  396,071
  442,358
  491,097
  542,251
  595,797
  651,725
  710,044
  770,778
  833,969
  899,672
  967,962
Funds from operations, $m
  0
  23,564
  33,596
  47,586
  66,489
  91,305
  123,029
  162,614
  210,924
  268,705
  336,565
  412,454
  501,688
  601,921
  713,189
  835,421
  968,465
  1,112,115
  1,266,129
  1,430,259
  1,604,261
  1,787,923
  1,981,065
  2,183,562
  2,395,339
  2,616,386
  2,846,755
  3,086,562
  3,335,989
  3,595,281
  3,864,747
Change in working capital, $m
  0
  8,023
  11,660
  16,379
  22,292
  29,469
  37,924
  47,619
  58,460
  70,312
  83,004
  96,350
  110,154
  124,232
  138,414
  152,555
  166,540
  180,288
  193,744
  206,886
  219,717
  232,261
  244,562
  256,679
  268,678
  280,636
  292,633
  304,751
  317,074
  329,685
  342,665
Cash from operations, $m
  0
  15,541
  21,936
  31,208
  44,197
  61,836
  85,105
  114,995
  152,463
  198,393
  253,561
  316,105
  391,533
  477,689
  574,775
  682,866
  801,925
  931,827
  1,072,386
  1,223,373
  1,384,545
  1,555,662
  1,736,503
  1,926,883
  2,126,662
  2,335,751
  2,554,123
  2,781,811
  3,018,915
  3,265,596
  3,522,082
Maintenance CAPEX, $m
  0
  -2,666
  -4,264
  -6,587
  -9,852
  -14,294
  -20,167
  -27,725
  -37,215
  -48,866
  -62,878
  -79,420
  -98,622
  -120,575
  -145,333
  -172,918
  -203,321
  -236,511
  -272,441
  -311,052
  -352,283
  -396,071
  -442,358
  -491,097
  -542,251
  -595,797
  -651,725
  -710,044
  -770,778
  -833,969
  -899,672
New CAPEX, $m
  0
  -34,985
  -50,890
  -71,484
  -97,292
  -128,615
  -165,520
  -207,832
  -255,149
  -306,875
  -362,272
  -420,517
  -480,768
  -542,209
  -604,104
  -665,822
  -726,864
  -786,863
  -845,593
  -902,951
  -958,950
  -1,013,699
  -1,067,389
  -1,120,270
  -1,172,641
  -1,224,831
  -1,277,191
  -1,330,081
  -1,383,866
  -1,438,906
  -1,495,556
Cash from investing activities, $m
  0
  -37,651
  -55,154
  -78,071
  -107,144
  -142,909
  -185,687
  -235,557
  -292,364
  -355,741
  -425,150
  -499,937
  -579,390
  -662,784
  -749,437
  -838,740
  -930,185
  -1,023,374
  -1,118,034
  -1,214,003
  -1,311,233
  -1,409,770
  -1,509,747
  -1,611,367
  -1,714,892
  -1,820,628
  -1,928,916
  -2,040,125
  -2,154,644
  -2,272,875
  -2,395,228
Free cash flow, $m
  0
  -22,110
  -33,218
  -46,864
  -62,947
  -81,073
  -100,581
  -120,562
  -139,901
  -157,348
  -171,589
  -183,833
  -187,857
  -185,095
  -174,662
  -155,874
  -128,259
  -91,547
  -45,648
  9,370
  73,312
  145,892
  226,756
  315,516
  411,770
  515,123
  625,207
  741,686
  864,270
  992,721
  1,126,854
Issuance/(repayment) of debt, $m
  0
  55,205
  80,136
  112,566
  153,206
  202,530
  260,644
  327,273
  401,784
  483,237
  570,469
  662,189
  757,065
  853,816
  951,282
  1,048,470
  1,144,592
  1,239,073
  1,331,554
  1,421,876
  1,510,057
  1,596,272
  1,680,817
  1,764,089
  1,846,557
  1,928,740
  2,011,191
  2,094,478
  2,179,173
  2,265,845
  2,355,052
Issuance/(repurchase) of shares, $m
  0
  50,225
  69,785
  94,473
  124,394
  159,315
  198,612
  241,280
  285,990
  331,172
  375,116
  409,311
  445,640
  475,823
  498,577
  512,882
  517,997
  513,456
  499,047
  474,784
  440,868
  397,645
  345,568
  285,163
  216,990
  141,620
  59,611
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  0
  105,430
  149,921
  207,039
  277,600
  361,845
  459,256
  568,553
  687,774
  814,409
  945,585
  1,071,500
  1,202,705
  1,329,639
  1,449,859
  1,561,352
  1,662,589
  1,752,529
  1,830,601
  1,896,660
  1,950,925
  1,993,917
  2,026,385
  2,049,252
  2,063,547
  2,070,360
  2,070,802
  2,094,478
  2,179,173
  2,265,845
  2,355,052
Total cash flow (excl. dividends), $m
  0
  83,319
  116,703
  160,175
  214,654
  280,772
  358,674
  447,991
  547,873
  657,060
  773,996
  887,666
  1,014,848
  1,144,544
  1,275,197
  1,405,478
  1,534,329
  1,660,982
  1,784,953
  1,906,030
  2,024,237
  2,139,808
  2,253,141
  2,364,767
  2,475,316
  2,585,483
  2,696,009
  2,836,164
  3,043,443
  3,258,566
  3,481,906
Retained Cash Flow (-), $m
  -78,787
  -60,244
  -87,513
  -122,927
  -167,309
  -221,173
  -284,636
  -357,399
  -438,768
  -527,719
  -622,981
  -723,143
  -826,752
  -932,410
  -1,038,848
  -1,144,982
  -1,249,952
  -1,353,130
  -1,454,124
  -1,552,760
  -1,649,059
  -1,743,209
  -1,835,536
  -1,926,473
  -2,016,532
  -2,106,281
  -2,196,322
  -2,287,275
  -2,379,766
  -2,474,416
  -2,571,835
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
 
  23,075
  29,190
  37,247
  47,345
  59,599
  74,038
  90,592
  109,105
  129,342
  151,015
  164,523
  188,095
  212,134
  236,349
  260,496
  284,378
  307,852
  330,829
  353,270
  375,179
  396,599
  417,605
  438,294
  458,783
  479,202
  499,687
  548,889
  663,677
  784,150
  910,071
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
 
  22,124
  26,723
  32,415
  38,984
  46,197
  53,732
  61,203
  68,193
  74,300
  79,171
  78,130
  80,267
  80,657
  79,347
  76,477
  72,266
  66,984
  60,925
  54,394
  47,674
  41,021
  34,650
  28,726
  23,367
  18,642
  14,578
  11,781
  10,268
  8,560
  6,853
Current shareholders' claim on cash, %
  100
  71.4
  53.0
  40.6
  32.0
  25.9
  21.4
  18.1
  15.5
  13.6
  12.1
  10.9
  9.9
  9.1
  8.5
  8.0
  7.6
  7.3
  7.0
  6.8
  6.6
  6.5
  6.4
  6.3
  6.2
  6.2
  6.2
  6.2
  6.2
  6.2
  6.2

DowDuPont Inc. is a holding company formed through the merger of equals between The Dow Chemical Company and E. I. du Pont de Nemours and Company (DuPont). The Company's business divisions include Agriculture division, Material Science division, and a Specialty Products division. The Agriculture Division offers a complete portfolio of products and technologies, traits and crop protection. The Materials Science Division provides solutions, such as packaging, transportation, infrastructure and customer care. The Specialty Products division provides solution for industrial, safety, energy, food, nutrition, construction, electronics and consumer goods industries. The company provides solutions to a range of markets, including aerospace, automotive, consumer electronics, military, printing, renewable energy, semiconductors, child nutrition, dietary supplements, carpet and apparel, fertilizer, and oil and gas/energy.

FINANCIAL RATIOS  of  DowDuPont (DWDP)

Valuation Ratios
P/E Ratio 13.7
Price to Sales 1.7
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio 6
Current Ratio 0.1
LT Debt to Equity 30.6%
Total Debt to Equity 33.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 11.3%
Ret/ On Assets - 3 Yr. Avg. 3.8%
Return On Total Capital 17%
Ret/ On T. Cap. - 3 Yr. Avg. 5.7%
Return On Equity 22.7%
Return On Equity - 3 Yr. Avg. 7.6%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 28.4%
Gross Margin - 3 Yr. Avg. 9.5%
EBITDA Margin 15.8%
EBITDA Margin - 3 Yr. Avg. 5.3%
Operating Margin 16.4%
Oper. Margin - 3 Yr. Avg. 5.5%
Pre-Tax Margin 15.8%
Pre-Tax Margin - 3 Yr. Avg. 5.3%
Net Profit Margin 12.1%
Net Profit Margin - 3 Yr. Avg. 4%
Effective Tax Rate 22.5%
Eff/ Tax Rate - 3 Yr. Avg. 7.5%
Payout Ratio 0%

DWDP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DWDP stock intrinsic value calculation we used $62484 million for the last fiscal year's total revenue generated by DowDuPont. The default revenue input number comes from 2015 income statement of DowDuPont. 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 DWDP 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 DWDP is calculated based on our internal credit rating of DowDuPont, 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 DowDuPont.
    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 DWDP stock the variable cost ratio is equal to 90%.

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 DWDP 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 5.4% for DowDuPont.

Corporate tax rate of 27% is the nominal tax rate for DowDuPont. 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 DWDP 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 DWDP are equal to 93.4%.

Life of production assets of 21.9 years is the average useful life of capital assets used in DowDuPont 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 DWDP is equal to 21.4%. 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 - $100330 million for DowDuPont - 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 2307.38 million for DowDuPont 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 DowDuPont at the current share price and the inputted number of shares is $125.4 billion.

COMPANY NEWS

▶ DuPont Rises 3%   [02:54PM  Investing.com]
▶ DuPont Rises 3%   [Dec-11-18 11:34AM  Investing.com]
▶ How General Electric Could Get Itself Back on Track   [Dec-07-18 05:02PM  Motley Fool]
▶ DuPont Falls 3%   [04:02PM  Investing.com]
▶ DuPont Falls 3%   [Dec-06-18 11:34AM  Investing.com]
▶ Phil Fisher: Growth Stocks vs. Cigar-Butt Stocks   [Dec-05-18 04:15PM  GuruFocus.com]
▶ Phil Fisher: The 15 Points, Part 2   [04:57PM  GuruFocus.com]
▶ DuPont Falls 3%   [02:20PM  Investing.com]
▶ Phil Fisher: The 15 Points, Part 1   [Dec-03-18 04:31PM  GuruFocus.com]
▶ DuPont Rises 3%   [11:32AM  Investing.com]
▶ Winners and losers emerge in U.S., China trade truce   [10:56AM  Yahoo Finance Video]
▶ Better Buy: Albemarle vs. DowDuPont   [Dec-01-18 06:03PM  Motley Fool]
▶ 8 Stocks to Buy for 2019 (and 5 to Sell)   [Nov-30-18 03:28PM  Kiplinger]
▶ Here Are 3 Key Numbers From United Technologies' Breakup Plan   [04:02PM  Investor's Business Daily]
▶ Trade Gloom Hits Materials Midday   [02:20PM  Investing.com]
▶ Wall Street sells off again as tech, energy struggle   [Nov-20-18 05:24PM  Yahoo Finance Video]
▶ DuPont Falls 3%   [11:54AM  Investing.com]
▶ California recommends restrictions for popular pesticide   [Nov-15-18 06:04PM  Associated Press]
▶ DowDuPont Announces Pricing of Senior Unsecured Notes   [Nov-14-18 06:50PM  PR Newswire]
▶ Material ETFs Gain on Q3 Earnings   [Nov-12-18 11:25AM  Zacks]
▶ DowDuPont set to spin off seed, weed killer division Corteva   [Nov-09-18 11:01AM  Yahoo Finance Video]
▶ Why DowDuPont Lost 16.2% in October   [10:53AM  Motley Fool]
▶ GE slides after price target slashed to $6   [08:42AM  Yahoo Finance]
▶ DowDuPont CEO on upcoming split   [06:00PM  CNBC Videos]
▶ [$$] U.S.-China Trade Tensions on Display at Shanghai Expo   [Nov-07-18 07:57PM  The Wall Street Journal]
▶ DuPont Rises 3%   [04:50PM  Investing.com]
▶ Is DowDuPont Inc. (DWDP) A Good Stock To Buy?   [11:53AM  Insider Monkey]
▶ Is DowDuPont a Buy?   [Nov-03-18 08:57AM  Motley Fool]
▶ DuPont Rises 8%   [05:58PM  Investing.com]
Financial statements of DWDP
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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