Intrinsic value of World Fuel Services - INT

Previous Close

$33.19

  Intrinsic Value

$892.04

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+237%

Previous close

$33.19

 
Intrinsic value

$892.04

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+237%

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

We calculate the intrinsic value of INT 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 2.3

 

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, %
  -11.08
  57.90
  52.61
  47.85
  43.56
  39.71
  36.24
  33.11
  30.30
  27.77
  25.49
  23.45
  21.60
  19.94
  18.45
  17.10
  15.89
  14.80
  13.82
  12.94
  12.15
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
Revenue, $m
  27,016
  42,658
  65,101
  96,251
  138,182
  193,050
  263,006
  350,096
  456,181
  582,871
  731,471
  902,965
  1,098,011
  1,316,960
  1,559,892
  1,826,662
  2,116,949
  2,430,310
  2,766,233
  3,124,184
  3,503,647
  3,904,163
  4,325,355
  4,766,949
  5,228,795
  5,710,871
  6,213,295
  6,736,325
  7,280,359
  7,845,934
  8,433,724
Variable operating expenses, $m
 
  41,885
  63,876
  94,400
  135,489
  189,255
  257,805
  343,144
  447,098
  571,242
  716,856
  884,820
  1,075,947
  1,290,496
  1,528,547
  1,789,957
  2,074,410
  2,381,474
  2,710,647
  3,061,405
  3,433,243
  3,825,711
  4,238,439
  4,671,160
  5,123,725
  5,596,114
  6,088,442
  6,600,962
  7,134,064
  7,688,274
  8,264,253
Fixed operating expenses, $m
 
  275
  282
  289
  296
  303
  311
  319
  327
  335
  343
  352
  360
  369
  379
  388
  398
  408
  418
  428
  439
  450
  461
  473
  485
  497
  509
  522
  535
  548
  562
Total operating expenses, $m
  26,827
  42,160
  64,158
  94,689
  135,785
  189,558
  258,116
  343,463
  447,425
  571,577
  717,199
  885,172
  1,076,307
  1,290,865
  1,528,926
  1,790,345
  2,074,808
  2,381,882
  2,711,065
  3,061,833
  3,433,682
  3,826,161
  4,238,900
  4,671,633
  5,124,210
  5,596,611
  6,088,951
  6,601,484
  7,134,599
  7,688,822
  8,264,815
Operating income, $m
  189
  499
  943
  1,562
  2,397
  3,492
  4,891
  6,633
  8,757
  11,294
  14,272
  17,793
  21,704
  26,094
  30,967
  36,318
  42,141
  48,428
  55,168
  62,350
  69,965
  78,002
  86,454
  95,316
  104,585
  114,260
  124,344
  134,841
  145,760
  157,111
  168,909
EBITDA, $m
  271
  635
  1,106
  1,763
  2,650
  3,813
  5,297
  7,146
  9,399
  12,092
  15,252
  18,900
  23,049
  27,708
  32,879
  38,557
  44,736
  51,407
  58,559
  66,180
  74,260
  82,788
  91,756
  101,160
  110,995
  121,260
  131,960
  143,098
  154,684
  166,729
  179,247
Interest expense (income), $m
  41
  49
  134
  255
  423
  650
  946
  1,324
  1,794
  2,367
  3,051
  3,854
  4,780
  5,834
  7,016
  8,329
  9,769
  11,337
  13,030
  14,844
  16,778
  18,827
  20,990
  23,265
  25,650
  28,145
  30,749
  33,462
  36,287
  39,226
  42,280
Earnings before tax, $m
  142
  450
  809
  1,307
  1,974
  2,843
  3,945
  5,309
  6,962
  8,927
  11,220
  13,939
  16,923
  20,260
  23,950
  27,989
  32,372
  37,091
  42,138
  47,506
  53,187
  59,175
  65,464
  72,051
  78,935
  86,115
  93,595
  101,379
  109,473
  117,886
  126,629
Tax expense, $m
  16
  121
  219
  353
  533
  768
  1,065
  1,433
  1,880
  2,410
  3,029
  3,763
  4,569
  5,470
  6,467
  7,557
  8,740
  10,014
  11,377
  12,827
  14,361
  15,977
  17,675
  19,454
  21,312
  23,251
  25,271
  27,372
  29,558
  31,829
  34,190
Net income, $m
  126
  328
  591
  954
  1,441
  2,075
  2,880
  3,876
  5,083
  6,517
  8,191
  10,175
  12,354
  14,790
  17,484
  20,432
  23,631
  27,076
  30,761
  34,680
  38,827
  43,198
  47,789
  52,597
  57,622
  62,864
  68,324
  74,006
  79,915
  86,057
  92,439

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  699
  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
  5,413
  7,443
  11,359
  16,795
  24,111
  33,685
  45,892
  61,088
  79,599
  101,705
  127,634
  157,558
  191,591
  229,796
  272,185
  318,734
  369,386
  424,064
  482,679
  545,138
  611,350
  681,236
  754,729
  831,783
  912,370
  996,488
  1,084,155
  1,175,419
  1,270,347
  1,369,034
  1,471,597
Adjusted assets (=assets-cash), $m
  4,714
  7,443
  11,359
  16,795
  24,111
  33,685
  45,892
  61,088
  79,599
  101,705
  127,634
  157,558
  191,591
  229,796
  272,185
  318,734
  369,386
  424,064
  482,679
  545,138
  611,350
  681,236
  754,729
  831,783
  912,370
  996,488
  1,084,155
  1,175,419
  1,270,347
  1,369,034
  1,471,597
Revenue / Adjusted assets
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
  5.731
Average production assets, $m
  515
  811
  1,237
  1,829
  2,625
  3,668
  4,997
  6,652
  8,667
  11,075
  13,898
  17,156
  20,862
  25,022
  29,638
  34,707
  40,222
  46,176
  52,558
  59,359
  66,569
  74,179
  82,182
  90,572
  99,347
  108,507
  118,053
  127,990
  138,327
  149,073
  160,241
Working capital, $m
  1,654
  1,536
  2,344
  3,465
  4,975
  6,950
  9,468
  12,603
  16,423
  20,983
  26,333
  32,507
  39,528
  47,411
  56,156
  65,760
  76,210
  87,491
  99,584
  112,471
  126,131
  140,550
  155,713
  171,610
  188,237
  205,591
  223,679
  242,508
  262,093
  282,454
  303,614
Total debt, $m
  1,186
  3,184
  6,070
  10,076
  15,468
  22,524
  31,520
  42,720
  56,362
  72,655
  91,764
  113,818
  138,901
  167,058
  198,298
  232,605
  269,935
  310,233
  353,432
  399,464
  448,263
  499,769
  553,934
  610,722
  670,115
  732,109
  796,721
  863,982
  933,944
  1,006,676
  1,082,265
Total liabilities, $m
  3,488
  5,486
  8,372
  12,378
  17,770
  24,826
  33,822
  45,022
  58,664
  74,957
  94,066
  116,120
  141,203
  169,360
  200,600
  234,907
  272,237
  312,535
  355,734
  401,766
  450,565
  502,071
  556,236
  613,024
  672,417
  734,411
  799,023
  866,284
  936,246
  1,008,978
  1,084,567
Total equity, $m
  1,925
  1,958
  2,988
  4,417
  6,341
  8,859
  12,070
  16,066
  20,935
  26,748
  33,568
  41,438
  50,389
  60,436
  71,585
  83,827
  97,148
  111,529
  126,945
  143,371
  160,785
  179,165
  198,494
  218,759
  239,953
  262,076
  285,133
  309,135
  334,101
  360,056
  387,030
Total liabilities and equity, $m
  5,413
  7,444
  11,360
  16,795
  24,111
  33,685
  45,892
  61,088
  79,599
  101,705
  127,634
  157,558
  191,592
  229,796
  272,185
  318,734
  369,385
  424,064
  482,679
  545,137
  611,350
  681,236
  754,730
  831,783
  912,370
  996,487
  1,084,156
  1,175,419
  1,270,347
  1,369,034
  1,471,597
Debt-to-equity ratio
  0.616
  1.630
  2.030
  2.280
  2.440
  2.540
  2.610
  2.660
  2.690
  2.720
  2.730
  2.750
  2.760
  2.760
  2.770
  2.770
  2.780
  2.780
  2.780
  2.790
  2.790
  2.790
  2.790
  2.790
  2.790
  2.790
  2.790
  2.790
  2.800
  2.800
  2.800
Adjusted equity ratio
  0.260
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263
  0.263

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  126
  328
  591
  954
  1,441
  2,075
  2,880
  3,876
  5,083
  6,517
  8,191
  10,175
  12,354
  14,790
  17,484
  20,432
  23,631
  27,076
  30,761
  34,680
  38,827
  43,198
  47,789
  52,597
  57,622
  62,864
  68,324
  74,006
  79,915
  86,057
  92,439
Depreciation, amort., depletion, $m
  82
  136
  163
  202
  253
  320
  406
  513
  643
  798
  980
  1,107
  1,346
  1,614
  1,912
  2,239
  2,595
  2,979
  3,391
  3,830
  4,295
  4,786
  5,302
  5,843
  6,409
  7,000
  7,616
  8,257
  8,924
  9,618
  10,338
Funds from operations, $m
  222
  464
  754
  1,156
  1,694
  2,395
  3,286
  4,388
  5,725
  7,315
  9,171
  11,282
  13,700
  16,404
  19,396
  22,671
  26,226
  30,055
  34,152
  38,509
  43,121
  47,983
  53,091
  58,441
  64,032
  69,865
  75,941
  82,264
  88,839
  95,674
  102,777
Change in working capital, $m
  17
  563
  808
  1,121
  1,510
  1,975
  2,518
  3,135
  3,819
  4,561
  5,350
  6,174
  7,022
  7,882
  8,746
  9,604
  10,450
  11,281
  12,093
  12,886
  13,661
  14,419
  15,163
  15,897
  16,626
  17,355
  18,087
  18,829
  19,585
  20,361
  21,160
Cash from operations, $m
  205
  -99
  -54
  34
  185
  420
  767
  1,253
  1,906
  2,754
  3,821
  5,108
  6,678
  8,522
  10,650
  13,067
  15,776
  18,774
  22,059
  25,623
  29,461
  33,565
  37,928
  42,543
  47,405
  52,510
  57,853
  63,435
  69,254
  75,313
  81,617
Maintenance CAPEX, $m
  0
  -33
  -52
  -80
  -118
  -169
  -237
  -322
  -429
  -559
  -714
  -897
  -1,107
  -1,346
  -1,614
  -1,912
  -2,239
  -2,595
  -2,979
  -3,391
  -3,830
  -4,295
  -4,786
  -5,302
  -5,843
  -6,409
  -7,000
  -7,616
  -8,257
  -8,924
  -9,618
New CAPEX, $m
  -36
  -296
  -426
  -592
  -797
  -1,043
  -1,329
  -1,655
  -2,016
  -2,407
  -2,823
  -3,258
  -3,706
  -4,160
  -4,616
  -5,069
  -5,515
  -5,954
  -6,383
  -6,801
  -7,210
  -7,610
  -8,003
  -8,390
  -8,775
  -9,159
  -9,546
  -9,938
  -10,337
  -10,746
  -11,168
Cash from investing activities, $m
  -429
  -329
  -478
  -672
  -915
  -1,212
  -1,566
  -1,977
  -2,445
  -2,966
  -3,537
  -4,155
  -4,813
  -5,506
  -6,230
  -6,981
  -7,754
  -8,549
  -9,362
  -10,192
  -11,040
  -11,905
  -12,789
  -13,692
  -14,618
  -15,568
  -16,546
  -17,554
  -18,594
  -19,670
  -20,786
Free cash flow, $m
  -224
  -428
  -532
  -637
  -730
  -792
  -799
  -724
  -539
  -212
  284
  953
  1,865
  3,016
  4,420
  6,087
  8,021
  10,225
  12,697
  15,431
  18,421
  21,660
  25,139
  28,851
  32,787
  36,941
  41,307
  45,881
  50,660
  55,643
  60,831
Issuance/(repayment) of debt, $m
  402
  2,013
  2,886
  4,006
  5,392
  7,056
  8,996
  11,200
  13,642
  16,292
  19,110
  22,054
  25,083
  28,157
  31,241
  34,306
  37,331
  40,298
  43,199
  46,032
  48,799
  51,506
  54,165
  56,789
  59,393
  61,994
  64,611
  67,261
  69,962
  72,732
  75,589
Issuance/(repurchase) of shares, $m
  -41
  388
  439
  475
  483
  443
  331
  121
  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  
  358
  2,401
  3,325
  4,481
  5,875
  7,499
  9,327
  11,321
  13,642
  16,292
  19,110
  22,054
  25,083
  28,157
  31,241
  34,306
  37,331
  40,298
  43,199
  46,032
  48,799
  51,506
  54,165
  56,789
  59,393
  61,994
  64,611
  67,261
  69,962
  72,732
  75,589
Total cash flow (excl. dividends), $m
  133
  1,973
  2,793
  3,844
  5,145
  6,707
  8,528
  10,597
  13,104
  16,080
  19,393
  23,007
  26,948
  31,173
  35,661
  40,393
  45,352
  50,523
  55,896
  61,463
  67,220
  73,166
  79,304
  85,639
  92,180
  98,935
  105,918
  113,142
  120,622
  128,376
  136,420
Retained Cash Flow (-), $m
  -29
  -717
  -1,030
  -1,430
  -1,924
  -2,518
  -3,210
  -3,997
  -4,868
  -5,814
  -6,819
  -7,870
  -8,951
  -10,048
  -11,148
  -12,242
  -13,321
  -14,380
  -15,416
  -16,427
  -17,414
  -18,380
  -19,329
  -20,265
  -21,194
  -22,123
  -23,057
  -24,002
  -24,966
  -25,955
  -26,974
Prev. year cash balance distribution, $m
 
  684
  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
 
  1,941
  1,763
  2,414
  3,221
  4,189
  5,318
  6,600
  8,236
  10,266
  12,574
  15,137
  17,997
  21,125
  24,513
  28,151
  32,030
  36,143
  40,480
  45,036
  49,806
  54,786
  59,975
  65,374
  70,985
  76,812
  82,861
  89,140
  95,656
  102,421
  109,446
Discount rate, %
 
  4.80
  5.04
  5.29
  5.56
  5.83
  6.13
  6.43
  6.75
  7.09
  7.45
  7.82
  8.21
  8.62
  9.05
  9.50
  9.98
  10.48
  11.00
  11.55
  12.13
  12.74
  13.37
  14.04
  14.74
  15.48
  16.25
  17.07
  17.92
  18.82
  19.76
PV of cash for distribution, $m
 
  1,852
  1,598
  2,068
  2,595
  3,155
  3,722
  4,266
  4,882
  5,541
  6,131
  6,613
  6,983
  7,210
  7,287
  7,212
  6,992
  6,643
  6,185
  5,643
  5,045
  4,419
  3,791
  3,184
  2,616
  2,102
  1,651
  1,266
  947
  690
  490
Current shareholders' claim on cash, %
  100
  79.3
  66.8
  59.0
  54.0
  51.1
  49.5
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1
  49.1

World Fuel Services Corporation, an energy management company, provides energy procurement advisory, supply fulfillment and transaction, and payment management solutions to commercial and industrial customers in the aviation, marine, and transportation industries. It operates through three segments: Aviation, Marine, and Land. The Aviation segment offers fuel management; price risk management; ground handling; dispatch services; and international trip planning services, such as flight plans, weather reports, and overflight permits. This segment offers fuel and related products and services to commercial airlines, second and third tier airlines, cargo carriers, regional and low cost carriers, airports, fixed based operators, corporate fleets, fractional operators, private aircraft, military fleets, and to the United States (U.S.) and foreign governments, as well as intergovernmental organizations. The Marine segment provides fuel, lubricants, and related products and services to international container and tanker fleets, commercial cruise lines, yachts and time charter operators, offshore rig owners and operators, the U.S. and foreign governments, and other fuel suppliers. Its marine fuel-related services include management services to procure fuel, cost control, quality control, claims management, and card payment and related processing services. This segment also offers fueling of vessels in ports and at sea, and transportation and delivery of fuel and fuel-related products. The Land segment provides fuel, lubricants, power and natural gas solutions to petroleum distributors operating in the land transportation market; retail petroleum operators; and industrial, commercial, residential, and government customers. This segment also offers management services to procure fuel and price risk management; card payment solutions, merchant processing services, and payment solutions. The company was founded in 1984 and is headquartered in Miami, Florida.

FINANCIAL RATIOS  of  World Fuel Services (INT)

Valuation Ratios
P/E Ratio 18.4
Price to Sales 0.1
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 11.3
Price to Free Cash Flow 13.7
Growth Rates
Sales Growth Rate -11.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -29.4%
Cap. Spend. - 3 Yr. Gr. Rate -15.4%
Financial Strength
Quick Ratio 47
Current Ratio 0.1
LT Debt to Equity 60.8%
Total Debt to Equity 61.6%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.3%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 4.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.9%
Return On Equity 6.6%
Return On Equity - 3 Yr. Avg. 9.5%
Asset Turnover 5.4
Profitability Ratios
Gross Margin 3.3%
Gross Margin - 3 Yr. Avg. 2.7%
EBITDA Margin 1%
EBITDA Margin - 3 Yr. Avg. 1%
Operating Margin 0.7%
Oper. Margin - 3 Yr. Avg. 0.7%
Pre-Tax Margin 0.5%
Pre-Tax Margin - 3 Yr. Avg. 0.6%
Net Profit Margin 0.5%
Net Profit Margin - 3 Yr. Avg. 0.5%
Effective Tax Rate 11.3%
Eff/ Tax Rate - 3 Yr. Avg. 17.5%
Payout Ratio 13.5%

INT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INT stock intrinsic value calculation we used $27016 million for the last fiscal year's total revenue generated by World Fuel Services. The default revenue input number comes from 2016 income statement of World Fuel Services. 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 INT stock valuation model: a) initial revenue growth rate of 57.9% 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 4.8%, whose default value for INT is calculated based on our internal credit rating of World Fuel Services, 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 World Fuel Services.
    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 INT stock the variable cost ratio is equal to 98.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $268 million in the base year in the intrinsic value calculation for INT 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 4.2% for World Fuel Services.

Corporate tax rate of 27% is the nominal tax rate for World Fuel Services. 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 INT 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 INT are equal to 1.9%.

Life of production assets of 15.5 years is the average useful life of capital assets used in World Fuel Services 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 INT is equal to 3.6%. 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 - $1925 million for World Fuel Services - 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 69.498 million for World Fuel Services 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 World Fuel Services at the current share price and the inputted number of shares is $2.3 billion.

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COMPANY NEWS

▶ World Fuel Services posts 2Q profit   [Jul-27-17 11:37PM  Associated Press]
▶ World Fuel Services posts 1Q profit   [Apr-27-17 06:26PM  Associated Press]
▶ Near-Term Uncertainties to Weigh on These Energy Stocks   [Mar-28-17 05:47PM  Investopedia]
▶ Stocks Reach Their 3-Year Lows   [Mar-25-17 03:15PM  GuruFocus.com]
▶ Oil and Gas Stock Roundup: Not Everyone Is Optimistic   [Feb-18-17 10:00AM  Motley Fool]
▶ World Fuel Services Corp Stock Sinks After Earnings Miss   [Feb-15-17 11:36AM  Motley Fool]
▶ Hedge Funds Are Selling Outfront Media Inc (OUT)   [Dec-08-16 08:32AM  at Insider Monkey]
▶ Hedge Funds Are Selling Tempur Sealy International Inc (TPX)   [Nov-25-16 06:18PM  at Insider Monkey]
Stock chart of INT Financial statements of INT
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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