Intrinsic value of ILG - ILG

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$23.68

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$23.68

 
Intrinsic value

$294.07

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence* premium content

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

We calculate the intrinsic value of ILG stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.0

 

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, %
  94.55
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,356
  2,170
  3,352
  5,013
  7,274
  10,262
  14,108
  18,937
  24,865
  31,995
  40,413
  50,184
  61,354
  73,953
  87,989
  103,459
  120,348
  138,631
  158,278
  179,258
  201,540
  225,093
  249,894
  275,924
  303,170
  331,629
  361,305
  392,209
  424,363
  457,796
  492,546
Variable operating expenses, $m
 
  1,411
  2,150
  3,188
  4,601
  6,468
  8,871
  11,888
  15,593
  20,048
  25,308
  31,357
  38,337
  46,209
  54,980
  64,647
  75,199
  86,623
  98,900
  112,010
  125,932
  140,649
  156,146
  172,411
  189,436
  207,218
  225,761
  245,072
  265,163
  286,054
  307,767
Fixed operating expenses, $m
 
  111
  113
  116
  119
  122
  125
  128
  132
  135
  138
  142
  145
  149
  153
  156
  160
  164
  168
  173
  177
  181
  186
  191
  195
  200
  205
  210
  216
  221
  227
Total operating expenses, $m
  1,008
  1,522
  2,263
  3,304
  4,720
  6,590
  8,996
  12,016
  15,725
  20,183
  25,446
  31,499
  38,482
  46,358
  55,133
  64,803
  75,359
  86,787
  99,068
  112,183
  126,109
  140,830
  156,332
  172,602
  189,631
  207,418
  225,966
  245,282
  265,379
  286,275
  307,994
Operating income, $m
  348
  647
  1,088
  1,709
  2,554
  3,672
  5,112
  6,920
  9,141
  11,812
  14,967
  18,685
  22,872
  27,594
  32,857
  38,656
  44,988
  51,843
  59,210
  67,076
  75,431
  84,262
  93,562
  103,322
  113,539
  124,211
  135,338
  146,927
  158,984
  171,522
  184,552
EBITDA, $m
  410
  758
  1,229
  1,891
  2,793
  3,986
  5,523
  7,453
  9,824
  12,675
  16,042
  19,951
  24,419
  29,460
  35,076
  41,266
  48,024
  55,340
  63,202
  71,598
  80,514
  89,940
  99,865
  110,282
  121,186
  132,575
  144,452
  156,820
  169,689
  183,069
  196,976
Interest expense (income), $m
  24
  25
  67
  128
  213
  330
  484
  682
  931
  1,237
  1,605
  2,039
  2,542
  3,118
  3,768
  4,492
  5,289
  6,160
  7,103
  8,116
  9,198
  10,346
  11,561
  12,839
  14,182
  15,586
  17,054
  18,584
  20,177
  21,835
  23,559
Earnings before tax, $m
  324
  622
  1,021
  1,581
  2,340
  3,342
  4,627
  6,238
  8,209
  10,575
  13,362
  16,646
  20,329
  24,476
  29,089
  34,165
  39,699
  45,683
  52,107
  58,960
  66,233
  73,916
  82,001
  90,483
  99,357
  108,624
  118,285
  128,343
  138,807
  149,686
  160,993
Tax expense, $m
  57
  168
  276
  427
  632
  902
  1,249
  1,684
  2,217
  2,855
  3,608
  4,494
  5,489
  6,609
  7,854
  9,224
  10,719
  12,334
  14,069
  15,919
  17,883
  19,957
  22,140
  24,430
  26,827
  29,329
  31,937
  34,653
  37,478
  40,415
  43,468
Net income, $m
  265
  454
  746
  1,154
  1,708
  2,439
  3,378
  4,553
  5,993
  7,720
  9,754
  12,152
  14,840
  17,868
  21,235
  24,940
  28,980
  33,349
  38,038
  43,041
  48,350
  53,959
  59,861
  66,052
  72,531
  79,296
  86,348
  93,691
  101,329
  109,271
  117,525

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  126
  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
  3,304
  5,081
  7,850
  11,740
  17,034
  24,033
  33,039
  44,348
  58,232
  74,931
  94,644
  117,526
  143,687
  173,191
  206,063
  242,294
  281,846
  324,663
  370,675
  419,809
  471,990
  527,150
  585,232
  646,191
  710,000
  776,649
  846,147
  918,522
  993,825
  1,072,123
  1,153,503
Adjusted assets (=assets-cash), $m
  3,178
  5,081
  7,850
  11,740
  17,034
  24,033
  33,039
  44,348
  58,232
  74,931
  94,644
  117,526
  143,687
  173,191
  206,063
  242,294
  281,846
  324,663
  370,675
  419,809
  471,990
  527,150
  585,232
  646,191
  710,000
  776,649
  846,147
  918,522
  993,825
  1,072,123
  1,153,503
Revenue / Adjusted assets
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
Average production assets, $m
  687
  1,100
  1,699
  2,542
  3,688
  5,203
  7,153
  9,601
  12,607
  16,222
  20,489
  25,443
  31,107
  37,494
  44,610
  52,454
  61,017
  70,286
  80,247
  90,884
  102,181
  114,122
  126,696
  139,893
  153,707
  168,136
  183,181
  198,850
  215,152
  232,103
  249,721
Working capital, $m
  227
  338
  523
  782
  1,135
  1,601
  2,201
  2,954
  3,879
  4,991
  6,304
  7,829
  9,571
  11,537
  13,726
  16,140
  18,774
  21,626
  24,691
  27,964
  31,440
  35,115
  38,983
  43,044
  47,295
  51,734
  56,364
  61,185
  66,201
  71,416
  76,837
Total debt, $m
  691
  1,555
  2,973
  4,965
  7,675
  11,259
  15,870
  21,660
  28,769
  37,319
  47,412
  59,127
  72,522
  87,628
  104,458
  123,008
  143,259
  165,181
  188,740
  213,896
  240,613
  268,855
  298,593
  329,804
  362,474
  396,598
  432,181
  469,237
  507,792
  547,881
  589,548
Total liabilities, $m
  1,737
  2,601
  4,019
  6,011
  8,721
  12,305
  16,916
  22,706
  29,815
  38,365
  48,458
  60,173
  73,568
  88,674
  105,504
  124,054
  144,305
  166,227
  189,786
  214,942
  241,659
  269,901
  299,639
  330,850
  363,520
  397,644
  433,227
  470,283
  508,838
  548,927
  590,594
Total equity, $m
  1,567
  2,480
  3,831
  5,729
  8,313
  11,728
  16,123
  21,642
  28,417
  36,566
  46,186
  57,353
  70,119
  84,517
  100,559
  118,239
  137,541
  158,435
  180,890
  204,867
  230,331
  257,249
  285,593
  315,341
  346,480
  379,005
  412,919
  448,239
  484,987
  523,196
  562,909
Total liabilities and equity, $m
  3,304
  5,081
  7,850
  11,740
  17,034
  24,033
  33,039
  44,348
  58,232
  74,931
  94,644
  117,526
  143,687
  173,191
  206,063
  242,293
  281,846
  324,662
  370,676
  419,809
  471,990
  527,150
  585,232
  646,191
  710,000
  776,649
  846,146
  918,522
  993,825
  1,072,123
  1,153,503
Debt-to-equity ratio
  0.441
  0.630
  0.780
  0.870
  0.920
  0.960
  0.980
  1.000
  1.010
  1.020
  1.030
  1.030
  1.030
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
  1.050
Adjusted equity ratio
  0.453
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488
  0.488

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  265
  454
  746
  1,154
  1,708
  2,439
  3,378
  4,553
  5,993
  7,720
  9,754
  12,152
  14,840
  17,868
  21,235
  24,940
  28,980
  33,349
  38,038
  43,041
  48,350
  53,959
  59,861
  66,052
  72,531
  79,296
  86,348
  93,691
  101,329
  109,271
  117,525
Depreciation, amort., depletion, $m
  62
  111
  140
  182
  239
  315
  412
  533
  683
  863
  1,075
  1,266
  1,548
  1,865
  2,219
  2,610
  3,036
  3,497
  3,992
  4,522
  5,084
  5,678
  6,303
  6,960
  7,647
  8,365
  9,114
  9,893
  10,704
  11,547
  12,424
Funds from operations, $m
  -100
  565
  886
  1,336
  1,948
  2,754
  3,790
  5,087
  6,676
  8,583
  10,830
  13,417
  16,388
  19,733
  23,454
  27,550
  32,016
  36,845
  42,030
  47,563
  53,434
  59,636
  66,164
  73,012
  80,178
  87,661
  95,461
  103,584
  112,033
  120,818
  129,949
Change in working capital, $m
  -93
  127
  184
  259
  353
  466
  600
  753
  925
  1,112
  1,313
  1,524
  1,743
  1,965
  2,190
  2,413
  2,635
  2,852
  3,065
  3,273
  3,476
  3,674
  3,869
  4,061
  4,250
  4,440
  4,629
  4,821
  5,016
  5,216
  5,421
Cash from operations, $m
  -7
  784
  701
  1,077
  1,595
  2,288
  3,190
  4,334
  5,751
  7,471
  9,516
  11,893
  14,645
  17,768
  21,264
  25,137
  29,381
  33,993
  38,965
  44,290
  49,958
  55,962
  62,295
  68,952
  75,928
  83,221
  90,832
  98,763
  107,017
  115,603
  124,528
Maintenance CAPEX, $m
  0
  -34
  -55
  -85
  -126
  -183
  -259
  -356
  -478
  -627
  -807
  -1,019
  -1,266
  -1,548
  -1,865
  -2,219
  -2,610
  -3,036
  -3,497
  -3,992
  -4,522
  -5,084
  -5,678
  -6,303
  -6,960
  -7,647
  -8,365
  -9,114
  -9,893
  -10,704
  -11,547
New CAPEX, $m
  -95
  -413
  -599
  -842
  -1,146
  -1,515
  -1,950
  -2,448
  -3,006
  -3,615
  -4,268
  -4,954
  -5,664
  -6,387
  -7,116
  -7,844
  -8,563
  -9,269
  -9,961
  -10,637
  -11,297
  -11,942
  -12,574
  -13,197
  -13,814
  -14,429
  -15,046
  -15,669
  -16,302
  -16,951
  -17,618
Cash from investing activities, $m
  -189
  -447
  -654
  -927
  -1,272
  -1,698
  -2,209
  -2,804
  -3,484
  -4,242
  -5,075
  -5,973
  -6,930
  -7,935
  -8,981
  -10,063
  -11,173
  -12,305
  -13,458
  -14,629
  -15,819
  -17,026
  -18,252
  -19,500
  -20,774
  -22,076
  -23,411
  -24,783
  -26,195
  -27,655
  -29,165
Free cash flow, $m
  -196
  337
  47
  150
  322
  589
  981
  1,529
  2,268
  3,228
  4,442
  5,920
  7,716
  9,833
  12,283
  15,074
  18,209
  21,688
  25,507
  29,660
  34,140
  38,937
  44,043
  49,451
  55,154
  61,145
  67,421
  73,980
  80,822
  87,948
  95,363
Issuance/(repayment) of debt, $m
  440
  975
  1,418
  1,992
  2,711
  3,583
  4,611
  5,790
  7,109
  8,550
  10,093
  11,716
  13,394
  15,106
  16,831
  18,550
  20,251
  21,922
  23,558
  25,156
  26,717
  28,242
  29,738
  31,211
  32,670
  34,124
  35,583
  37,056
  38,555
  40,088
  41,667
Issuance/(repurchase) of shares, $m
  -101
  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 from financing (excl. dividends), $m  
  286
  975
  1,418
  1,992
  2,711
  3,583
  4,611
  5,790
  7,109
  8,550
  10,093
  11,716
  13,394
  15,106
  16,831
  18,550
  20,251
  21,922
  23,558
  25,156
  26,717
  28,242
  29,738
  31,211
  32,670
  34,124
  35,583
  37,056
  38,555
  40,088
  41,667
Total cash flow (excl. dividends), $m
  85
  1,312
  1,465
  2,142
  3,033
  4,173
  5,592
  7,320
  9,376
  11,778
  14,535
  17,636
  21,110
  24,939
  29,113
  33,624
  38,460
  43,610
  49,066
  54,817
  60,856
  67,179
  73,781
  80,662
  87,824
  95,269
  103,004
  111,037
  119,377
  128,037
  137,030
Retained Cash Flow (-), $m
  -1,135
  -928
  -1,351
  -1,898
  -2,584
  -3,415
  -4,395
  -5,519
  -6,775
  -8,149
  -9,620
  -11,167
  -12,766
  -14,398
  -16,042
  -17,680
  -19,301
  -20,895
  -22,454
  -23,977
  -25,464
  -26,918
  -28,344
  -29,748
  -31,139
  -32,525
  -33,915
  -35,319
  -36,748
  -38,209
  -39,714
Prev. year cash balance distribution, $m
 
  15
  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
 
  400
  114
  244
  449
  757
  1,197
  1,801
  2,601
  3,629
  4,915
  6,469
  8,344
  10,541
  13,071
  15,943
  19,158
  22,716
  26,612
  30,840
  35,392
  40,261
  45,437
  50,914
  56,685
  62,745
  69,089
  75,717
  82,629
  89,827
  97,316
Discount rate, %
 
  6.50
  6.83
  7.17
  7.52
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
PV of cash for distribution, $m
 
  375
  100
  198
  336
  518
  742
  1,004
  1,291
  1,590
  1,881
  2,138
  2,355
  2,509
  2,590
  2,594
  2,521
  2,381
  2,185
  1,949
  1,690
  1,425
  1,167
  929
  718
  539
  392
  276
  188
  124
  79
Current shareholders' claim on cash, %
  100
  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
  100.0

ILG, Inc., together with its subsidiaries, provides non-traditional lodging covering a portfolio of leisure businesses from vacation exchange and rental to vacation ownership. The company operates through two segments, Exchange and Rental, and Vacation Ownership. The Exchange and Rental segment offers leisure and travel-related products and services to owners of vacation interests and others primarily through various membership programs, as well as related services to resort developer clients; and allows owners of vacation ownership interests to exchange their occupancy rights for alternative accommodations at another resort and/or occupancy period. This segment also provides vacation property rental services for condominium owners, hotel owners, and homeowners' associations. The Vacation Ownership segment engages in the management of vacation ownership resorts; and the sale, marketing, and financing of vacation ownership interests, as well as in the provision of related services to owners and associations. As of December 31, 2015, it provided management services to approximately 200 vacation ownership properties and/or their associations. The company was formerly known as Interval Leisure Group, Inc. and changed its name to ILG, Inc. in October 2016. ILG, Inc. was founded in 1976 and is headquartered in Miami, Florida.

FINANCIAL RATIOS  of  ILG (ILG)

Valuation Ratios
P/E Ratio 11.1
Price to Sales 2.2
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow -421.7
Price to Free Cash Flow -28.9
Growth Rates
Sales Growth Rate 94.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 375%
Cap. Spend. - 3 Yr. Gr. Rate 41.1%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 37%
Total Debt to Equity 44.1%
Interest Coverage 15
Management Effectiveness
Return On Assets 12.4%
Ret/ On Assets - 3 Yr. Avg. 8.6%
Return On Total Capital 17.1%
Ret/ On T. Cap. - 3 Yr. Avg. 12.1%
Return On Equity 26.5%
Return On Equity - 3 Yr. Avg. 22%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 50.1%
Gross Margin - 3 Yr. Avg. 53.9%
EBITDA Margin 30.2%
EBITDA Margin - 3 Yr. Avg. 26.6%
Operating Margin 25.7%
Oper. Margin - 3 Yr. Avg. 21.6%
Pre-Tax Margin 23.9%
Pre-Tax Margin - 3 Yr. Avg. 20.4%
Net Profit Margin 19.5%
Net Profit Margin - 3 Yr. Avg. 14.3%
Effective Tax Rate 17.6%
Eff/ Tax Rate - 3 Yr. Avg. 29.5%
Payout Ratio 19.6%

ILG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ILG stock intrinsic value calculation we used $1356 million for the last fiscal year's total revenue generated by ILG. The default revenue input number comes from 2016 income statement of ILG. 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 ILG 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 6.5%, whose default value for ILG is calculated based on our internal credit rating of ILG, 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 ILG.
    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 ILG stock the variable cost ratio is equal to 66.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $108 million in the base year in the intrinsic value calculation for ILG stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.3% for ILG.

Corporate tax rate of 27% is the nominal tax rate for ILG. 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 ILG 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 ILG are equal to 50.7%.

Life of production assets of 20.1 years is the average useful life of capital assets used in ILG 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 ILG is equal to 15.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1567 million for ILG - 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 125.477 million for ILG 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 ILG at the current share price and the inputted number of shares is $3.0 billion.


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