Intrinsic value of INTL FCStone - INTL

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$37.54

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$37.54

 
Intrinsic value

$9,743

 
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 INTL.

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

We calculate the intrinsic value of INTL 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 0.7

 

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, %
  -57.47
  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
  14,755
  23,608
  36,474
  54,547
  79,146
  111,663
  153,511
  206,056
  270,565
  348,151
  439,744
  546,062
  667,613
  804,698
  957,432
  1,125,770
  1,309,540
  1,508,481
  1,722,269
  1,950,560
  2,193,008
  2,449,299
  2,719,163
  3,002,398
  3,298,873
  3,608,544
  3,931,452
  4,267,732
  4,617,611
  4,981,406
  5,359,523
Variable operating expenses, $m
 
  23,558
  36,394
  54,425
  78,966
  111,408
  153,159
  205,582
  269,941
  347,347
  438,726
  544,792
  666,060
  802,827
  955,205
  1,123,152
  1,306,495
  1,504,973
  1,718,264
  1,946,024
  2,187,909
  2,443,603
  2,712,840
  2,995,416
  3,291,202
  3,600,153
  3,922,310
  4,257,809
  4,606,874
  4,969,822
  5,347,060
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
  14,682
  23,558
  36,394
  54,425
  78,966
  111,408
  153,159
  205,582
  269,941
  347,347
  438,726
  544,792
  666,060
  802,827
  955,205
  1,123,152
  1,306,495
  1,504,973
  1,718,264
  1,946,024
  2,187,909
  2,443,603
  2,712,840
  2,995,416
  3,291,202
  3,600,153
  3,922,310
  4,257,809
  4,606,874
  4,969,822
  5,347,060
Operating income, $m
  73
  50
  80
  122
  179
  255
  352
  474
  624
  805
  1,018
  1,270
  1,552
  1,871
  2,226
  2,618
  3,045
  3,508
  4,005
  4,536
  5,099
  5,695
  6,323
  6,982
  7,671
  8,391
  9,142
  9,924
  10,737
  11,583
  12,463
EBITDA, $m
  81
  59
  92
  137
  199
  281
  387
  519
  682
  877
  1,108
  1,376
  1,682
  2,027
  2,412
  2,836
  3,299
  3,801
  4,339
  4,914
  5,525
  6,171
  6,851
  7,565
  8,311
  9,092
  9,905
  10,753
  11,634
  12,551
  13,503
Interest expense (income), $m
  26
  2
  82
  206
  380
  616
  928
  1,330
  1,835
  2,454
  3,199
  4,079
  5,100
  6,267
  7,584
  9,051
  10,667
  12,432
  14,343
  16,396
  18,588
  20,917
  23,378
  25,970
  28,690
  31,537
  34,511
  37,612
  40,842
  44,202
  47,695
Earnings before tax, $m
  73
  49
  -2
  -84
  -200
  -361
  -576
  -856
  -1,210
  -1,649
  -2,182
  -2,809
  -3,548
  -4,396
  -5,357
  -6,433
  -7,622
  -8,924
  -10,338
  -11,860
  -13,489
  -15,221
  -17,055
  -18,988
  -21,019
  -23,146
  -25,369
  -27,688
  -30,104
  -32,618
  -35,233
Tax expense, $m
  18
  13
  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
  55
  35
  -2
  -84
  -200
  -361
  -576
  -856
  -1,210
  -1,649
  -2,182
  -2,809
  -3,548
  -4,396
  -5,357
  -6,433
  -7,622
  -8,924
  -10,338
  -11,860
  -13,489
  -15,221
  -17,055
  -18,988
  -21,019
  -23,146
  -25,369
  -27,688
  -30,104
  -32,618
  -35,233

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,453
  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
  5,951
  7,198
  11,120
  16,630
  24,130
  34,044
  46,802
  62,822
  82,489
  106,144
  134,068
  166,482
  203,540
  245,335
  291,900
  343,222
  399,250
  459,903
  525,082
  594,683
  668,600
  746,737
  829,013
  915,365
  1,005,754
  1,100,166
  1,198,613
  1,301,138
  1,407,808
  1,518,721
  1,634,001
Adjusted assets (=assets-cash), $m
  4,498
  7,198
  11,120
  16,630
  24,130
  34,044
  46,802
  62,822
  82,489
  106,144
  134,068
  166,482
  203,540
  245,335
  291,900
  343,222
  399,250
  459,903
  525,082
  594,683
  668,600
  746,737
  829,013
  915,365
  1,005,754
  1,100,166
  1,198,613
  1,301,138
  1,407,808
  1,518,721
  1,634,001
Revenue / Adjusted assets
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
  3.280
Average production assets, $m
  34
  47
  73
  109
  158
  223
  307
  412
  541
  696
  879
  1,092
  1,335
  1,609
  1,915
  2,252
  2,619
  3,017
  3,445
  3,901
  4,386
  4,899
  5,438
  6,005
  6,598
  7,217
  7,863
  8,535
  9,235
  9,963
  10,719
Working capital, $m
  0
  -165
  -255
  -382
  -554
  -782
  -1,075
  -1,442
  -1,894
  -2,437
  -3,078
  -3,822
  -4,673
  -5,633
  -6,702
  -7,880
  -9,167
  -10,559
  -12,056
  -13,654
  -15,351
  -17,145
  -19,034
  -21,017
  -23,092
  -25,260
  -27,520
  -29,874
  -32,323
  -34,870
  -37,517
Total debt, $m
  1,395
  2,356
  5,886
  10,845
  17,595
  26,517
  38,000
  52,418
  70,118
  91,407
  116,539
  145,712
  179,064
  216,679
  258,588
  304,778
  355,203
  409,790
  468,452
  531,093
  597,618
  667,942
  741,990
  819,707
  901,057
  986,027
  1,074,630
  1,166,902
  1,262,905
  1,362,727
  1,466,479
Total liabilities, $m
  5,518
  6,478
  10,008
  14,967
  21,717
  30,639
  42,122
  56,540
  74,240
  95,529
  120,661
  149,834
  183,186
  220,801
  262,710
  308,900
  359,325
  413,912
  472,574
  535,215
  601,740
  672,064
  746,112
  823,829
  905,179
  990,149
  1,078,752
  1,171,024
  1,267,027
  1,366,849
  1,470,601
Total equity, $m
  434
  720
  1,112
  1,663
  2,413
  3,404
  4,680
  6,282
  8,249
  10,614
  13,407
  16,648
  20,354
  24,533
  29,190
  34,322
  39,925
  45,990
  52,508
  59,468
  66,860
  74,674
  82,901
  91,537
  100,575
  110,017
  119,861
  130,114
  140,781
  151,872
  163,400
Total liabilities and equity, $m
  5,952
  7,198
  11,120
  16,630
  24,130
  34,043
  46,802
  62,822
  82,489
  106,143
  134,068
  166,482
  203,540
  245,334
  291,900
  343,222
  399,250
  459,902
  525,082
  594,683
  668,600
  746,738
  829,013
  915,366
  1,005,754
  1,100,166
  1,198,613
  1,301,138
  1,407,808
  1,518,721
  1,634,001
Debt-to-equity ratio
  3.214
  3.270
  5.290
  6.520
  7.290
  7.790
  8.120
  8.340
  8.500
  8.610
  8.690
  8.750
  8.800
  8.830
  8.860
  8.880
  8.900
  8.910
  8.920
  8.930
  8.940
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
  8.970
Adjusted equity ratio
  0.074
  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
  55
  35
  -2
  -84
  -200
  -361
  -576
  -856
  -1,210
  -1,649
  -2,182
  -2,809
  -3,548
  -4,396
  -5,357
  -6,433
  -7,622
  -8,924
  -10,338
  -11,860
  -13,489
  -15,221
  -17,055
  -18,988
  -21,019
  -23,146
  -25,369
  -27,688
  -30,104
  -32,618
  -35,233
Depreciation, amort., depletion, $m
  8
  9
  12
  15
  20
  26
  35
  45
  57
  72
  90
  106
  130
  156
  186
  219
  254
  293
  334
  379
  426
  476
  528
  583
  641
  701
  763
  829
  897
  967
  1,041
Funds from operations, $m
  -122
  45
  9
  -69
  -180
  -334
  -541
  -811
  -1,153
  -1,577
  -2,091
  -2,703
  -3,418
  -4,240
  -5,172
  -6,214
  -7,368
  -8,632
  -10,003
  -11,481
  -13,063
  -14,746
  -16,527
  -18,405
  -20,378
  -22,445
  -24,606
  -26,860
  -29,208
  -31,651
  -34,192
Change in working capital, $m
  -94
  -62
  -90
  -127
  -172
  -228
  -293
  -368
  -452
  -543
  -641
  -744
  -851
  -960
  -1,069
  -1,178
  -1,286
  -1,393
  -1,497
  -1,598
  -1,697
  -1,794
  -1,889
  -1,983
  -2,075
  -2,168
  -2,260
  -2,354
  -2,449
  -2,547
  -2,647
Cash from operations, $m
  -28
  111
  100
  58
  -8
  -107
  -248
  -443
  -701
  -1,034
  -1,450
  -1,959
  -2,567
  -3,280
  -4,102
  -5,036
  -6,081
  -7,239
  -8,507
  -9,883
  -11,366
  -12,952
  -14,638
  -16,422
  -18,303
  -20,278
  -22,345
  -24,506
  -26,758
  -29,105
  -31,545
Maintenance CAPEX, $m
  0
  -3
  -5
  -7
  -11
  -15
  -22
  -30
  -40
  -53
  -68
  -85
  -106
  -130
  -156
  -186
  -219
  -254
  -293
  -334
  -379
  -426
  -476
  -528
  -583
  -641
  -701
  -763
  -829
  -897
  -967
New CAPEX, $m
  -15
  -13
  -26
  -36
  -49
  -65
  -84
  -105
  -129
  -155
  -183
  -213
  -243
  -274
  -305
  -337
  -368
  -398
  -428
  -457
  -485
  -513
  -540
  -566
  -593
  -619
  -646
  -673
  -700
  -728
  -756
Cash from investing activities, $m
  -36
  -16
  -31
  -43
  -60
  -80
  -106
  -135
  -169
  -208
  -251
  -298
  -349
  -404
  -461
  -523
  -587
  -652
  -721
  -791
  -864
  -939
  -1,016
  -1,094
  -1,176
  -1,260
  -1,347
  -1,436
  -1,529
  -1,625
  -1,723
Free cash flow, $m
  -64
  94
  69
  15
  -68
  -187
  -354
  -578
  -870
  -1,242
  -1,701
  -2,257
  -2,916
  -3,684
  -4,564
  -5,558
  -6,668
  -7,891
  -9,227
  -10,674
  -12,229
  -13,890
  -15,653
  -17,517
  -19,479
  -21,538
  -23,692
  -25,942
  -28,287
  -30,729
  -33,269
Issuance/(repayment) of debt, $m
  141
  2,311
  3,530
  4,959
  6,749
  8,922
  11,483
  14,418
  17,701
  21,289
  25,132
  29,173
  33,352
  37,615
  41,909
  46,190
  50,425
  54,587
  58,662
  62,641
  66,525
  70,324
  74,048
  77,717
  81,350
  84,971
  88,603
  92,272
  96,003
  99,822
  103,752
Issuance/(repurchase) of shares, $m
  -16
  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  
  121
  2,311
  3,530
  4,959
  6,749
  8,922
  11,483
  14,418
  17,701
  21,289
  25,132
  29,173
  33,352
  37,615
  41,909
  46,190
  50,425
  54,587
  58,662
  62,641
  66,525
  70,324
  74,048
  77,717
  81,350
  84,971
  88,603
  92,272
  96,003
  99,822
  103,752
Total cash flow (excl. dividends), $m
  48
  2,405
  3,600
  4,974
  6,682
  8,735
  11,129
  13,840
  16,830
  20,047
  23,431
  26,916
  30,436
  33,931
  37,345
  40,632
  43,757
  46,696
  49,434
  51,966
  54,296
  56,434
  58,395
  60,200
  61,871
  63,433
  64,911
  66,331
  67,716
  69,093
  70,483
Retained Cash Flow (-), $m
  -37
  -389
  -392
  -551
  -750
  -991
  -1,276
  -1,602
  -1,967
  -2,365
  -2,792
  -3,241
  -3,706
  -4,179
  -4,657
  -5,132
  -5,603
  -6,065
  -6,518
  -6,960
  -7,392
  -7,814
  -8,228
  -8,635
  -9,039
  -9,441
  -9,845
  -10,252
  -10,667
  -11,091
  -11,528
Prev. year cash balance distribution, $m
 
  103
  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
 
  2,119
  3,207
  4,423
  5,932
  7,744
  9,853
  12,238
  14,863
  17,682
  20,639
  23,674
  26,730
  29,751
  32,688
  35,500
  38,155
  40,631
  42,916
  45,006
  46,904
  48,620
  50,167
  51,565
  52,832
  53,992
  55,066
  56,078
  57,049
  58,002
  58,955
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
 
  2,032
  2,936
  3,849
  4,884
  6,002
  7,151
  8,268
  9,290
  10,157
  10,820
  11,243
  11,407
  11,312
  10,974
  10,422
  9,696
  8,841
  7,903
  6,930
  5,960
  5,029
  4,163
  3,380
  2,691
  2,100
  1,607
  1,204
  883
  633
  444
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

INTL FCStone Inc. operates as a financial services company worldwide. The company's Commercial Hedging segment offers risk management consulting services related to agricultural and energy commodities, and base metal products listed on the London Metals Exchange. Its Global Payments segment provides payment solutions to banks and commercial businesses; and charities and non-governmental organizations, and government organizations. The company’s Securities segment offers value-added solutions that facilitate cross-border trading in foreign securities, including unlisted American Depositary Receipts, Global Depository Receipts, and foreign ordinary shares. This segment also operates as an institutional dealer in fixed income securities to serve asset managers, commercial bank trust and investment departments, broker-dealers, and insurance companies. In addition, it originates, structures, and places debt instruments; trades in various international debt instruments; and offers asset management services. The company’s Physical Commodities segment provides a range of trading and hedging services comprising OTC products for selecting producers, consumers, and investors. This segment also offers financing services to commercial commodity-related companies against physical inventories, such as grain, lumber, meat, energy product, and renewable fuel. The company’s Clearing and Execution Services segment offers prime brokerage foreign exchange services for the financial institutions and professional traders; provides a range of OTC products, including 24-hour a day execution of spot, forwards, and options, as well as non-deliverable forwards; and operates a proprietary foreign exchange desk that arbitrages the exchange-traded foreign exchange markets with the cash markets. The company was formerly known as International Assets Holding Corporation and changed its name to INTL FCStone Inc. in March 2011. INTL FCStone Inc. was founded in 1924 and is based in New York, New York.

FINANCIAL RATIOS  of  INTL FCStone (INTL)

Valuation Ratios
P/E Ratio 12.6
Price to Sales 0
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow -24.7
Price to Free Cash Flow -16.1
Growth Rates
Sales Growth Rate -57.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 66.7%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
Financial Strength
Quick Ratio 1
Current Ratio NaN
LT Debt to Equity 10.4%
Total Debt to Equity 321.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 1.4%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital 3.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.5%
Return On Equity 13.2%
Return On Equity - 3 Yr. Avg. 11.3%
Asset Turnover 2.7
Profitability Ratios
Gross Margin 4.4%
Gross Margin - 3 Yr. Avg. 2.5%
EBITDA Margin 0.7%
EBITDA Margin - 3 Yr. Avg. 0.4%
Operating Margin 0.5%
Oper. Margin - 3 Yr. Avg. 0.3%
Pre-Tax Margin 0.5%
Pre-Tax Margin - 3 Yr. Avg. 0.3%
Net Profit Margin 0.4%
Net Profit Margin - 3 Yr. Avg. 0.2%
Effective Tax Rate 24.7%
Eff/ Tax Rate - 3 Yr. Avg. 25.3%
Payout Ratio 0%

INTL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the INTL stock intrinsic value calculation we used $14755 million for the last fiscal year's total revenue generated by INTL FCStone. The default revenue input number comes from 2016 income statement of INTL FCStone. 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 INTL 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 4.3%, whose default value for INTL is calculated based on our internal credit rating of INTL FCStone, 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 INTL FCStone.
    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 INTL stock the variable cost ratio is equal to 99.8%.

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 INTL 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 3.5% for INTL FCStone.

Corporate tax rate of 27% is the nominal tax rate for INTL FCStone. 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 INTL 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 INTL are equal to 0.2%.

Life of production assets of 10.3 years is the average useful life of capital assets used in INTL FCStone 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 INTL is equal to -0.7%. 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 - $434 million for INTL FCStone - 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 18.788 million for INTL FCStone 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 INTL FCStone at the current share price and the inputted number of shares is $0.7 billion.


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▶ INTL FCStone Inc. To Redeem Senior Notes   [08:24AM  GlobeNewswire]
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Stock chart of INTL Financial statements of INTL
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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