Intrinsic value of Interactive Brokers Group - IBKR

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$34.24

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$34.24

 
Intrinsic value

$394.68

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence* premium content

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

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

We calculate the intrinsic value of IBKR 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 14.0

 

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, %
  17.44
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  1,475
  1,505
  1,539
  1,579
  1,623
  1,672
  1,726
  1,785
  1,849
  1,917
  1,991
  2,070
  2,154
  2,243
  2,338
  2,439
  2,546
  2,659
  2,779
  2,905
  3,038
  3,179
  3,328
  3,484
  3,649
  3,823
  4,006
  4,198
  4,401
  4,614
  4,838
Variable operating expenses, $m
 
  955
  977
  1,002
  1,031
  1,062
  1,096
  1,134
  1,174
  1,217
  1,264
  1,314
  1,367
  1,424
  1,485
  1,549
  1,617
  1,688
  1,764
  1,845
  1,929
  2,019
  2,113
  2,213
  2,317
  2,428
  2,544
  2,666
  2,795
  2,930
  3,072
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
  714
  955
  977
  1,002
  1,031
  1,062
  1,096
  1,134
  1,174
  1,217
  1,264
  1,314
  1,367
  1,424
  1,485
  1,549
  1,617
  1,688
  1,764
  1,845
  1,929
  2,019
  2,113
  2,213
  2,317
  2,428
  2,544
  2,666
  2,795
  2,930
  3,072
Operating income, $m
  761
  549
  562
  576
  592
  610
  630
  652
  675
  700
  727
  755
  786
  819
  853
  890
  929
  970
  1,014
  1,060
  1,109
  1,160
  1,215
  1,272
  1,332
  1,395
  1,462
  1,532
  1,606
  1,684
  1,766
EBITDA, $m
  786
  557
  569
  584
  601
  619
  639
  660
  684
  709
  737
  766
  797
  830
  865
  902
  942
  984
  1,028
  1,075
  1,124
  1,176
  1,231
  1,289
  1,350
  1,415
  1,482
  1,553
  1,628
  1,707
  1,790
Interest expense (income), $m
  77
  0
  -56,343
  -55,072
  -53,620
  -51,989
  -50,182
  -48,199
  -46,040
  -43,703
  -41,185
  -38,483
  -35,592
  -32,508
  -29,224
  -25,733
  -22,030
  -18,105
  -13,950
  -9,556
  -4,914
  -12
  5,160
  10,614
  16,364
  22,421
  28,801
  35,519
  42,589
  50,030
  57,857
Earnings before tax, $m
  761
  549
  56,905
  55,649
  54,212
  52,599
  50,812
  48,851
  46,715
  44,403
  41,912
  39,239
  36,379
  33,327
  30,077
  26,624
  22,959
  19,075
  14,964
  10,617
  6,023
  1,173
  -3,945
  -9,343
  -15,032
  -21,026
  -27,339
  -33,986
  -40,983
  -48,345
  -56,091
Tax expense, $m
  62
  148
  15,364
  15,025
  14,637
  14,202
  13,719
  13,190
  12,613
  11,989
  11,316
  10,594
  9,822
  8,998
  8,121
  7,188
  6,199
  5,150
  4,040
  2,866
  1,626
  317
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  84
  401
  41,541
  40,623
  39,575
  38,397
  37,093
  35,661
  34,102
  32,414
  30,596
  28,644
  26,556
  24,328
  21,956
  19,435
  16,760
  13,925
  10,924
  7,750
  4,397
  856
  -3,945
  -9,343
  -15,032
  -21,026
  -27,339
  -33,986
  -40,983
  -48,345
  -56,091

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  25,942
  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
  54,673
  29,500
  30,179
  30,954
  31,825
  32,790
  33,848
  35,001
  36,249
  37,593
  39,036
  40,579
  42,226
  43,980
  45,843
  47,821
  49,917
  52,135
  54,481
  56,960
  59,577
  62,338
  65,251
  68,320
  71,555
  74,961
  78,548
  82,323
  86,296
  90,475
  94,871
Adjusted assets (=assets-cash), $m
  28,731
  29,500
  30,179
  30,954
  31,825
  32,790
  33,848
  35,001
  36,249
  37,593
  39,036
  40,579
  42,226
  43,980
  45,843
  47,821
  49,917
  52,135
  54,481
  56,960
  59,577
  62,338
  65,251
  68,320
  71,555
  74,961
  78,548
  82,323
  86,296
  90,475
  94,871
Revenue / Adjusted assets
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
  0.051
Average production assets, $m
  38
  38
  38
  39
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  58
  61
  64
  66
  69
  73
  76
  79
  83
  87
  91
  96
  100
  105
  110
  115
  121
Working capital, $m
  0
  -26,386
  -26,993
  -27,687
  -28,465
  -29,328
  -30,275
  -31,306
  -32,422
  -33,625
  -34,915
  -36,296
  -37,769
  -39,337
  -41,004
  -42,773
  -44,647
  -46,632
  -48,730
  -50,947
  -53,288
  -55,758
  -58,363
  -61,108
  -64,001
  -67,048
  -70,256
  -73,633
  -77,186
  -80,924
  -84,856
Total debt, $m
  74
  -27,075
  -26,464
  -25,766
  -24,983
  -24,114
  -23,162
  -22,124
  -21,001
  -19,791
  -18,493
  -17,104
  -15,621
  -14,043
  -12,366
  -10,586
  -8,700
  -6,703
  -4,592
  -2,361
  -6
  2,480
  5,101
  7,863
  10,774
  13,840
  17,068
  20,466
  24,041
  27,802
  31,759
Total liabilities, $m
  53,699
  26,550
  27,161
  27,859
  28,642
  29,511
  30,463
  31,501
  32,624
  33,834
  35,132
  36,521
  38,004
  39,582
  41,259
  43,039
  44,925
  46,922
  49,033
  51,264
  53,619
  56,105
  58,726
  61,488
  64,399
  67,465
  70,693
  74,091
  77,666
  81,427
  85,384
Total equity, $m
  974
  2,950
  3,018
  3,095
  3,182
  3,279
  3,385
  3,500
  3,625
  3,759
  3,904
  4,058
  4,223
  4,398
  4,584
  4,782
  4,992
  5,214
  5,448
  5,696
  5,958
  6,234
  6,525
  6,832
  7,155
  7,496
  7,855
  8,232
  8,630
  9,047
  9,487
Total liabilities and equity, $m
  54,673
  29,500
  30,179
  30,954
  31,824
  32,790
  33,848
  35,001
  36,249
  37,593
  39,036
  40,579
  42,227
  43,980
  45,843
  47,821
  49,917
  52,136
  54,481
  56,960
  59,577
  62,339
  65,251
  68,320
  71,554
  74,961
  78,548
  82,323
  86,296
  90,474
  94,871
Debt-to-equity ratio
  0.076
  -9.180
  -8.770
  -8.320
  -7.850
  -7.350
  -6.840
  -6.320
  -5.790
  -5.260
  -4.740
  -4.210
  -3.700
  -3.190
  -2.700
  -2.210
  -1.740
  -1.290
  -0.840
  -0.410
  0.000
  0.400
  0.780
  1.150
  1.510
  1.850
  2.170
  2.490
  2.790
  3.070
  3.350
Adjusted equity ratio
  -0.866
  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
  84
  401
  41,541
  40,623
  39,575
  38,397
  37,093
  35,661
  34,102
  32,414
  30,596
  28,644
  26,556
  24,328
  21,956
  19,435
  16,760
  13,925
  10,924
  7,750
  4,397
  856
  -3,945
  -9,343
  -15,032
  -21,026
  -27,339
  -33,986
  -40,983
  -48,345
  -56,091
Depreciation, amort., depletion, $m
  25
  8
  8
  8
  8
  8
  9
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  13
  14
  15
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
Funds from operations, $m
  279
  408
  41,548
  40,631
  39,583
  38,406
  37,101
  35,670
  34,111
  32,424
  30,606
  28,655
  26,567
  24,340
  21,968
  19,447
  16,773
  13,938
  10,938
  7,765
  4,412
  872
  -3,929
  -9,325
  -15,014
  -21,007
  -27,319
  -33,965
  -40,961
  -48,322
  -56,067
Change in working capital, $m
  -265
  -517
  -607
  -694
  -779
  -863
  -947
  -1,031
  -1,116
  -1,202
  -1,290
  -1,381
  -1,473
  -1,568
  -1,667
  -1,769
  -1,874
  -1,984
  -2,098
  -2,217
  -2,341
  -2,470
  -2,605
  -2,746
  -2,893
  -3,047
  -3,208
  -3,377
  -3,553
  -3,738
  -3,932
Cash from operations, $m
  544
  929
  42,155
  41,325
  40,362
  39,269
  38,048
  36,701
  35,227
  33,626
  31,896
  30,035
  28,040
  25,908
  23,635
  21,216
  18,647
  15,922
  13,036
  9,982
  6,753
  3,342
  -1,324
  -6,579
  -12,121
  -17,960
  -24,111
  -30,589
  -37,408
  -44,584
  -52,135
Maintenance CAPEX, $m
  0
  -8
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
New CAPEX, $m
  -27
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
Cash from investing activities, $m
  -6
  -8
  -9
  -9
  -9
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -15
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -21
  -22
  -24
  -25
  -26
  -27
  -29
Free cash flow, $m
  538
  922
  42,147
  41,316
  40,353
  39,259
  38,039
  36,691
  35,217
  33,615
  31,885
  30,023
  28,028
  25,895
  23,621
  21,202
  18,632
  15,907
  13,020
  9,965
  6,735
  3,323
  -1,343
  -6,600
  -12,142
  -17,983
  -24,135
  -30,614
  -37,434
  -44,611
  -52,164
Issuance/(repayment) of debt, $m
  74
  -27,075
  611
  698
  784
  868
  953
  1,037
  1,123
  1,210
  1,298
  1,389
  1,482
  1,578
  1,677
  1,780
  1,886
  1,997
  2,111
  2,231
  2,355
  2,485
  2,621
  2,763
  2,911
  3,066
  3,228
  3,398
  3,575
  3,761
  3,956
Issuance/(repurchase) of shares, $m
  -1
  28,129
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  4,144
  9,555
  15,257
  21,266
  27,594
  34,256
  41,268
  48,647
Cash from financing (excl. dividends), $m  
  -163
  1,054
  611
  698
  784
  868
  953
  1,037
  1,123
  1,210
  1,298
  1,389
  1,482
  1,578
  1,677
  1,780
  1,886
  1,997
  2,111
  2,231
  2,355
  2,485
  2,621
  6,907
  12,466
  18,323
  24,494
  30,992
  37,831
  45,029
  52,603
Total cash flow (excl. dividends), $m
  350
  -26,153
  42,757
  42,014
  41,136
  40,128
  38,991
  37,728
  36,340
  34,825
  33,183
  31,412
  29,510
  27,473
  25,299
  22,982
  20,518
  17,903
  15,131
  12,195
  9,090
  5,809
  1,278
  -3,837
  -9,231
  -14,917
  -20,907
  -27,216
  -33,859
  -40,850
  -48,207
Retained Cash Flow (-), $m
  -111
  -27,844
  -68
  -78
  -87
  -96
  -106
  -115
  -125
  -134
  -144
  -154
  -165
  -175
  -186
  -198
  -210
  -222
  -235
  -248
  -262
  -276
  -291
  -307
  -323
  -341
  -359
  -378
  -397
  -418
  -440
Prev. year cash balance distribution, $m
 
  25,868
  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
 
  0
  42,690
  41,937
  41,049
  40,031
  38,885
  37,613
  36,215
  34,691
  33,039
  31,258
  29,345
  27,298
  25,112
  22,784
  20,309
  17,681
  14,896
  11,948
  8,829
  5,532
  986
  0
  0
  0
  0
  0
  0
  0
  0
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
 
  0
  39,081
  36,496
  33,800
  31,029
  28,221
  25,411
  22,635
  19,928
  17,321
  14,844
  12,523
  10,379
  8,431
  6,689
  5,161
  3,847
  2,743
  1,840
  1,122
  572
  82
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  47.0
  41.2
  34.0
  26.5
  19.6
  13.8
  9.4
  6.1

Interactive Brokers Group, Inc. operates as an automated electronic broker and market maker in approximately 100 electronic exchanges and market centers worldwide. It specializes in executing and clearing trades in securities, futures, foreign exchange instruments, bonds, and mutual funds. The company custodies and services accounts for hedge and mutual funds, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors. It offers custody, prime brokerage, securities, and margin lending services. The company provides electronic execution and clearing services; and market making services on exchanges and market centers, primarily in exchange-traded equities, equity options, and equity-index options and futures. Interactive Brokers Group, Inc. was founded in 1977 and is headquartered in Greenwich, Connecticut.

FINANCIAL RATIOS  of  Interactive Brokers Group (IBKR)

Valuation Ratios
P/E Ratio 27.7
Price to Sales 1.6
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow 4.5
Growth Rates
Sales Growth Rate 17.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10%
Cap. Spend. - 3 Yr. Gr. Rate 9.7%
Financial Strength
Quick Ratio 351
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 7.6%
Interest Coverage 11
Management Effectiveness
Return On Assets 0.3%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 8.8%
Ret/ On T. Cap. - 3 Yr. Avg. 6.9%
Return On Equity 9.1%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0
Profitability Ratios
Gross Margin 94.6%
Gross Margin - 3 Yr. Avg. 94.3%
EBITDA Margin 58.5%
EBITDA Margin - 3 Yr. Avg. 51.9%
Operating Margin 51.6%
Oper. Margin - 3 Yr. Avg. 44.5%
Pre-Tax Margin 51.6%
Pre-Tax Margin - 3 Yr. Avg. 44.5%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 4.5%
Effective Tax Rate 8.1%
Eff/ Tax Rate - 3 Yr. Avg. 8.9%
Payout Ratio 31%

IBKR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IBKR stock intrinsic value calculation we used $1475 million for the last fiscal year's total revenue generated by Interactive Brokers Group. The default revenue input number comes from 2016 income statement of Interactive Brokers Group. 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 IBKR stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for IBKR is calculated based on our internal credit rating of Interactive Brokers Group, 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 Interactive Brokers Group.
    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 IBKR stock the variable cost ratio is equal to 63.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for IBKR 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 208.1% for Interactive Brokers Group.

Corporate tax rate of 27% is the nominal tax rate for Interactive Brokers Group. 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 IBKR 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 IBKR are equal to 2.5%.

Life of production assets of 1.5 years is the average useful life of capital assets used in Interactive Brokers Group 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 IBKR is equal to -1753.8%. 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 - $974 million for Interactive Brokers Group - 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 408.122 million for Interactive Brokers Group 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 Interactive Brokers Group at the current share price and the inputted number of shares is $14.0 billion.


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COMPANY NEWS

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Stock chart of IBKR Financial statements of IBKR
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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