Intrinsic value of Fifth Third Bancorp - FITB

Previous Close

$29.46

  Intrinsic Value

$9.65

stock screener

  Rating & Target

str. sell

-67%

Previous close

$29.46

 
Intrinsic value

$9.65

 
Up/down potential

-67%

 
Rating

str. sell

Our model is not good at valuating stocks of financial companies, such as FITB.

We calculate the intrinsic value of FITB 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
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, %
  -100.00
  13.30
  12.47
  11.72
  11.05
  10.45
  9.90
  9.41
  8.97
  8.57
  8.22
  7.89
  7.60
  7.34
  7.11
  6.90
  6.71
  6.54
  6.38
  6.25
  6.12
  6.01
  5.91
  5.82
  5.74
  5.66
  5.60
  5.54
  5.48
  5.43
  5.39
Revenue, $m
  0
  7,660
  8,615
  9,625
  10,689
  11,806
  12,975
  14,196
  15,469
  16,795
  18,175
  19,610
  21,101
  22,650
  24,261
  25,935
  27,674
  29,484
  31,366
  33,325
  35,365
  37,490
  39,705
  42,015
  44,425
  46,940
  49,567
  52,311
  55,179
  58,178
  61,314
Variable operating expenses, $m
 
  1,003
  1,129
  1,261
  1,400
  1,547
  1,700
  1,860
  2,026
  2,200
  2,381
  2,569
  2,764
  2,967
  3,178
  3,397
  3,625
  3,862
  4,109
  4,366
  4,633
  4,911
  5,201
  5,504
  5,820
  6,149
  6,493
  6,853
  7,228
  7,621
  8,032
Fixed operating expenses, $m
 
  3,261
  3,333
  3,406
  3,481
  3,558
  3,636
  3,716
  3,798
  3,881
  3,967
  4,054
  4,143
  4,234
  4,328
  4,423
  4,520
  4,619
  4,721
  4,825
  4,931
  5,040
  5,150
  5,264
  5,380
  5,498
  5,619
  5,742
  5,869
  5,998
  6,130
Total operating expenses, $m
  0
  4,264
  4,462
  4,667
  4,881
  5,105
  5,336
  5,576
  5,824
  6,081
  6,348
  6,623
  6,907
  7,201
  7,506
  7,820
  8,145
  8,481
  8,830
  9,191
  9,564
  9,951
  10,351
  10,768
  11,200
  11,647
  12,112
  12,595
  13,097
  13,619
  14,162
Operating income, $m
  0
  3,396
  4,154
  4,958
  5,808
  6,701
  7,639
  8,620
  9,645
  10,714
  11,827
  12,987
  14,193
  15,449
  16,755
  18,114
  19,529
  21,002
  22,536
  24,135
  25,801
  27,539
  29,353
  31,247
  33,226
  35,293
  37,455
  39,716
  42,082
  44,559
  47,152
EBITDA, $m
  453
  19,505
  22,272
  25,201
  28,287
  31,529
  34,924
  38,473
  42,176
  46,033
  50,049
  54,226
  58,568
  63,083
  67,776
  72,655
  77,729
  83,007
  88,499
  94,218
  100,174
  106,381
  112,853
  119,605
  126,651
  134,008
  141,694
  149,726
  158,123
  166,906
  176,096
Interest expense (income), $m
  578
  6,843
  6,913
  7,616
  8,360
  9,143
  9,966
  10,826
  11,726
  12,663
  13,640
  14,656
  15,712
  16,810
  17,951
  19,137
  20,370
  21,651
  22,983
  24,369
  25,812
  27,314
  28,879
  30,510
  32,211
  33,985
  35,837
  37,772
  39,792
  41,904
  44,112
Earnings before tax, $m
  2,065
  -3,448
  -2,759
  -2,658
  -2,553
  -2,442
  -2,327
  -2,206
  -2,081
  -1,950
  -1,812
  -1,669
  -1,519
  -1,361
  -1,196
  -1,023
  -841
  -649
  -447
  -235
  -11
  225
  475
  737
  1,015
  1,308
  1,617
  1,944
  2,289
  2,654
  3,040
Tax expense, $m
  505
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  61
  128
  199
  274
  353
  437
  525
  618
  717
  821
Net income, $m
  1,564
  -3,448
  -2,759
  -2,658
  -2,553
  -2,442
  -2,327
  -2,206
  -2,081
  -1,950
  -1,812
  -1,669
  -1,519
  -1,361
  -1,196
  -1,023
  -841
  -649
  -447
  -235
  -11
  165
  346
  538
  741
  955
  1,181
  1,419
  1,671
  1,938
  2,219

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  142,177
  116,064
  130,537
  145,840
  161,956
  178,874
  196,584
  215,084
  234,377
  254,470
  275,376
  297,114
  319,709
  343,189
  367,589
  392,948
  419,310
  446,725
  475,245
  504,927
  535,835
  568,034
  601,594
  636,591
  673,104
  711,215
  751,014
  792,592
  836,047
  881,481
  929,001
Adjusted assets (=assets-cash), $m
  142,177
  116,064
  130,537
  145,840
  161,956
  178,874
  196,584
  215,084
  234,377
  254,470
  275,376
  297,114
  319,709
  343,189
  367,589
  392,948
  419,310
  446,725
  475,245
  504,927
  535,835
  568,034
  601,594
  636,591
  673,104
  711,215
  751,014
  792,592
  836,047
  881,481
  929,001
Revenue / Adjusted assets
  0.000
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
  0.066
Average production assets, $m
  2,927
  161,094
  181,183
  202,423
  224,792
  248,273
  272,855
  298,533
  325,311
  353,199
  382,217
  412,389
  443,750
  476,339
  510,206
  545,404
  581,994
  620,045
  659,630
  700,829
  743,728
  788,420
  835,001
  883,576
  934,254
  987,153
  1,042,392
  1,100,102
  1,160,416
  1,223,478
  1,289,435
Working capital, $m
  0
  -138,765
  -156,069
  -174,365
  -193,633
  -213,859
  -235,034
  -257,153
  -280,219
  -304,242
  -329,237
  -355,227
  -382,241
  -410,313
  -439,485
  -469,804
  -501,323
  -534,100
  -568,198
  -603,686
  -640,639
  -679,136
  -719,260
  -761,102
  -804,756
  -850,322
  -897,905
  -947,615
  -999,569
  -1,053,890
  -1,110,704
Total debt, $m
  15,148
  128,020
  141,046
  154,819
  169,324
  184,549
  200,489
  217,139
  234,502
  252,586
  271,402
  290,966
  311,301
  332,433
  354,393
  377,216
  400,942
  425,615
  451,283
  477,998
  505,815
  534,793
  564,998
  596,495
  629,356
  663,657
  699,475
  736,896
  776,005
  816,896
  859,664
Total liabilities, $m
  125,972
  104,457
  117,483
  131,256
  145,761
  160,986
  176,926
  193,576
  210,939
  229,023
  247,839
  267,403
  287,738
  308,870
  330,830
  353,653
  377,379
  402,052
  427,720
  454,435
  482,252
  511,230
  541,435
  572,932
  605,793
  640,094
  675,912
  713,333
  752,442
  793,333
  836,101
Total equity, $m
  16,205
  11,606
  13,054
  14,584
  16,196
  17,887
  19,658
  21,508
  23,438
  25,447
  27,538
  29,711
  31,971
  34,319
  36,759
  39,295
  41,931
  44,672
  47,524
  50,493
  53,584
  56,803
  60,159
  63,659
  67,310
  71,122
  75,101
  79,259
  83,605
  88,148
  92,900
Total liabilities and equity, $m
  142,177
  116,063
  130,537
  145,840
  161,957
  178,873
  196,584
  215,084
  234,377
  254,470
  275,377
  297,114
  319,709
  343,189
  367,589
  392,948
  419,310
  446,724
  475,244
  504,928
  535,836
  568,033
  601,594
  636,591
  673,103
  711,216
  751,013
  792,592
  836,047
  881,481
  929,001
Debt-to-equity ratio
  0.935
  11.030
  10.810
  10.620
  10.450
  10.320
  10.200
  10.100
  10.010
  9.930
  9.860
  9.790
  9.740
  9.690
  9.640
  9.600
  9.560
  9.530
  9.500
  9.470
  9.440
  9.410
  9.390
  9.370
  9.350
  9.330
  9.310
  9.300
  9.280
  9.270
  9.250
Adjusted equity ratio
  0.114
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,564
  -3,448
  -2,759
  -2,658
  -2,553
  -2,442
  -2,327
  -2,206
  -2,081
  -1,950
  -1,812
  -1,669
  -1,519
  -1,361
  -1,196
  -1,023
  -841
  -649
  -447
  -235
  -11
  165
  346
  538
  741
  955
  1,181
  1,419
  1,671
  1,938
  2,219
Depreciation, amort., depletion, $m
  453
  16,109
  18,118
  20,242
  22,479
  24,827
  27,285
  29,853
  32,531
  35,320
  38,222
  41,239
  44,375
  47,634
  51,021
  54,540
  58,199
  62,005
  65,963
  70,083
  74,373
  78,842
  83,500
  88,358
  93,425
  98,715
  104,239
  110,010
  116,042
  122,348
  128,943
Funds from operations, $m
  2,425
  12,662
  15,359
  17,584
  19,927
  22,385
  24,959
  27,647
  30,450
  33,370
  36,409
  39,570
  42,856
  46,273
  49,824
  53,518
  57,359
  61,356
  65,516
  69,848
  74,362
  79,007
  83,846
  88,896
  94,166
  99,670
  105,420
  111,429
  117,713
  124,285
  131,162
Change in working capital, $m
  311
  -16,289
  -17,304
  -18,296
  -19,269
  -20,226
  -21,174
  -22,119
  -23,066
  -24,023
  -24,995
  -25,990
  -27,014
  -28,072
  -29,172
  -30,319
  -31,519
  -32,777
  -34,098
  -35,488
  -36,953
  -38,497
  -40,125
  -41,842
  -43,654
  -45,566
  -47,583
  -49,710
  -51,954
  -54,320
  -56,815
Cash from operations, $m
  2,114
  28,951
  32,663
  35,880
  39,195
  42,611
  46,133
  49,766
  53,516
  57,393
  61,404
  65,560
  69,870
  74,345
  78,997
  83,837
  88,878
  94,132
  99,614
  105,337
  111,315
  117,503
  123,971
  130,738
  137,820
  145,236
  153,003
  161,140
  169,667
  178,606
  187,977
Maintenance CAPEX, $m
  0
  -14,219
  -16,109
  -18,118
  -20,242
  -22,479
  -24,827
  -27,285
  -29,853
  -32,531
  -35,320
  -38,222
  -41,239
  -44,375
  -47,634
  -51,021
  -54,540
  -58,199
  -62,005
  -65,963
  -70,083
  -74,373
  -78,842
  -83,500
  -88,358
  -93,425
  -98,715
  -104,239
  -110,010
  -116,042
  -122,348
New CAPEX, $m
  -186
  -18,909
  -20,088
  -21,240
  -22,369
  -23,481
  -24,582
  -25,678
  -26,778
  -27,888
  -29,017
  -30,172
  -31,361
  -32,590
  -33,867
  -35,198
  -36,591
  -38,051
  -39,585
  -41,199
  -42,899
  -44,691
  -46,581
  -48,575
  -50,679
  -52,898
  -55,240
  -57,710
  -60,315
  -63,061
  -65,957
Cash from investing activities, $m
  -2,887
  -33,128
  -36,197
  -39,358
  -42,611
  -45,960
  -49,409
  -52,963
  -56,631
  -60,419
  -64,337
  -68,394
  -72,600
  -76,965
  -81,501
  -86,219
  -91,131
  -96,250
  -101,590
  -107,162
  -112,982
  -119,064
  -125,423
  -132,075
  -139,037
  -146,323
  -153,955
  -161,949
  -170,325
  -179,103
  -188,305
Free cash flow, $m
  -773
  -4,177
  -3,535
  -3,478
  -3,416
  -3,349
  -3,276
  -3,198
  -3,115
  -3,026
  -2,933
  -2,834
  -2,730
  -2,620
  -2,504
  -2,382
  -2,253
  -2,118
  -1,976
  -1,825
  -1,667
  -1,561
  -1,452
  -1,337
  -1,216
  -1,088
  -952
  -809
  -658
  -497
  -328
Issuance/(repayment) of debt, $m
  644
  1,295
  13,026
  13,773
  14,505
  15,226
  15,939
  16,650
  17,363
  18,084
  18,816
  19,564
  20,335
  21,132
  21,960
  22,823
  23,726
  24,673
  25,668
  26,714
  27,817
  28,979
  30,204
  31,497
  32,861
  34,300
  35,819
  37,420
  39,109
  40,891
  42,768
Issuance/(repurchase) of shares, $m
  -661
  15,054
  4,207
  4,189
  4,164
  4,134
  4,098
  4,057
  4,010
  3,959
  3,903
  3,843
  3,778
  3,709
  3,636
  3,559
  3,477
  3,390
  3,299
  3,203
  3,101
  3,055
  3,010
  2,961
  2,910
  2,856
  2,799
  2,739
  2,674
  2,606
  2,533
Cash from financing (excl. dividends), $m  
  1,079
  16,349
  17,233
  17,962
  18,669
  19,360
  20,037
  20,707
  21,373
  22,043
  22,719
  23,407
  24,113
  24,841
  25,596
  26,382
  27,203
  28,063
  28,967
  29,917
  30,918
  32,034
  33,214
  34,458
  35,771
  37,156
  38,618
  40,159
  41,783
  43,497
  45,301
Total cash flow (excl. dividends), $m
  306
  12,173
  13,698
  14,483
  15,253
  16,011
  16,761
  17,509
  18,259
  19,016
  19,786
  20,573
  21,384
  22,222
  23,092
  24,000
  24,950
  25,945
  26,991
  28,092
  29,251
  30,473
  31,762
  33,121
  34,556
  36,069
  37,666
  39,350
  41,126
  42,999
  44,973
Retained Cash Flow (-), $m
  -366
  -15,054
  -4,207
  -4,189
  -4,164
  -4,134
  -4,098
  -4,057
  -4,010
  -3,959
  -3,903
  -3,843
  -3,778
  -3,709
  -3,636
  -3,559
  -3,477
  -3,390
  -3,299
  -3,203
  -3,101
  -3,220
  -3,356
  -3,500
  -3,651
  -3,811
  -3,980
  -4,158
  -4,345
  -4,543
  -4,752
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
 
  115
  130
  146
  164
  182
  201
  221
  241
  263
  286
  309
  333
  359
  385
  412
  441
  470
  501
  533
  567
  601
  637
  675
  714
  755
  798
  843
  889
  938
  989
Cash available for distribution, $m
 
  -2,881
  9,491
  10,294
  11,088
  11,877
  12,663
  13,452
  14,249
  15,057
  15,883
  16,730
  17,605
  18,512
  19,456
  20,441
  21,473
  22,555
  23,692
  24,889
  26,150
  27,253
  28,406
  29,622
  30,904
  32,258
  33,686
  35,192
  36,781
  38,456
  40,221
Discount rate, %
 
  15.70
  16.49
  17.31
  18.17
  19.08
  20.04
  21.04
  22.09
  23.20
  24.36
  25.57
  26.85
  28.19
  29.60
  31.08
  32.64
  34.27
  35.98
  37.78
  39.67
  41.66
  43.74
  45.93
  48.22
  50.63
  53.17
  55.82
  58.62
  61.55
  64.62
PV of cash for distribution, $m
 
  -2,490
  6,995
  6,377
  5,686
  4,960
  4,233
  3,534
  2,886
  2,303
  1,796
  1,367
  1,014
  733
  516
  353
  234
  151
  94
  56
  33
  18
  10
  5
  2
  1
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  36.7
  27.8
  21.6
  17.2
  14.0
  11.6
  9.8
  8.4
  7.3
  6.4
  5.7
  5.1
  4.6
  4.2
  3.8
  3.5
  3.3
  3.1
  2.9
  2.8
  2.6
  2.5
  2.4
  2.3
  2.2
  2.1
  2.1
  2.0
  1.9

Fifth Third Bancorp is a bank holding company and a financial holding company. The Company conducts its principal lending, deposit gathering, transaction processing and service advisory activities through its banking and non-banking subsidiaries from banking centers located throughout the Midwestern and Southeastern regions of the United States. It operates through four segments: Commercial Banking, Branch Banking, Consumer Lending, and Wealth and Asset Management. It diversifies its loan and lease portfolio by offering a range of loan and lease products with various payment terms and rate structures. It offers commercial and industrial loans, commercial mortgage loans, commercial construction loans, commercial leases, residential mortgage loans, home equity, automobile loans, credit card, and other consumer loans and leases. It offers various types of deposits, such as demand deposits, interest checking deposits, savings deposits, money market deposits and transaction deposits.

FINANCIAL RATIOS  of  Fifth Third Bancorp (FITB)

Valuation Ratios
P/E Ratio 14.1
Price to Sales 0
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 10.5
Price to Free Cash Flow 11.5
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 13.4%
Cap. Spend. - 3 Yr. Gr. Rate -7.5%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 93.5%
Total Debt to Equity 93.5%
Interest Coverage 5
Management Effectiveness
Return On Assets 1.4%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital 4.9%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
Return On Equity 9.8%
Return On Equity - 3 Yr. Avg. 10.1%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 24.5%
Eff/ Tax Rate - 3 Yr. Avg. 26.4%
Payout Ratio 29%

FITB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FITB stock intrinsic value calculation we used $6761 million for the last fiscal year's total revenue generated by Fifth Third Bancorp. The default revenue input number comes from 2016 income statement of Fifth Third Bancorp. 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 FITB stock valuation model: a) initial revenue growth rate of 13.3% 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 15.7%, whose default value for FITB is calculated based on our internal credit rating of Fifth Third Bancorp, 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 Fifth Third Bancorp.
    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 FITB stock the variable cost ratio is equal to 13.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3191 million in the base year in the intrinsic value calculation for FITB 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 Fifth Third Bancorp.

Corporate tax rate of 27% is the nominal tax rate for Fifth Third Bancorp. 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 FITB stock is equal to 1.7%.

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 FITB are equal to 2103%.

Life of production assets of 10 years is the average useful life of capital assets used in Fifth Third Bancorp 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 FITB is equal to -1811.5%. 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 - $0 million for Fifth Third Bancorp - 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 728 million for Fifth Third Bancorp 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 Fifth Third Bancorp at the current share price and the inputted number of shares is $21.4 billion.

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CHFC Chemical Finan 55.64 64.18  hold

COMPANY NEWS

▶ Fifth Third adding dozens of branches in growth markets, closing others   [01:52PM  American City Business Journals]
▶ Why Fifth Thirds earnings surprised analysts   [08:03AM  American City Business Journals]
▶ Day Ahead: Top 3 Things to Watch   [Jul-18-18 07:44PM  Investing.com]
▶ Fifth Third opening branches in high-growth areas   [Jul-02-18 02:46PM  American City Business Journals]
▶ Fifth Third plans to give more money to shareholders   [02:14PM  American City Business Journals]
▶ Developer tees up office space, hotel to overhaul Midtown site   [08:15AM  American City Business Journals]
▶ 7 things to know today and Apple's uber-bundle subscription package   [07:12AM  American City Business Journals]
▶ Fifth Third Announces 2018 CCAR Capital Plan   [Jun-28-18 04:35PM  Business Wire]
▶ Fifth Third Bank to Open Seven New Financial Centers   [Jun-25-18 03:13PM  Business Wire]
▶ Fifth Third cuts jobs   [01:32PM  American City Business Journals]
▶ Fifth Third gets national recognition for maternity concierge service   [06:07AM  American City Business Journals]
▶ Fifth Third gives shareholders a big dividend hike   [Jun-20-18 01:28PM  American City Business Journals]
▶ Five Things to Know Before You Buy a Home   [01:07PM  Business Wire]
▶ Fifth Third Bank's office rebuild mirrors company-wide culture shift (photos)   [Jun-15-18 02:40PM  American City Business Journals]
▶ EXCLUSIVE: Cincinnati poised to scoop up manufacturing jobs, Fifth Third expert says   [Jun-14-18 02:29PM  American City Business Journals]
▶ Fifth Third executive to head USF board for another two years   [12:30PM  American City Business Journals]
▶ Fifth Third pays $1.2 billion to retire cheap debt   [Jun-12-18 01:20PM  American City Business Journals]
▶ Fifth Third gets into robo-adviser business   [Jun-07-18 02:52PM  American City Business Journals]
▶ Fifth Thirds digital growth nets national award   [Jun-06-18 01:54PM  American City Business Journals]
▶ Affordable homes coming to one of Cincinnati's hottest neighborhoods   [May-31-18 01:54PM  American City Business Journals]
▶ A Wave of Bank M&A May Be on the Way   [May-29-18 10:42AM  Barrons.com]
▶ Bank Bill to Bring More Competition, M&A   [May-28-18 07:00AM  Morningstar]
▶ [$$] Expect More Bank Mergers After Dodd-Frank Rollback   [May-26-18 12:01AM  Barrons.com]
▶ Bank M&A Deals Vaulting Higher in 2018   [May-25-18 11:10AM  Barrons.com]
▶ Fifth Third Bancorp Gets Relative Strength Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Trump signs bill easing post-2008 crisis restraints on banks   [May-24-18 04:17PM  Associated Press]
▶ Fifth Third names new chief legal officer   [02:58PM  American City Business Journals]
▶ Company News For May 23, 2018   [10:01AM  Zacks]
▶ Congress moves to dismantle key post-crisis bank rules   [May-22-18 07:57PM  Associated Press]
▶ More Bank Mergers Are on the WayFinally   [11:20AM  Barrons.com]
▶ Company News For May 22, 2018   [09:54AM  Zacks]
▶ [$$] Fifth Third Agrees to Buy MB Financial   [12:26AM  The Wall Street Journal]
▶ [$$] Fifth Third Signals Resurgence of Banker Confidence   [12:26AM  The Wall Street Journal]
▶ Asian markets mostly lower after Wall Street gains   [May-21-18 10:30PM  Associated Press]
▶ [$$] Fifth Third Acquires MB Financial   [06:18PM  The Wall Street Journal]
Financial statements of FITB
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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