Intrinsic value of INTL FCStone - INTL

Previous Close

$38.16

  Intrinsic Value

$483.24

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+5000%

Previous close

$38.16

 
Intrinsic value

$483.24

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+5000%

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
  47.20
  42.98
  39.18
  35.76
  32.69
  29.92
  27.43
  25.18
  23.17
  21.35
  19.71
  18.24
  16.92
  15.73
  14.65
  13.69
  12.82
  12.04
  11.33
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.45
  7.21
  6.99
Revenue, $m
  14,755
  21,719
  31,054
  43,222
  58,680
  77,861
  101,156
  128,900
  161,362
  198,742
  241,172
  288,718
  341,388
  399,145
  461,918
  529,607
  602,103
  679,291
  761,063
  847,321
  937,990
  1,033,013
  1,132,363
  1,236,039
  1,344,071
  1,456,518
  1,573,470
  1,695,045
  1,821,392
  1,952,688
  2,089,135
Variable operating expenses, $m
 
  21,674
  30,987
  43,126
  58,548
  77,685
  100,925
  128,605
  160,991
  198,285
  240,616
  288,046
  340,594
  398,217
  460,844
  528,376
  600,703
  677,712
  759,293
  845,351
  935,809
  1,030,611
  1,129,730
  1,233,165
  1,340,946
  1,453,131
  1,569,811
  1,691,103
  1,817,157
  1,948,147
  2,084,277
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
  21,674
  30,987
  43,126
  58,548
  77,685
  100,925
  128,605
  160,991
  198,285
  240,616
  288,046
  340,594
  398,217
  460,844
  528,376
  600,703
  677,712
  759,293
  845,351
  935,809
  1,030,611
  1,129,730
  1,233,165
  1,340,946
  1,453,131
  1,569,811
  1,691,103
  1,817,157
  1,948,147
  2,084,277
Operating income, $m
  73
  46
  67
  96
  132
  176
  230
  295
  370
  457
  556
  671
  794
  928
  1,074
  1,232
  1,400
  1,580
  1,770
  1,970
  2,181
  2,402
  2,633
  2,874
  3,125
  3,387
  3,659
  3,942
  4,235
  4,541
  4,858
EBITDA, $m
  81
  53
  75
  105
  142
  189
  245
  313
  391
  482
  585
  700
  828
  968
  1,120
  1,284
  1,460
  1,647
  1,846
  2,055
  2,275
  2,505
  2,746
  2,998
  3,260
  3,533
  3,816
  4,111
  4,417
  4,736
  5,067
Interest expense (income), $m
  26
  2
  82
  205
  367
  572
  826
  1,135
  1,502
  1,933
  2,428
  2,991
  3,621
  4,319
  5,085
  5,917
  6,814
  7,775
  8,798
  9,882
  11,025
  12,227
  13,487
  14,804
  16,178
  17,610
  19,100
  20,651
  22,262
  23,937
  25,677
Earnings before tax, $m
  73
  44
  -14
  -110
  -235
  -395
  -595
  -840
  -1,132
  -1,475
  -1,872
  -2,319
  -2,827
  -3,391
  -4,010
  -4,685
  -5,414
  -6,195
  -7,028
  -7,912
  -8,844
  -9,825
  -10,854
  -11,929
  -13,052
  -14,223
  -15,441
  -16,709
  -18,027
  -19,396
  -20,819
Tax expense, $m
  18
  12
  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
  32
  -14
  -110
  -235
  -395
  -595
  -840
  -1,132
  -1,475
  -1,872
  -2,319
  -2,827
  -3,391
  -4,010
  -4,685
  -5,414
  -6,195
  -7,028
  -7,912
  -8,844
  -9,825
  -10,854
  -11,929
  -13,052
  -14,223
  -15,441
  -16,709
  -18,027
  -19,396
  -20,819

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
  5,950
  8,202
  11,727
  16,323
  22,160
  29,404
  38,201
  48,678
  60,937
  75,054
  91,077
  109,032
  128,923
  150,735
  174,440
  200,003
  227,380
  256,530
  287,410
  319,985
  354,226
  390,111
  427,630
  466,782
  507,580
  550,045
  594,211
  640,123
  687,837
  737,420
  788,948
Adjusted assets (=assets-cash), $m
  4,497
  8,202
  11,727
  16,323
  22,160
  29,404
  38,201
  48,678
  60,937
  75,054
  91,077
  109,032
  128,923
  150,735
  174,440
  200,003
  227,380
  256,530
  287,410
  319,985
  354,226
  390,111
  427,630
  466,782
  507,580
  550,045
  594,211
  640,123
  687,837
  737,420
  788,948
Revenue / Adjusted assets
  3.281
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
  2.648
Average production assets, $m
  20
  22
  31
  43
  59
  78
  101
  129
  161
  199
  241
  289
  341
  399
  462
  530
  602
  679
  761
  847
  938
  1,033
  1,132
  1,236
  1,344
  1,457
  1,573
  1,695
  1,821
  1,953
  2,089
Working capital, $m
  0
  -1,868
  -2,671
  -3,717
  -5,046
  -6,696
  -8,699
  -11,085
  -13,877
  -17,092
  -20,741
  -24,830
  -29,359
  -34,327
  -39,725
  -45,546
  -51,781
  -58,419
  -65,451
  -72,870
  -80,667
  -88,839
  -97,383
  -106,299
  -115,590
  -125,261
  -135,318
  -145,774
  -156,640
  -167,931
  -179,666
Total debt, $m
  227
  2,093
  5,266
  9,401
  14,655
  21,174
  29,092
  38,521
  49,555
  62,259
  76,680
  92,840
  110,742
  130,372
  151,707
  174,713
  199,353
  225,588
  253,380
  282,698
  313,514
  345,811
  379,578
  414,815
  451,533
  489,751
  529,501
  570,821
  613,764
  658,389
  704,764
Total liabilities, $m
  5,517
  7,382
  10,555
  14,690
  19,944
  26,463
  34,381
  43,810
  54,844
  67,548
  81,969
  98,129
  116,031
  135,661
  156,996
  180,002
  204,642
  230,877
  258,669
  287,987
  318,803
  351,100
  384,867
  420,104
  456,822
  495,040
  534,790
  576,110
  619,053
  663,678
  710,053
Total equity, $m
  434
  820
  1,173
  1,632
  2,216
  2,940
  3,820
  4,868
  6,094
  7,505
  9,108
  10,903
  12,892
  15,073
  17,444
  20,000
  22,738
  25,653
  28,741
  31,999
  35,423
  39,011
  42,763
  46,678
  50,758
  55,004
  59,421
  64,012
  68,784
  73,742
  78,895
Total liabilities and equity, $m
  5,951
  8,202
  11,728
  16,322
  22,160
  29,403
  38,201
  48,678
  60,938
  75,053
  91,077
  109,032
  128,923
  150,734
  174,440
  200,002
  227,380
  256,530
  287,410
  319,986
  354,226
  390,111
  427,630
  466,782
  507,580
  550,044
  594,211
  640,122
  687,837
  737,420
  788,948
Debt-to-equity ratio
  0.523
  2.550
  4.490
  5.760
  6.610
  7.200
  7.620
  7.910
  8.130
  8.300
  8.420
  8.510
  8.590
  8.650
  8.700
  8.740
  8.770
  8.790
  8.820
  8.830
  8.850
  8.860
  8.880
  8.890
  8.900
  8.900
  8.910
  8.920
  8.920
  8.930
  8.930
Adjusted equity ratio
  -0.186
  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
  32
  -14
  -110
  -235
  -395
  -595
  -840
  -1,132
  -1,475
  -1,872
  -2,319
  -2,827
  -3,391
  -4,010
  -4,685
  -5,414
  -6,195
  -7,028
  -7,912
  -8,844
  -9,825
  -10,854
  -11,929
  -13,052
  -14,223
  -15,441
  -16,709
  -18,027
  -19,396
  -20,819
Depreciation, amort., depletion, $m
  8
  7
  8
  9
  11
  13
  15
  18
  21
  25
  29
  29
  34
  40
  46
  53
  60
  68
  76
  85
  94
  103
  113
  124
  134
  146
  157
  170
  182
  195
  209
Funds from operations, $m
  -122
  39
  -6
  -101
  -224
  -383
  -580
  -822
  -1,111
  -1,451
  -1,843
  -2,290
  -2,793
  -3,351
  -3,964
  -4,632
  -5,354
  -6,127
  -6,952
  -7,827
  -8,750
  -9,722
  -10,740
  -11,806
  -12,918
  -14,077
  -15,284
  -16,540
  -17,845
  -19,201
  -20,610
Change in working capital, $m
  -94
  -599
  -803
  -1,046
  -1,329
  -1,650
  -2,003
  -2,386
  -2,792
  -3,215
  -3,649
  -4,089
  -4,530
  -4,967
  -5,398
  -5,821
  -6,235
  -6,638
  -7,032
  -7,418
  -7,797
  -8,172
  -8,544
  -8,916
  -9,291
  -9,670
  -10,058
  -10,455
  -10,866
  -11,291
  -11,734
Cash from operations, $m
  -28
  638
  796
  946
  1,105
  1,267
  1,423
  1,564
  1,681
  1,764
  1,806
  1,799
  1,737
  1,616
  1,434
  1,189
  881
  511
  80
  -409
  -953
  -1,550
  -2,196
  -2,890
  -3,627
  -4,407
  -5,226
  -6,084
  -6,979
  -7,910
  -8,876
Maintenance CAPEX, $m
  0
  -2
  -2
  -3
  -4
  -6
  -8
  -10
  -13
  -16
  -20
  -24
  -29
  -34
  -40
  -46
  -53
  -60
  -68
  -76
  -85
  -94
  -103
  -113
  -124
  -134
  -146
  -157
  -170
  -182
  -195
New CAPEX, $m
  -15
  -2
  -9
  -12
  -15
  -19
  -23
  -28
  -32
  -37
  -42
  -48
  -53
  -58
  -63
  -68
  -72
  -77
  -82
  -86
  -91
  -95
  -99
  -104
  -108
  -112
  -117
  -122
  -126
  -131
  -136
Cash from investing activities, $m
  -36
  -4
  -11
  -15
  -19
  -25
  -31
  -38
  -45
  -53
  -62
  -72
  -82
  -92
  -103
  -114
  -125
  -137
  -150
  -162
  -176
  -189
  -202
  -217
  -232
  -246
  -263
  -279
  -296
  -313
  -331
Free cash flow, $m
  -64
  634
  785
  931
  1,085
  1,242
  1,392
  1,526
  1,635
  1,711
  1,743
  1,727
  1,655
  1,524
  1,332
  1,075
  756
  373
  -69
  -571
  -1,128
  -1,738
  -2,399
  -3,107
  -3,859
  -4,654
  -5,489
  -6,363
  -7,275
  -8,223
  -9,208
Issuance/(repayment) of debt, $m
  141
  2,049
  3,173
  4,136
  5,254
  6,519
  7,917
  9,430
  11,033
  12,705
  14,421
  16,160
  17,901
  19,631
  21,335
  23,006
  24,640
  26,235
  27,792
  29,318
  30,816
  32,296
  33,767
  35,237
  36,718
  38,218
  39,749
  41,321
  42,943
  44,625
  46,376
Issuance/(repurchase) of shares, $m
  -16
  548
  367
  569
  819
  1,120
  1,475
  1,887
  2,358
  2,887
  3,474
  4,115
  4,816
  5,572
  6,381
  7,241
  8,152
  9,110
  10,116
  11,169
  12,268
  13,413
  14,605
  15,845
  17,132
  18,469
  19,858
  21,300
  22,798
  24,354
  25,972
Cash from financing (excl. dividends), $m  
  121
  2,597
  3,540
  4,705
  6,073
  7,639
  9,392
  11,317
  13,391
  15,592
  17,895
  20,275
  22,717
  25,203
  27,716
  30,247
  32,792
  35,345
  37,908
  40,487
  43,084
  45,709
  48,372
  51,082
  53,850
  56,687
  59,607
  62,621
  65,741
  68,979
  72,348
Total cash flow (excl. dividends), $m
  48
  3,231
  4,325
  5,635
  7,158
  8,881
  10,784
  12,843
  15,026
  17,302
  19,639
  22,001
  24,373
  26,727
  29,047
  31,323
  33,547
  35,718
  37,839
  39,916
  41,956
  43,971
  45,974
  47,975
  49,991
  52,034
  54,119
  56,258
  58,466
  60,756
  63,140
Retained Cash Flow (-), $m
  -37
  -580
  -367
  -569
  -819
  -1,120
  -1,475
  -1,887
  -2,358
  -2,887
  -3,474
  -4,115
  -4,816
  -5,572
  -6,381
  -7,241
  -8,152
  -9,110
  -10,116
  -11,169
  -12,268
  -13,413
  -14,605
  -15,845
  -17,132
  -18,469
  -19,858
  -21,300
  -22,798
  -24,354
  -25,972
Prev. year cash balance distribution, $m
 
  194
  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
 
  2,845
  3,958
  5,066
  6,339
  7,761
  9,309
  10,956
  12,669
  14,415
  16,164
  17,887
  19,557
  21,155
  22,667
  24,082
  25,395
  26,608
  27,723
  28,747
  29,688
  30,558
  31,368
  32,131
  32,859
  33,565
  34,260
  34,958
  35,668
  36,402
  37,168
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
 
  2,728
  3,623
  4,409
  5,220
  6,016
  6,756
  7,402
  7,918
  8,281
  8,474
  8,494
  8,346
  8,044
  7,610
  7,070
  6,454
  5,789
  5,105
  4,426
  3,772
  3,161
  2,603
  2,106
  1,674
  1,306
  1,000
  750
  552
  397
  280
Current shareholders' claim on cash, %
  100
  41.2
  32.2
  24.7
  18.8
  14.3
  10.9
  8.3
  6.4
  4.9
  3.8
  3.0
  2.3
  1.8
  1.5
  1.2
  0.9
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0

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 12.8
Price to Sales 0
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow -25.1
Price to Free Cash Flow -16.4
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 8
Current Ratio NaN
LT Debt to Equity 10.1%
Total Debt to Equity 52.3%
Interest Coverage 4
Management Effectiveness
Return On Assets 1.4%
Ret/ On Assets - 3 Yr. Avg. 1.3%
Return On Total Capital 5.1%
Ret/ On T. Cap. - 3 Yr. Avg. 5.1%
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 47.2% 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 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 3.9% 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 0.1%.

Life of production assets of 10 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 -8.6%. 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 - $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 18.229 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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COMPANY NEWS

▶ [$$] Once Maligned, CIOs Level Up to Corner Office   [Jun-16-17 01:19PM  The Wall Street Journal]
▶ ETFs with exposure to INTL FCStone, Inc. : June 8, 2017   [Jun-08-17 01:41PM  Capital Cube]
▶ FCStone posts 2Q profit   [May-10-17 06:18PM  Associated Press]
▶ Trump's Immigration Rules and the Coming Food-Price Pinch   [Mar-16-17 02:16PM  The Wall Street Journal]
▶ Trump's Immigration Rules and the Coming Food-Price Pinch   [02:16PM  at The Wall Street Journal]
▶ Bernstein Slaps Intel With Downgrade   [Mar-09-17 09:05AM  at Investopedia]
▶ Bernstein Slaps Intel With Downgrade   [Mar-03-17 01:23PM  Investopedia]
▶ Barrons Prefers Microsoft Over Intel (MSFT, INTL)   [Jan-30-17 10:41AM  at Investopedia]
▶ INTL Fcstone Inc (INTL): Lagging Peers In This Important Metric   [Dec-12-16 03:43PM  at Insider Monkey]
▶ INTL FCStone Inc. To Redeem Senior Notes   [08:24AM  GlobeNewswire]
▶ The Morning Download: Intel Facing More Competition in the Cloud   [Jul-21-16 08:22AM  at The Wall Street Journal]
▶ INTL FCStone Releases Honduras The Great Coffee Comeback   [Jul-20-16 09:31AM  GlobeNewswire]
Stock chart of INTL Financial statements of INTL Annual reports 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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