Intrinsic value of Orix ADR - IX

Previous Close

$85.82

  Intrinsic Value

$642.85

stock screener

  Rating & Target

str. buy

+649%

  Value-price divergence*

-114%

Previous close

$85.82

 
Intrinsic value

$642.85

 
Up/down potential

+649%

 
Rating

str. buy

 
Value-price divergence*

-114%

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

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

We calculate the intrinsic value of IX 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 2017), $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 22.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.06
  31.60
  28.94
  26.55
  24.39
  22.45
  20.71
  19.14
  17.72
  16.45
  15.31
  14.27
  13.35
  12.51
  11.76
  11.09
  10.48
  9.93
  9.44
  8.99
  8.59
  8.23
  7.91
  7.62
  7.36
  7.12
  6.91
  6.72
  6.55
  6.39
  6.25
Revenue, $m
  23,319
  30,688
  39,569
  50,073
  62,286
  76,271
  92,064
  109,682
  129,121
  150,362
  173,375
  198,124
  224,568
  252,668
  282,385
  313,688
  346,552
  380,962
  416,910
  454,400
  493,448
  534,078
  576,327
  620,240
  665,874
  713,297
  762,583
  813,818
  867,097
  922,522
  980,207
Variable operating expenses, $m
 
  26,576
  34,267
  43,363
  53,940
  66,051
  79,728
  94,985
  111,819
  130,213
  150,143
  171,576
  194,476
  218,810
  244,545
  271,654
  300,114
  329,913
  361,044
  393,511
  427,326
  462,512
  499,099
  537,128
  576,647
  617,715
  660,397
  704,766
  750,906
  798,904
  848,859
Fixed operating expenses, $m
 
  272
  278
  285
  293
  300
  307
  315
  323
  331
  339
  348
  356
  365
  374
  384
  393
  403
  413
  424
  434
  445
  456
  468
  479
  491
  504
  516
  529
  542
  556
Total operating expenses, $m
  20,453
  26,848
  34,545
  43,648
  54,233
  66,351
  80,035
  95,300
  112,142
  130,544
  150,482
  171,924
  194,832
  219,175
  244,919
  272,038
  300,507
  330,316
  361,457
  393,935
  427,760
  462,957
  499,555
  537,596
  577,126
  618,206
  660,901
  705,282
  751,435
  799,446
  849,415
Operating income, $m
  2,866
  3,841
  5,024
  6,424
  8,054
  9,920
  12,029
  14,382
  16,979
  19,818
  22,893
  26,201
  29,736
  33,492
  37,465
  41,650
  46,045
  50,646
  55,453
  60,466
  65,688
  71,121
  76,772
  82,645
  88,748
  95,090
  101,682
  108,535
  115,662
  123,076
  130,792
EBITDA, $m
  5,074
  3,841
  5,024
  6,424
  8,054
  9,920
  12,029
  14,382
  16,979
  19,818
  22,893
  26,201
  29,736
  33,492
  37,465
  41,650
  46,045
  50,646
  55,453
  60,466
  65,688
  71,121
  76,772
  82,645
  88,748
  95,090
  101,682
  108,535
  115,662
  123,076
  130,792
Interest expense (income), $m
  0
  1,175
  1,991
  2,972
  4,132
  5,480
  7,024
  8,768
  10,713
  12,860
  15,205
  17,746
  20,479
  23,399
  26,501
  29,782
  33,239
  36,867
  40,667
  44,636
  48,775
  53,087
  57,573
  62,238
  67,087
  72,125
  77,361
  82,803
  88,461
  94,343
  100,463
Earnings before tax, $m
  3,700
  2,666
  3,033
  3,453
  3,922
  4,440
  5,005
  5,614
  6,266
  6,958
  7,688
  8,455
  9,257
  10,094
  10,964
  11,868
  12,806
  13,778
  14,786
  15,830
  16,912
  18,035
  19,199
  20,407
  21,661
  22,965
  24,321
  25,732
  27,201
  28,732
  30,329
Tax expense, $m
  1,254
  720
  819
  932
  1,059
  1,199
  1,351
  1,516
  1,692
  1,879
  2,076
  2,283
  2,499
  2,725
  2,960
  3,204
  3,458
  3,720
  3,992
  4,274
  4,566
  4,869
  5,184
  5,510
  5,849
  6,201
  6,567
  6,948
  7,344
  7,758
  8,189
Net income, $m
  2,379
  1,946
  2,214
  2,520
  2,863
  3,241
  3,654
  4,098
  4,574
  5,079
  5,612
  6,172
  6,758
  7,368
  8,004
  8,664
  9,348
  10,058
  10,794
  11,556
  12,346
  13,165
  14,015
  14,897
  15,813
  16,765
  17,754
  18,784
  19,857
  20,975
  22,140

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  9,865
  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
  97,779
  115,803
  149,316
  188,954
  235,042
  287,815
  347,413
  413,895
  487,248
  567,403
  654,246
  747,638
  847,428
  953,464
  1,065,604
  1,183,729
  1,307,744
  1,437,591
  1,573,244
  1,714,718
  1,862,068
  2,015,390
  2,174,818
  2,340,528
  2,512,734
  2,691,685
  2,877,670
  3,071,011
  3,272,063
  3,481,217
  3,698,893
Adjusted assets (=assets-cash), $m
  87,914
  115,803
  149,316
  188,954
  235,042
  287,815
  347,413
  413,895
  487,248
  567,403
  654,246
  747,638
  847,428
  953,464
  1,065,604
  1,183,729
  1,307,744
  1,437,591
  1,573,244
  1,714,718
  1,862,068
  2,015,390
  2,174,818
  2,340,528
  2,512,734
  2,691,685
  2,877,670
  3,071,011
  3,272,063
  3,481,217
  3,698,893
Revenue / Adjusted assets
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
  0.265
Average production assets, $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
  0
Working capital, $m
  0
  -9,728
  -12,543
  -15,873
  -19,745
  -24,178
  -29,184
  -34,769
  -40,931
  -47,665
  -54,960
  -62,805
  -71,188
  -80,096
  -89,516
  -99,439
  -109,857
  -120,765
  -132,160
  -144,045
  -156,423
  -169,303
  -182,696
  -196,616
  -211,082
  -226,115
  -241,739
  -257,980
  -274,870
  -292,440
  -310,726
Total debt, $m
  36,027
  56,890
  84,908
  118,045
  156,575
  200,692
  250,516
  306,095
  367,418
  434,428
  507,028
  585,105
  668,529
  757,175
  850,924
  949,676
  1,053,353
  1,161,905
  1,275,311
  1,393,583
  1,516,768
  1,644,945
  1,778,227
  1,916,761
  2,060,724
  2,210,328
  2,365,811
  2,527,444
  2,695,524
  2,870,376
  3,052,354
Total liabilities, $m
  75,948
  96,811
  124,829
  157,966
  196,496
  240,613
  290,437
  346,016
  407,339
  474,349
  546,949
  625,026
  708,450
  797,096
  890,845
  989,597
  1,093,274
  1,201,826
  1,315,232
  1,433,504
  1,556,689
  1,684,866
  1,818,148
  1,956,682
  2,100,645
  2,250,249
  2,405,732
  2,567,365
  2,735,445
  2,910,297
  3,092,275
Total equity, $m
  21,831
  18,992
  24,488
  30,988
  38,547
  47,202
  56,976
  67,879
  79,909
  93,054
  107,296
  122,613
  138,978
  156,368
  174,759
  194,132
  214,470
  235,765
  258,012
  281,214
  305,379
  330,524
  356,670
  383,847
  412,088
  441,436
  471,938
  503,646
  536,618
  570,920
  606,619
Total liabilities and equity, $m
  97,779
  115,803
  149,317
  188,954
  235,043
  287,815
  347,413
  413,895
  487,248
  567,403
  654,245
  747,639
  847,428
  953,464
  1,065,604
  1,183,729
  1,307,744
  1,437,591
  1,573,244
  1,714,718
  1,862,068
  2,015,390
  2,174,818
  2,340,529
  2,512,733
  2,691,685
  2,877,670
  3,071,011
  3,272,063
  3,481,217
  3,698,894
Debt-to-equity ratio
  1.650
  3.000
  3.470
  3.810
  4.060
  4.250
  4.400
  4.510
  4.600
  4.670
  4.730
  4.770
  4.810
  4.840
  4.870
  4.890
  4.910
  4.930
  4.940
  4.960
  4.970
  4.980
  4.990
  4.990
  5.000
  5.010
  5.010
  5.020
  5.020
  5.030
  5.030
Adjusted equity ratio
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164
  0.164

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,379
  1,946
  2,214
  2,520
  2,863
  3,241
  3,654
  4,098
  4,574
  5,079
  5,612
  6,172
  6,758
  7,368
  8,004
  8,664
  9,348
  10,058
  10,794
  11,556
  12,346
  13,165
  14,015
  14,897
  15,813
  16,765
  17,754
  18,784
  19,857
  20,975
  22,140
Depreciation, amort., depletion, $m
  2,208
  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
Funds from operations, $m
  6,866
  1,946
  2,214
  2,520
  2,863
  3,241
  3,654
  4,098
  4,574
  5,079
  5,612
  6,172
  6,758
  7,368
  8,004
  8,664
  9,348
  10,058
  10,794
  11,556
  12,346
  13,165
  14,015
  14,897
  15,813
  16,765
  17,754
  18,784
  19,857
  20,975
  22,140
Change in working capital, $m
  1,782
  -2,336
  -2,815
  -3,330
  -3,872
  -4,433
  -5,007
  -5,585
  -6,162
  -6,733
  -7,295
  -7,845
  -8,383
  -8,908
  -9,420
  -9,923
  -10,418
  -10,908
  -11,396
  -11,885
  -12,378
  -12,880
  -13,393
  -13,920
  -14,466
  -15,033
  -15,624
  -16,242
  -16,889
  -17,570
  -18,286
Cash from operations, $m
  5,084
  4,282
  5,029
  5,850
  6,735
  7,675
  8,660
  9,683
  10,736
  11,813
  12,908
  14,018
  15,141
  16,276
  17,424
  18,587
  19,766
  20,966
  22,189
  23,441
  24,724
  26,045
  27,408
  28,817
  30,279
  31,797
  33,378
  35,026
  36,746
  38,545
  40,426
Maintenance CAPEX, $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
  0
New CAPEX, $m
  -8,618
  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 investing activities, $m
  -2,068
  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
Free cash flow, $m
  3,016
  4,282
  5,029
  5,850
  6,735
  7,675
  8,660
  9,683
  10,736
  11,813
  12,908
  14,018
  15,141
  16,276
  17,424
  18,587
  19,766
  20,966
  22,189
  23,441
  24,724
  26,045
  27,408
  28,817
  30,279
  31,797
  33,378
  35,026
  36,746
  38,545
  40,426
Issuance/(repayment) of debt, $m
  -1,311
  23,331
  28,017
  33,137
  38,530
  44,118
  49,824
  55,579
  61,323
  67,009
  72,601
  78,076
  83,424
  88,646
  93,749
  98,752
  103,677
  108,552
  113,406
  118,272
  123,185
  128,177
  133,282
  138,534
  143,964
  149,603
  155,483
  161,633
  168,080
  174,852
  181,978
Issuance/(repurchase) of shares, $m
  0
  2,612
  3,282
  3,980
  4,695
  5,413
  6,120
  6,805
  7,456
  8,066
  8,630
  9,144
  9,608
  10,021
  10,387
  10,709
  10,990
  11,237
  11,453
  11,646
  11,819
  11,980
  12,131
  12,280
  12,429
  12,584
  12,747
  12,923
  13,116
  13,327
  13,559
Cash from financing (excl. dividends), $m  
  243
  25,943
  31,299
  37,117
  43,225
  49,531
  55,944
  62,384
  68,779
  75,075
  81,231
  87,220
  93,032
  98,667
  104,136
  109,461
  114,667
  119,789
  124,859
  129,918
  135,004
  140,157
  145,413
  150,814
  156,393
  162,187
  168,230
  174,556
  181,196
  188,179
  195,537
Total cash flow (excl. dividends), $m
  3,228
  30,225
  36,329
  42,967
  49,960
  57,205
  64,604
  72,067
  79,515
  86,888
  94,138
  101,238
  108,173
  114,943
  121,561
  128,048
  134,434
  140,754
  147,048
  153,359
  159,728
  166,201
  172,821
  179,631
  186,671
  193,984
  201,609
  209,582
  217,942
  226,724
  235,963
Retained Cash Flow (-), $m
  -1,718
  -4,558
  -5,496
  -6,501
  -7,559
  -8,655
  -9,774
  -10,903
  -12,030
  -13,145
  -14,242
  -15,316
  -16,366
  -17,390
  -18,391
  -19,372
  -20,339
  -21,295
  -22,247
  -23,202
  -24,165
  -25,145
  -26,146
  -27,176
  -28,242
  -29,348
  -30,502
  -31,708
  -32,973
  -34,301
  -35,699
Prev. year cash balance distribution, $m
 
  7,397
  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
 
  33,064
  30,832
  36,467
  42,402
  48,551
  54,830
  61,164
  67,485
  73,742
  79,896
  85,922
  91,807
  97,553
  103,170
  108,675
  114,095
  119,459
  124,801
  130,157
  135,563
  141,057
  146,675
  152,454
  158,430
  164,636
  171,107
  177,874
  184,969
  192,422
  200,264
Discount rate, %
 
  8.20
  8.61
  9.04
  9.49
  9.97
  10.47
  10.99
  11.54
  12.12
  12.72
  13.36
  14.02
  14.73
  15.46
  16.24
  17.05
  17.90
  18.79
  19.73
  20.72
  21.76
  22.84
  23.99
  25.19
  26.45
  27.77
  29.16
  30.61
  32.15
  33.75
PV of cash for distribution, $m
 
  30,558
  26,138
  28,128
  29,502
  30,191
  30,176
  29,481
  28,172
  26,347
  24,126
  21,636
  19,006
  16,354
  13,784
  11,378
  9,194
  7,270
  5,622
  4,249
  3,137
  2,260
  1,587
  1,085
  722
  467
  293
  178
  105
  59
  33
Current shareholders' claim on cash, %
  100
  85.2
  73.1
  63.2
  55.2
  48.6
  43.2
  38.8
  35.1
  32.0
  29.3
  27.1
  25.2
  23.6
  22.2
  20.9
  19.9
  18.9
  18.1
  17.3
  16.6
  16.0
  15.5
  15.0
  14.5
  14.1
  13.7
  13.4
  13.1
  12.8
  12.5

ORIX Corporation (ORIX) is a financial services company. The Company operates through six segments: Corporate Financial Services, which consists of lending, leasing and fee business; Maintenance Leasing, which consists of automobile leasing and rentals, car sharing, and test and measurement instruments and information technology-related equipment rentals and leasing; Real Estate, which consists of real estate development and rental, facility operation, real estate investment trust (REIT) asset management, and real estate investment advisory services; Investment and Operation, which consists of environment and energy-related business, principal investment and loan servicing (asset recovery); Retail Segment, which consists of life insurance, banking and card loan business, and Overseas Business, which consists of leasing, lending, investment in bonds, investment banking, asset management and ship- and aircraft-related operations.

FINANCIAL RATIOS  of  Orix ADR (IX)

Valuation Ratios
P/E Ratio 47.1
Price to Sales 4.8
Price to Book 5.1
Price to Tangible Book
Price to Cash Flow 22
Price to Free Cash Flow -31.7
Growth Rates
Sales Growth Rate 13.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -8.6%
Cap. Spend. - 3 Yr. Gr. Rate 1.7%
Financial Strength
Quick Ratio 4
Current Ratio NaN
LT Debt to Equity 153.7%
Total Debt to Equity 165%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 2.4%
Return On Total Capital 4.1%
Ret/ On T. Cap. - 3 Yr. Avg. 3.9%
Return On Equity 11.3%
Return On Equity - 3 Yr. Avg. 11.5%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 29.4%
Gross Margin - 3 Yr. Avg. 31.5%
EBITDA Margin 25.3%
EBITDA Margin - 3 Yr. Avg. 26.2%
Operating Margin 12.3%
Oper. Margin - 3 Yr. Avg. 12.1%
Pre-Tax Margin 15.9%
Pre-Tax Margin - 3 Yr. Avg. 16.1%
Net Profit Margin 10.2%
Net Profit Margin - 3 Yr. Avg. 10.7%
Effective Tax Rate 33.9%
Eff/ Tax Rate - 3 Yr. Avg. 30.2%
Payout Ratio 22.4%

IX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IX stock intrinsic value calculation we used $23319 million for the last fiscal year's total revenue generated by Orix ADR. The default revenue input number comes from 2017 income statement of Orix ADR. 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 IX stock valuation model: a) initial revenue growth rate of 31.6% 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 8.2%, whose default value for IX is calculated based on our internal credit rating of Orix ADR, 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 Orix ADR.
    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 IX stock the variable cost ratio is equal to 86.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $265 million in the base year in the intrinsic value calculation for IX 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 Orix ADR.

Corporate tax rate of 27% is the nominal tax rate for Orix ADR. 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 IX 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 IX are equal to 0%.

Life of production assets of 0 years is the average useful life of capital assets used in Orix ADR 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 IX is equal to -31.7%. 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 - $21831 million for Orix ADR - 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 264.669 million for Orix ADR 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 Orix ADR at the current share price and the inputted number of shares is $22.7 billion.

RELATED COMPANIES Price Int.Val. Rating

COMPANY NEWS

▶ ORIX USA Acquires Lancaster Pollard   [Sep-13-17 10:00AM  Business Wire]
▶ [$$] Orix chief seeks Trump boom to offset stagnation in Japan   [Jan-09-17 08:07AM  at Financial Times]
▶ ORIX Acquires Controlling Interest in RB Capital   [Dec-15-16 09:00AM  Business Wire]
▶ Is Continental Resources, Inc. (CLR) a Good Stock To Buy?   [Nov-28-16 12:17PM  at Insider Monkey]
▶ Should You Invest in Marriott International Inc (MAR)?   [Nov-25-16 09:55AM  at Insider Monkey]
▶ ORIX Completes Growth Capital Investment in Practice Fusion   [Nov-08-16 01:13PM  Business Wire]
▶ ORIX Ventures Changes Name to ORIX Growth Capital   [Jul-26-16 03:06PM  Business Wire]
▶ Hotel JAL City Haneda Tokyo West Wing to Open in September   [Jul-11-16 11:00PM  Business Wire]
▶ ORIX USA Group Launches IX Capital Partners   [Mar-22-16 12:45PM  Business Wire]
▶ [$$] Vinci, Orix Tapped to Operate Two Japanese Airports   [Nov-10  06:15AM  at The Wall Street Journal]
Financial statements of IX
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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