Intrinsic value of INVESCO - IVZ

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$32.94

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$32.94

 
Intrinsic value

$38.74

 
Up/down potential

+18%

 
Rating

hold

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

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

We calculate the intrinsic value of IVZ 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 13.4

 

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, %
  -7.59
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  4,734
  4,829
  4,940
  5,067
  5,209
  5,367
  5,540
  5,729
  5,933
  6,153
  6,390
  6,642
  6,912
  7,199
  7,504
  7,828
  8,171
  8,534
  8,918
  9,323
  9,752
  10,204
  10,680
  11,183
  11,712
  12,270
  12,857
  13,475
  14,125
  14,809
  15,529
Variable operating expenses, $m
 
  2,745
  2,794
  2,850
  2,913
  2,983
  3,059
  3,142
  3,233
  3,330
  3,434
  2,933
  3,052
  3,179
  3,313
  3,456
  3,608
  3,768
  3,937
  4,117
  4,306
  4,505
  4,716
  4,938
  5,171
  5,418
  5,677
  5,950
  6,237
  6,539
  6,856
Fixed operating expenses, $m
 
  899
  921
  944
  968
  992
  1,017
  1,042
  1,069
  1,095
  1,123
  1,151
  1,179
  1,209
  1,239
  1,270
  1,302
  1,334
  1,368
  1,402
  1,437
  1,473
  1,510
  1,548
  1,586
  1,626
  1,667
  1,708
  1,751
  1,795
  1,840
Total operating expenses, $m
  3,558
  3,644
  3,715
  3,794
  3,881
  3,975
  4,076
  4,184
  4,302
  4,425
  4,557
  4,084
  4,231
  4,388
  4,552
  4,726
  4,910
  5,102
  5,305
  5,519
  5,743
  5,978
  6,226
  6,486
  6,757
  7,044
  7,344
  7,658
  7,988
  8,334
  8,696
Operating income, $m
  1,176
  1,185
  1,224
  1,272
  1,328
  1,392
  1,464
  1,544
  1,632
  1,728
  1,833
  2,559
  2,681
  2,811
  2,951
  3,101
  3,261
  3,431
  3,612
  3,805
  4,009
  4,226
  4,455
  4,698
  4,955
  5,226
  5,514
  5,817
  6,138
  6,476
  6,833
EBITDA, $m
  1,277
  1,860
  1,901
  1,950
  2,008
  2,074
  2,148
  2,231
  2,321
  2,420
  2,528
  2,644
  2,769
  2,904
  3,048
  3,202
  3,366
  3,541
  3,727
  3,924
  4,134
  4,356
  4,592
  4,841
  5,105
  5,384
  5,679
  5,990
  6,319
  6,666
  7,032
Interest expense (income), $m
  81
  228
  240
  255
  272
  292
  313
  336
  362
  389
  419
  451
  485
  521
  560
  601
  645
  691
  740
  791
  846
  904
  965
  1,029
  1,097
  1,168
  1,243
  1,322
  1,406
  1,493
  1,585
Earnings before tax, $m
  1,207
  957
  984
  1,017
  1,056
  1,101
  1,151
  1,208
  1,270
  1,339
  1,414
  2,108
  2,196
  2,290
  2,392
  2,500
  2,617
  2,741
  2,873
  3,013
  3,163
  3,322
  3,490
  3,669
  3,858
  4,058
  4,270
  4,495
  4,732
  4,983
  5,247
Tax expense, $m
  339
  258
  266
  275
  285
  297
  311
  326
  343
  362
  382
  569
  593
  618
  646
  675
  706
  740
  776
  814
  854
  897
  942
  991
  1,042
  1,096
  1,153
  1,214
  1,278
  1,345
  1,417
Net income, $m
  854
  699
  718
  742
  771
  803
  840
  882
  927
  977
  1,032
  1,539
  1,603
  1,672
  1,746
  1,825
  1,910
  2,001
  2,097
  2,200
  2,309
  2,425
  2,548
  2,678
  2,816
  2,963
  3,117
  3,281
  3,454
  3,637
  3,831

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,328
  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
  25,734
  24,890
  25,463
  26,117
  26,852
  27,666
  28,559
  29,532
  30,584
  31,719
  32,936
  34,238
  35,628
  37,107
  38,680
  40,348
  42,116
  43,988
  45,967
  48,059
  50,267
  52,597
  55,054
  57,644
  60,373
  63,247
  66,273
  69,459
  72,810
  76,337
  80,046
Adjusted assets (=assets-cash), $m
  24,406
  24,890
  25,463
  26,117
  26,852
  27,666
  28,559
  29,532
  30,584
  31,719
  32,936
  34,238
  35,628
  37,107
  38,680
  40,348
  42,116
  43,988
  45,967
  48,059
  50,267
  52,597
  55,054
  57,644
  60,373
  63,247
  66,273
  69,459
  72,810
  76,337
  80,046
Revenue / Adjusted assets
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
Average production assets, $m
  1,823
  1,859
  1,902
  1,951
  2,006
  2,066
  2,133
  2,206
  2,284
  2,369
  2,460
  2,557
  2,661
  2,772
  2,889
  3,014
  3,146
  3,285
  3,433
  3,590
  3,754
  3,928
  4,112
  4,305
  4,509
  4,724
  4,950
  5,188
  5,438
  5,702
  5,979
Working capital, $m
  0
  -1,357
  -1,388
  -1,424
  -1,464
  -1,508
  -1,557
  -1,610
  -1,667
  -1,729
  -1,795
  -1,866
  -1,942
  -2,023
  -2,109
  -2,200
  -2,296
  -2,398
  -2,506
  -2,620
  -2,740
  -2,867
  -3,001
  -3,142
  -3,291
  -3,448
  -3,613
  -3,786
  -3,969
  -4,161
  -4,364
Total debt, $m
  6,506
  6,869
  7,297
  7,785
  8,334
  8,942
  9,609
  10,336
  11,123
  11,970
  12,879
  13,852
  14,890
  15,995
  17,170
  18,416
  19,737
  21,135
  22,614
  24,176
  25,825
  27,566
  29,401
  31,336
  33,375
  35,522
  37,782
  40,162
  42,665
  45,299
  48,070
Total liabilities, $m
  18,231
  18,593
  19,021
  19,509
  20,058
  20,666
  21,333
  22,060
  22,847
  23,694
  24,603
  25,576
  26,614
  27,719
  28,894
  30,140
  31,461
  32,859
  34,338
  35,900
  37,549
  39,290
  41,125
  43,060
  45,099
  47,246
  49,506
  51,886
  54,389
  57,023
  59,794
Total equity, $m
  7,504
  6,297
  6,442
  6,608
  6,793
  6,999
  7,225
  7,471
  7,738
  8,025
  8,333
  8,662
  9,014
  9,388
  9,786
  10,208
  10,655
  11,129
  11,630
  12,159
  12,718
  13,307
  13,929
  14,584
  15,274
  16,002
  16,767
  17,573
  18,421
  19,313
  20,252
Total liabilities and equity, $m
  25,735
  24,890
  25,463
  26,117
  26,851
  27,665
  28,558
  29,531
  30,585
  31,719
  32,936
  34,238
  35,628
  37,107
  38,680
  40,348
  42,116
  43,988
  45,968
  48,059
  50,267
  52,597
  55,054
  57,644
  60,373
  63,248
  66,273
  69,459
  72,810
  76,336
  80,046
Debt-to-equity ratio
  0.867
  1.090
  1.130
  1.180
  1.230
  1.280
  1.330
  1.380
  1.440
  1.490
  1.550
  1.600
  1.650
  1.700
  1.750
  1.800
  1.850
  1.900
  1.940
  1.990
  2.030
  2.070
  2.110
  2.150
  2.190
  2.220
  2.250
  2.290
  2.320
  2.350
  2.370
Adjusted equity ratio
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253
  0.253

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  854
  699
  718
  742
  771
  803
  840
  882
  927
  977
  1,032
  1,539
  1,603
  1,672
  1,746
  1,825
  1,910
  2,001
  2,097
  2,200
  2,309
  2,425
  2,548
  2,678
  2,816
  2,963
  3,117
  3,281
  3,454
  3,637
  3,831
Depreciation, amort., depletion, $m
  101
  675
  676
  678
  680
  682
  684
  686
  689
  692
  695
  85
  89
  92
  96
  100
  105
  110
  114
  120
  125
  131
  137
  144
  150
  157
  165
  173
  181
  190
  199
Funds from operations, $m
  -362
  1,374
  1,395
  1,420
  1,450
  1,485
  1,524
  1,568
  1,616
  1,669
  1,727
  1,624
  1,692
  1,764
  1,842
  1,926
  2,015
  2,110
  2,212
  2,319
  2,434
  2,556
  2,685
  2,822
  2,967
  3,120
  3,282
  3,454
  3,636
  3,827
  4,030
Change in working capital, $m
  -491
  -27
  -31
  -36
  -40
  -44
  -49
  -53
  -57
  -62
  -66
  -71
  -76
  -81
  -86
  -91
  -96
  -102
  -108
  -114
  -120
  -127
  -134
  -141
  -149
  -157
  -165
  -174
  -183
  -192
  -202
Cash from operations, $m
  129
  1,442
  1,426
  1,456
  1,490
  1,530
  1,573
  1,621
  1,674
  1,731
  1,793
  1,695
  1,767
  1,845
  1,928
  2,017
  2,111
  2,212
  2,319
  2,433
  2,554
  2,683
  2,819
  2,963
  3,115
  3,277
  3,447
  3,628
  3,818
  4,020
  4,232
Maintenance CAPEX, $m
  0
  -61
  -62
  -63
  -65
  -67
  -69
  -71
  -74
  -76
  -79
  -82
  -85
  -89
  -92
  -96
  -100
  -105
  -110
  -114
  -120
  -125
  -131
  -137
  -144
  -150
  -157
  -165
  -173
  -181
  -190
New CAPEX, $m
  -148
  -37
  -43
  -49
  -55
  -61
  -67
  -73
  -79
  -85
  -91
  -97
  -104
  -111
  -117
  -125
  -132
  -140
  -148
  -156
  -165
  -174
  -184
  -193
  -204
  -215
  -226
  -238
  -250
  -263
  -277
Cash from investing activities, $m
  -991
  -98
  -105
  -112
  -120
  -128
  -136
  -144
  -153
  -161
  -170
  -179
  -189
  -200
  -209
  -221
  -232
  -245
  -258
  -270
  -285
  -299
  -315
  -330
  -348
  -365
  -383
  -403
  -423
  -444
  -467
Free cash flow, $m
  -862
  1,344
  1,321
  1,344
  1,371
  1,402
  1,437
  1,477
  1,522
  1,570
  1,624
  1,516
  1,578
  1,646
  1,718
  1,796
  1,879
  1,967
  2,062
  2,163
  2,270
  2,384
  2,504
  2,632
  2,768
  2,912
  3,064
  3,225
  3,395
  3,575
  3,765
Issuance/(repayment) of debt, $m
  29
  363
  428
  489
  549
  608
  667
  727
  786
  847
  909
  973
  1,038
  1,105
  1,175
  1,246
  1,321
  1,398
  1,479
  1,562
  1,650
  1,741
  1,836
  1,935
  2,039
  2,147
  2,261
  2,379
  2,504
  2,634
  2,771
Issuance/(repurchase) of shares, $m
  -535
  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  
  930
  363
  428
  489
  549
  608
  667
  727
  786
  847
  909
  973
  1,038
  1,105
  1,175
  1,246
  1,321
  1,398
  1,479
  1,562
  1,650
  1,741
  1,836
  1,935
  2,039
  2,147
  2,261
  2,379
  2,504
  2,634
  2,771
Total cash flow (excl. dividends), $m
  -63
  1,707
  1,749
  1,832
  1,919
  2,010
  2,105
  2,204
  2,308
  2,418
  2,533
  2,489
  2,616
  2,751
  2,893
  3,042
  3,200
  3,366
  3,541
  3,725
  3,919
  4,124
  4,340
  4,567
  4,807
  5,059
  5,324
  5,604
  5,899
  6,209
  6,536
Retained Cash Flow (-), $m
  381
  -121
  -145
  -166
  -186
  -206
  -226
  -246
  -266
  -287
  -308
  -329
  -352
  -374
  -398
  -422
  -447
  -474
  -501
  -529
  -559
  -589
  -622
  -655
  -690
  -727
  -766
  -806
  -848
  -892
  -938
Prev. year cash balance distribution, $m
 
  1,328
  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
 
  2,914
  1,604
  1,667
  1,734
  1,804
  1,879
  1,958
  2,042
  2,131
  2,225
  2,159
  2,265
  2,377
  2,495
  2,620
  2,752
  2,892
  3,040
  3,196
  3,361
  3,535
  3,718
  3,912
  4,116
  4,332
  4,559
  4,798
  5,051
  5,317
  5,597
Discount rate, %
 
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
 
  2,708
  1,376
  1,309
  1,237
  1,160
  1,078
  993
  906
  818
  730
  598
  523
  450
  383
  320
  263
  213
  169
  131
  100
  75
  54
  39
  27
  18
  12
  8
  5
  3
  2
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

Invesco Ltd. is a publicly owned investment manager. The firm provides its services to retail clients, institutional clients, high-net worth clients, public entities, corporations, unions, non-profit organizations, endowments, foundations, pension funds, financial institutions, and sovereign wealth funds. It manages separate client-focused equity and fixed income portfolios. The firm also launches equity, fixed income, commodity, multi-asset, and balanced mutual funds for its clients. It launches equity, fixed income, multi-asset, and balanced exchange-traded funds. The firm also launches and manages private funds. It invests in the public equity and fixed income markets across the globe. The firm also invests in alternative markets, such as commodities and currencies. For the equity portion of its portfolio, it invests in growth and value stocks of large-cap, mid-cap, and small-cap companies. For the fixed income portion of its portfolio, the firm invests in convertibles, government bonds, municipal bonds, treasury securities, and cash. It also invests in short term and intermediate term bonds, investment grade and high yield bonds, taxable and tax-free bonds, senior secured loans, and structured securities such as asset-backed securities, mortgage-backed securities, and commercial mortgage-backed securities. The firm employs absolute return, global macro, and long/short strategies. It employs quantitative analysis to make its investments. The firm was formerly known as Invesco Plc, AMVESCAP plc, Amvesco plc, Invesco PLC, Invesco MIM, and H. Lotery & Co. Ltd. Invesco Ltd. was founded in December 1935 and is based in Atlanta, Georgia with an additional office in Hamilton, Bermuda.

FINANCIAL RATIOS  of  INVESCO (IVZ)

Valuation Ratios
P/E Ratio 15.2
Price to Sales 2.7
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 100.7
Price to Free Cash Flow -683.9
Growth Rates
Sales Growth Rate -7.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 18.4%
Cap. Spend. - 3 Yr. Gr. Rate 11%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 86.7%
Total Debt to Equity 86.7%
Interest Coverage 16
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. 4.4%
Return On Total Capital 5.8%
Ret/ On T. Cap. - 3 Yr. Avg. 6.3%
Return On Equity 11.1%
Return On Equity - 3 Yr. Avg. 11.6%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 70.3%
Gross Margin - 3 Yr. Avg. 69.2%
EBITDA Margin 29.3%
EBITDA Margin - 3 Yr. Avg. 29.7%
Operating Margin 24.8%
Oper. Margin - 3 Yr. Avg. 25.3%
Pre-Tax Margin 25.5%
Pre-Tax Margin - 3 Yr. Avg. 26.4%
Net Profit Margin 18%
Net Profit Margin - 3 Yr. Avg. 18.7%
Effective Tax Rate 28.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.4%
Payout Ratio 53.9%

IVZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IVZ stock intrinsic value calculation we used $4734 million for the last fiscal year's total revenue generated by INVESCO. The default revenue input number comes from 2016 income statement of INVESCO. 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 IVZ stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.6%, whose default value for IVZ is calculated based on our internal credit rating of INVESCO, 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 INVESCO.
    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 IVZ stock the variable cost ratio is equal to 57.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $877 million in the base year in the intrinsic value calculation for IVZ 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 INVESCO.

Corporate tax rate of 27% is the nominal tax rate for INVESCO. 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 IVZ 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 IVZ are equal to 38.5%.

Life of production assets of 79 years is the average useful life of capital assets used in INVESCO 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 IVZ is equal to -28.1%. 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 - $7504 million for INVESCO - 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 405.485 million for INVESCO 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 INVESCO at the current share price and the inputted number of shares is $13.4 billion.


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COMPANY NEWS

▶ Invesco Buys Fast Growing European ETF Provider   [Apr-28-17 10:02AM  Barrons.com]
▶ Legg Mason: "Positive But Volatile"   [Apr-27-17 12:39PM  Barrons.com]
▶ Invesco to Acquire ETF Specialist Source   [09:36AM  Barrons.com]
▶ Invesco tops 1Q profit forecasts   [07:10AM  Associated Press]
▶ Invesco Ltd. To Announce First Quarter 2017 Results   [Apr-12-17 04:15PM  PR Newswire]
▶ PowerShares Launches 2 New Factor ETFs   [Apr-07-17 10:35AM  Benzinga]
▶ Invesco Closed-End Funds Declare Dividends   [Apr-03-17 04:13AM  PR Newswire]
▶ Goldman Sachs: Time To Buy Invesco   [09:49AM  at Barrons.com]
▶ Invesco launches high-dividend, low-volatility ETFs   [Mar-07-17 07:30AM  PR Newswire]
▶ Invesco Closed-End Funds Declare Dividends   [Mar-01-17 02:42PM  PR Newswire]
▶ Harvard's Endowment: T. Rowe's Rogers Joins Board   [Feb-14-17 01:57PM  at Barrons.com]
▶ Invesco Closed-End Funds Declare Dividends   [Feb-01-17 12:13PM  PR Newswire]
▶ More Fee Cuts At Vanguard   [Jan-27-17 12:52PM  at Barrons.com]
▶ Invesco Drops 1.8%, EPS Beats, Revenue Misses   [12:35PM  at Barrons.com]
▶ State Street: A Bad Case Of "Agita"   [12:04PM  at Barrons.com]
▶ Janus Seeks SEC Approval For Clean Shares   [11:11AM  at Barrons.com]
▶ J.P. Morgan Wins $1T In BlackRock Business From State Street   [Jan-25-17 01:43PM  at Barrons.com]
▶ Janus Tumbles On 4Q Earnings; EPS, Revenue Miss   [Jan-24-17 09:57AM  at Barrons.com]
▶ BlackRock: Too Big To Grow?   [Jan-17-17 10:05AM  at Barrons.com]
▶ Invesco Ltd. To Announce Fourth Quarter 2016 Results   [Jan-12-17 04:15PM  PR Newswire]
▶ Invesco Closed-End Funds Declare Dividends   [Jan-03-17 03:00PM  PR Newswire]
▶ Another Formerly High-Flying Hedge Fund Bites The Dust   [Dec-21-16 10:36AM  at Barrons.com]
▶ Calamos Management Going Private; Shares Surge 12%   [Dec-19-16 11:24AM  at Barrons.com]
Stock chart of IVZ Financial statements of IVZ
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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