Intrinsic value of Hancock Holding - HBHC

Previous Close

$51.65

  Intrinsic Value

$51.60

stock screener

  Rating & Target

hold

-0%

Previous close

$51.65

 
Intrinsic value

$51.60

 
Up/down potential

-0%

 
Rating

hold

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

We calculate the intrinsic value of HBHC 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
  25.30
  23.27
  21.44
  19.80
  18.32
  16.99
  15.79
  14.71
  13.74
  12.86
  12.08
  11.37
  10.73
  10.16
  9.64
  9.18
  8.76
  8.39
  8.05
  7.74
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
Revenue, $m
  0
  1,254
  1,546
  1,878
  2,249
  2,661
  3,114
  3,605
  4,135
  4,704
  5,309
  5,950
  6,626
  7,338
  8,083
  8,863
  9,676
  10,524
  11,407
  12,324
  13,279
  14,270
  15,301
  16,372
  17,485
  18,642
  19,846
  21,098
  22,402
  23,761
  25,176
Variable operating expenses, $m
 
  500
  617
  749
  898
  1,062
  1,242
  1,438
  1,650
  1,877
  2,118
  2,374
  2,644
  2,928
  3,225
  3,536
  3,861
  4,199
  4,551
  4,917
  5,298
  5,694
  6,105
  6,532
  6,976
  7,438
  7,919
  8,418
  8,939
  9,480
  10,045
Fixed operating expenses, $m
 
  307
  313
  320
  327
  334
  342
  349
  357
  365
  373
  381
  390
  398
  407
  416
  425
  434
  444
  454
  464
  474
  484
  495
  506
  517
  528
  540
  552
  564
  576
Total operating expenses, $m
  0
  807
  930
  1,069
  1,225
  1,396
  1,584
  1,787
  2,007
  2,242
  2,491
  2,755
  3,034
  3,326
  3,632
  3,952
  4,286
  4,633
  4,995
  5,371
  5,762
  6,168
  6,589
  7,027
  7,482
  7,955
  8,447
  8,958
  9,491
  10,044
  10,621
Operating income, $m
  0
  447
  616
  808
  1,025
  1,265
  1,529
  1,817
  2,128
  2,462
  2,818
  3,195
  3,593
  4,012
  4,451
  4,911
  5,390
  5,891
  6,411
  6,953
  7,517
  8,103
  8,712
  9,344
  10,003
  10,687
  11,399
  12,140
  12,912
  13,716
  14,554
EBITDA, $m
  48
  3,661
  4,578
  5,620
  6,789
  8,086
  9,509
  11,056
  12,726
  14,516
  16,422
  18,443
  20,574
  22,816
  25,166
  27,623
  30,188
  32,861
  35,643
  38,537
  41,546
  44,673
  47,923
  51,300
  54,811
  58,461
  62,258
  66,209
  70,323
  74,607
  79,072
Interest expense (income), $m
  70
  1,342
  1,488
  1,803
  2,161
  2,562
  3,007
  3,496
  4,027
  4,599
  5,213
  5,866
  6,559
  7,289
  8,058
  8,863
  9,705
  10,583
  11,499
  12,452
  13,443
  14,474
  15,545
  16,658
  17,814
  19,016
  20,266
  21,567
  22,919
  24,328
  25,794
Earnings before tax, $m
  187
  -895
  -872
  -995
  -1,136
  -1,297
  -1,478
  -1,678
  -1,898
  -2,137
  -2,395
  -2,672
  -2,966
  -3,278
  -3,606
  -3,952
  -4,314
  -4,693
  -5,087
  -5,499
  -5,926
  -6,371
  -6,833
  -7,313
  -7,812
  -8,329
  -8,867
  -9,426
  -10,007
  -10,611
  -11,240
Tax expense, $m
  38
  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
Net income, $m
  149
  -895
  -872
  -995
  -1,136
  -1,297
  -1,478
  -1,678
  -1,898
  -2,137
  -2,395
  -2,672
  -2,966
  -3,278
  -3,606
  -3,952
  -4,314
  -4,693
  -5,087
  -5,499
  -5,926
  -6,371
  -6,833
  -7,313
  -7,812
  -8,329
  -8,867
  -9,426
  -10,007
  -10,611
  -11,240

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
  23,975
  27,872
  34,358
  41,726
  49,987
  59,144
  69,190
  80,114
  91,899
  104,524
  117,971
  132,220
  147,253
  163,059
  179,625
  196,948
  215,027
  233,867
  253,478
  273,875
  295,080
  317,116
  340,016
  363,814
  388,550
  414,269
  441,020
  468,855
  497,833
  528,013
  559,462
Adjusted assets (=assets-cash), $m
  23,975
  27,872
  34,358
  41,726
  49,987
  59,144
  69,190
  80,114
  91,899
  104,524
  117,971
  132,220
  147,253
  163,059
  179,625
  196,948
  215,027
  233,867
  253,478
  273,875
  295,080
  317,116
  340,016
  363,814
  388,550
  414,269
  441,020
  468,855
  497,833
  528,013
  559,462
Revenue / Adjusted assets
  0.000
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
  0.045
Average production assets, $m
  2,251
  32,143
  39,622
  48,119
  57,645
  68,205
  79,791
  92,389
  105,979
  120,539
  136,046
  152,478
  169,815
  188,042
  207,147
  227,124
  247,973
  269,699
  292,315
  315,837
  340,290
  365,703
  392,111
  419,555
  448,082
  477,741
  508,591
  540,691
  574,108
  608,913
  645,181
Working capital, $m
  0
  -29,585
  -36,470
  -44,290
  -53,059
  -62,779
  -73,443
  -85,038
  -97,547
  -110,948
  -125,221
  -140,346
  -156,304
  -173,080
  -190,665
  -209,053
  -228,243
  -248,241
  -269,057
  -290,708
  -313,215
  -336,606
  -360,913
  -386,174
  -412,430
  -439,730
  -468,125
  -497,671
  -528,429
  -560,465
  -593,847
Total debt, $m
  797
  27,547
  33,384
  40,015
  47,450
  55,691
  64,733
  74,565
  85,171
  96,534
  108,636
  121,460
  134,990
  149,215
  164,125
  179,715
  195,987
  212,943
  230,592
  248,950
  268,033
  287,866
  308,476
  329,894
  352,157
  375,304
  399,380
  424,432
  450,511
  477,674
  505,978
Total liabilities, $m
  21,256
  25,085
  30,922
  37,553
  44,988
  53,229
  62,271
  72,103
  82,709
  94,072
  106,174
  118,998
  132,528
  146,753
  161,663
  177,254
  193,525
  210,481
  228,130
  246,488
  265,572
  285,404
  306,014
  327,432
  349,695
  372,842
  396,918
  421,970
  448,049
  475,212
  503,516
Total equity, $m
  2,720
  2,787
  3,436
  4,173
  4,999
  5,914
  6,919
  8,011
  9,190
  10,452
  11,797
  13,222
  14,725
  16,306
  17,963
  19,695
  21,503
  23,387
  25,348
  27,388
  29,508
  31,712
  34,002
  36,381
  38,855
  41,427
  44,102
  46,886
  49,783
  52,801
  55,946
Total liabilities and equity, $m
  23,976
  27,872
  34,358
  41,726
  49,987
  59,143
  69,190
  80,114
  91,899
  104,524
  117,971
  132,220
  147,253
  163,059
  179,626
  196,949
  215,028
  233,868
  253,478
  273,876
  295,080
  317,116
  340,016
  363,813
  388,550
  414,269
  441,020
  468,856
  497,832
  528,013
  559,462
Debt-to-equity ratio
  0.293
  9.880
  9.720
  9.590
  9.490
  9.420
  9.360
  9.310
  9.270
  9.240
  9.210
  9.190
  9.170
  9.150
  9.140
  9.130
  9.110
  9.110
  9.100
  9.090
  9.080
  9.080
  9.070
  9.070
  9.060
  9.060
  9.060
  9.050
  9.050
  9.050
  9.040
Adjusted equity ratio
  0.113
  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
  149
  -895
  -872
  -995
  -1,136
  -1,297
  -1,478
  -1,678
  -1,898
  -2,137
  -2,395
  -2,672
  -2,966
  -3,278
  -3,606
  -3,952
  -4,314
  -4,693
  -5,087
  -5,499
  -5,926
  -6,371
  -6,833
  -7,313
  -7,812
  -8,329
  -8,867
  -9,426
  -10,007
  -10,611
  -11,240
Depreciation, amort., depletion, $m
  48
  3,214
  3,962
  4,812
  5,765
  6,821
  7,979
  9,239
  10,598
  12,054
  13,605
  15,248
  16,981
  18,804
  20,715
  22,712
  24,797
  26,970
  29,231
  31,584
  34,029
  36,570
  39,211
  41,956
  44,808
  47,774
  50,859
  54,069
  57,411
  60,891
  64,518
Funds from operations, $m
  464
  2,320
  3,091
  3,817
  4,628
  5,523
  6,501
  7,561
  8,700
  9,917
  11,209
  12,576
  14,016
  15,527
  17,108
  18,760
  20,483
  22,277
  24,144
  26,085
  28,103
  30,199
  32,378
  34,642
  36,996
  39,445
  41,992
  44,643
  47,404
  50,280
  53,278
Change in working capital, $m
  123
  -5,974
  -6,885
  -7,820
  -8,769
  -9,720
  -10,664
  -11,595
  -12,509
  -13,401
  -14,273
  -15,124
  -15,958
  -16,777
  -17,585
  -18,388
  -19,190
  -19,998
  -20,816
  -21,651
  -22,507
  -23,391
  -24,307
  -25,261
  -26,257
  -27,300
  -28,395
  -29,546
  -30,758
  -32,035
  -33,382
Cash from operations, $m
  341
  8,293
  9,975
  11,638
  13,397
  15,243
  17,165
  19,156
  21,208
  23,318
  25,482
  27,701
  29,973
  32,303
  34,693
  37,148
  39,673
  42,275
  44,960
  47,736
  50,610
  53,590
  56,685
  59,903
  63,253
  66,745
  70,387
  74,189
  78,162
  82,315
  86,660
Maintenance CAPEX, $m
  0
  -2,566
  -3,214
  -3,962
  -4,812
  -5,765
  -6,821
  -7,979
  -9,239
  -10,598
  -12,054
  -13,605
  -15,248
  -16,981
  -18,804
  -20,715
  -22,712
  -24,797
  -26,970
  -29,231
  -31,584
  -34,029
  -36,570
  -39,211
  -41,956
  -44,808
  -47,774
  -50,859
  -54,069
  -57,411
  -60,891
New CAPEX, $m
  -19
  -6,487
  -7,480
  -8,496
  -9,527
  -10,560
  -11,586
  -12,598
  -13,590
  -14,560
  -15,507
  -16,432
  -17,337
  -18,227
  -19,105
  -19,977
  -20,849
  -21,726
  -22,616
  -23,522
  -24,453
  -25,413
  -26,408
  -27,444
  -28,526
  -29,660
  -30,849
  -32,100
  -33,417
  -34,805
  -36,268
Cash from investing activities, $m
  -1,321
  -9,053
  -10,694
  -12,458
  -14,339
  -16,325
  -18,407
  -20,577
  -22,829
  -25,158
  -27,561
  -30,037
  -32,585
  -35,208
  -37,909
  -40,692
  -43,561
  -46,523
  -49,586
  -52,753
  -56,037
  -59,442
  -62,978
  -66,655
  -70,482
  -74,468
  -78,623
  -82,959
  -87,486
  -92,216
  -97,159
Free cash flow, $m
  -980
  -759
  -719
  -821
  -942
  -1,081
  -1,241
  -1,421
  -1,620
  -1,840
  -2,078
  -2,336
  -2,612
  -2,905
  -3,216
  -3,544
  -3,888
  -4,249
  -4,625
  -5,018
  -5,427
  -5,852
  -6,294
  -6,752
  -7,229
  -7,723
  -8,237
  -8,770
  -9,324
  -9,900
  -10,499
Issuance/(repayment) of debt, $m
  -213
  2,697
  5,837
  6,631
  7,435
  8,241
  9,042
  9,832
  10,606
  11,363
  12,102
  12,824
  13,530
  14,225
  14,910
  15,591
  16,271
  16,956
  17,650
  18,357
  19,084
  19,833
  20,610
  21,418
  22,263
  23,147
  24,076
  25,052
  26,080
  27,163
  28,304
Issuance/(repurchase) of shares, $m
  263
  3,816
  1,520
  1,731
  1,962
  2,213
  2,483
  2,771
  3,077
  3,400
  3,740
  4,096
  4,469
  4,858
  5,263
  5,684
  6,122
  6,577
  7,049
  7,538
  8,047
  8,575
  9,123
  9,693
  10,285
  10,901
  11,542
  12,210
  12,905
  13,629
  14,385
Cash from financing (excl. dividends), $m  
  1,126
  6,513
  7,357
  8,362
  9,397
  10,454
  11,525
  12,603
  13,683
  14,763
  15,842
  16,920
  17,999
  19,083
  20,173
  21,275
  22,393
  23,533
  24,699
  25,895
  27,131
  28,408
  29,733
  31,111
  32,548
  34,048
  35,618
  37,262
  38,985
  40,792
  42,689
Total cash flow (excl. dividends), $m
  146
  5,755
  6,639
  7,541
  8,456
  9,373
  10,283
  11,181
  12,062
  12,923
  13,764
  14,585
  15,388
  16,178
  16,957
  17,731
  18,505
  19,284
  20,073
  20,878
  21,704
  22,556
  23,439
  24,359
  25,319
  26,325
  27,381
  28,491
  29,660
  30,892
  32,190
Retained Cash Flow (-), $m
  -307
  -3,816
  -1,520
  -1,731
  -1,962
  -2,213
  -2,483
  -2,771
  -3,077
  -3,400
  -3,740
  -4,096
  -4,469
  -4,858
  -5,263
  -5,684
  -6,122
  -6,577
  -7,049
  -7,538
  -8,047
  -8,575
  -9,123
  -9,693
  -10,285
  -10,901
  -11,542
  -12,210
  -12,905
  -13,629
  -14,385
Prev. year cash balance distribution, $m
 
  134
  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
 
  18
  23
  28
  34
  40
  48
  56
  65
  74
  85
  96
  107
  119
  132
  145
  160
  174
  189
  205
  222
  239
  257
  275
  295
  315
  336
  357
  380
  403
  428
Cash available for distribution, $m
 
  2,073
  5,118
  5,810
  6,493
  7,160
  7,801
  8,411
  8,985
  9,523
  10,024
  10,488
  10,919
  11,320
  11,694
  12,047
  12,383
  12,707
  13,025
  13,340
  13,657
  13,981
  14,316
  14,666
  15,034
  15,424
  15,839
  16,282
  16,755
  17,262
  17,805
Discount rate, %
 
  13.80
  14.49
  15.21
  15.98
  16.77
  17.61
  18.49
  19.42
  20.39
  21.41
  22.48
  23.60
  24.78
  26.02
  27.32
  28.69
  30.12
  31.63
  33.21
  34.87
  36.62
  38.45
  40.37
  42.39
  44.51
  46.73
  49.07
  51.52
  54.10
  56.80
PV of cash for distribution, $m
 
  1,821
  3,905
  3,799
  3,589
  3,297
  2,947
  2,564
  2,173
  1,793
  1,441
  1,127
  859
  637
  459
  322
  219
  145
  93
  57
  34
  20
  11
  6
  3
  2
  1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  32.4
  21.5
  14.6
  10.1
  7.1
  5.1
  3.7
  2.7
  2.0
  1.5
  1.1
  0.8
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Hancock Holding Company is a financial services company that provides a network of service financial choices to the Gulf South region, through its bank subsidiary, Whitney Bank (the Bank), a Mississippi state bank. The Company operates through overall banking operations segment. The Bank operates under brands, such as Hancock Bank in Mississippi, Alabama and Florida, and Whitney Bank in Louisiana and Texas. The Bank operates across the Gulf South region, which consists of southern Mississippi; southern and central Alabama; southern Louisiana; the northern, central, and panhandle regions of Florida; Houston, Texas, and Nashville, Tennessee. The Bank offers a range of traditional and online community banking services to commercial, small business and retail customers, providing a range of transaction and savings deposit products, treasury management services and investment brokerage services, among others.

FINANCIAL RATIOS  of  Hancock Holding (HBHC)

Valuation Ratios
P/E Ratio 29.2
Price to Sales 0
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 12.8
Price to Free Cash Flow 13.5
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -20.8%
Cap. Spend. - 3 Yr. Gr. Rate -9.9%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 29.3%
Total Debt to Equity 29.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 0.9%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.2%
Return On Equity 5.8%
Return On Equity - 3 Yr. Avg. 6.1%
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 20.3%
Eff/ Tax Rate - 3 Yr. Avg. 23.5%
Payout Ratio 51.7%

HBHC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HBHC stock intrinsic value calculation we used $1001 million for the last fiscal year's total revenue generated by Hancock Holding. The default revenue input number comes from 2016 income statement of Hancock Holding. 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 HBHC stock valuation model: a) initial revenue growth rate of 25.3% 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 13.8%, whose default value for HBHC is calculated based on our internal credit rating of Hancock Holding, 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 Hancock Holding.
    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 HBHC stock the variable cost ratio is equal to 39.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $300 million in the base year in the intrinsic value calculation for HBHC 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 Hancock Holding.

Corporate tax rate of 27% is the nominal tax rate for Hancock Holding. 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 HBHC stock is equal to 1.8%.

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 HBHC are equal to 2562.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Hancock Holding 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 HBHC is equal to -2358.8%. 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 - $0 million for Hancock Holding - 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 85 million for Hancock Holding 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 Hancock Holding at the current share price and the inputted number of shares is $4.4 billion.

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Financial statements of HBHC
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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