Intrinsic value of KAR Auction Services - KAR

Previous Close

$44.41

  Intrinsic Value

$61.38

stock screener

  Rating & Target

buy

+38%

  Value-price divergence*

-13%

Previous close

$44.41

 
Intrinsic value

$61.38

 
Up/down potential

+38%

 
Rating

buy

 
Value-price divergence*

-13%

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

We calculate the intrinsic value of KAR 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 6.1

 

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, %
  17.06
  14.40
  13.46
  12.61
  11.85
  11.17
  10.55
  10.00
  9.50
  9.05
  8.64
  8.28
  7.95
  7.65
  7.39
  7.15
  6.94
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
Revenue, $m
  3,150
  3,604
  4,089
  4,604
  5,150
  5,725
  6,329
  6,962
  7,623
  8,313
  9,031
  9,779
  10,556
  11,364
  12,204
  13,076
  13,983
  14,926
  15,906
  16,926
  17,987
  19,092
  20,243
  21,443
  22,693
  23,998
  25,360
  26,782
  28,268
  29,820
  31,443
Variable operating expenses, $m
 
  3,001
  3,377
  3,777
  4,201
  4,647
  5,115
  5,606
  6,119
  6,654
  7,211
  7,585
  8,188
  8,815
  9,466
  10,143
  10,847
  11,578
  12,338
  13,129
  13,953
  14,810
  15,703
  16,633
  17,603
  18,615
  19,672
  20,775
  21,927
  23,131
  24,390
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
  2,657
  3,001
  3,377
  3,777
  4,201
  4,647
  5,115
  5,606
  6,119
  6,654
  7,211
  7,585
  8,188
  8,815
  9,466
  10,143
  10,847
  11,578
  12,338
  13,129
  13,953
  14,810
  15,703
  16,633
  17,603
  18,615
  19,672
  20,775
  21,927
  23,131
  24,390
Operating income, $m
  494
  603
  711
  827
  949
  1,078
  1,214
  1,356
  1,504
  1,659
  1,820
  2,193
  2,368
  2,549
  2,737
  2,933
  3,136
  3,348
  3,568
  3,797
  4,035
  4,282
  4,541
  4,810
  5,090
  5,383
  5,688
  6,007
  6,340
  6,689
  7,053
EBITDA, $m
  735
  931
  1,057
  1,190
  1,331
  1,480
  1,636
  1,799
  1,970
  2,148
  2,334
  2,527
  2,728
  2,937
  3,154
  3,379
  3,614
  3,857
  4,111
  4,374
  4,649
  4,934
  5,232
  5,542
  5,865
  6,202
  6,554
  6,922
  7,305
  7,707
  8,126
Interest expense (income), $m
  125
  137
  179
  224
  272
  323
  376
  432
  491
  553
  617
  683
  753
  825
  900
  978
  1,060
  1,144
  1,231
  1,323
  1,417
  1,516
  1,619
  1,726
  1,837
  1,954
  2,075
  2,201
  2,334
  2,472
  2,616
Earnings before tax, $m
  355
  465
  532
  603
  678
  756
  838
  924
  1,013
  1,106
  1,203
  1,510
  1,615
  1,724
  1,837
  1,955
  2,077
  2,204
  2,336
  2,474
  2,617
  2,766
  2,922
  3,084
  3,253
  3,429
  3,613
  3,806
  4,007
  4,217
  4,437
Tax expense, $m
  133
  126
  144
  163
  183
  204
  226
  249
  274
  299
  325
  408
  436
  465
  496
  528
  561
  595
  631
  668
  707
  747
  789
  833
  878
  926
  976
  1,028
  1,082
  1,139
  1,198
Net income, $m
  222
  340
  389
  440
  495
  552
  612
  674
  740
  808
  878
  1,102
  1,179
  1,258
  1,341
  1,427
  1,516
  1,609
  1,706
  1,806
  1,911
  2,019
  2,133
  2,251
  2,375
  2,503
  2,638
  2,778
  2,925
  3,078
  3,239

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  202
  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
  6,558
  7,265
  8,243
  9,283
  10,383
  11,543
  12,761
  14,036
  15,369
  16,759
  18,208
  19,715
  21,282
  22,911
  24,604
  26,364
  28,192
  30,093
  32,069
  34,125
  36,265
  38,492
  40,813
  43,231
  45,753
  48,384
  51,129
  53,996
  56,991
  60,121
  63,393
Adjusted assets (=assets-cash), $m
  6,356
  7,265
  8,243
  9,283
  10,383
  11,543
  12,761
  14,036
  15,369
  16,759
  18,208
  19,715
  21,282
  22,911
  24,604
  26,364
  28,192
  30,093
  32,069
  34,125
  36,265
  38,492
  40,813
  43,231
  45,753
  48,384
  51,129
  53,996
  56,991
  60,121
  63,393
Revenue / Adjusted assets
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
Average production assets, $m
  1,560
  1,784
  2,024
  2,279
  2,549
  2,834
  3,133
  3,446
  3,773
  4,115
  4,470
  4,840
  5,225
  5,625
  6,041
  6,473
  6,922
  7,388
  7,874
  8,378
  8,904
  9,451
  10,020
  10,614
  11,233
  11,879
  12,553
  13,257
  13,992
  14,761
  15,564
Working capital, $m
  506
  468
  532
  599
  670
  744
  823
  905
  991
  1,081
  1,174
  1,271
  1,372
  1,477
  1,586
  1,700
  1,818
  1,940
  2,068
  2,200
  2,338
  2,482
  2,632
  2,788
  2,950
  3,120
  3,297
  3,482
  3,675
  3,877
  4,088
Total debt, $m
  2,470
  3,085
  3,862
  4,689
  5,564
  6,486
  7,454
  8,468
  9,527
  10,633
  11,784
  12,982
  14,228
  15,523
  16,869
  18,268
  19,722
  21,233
  22,804
  24,438
  26,139
  27,910
  29,755
  31,678
  33,683
  35,774
  37,957
  40,236
  42,617
  45,105
  47,707
Total liabilities, $m
  5,160
  5,776
  6,553
  7,380
  8,255
  9,177
  10,145
  11,159
  12,218
  13,324
  14,475
  15,673
  16,919
  18,214
  19,560
  20,959
  22,413
  23,924
  25,495
  27,129
  28,830
  30,601
  32,446
  34,369
  36,374
  38,465
  40,648
  42,927
  45,308
  47,796
  50,398
Total equity, $m
  1,397
  1,489
  1,690
  1,903
  2,129
  2,366
  2,616
  2,877
  3,151
  3,436
  3,733
  4,042
  4,363
  4,697
  5,044
  5,405
  5,779
  6,169
  6,574
  6,996
  7,434
  7,891
  8,367
  8,862
  9,379
  9,919
  10,482
  11,069
  11,683
  12,325
  12,996
Total liabilities and equity, $m
  6,557
  7,265
  8,243
  9,283
  10,384
  11,543
  12,761
  14,036
  15,369
  16,760
  18,208
  19,715
  21,282
  22,911
  24,604
  26,364
  28,192
  30,093
  32,069
  34,125
  36,264
  38,492
  40,813
  43,231
  45,753
  48,384
  51,130
  53,996
  56,991
  60,121
  63,394
Debt-to-equity ratio
  1.768
  2.070
  2.290
  2.460
  2.610
  2.740
  2.850
  2.940
  3.020
  3.090
  3.160
  3.210
  3.260
  3.310
  3.340
  3.380
  3.410
  3.440
  3.470
  3.490
  3.520
  3.540
  3.560
  3.570
  3.590
  3.610
  3.620
  3.630
  3.650
  3.660
  3.670
Adjusted equity ratio
  0.188
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205
  0.205

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  222
  340
  389
  440
  495
  552
  612
  674
  740
  808
  878
  1,102
  1,179
  1,258
  1,341
  1,427
  1,516
  1,609
  1,706
  1,806
  1,911
  2,019
  2,133
  2,251
  2,375
  2,503
  2,638
  2,778
  2,925
  3,078
  3,239
Depreciation, amort., depletion, $m
  241
  329
  345
  363
  382
  401
  422
  443
  466
  489
  514
  334
  360
  388
  417
  446
  477
  510
  543
  578
  614
  652
  691
  732
  775
  819
  866
  914
  965
  1,018
  1,073
Funds from operations, $m
  198
  668
  734
  803
  876
  953
  1,033
  1,118
  1,205
  1,297
  1,392
  1,436
  1,539
  1,646
  1,758
  1,873
  1,994
  2,119
  2,249
  2,384
  2,525
  2,671
  2,824
  2,983
  3,149
  3,323
  3,504
  3,693
  3,890
  4,096
  4,312
Change in working capital, $m
  -163
  59
  63
  67
  71
  75
  79
  82
  86
  90
  93
  97
  101
  105
  109
  113
  118
  123
  127
  133
  138
  144
  150
  156
  163
  170
  177
  185
  193
  202
  211
Cash from operations, $m
  361
  610
  671
  736
  805
  878
  955
  1,035
  1,120
  1,207
  1,299
  1,339
  1,438
  1,541
  1,648
  1,760
  1,876
  1,996
  2,121
  2,251
  2,387
  2,528
  2,674
  2,827
  2,987
  3,153
  3,327
  3,508
  3,697
  3,895
  4,101
Maintenance CAPEX, $m
  0
  -108
  -123
  -140
  -157
  -176
  -195
  -216
  -238
  -260
  -284
  -308
  -334
  -360
  -388
  -417
  -446
  -477
  -510
  -543
  -578
  -614
  -652
  -691
  -732
  -775
  -819
  -866
  -914
  -965
  -1,018
New CAPEX, $m
  -155
  -224
  -240
  -255
  -270
  -285
  -299
  -313
  -327
  -341
  -356
  -370
  -385
  -400
  -416
  -432
  -449
  -467
  -485
  -505
  -525
  -547
  -570
  -594
  -619
  -646
  -674
  -704
  -735
  -768
  -803
Cash from investing activities, $m
  -765
  -332
  -363
  -395
  -427
  -461
  -494
  -529
  -565
  -601
  -640
  -678
  -719
  -760
  -804
  -849
  -895
  -944
  -995
  -1,048
  -1,103
  -1,161
  -1,222
  -1,285
  -1,351
  -1,421
  -1,493
  -1,570
  -1,649
  -1,733
  -1,821
Free cash flow, $m
  -404
  278
  308
  341
  378
  418
  460
  506
  555
  606
  660
  661
  719
  781
  845
  911
  980
  1,052
  1,126
  1,203
  1,283
  1,367
  1,453
  1,542
  1,636
  1,732
  1,833
  1,938
  2,047
  2,161
  2,280
Issuance/(repayment) of debt, $m
  725
  720
  777
  827
  875
  922
  968
  1,014
  1,060
  1,105
  1,151
  1,198
  1,246
  1,295
  1,346
  1,399
  1,454
  1,511
  1,571
  1,634
  1,701
  1,771
  1,845
  1,923
  2,005
  2,091
  2,183
  2,279
  2,381
  2,488
  2,601
Issuance/(repurchase) of shares, $m
  -74
  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  
  610
  720
  777
  827
  875
  922
  968
  1,014
  1,060
  1,105
  1,151
  1,198
  1,246
  1,295
  1,346
  1,399
  1,454
  1,511
  1,571
  1,634
  1,701
  1,771
  1,845
  1,923
  2,005
  2,091
  2,183
  2,279
  2,381
  2,488
  2,601
Total cash flow (excl. dividends), $m
  204
  998
  1,085
  1,168
  1,253
  1,339
  1,429
  1,520
  1,614
  1,711
  1,811
  1,859
  1,965
  2,076
  2,191
  2,310
  2,434
  2,563
  2,698
  2,838
  2,984
  3,138
  3,298
  3,465
  3,640
  3,824
  4,016
  4,217
  4,428
  4,649
  4,881
Retained Cash Flow (-), $m
  -11
  -189
  -200
  -213
  -226
  -238
  -250
  -261
  -273
  -285
  -297
  -309
  -321
  -334
  -347
  -361
  -375
  -390
  -405
  -421
  -439
  -457
  -476
  -496
  -517
  -539
  -563
  -588
  -614
  -642
  -671
Prev. year cash balance distribution, $m
 
  97
  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
 
  905
  885
  955
  1,027
  1,102
  1,179
  1,259
  1,341
  1,426
  1,514
  1,550
  1,644
  1,742
  1,844
  1,949
  2,059
  2,173
  2,292
  2,416
  2,546
  2,681
  2,822
  2,969
  3,123
  3,285
  3,453
  3,630
  3,814
  4,008
  4,210
Discount rate, %
 
  8.50
  8.93
  9.37
  9.84
  10.33
  10.85
  11.39
  11.96
  12.56
  13.19
  13.85
  14.54
  15.26
  16.03
  16.83
  17.67
  18.55
  19.48
  20.46
  21.48
  22.55
  23.68
  24.86
  26.11
  27.41
  28.78
  30.22
  31.73
  33.32
  34.99
PV of cash for distribution, $m
 
  834
  746
  730
  706
  674
  635
  591
  543
  492
  439
  372
  323
  275
  230
  189
  152
  120
  93
  70
  52
  37
  26
  18
  12
  8
  5
  3
  2
  1
  1
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

KAR Auction Services, Inc., together with its subsidiaries, provides vehicle auction services in the United States, Canada, Mexico, and the United Kingdom. It operates in three segments: ADESA Auctions, IAA, and AFC. The ADESA Auctions segment offers whole car auctions and related services to the vehicle remarketing industry through online auctions and auction facilities. It also provides value-added services, such as auction related, transportation, reconditioning, inspection, title and repossession administration and remarketing, vehicle research, and analytical services. This segment sells its products and services through vehicle manufacturers, fleet companies, rental car companies, finance companies, and others. The IAA segment offers various loss solutions and salvage vehicle auction services that facilitate the remarketing of vehicles for a range of sellers, including insurance companies, dealerships, rental car companies, fleet lease companies, and charitable organizations. This segment also provides catastrophe, vehicle inspection center, and transportation and towing services. The AFC segment offers floorplan financing, a short-term inventory-secured financing, to independent used vehicle dealers. As of December 31, 2016, the company had a network of 77 whole car auction locations and 172 salvage auction sites. The company was formerly known as KAR Holdings, Inc. and changed its name to KAR Auction Services, Inc. in November 2009. KAR Auction Services, Inc. was founded in 2006 and is headquartered in Carmel, Indiana.

FINANCIAL RATIOS  of  KAR Auction Services (KAR)

Valuation Ratios
P/E Ratio 27.3
Price to Sales 1.9
Price to Book 4.3
Price to Tangible Book
Price to Cash Flow 16.8
Price to Free Cash Flow 29.5
Growth Rates
Sales Growth Rate 17.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.8%
Cap. Spend. - 3 Yr. Gr. Rate 9.8%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 169.3%
Total Debt to Equity 176.8%
Interest Coverage 4
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 4.6%
Return On Total Capital 6.2%
Ret/ On T. Cap. - 3 Yr. Avg. 6%
Return On Equity 16%
Return On Equity - 3 Yr. Avg. 13.9%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 42%
Gross Margin - 3 Yr. Avg. 42.6%
EBITDA Margin 22.9%
EBITDA Margin - 3 Yr. Avg. 22.9%
Operating Margin 15.7%
Oper. Margin - 3 Yr. Avg. 15.3%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. 11.6%
Net Profit Margin 7%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 37.5%
Eff/ Tax Rate - 3 Yr. Avg. 36.9%
Payout Ratio 70.7%

KAR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KAR stock intrinsic value calculation we used $3150 million for the last fiscal year's total revenue generated by KAR Auction Services. The default revenue input number comes from 2016 income statement of KAR Auction Services. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KAR stock valuation model: a) initial revenue growth rate of 14.4% 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 8.5%, whose default value for KAR is calculated based on our internal credit rating of KAR Auction Services, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of KAR Auction Services.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KAR stock the variable cost ratio is equal to 84.1%.

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 KAR 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 5.8% for KAR Auction Services.

Corporate tax rate of 27% is the nominal tax rate for KAR Auction Services. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KAR 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 KAR are equal to 49.5%.

Life of production assets of 14.5 years is the average useful life of capital assets used in KAR Auction Services operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KAR is equal to 13%. 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 - $1397 million for KAR Auction Services - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 136.515 million for KAR Auction Services is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of KAR Auction Services at the current share price and the inputted number of shares is $6.1 billion.

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COMPANY NEWS

▶ KAR Auction Services beats Street 2Q forecasts   [Aug-08-17 11:05PM  Associated Press]
▶ IAA Launches Active Inventory Management Solution   [Jul-25-17 11:00AM  PR Newswire]
▶ Insurance Auto Auctions Adds Over 40 Acres in Georgia   [May-24-17 01:00PM  PR Newswire]
▶ KAR Auction Services tops Street 1Q forecasts   [May-09-17 05:02PM  Associated Press]
▶ IAA Launches Comprehensive Fast Search Tool   [Apr-12-17 12:00PM  CNW Group]
▶ 16 Stocks Added to the Dividend Yield Focus Index   [Apr-05-17 06:00AM  Morningstar]
▶ /C O R R E C T I O N -- Insurance Auto Auctions, Inc./   [Mar-29-17 12:16PM  PR Newswire]
▶ KAR Auction Services Fortifies Investment in TradeRev   [Mar-16-17 04:15PM  GlobeNewswire]
▶ IAA Names Tim O'Day Chief Operating Officer   [Feb-15-17 10:00AM  PR Newswire]
▶ Automotive Finance Corporation Expands Leadership Team   [Jan-12-17 04:00PM  GlobeNewswire]
▶ Hedge Funds Arent Crazy About KAR Auction Services Inc (KAR)   [Dec-06-16 08:10AM  at Insider Monkey]
▶ Is Frontier Communications Corp (FTR) A Good Stock to Sell?   [Nov-27-16 02:23PM  at Insider Monkey]
▶ This Hedge Fund Just Made A Massive Bet Against the SPY   [Nov-11-16 02:43PM  at Insider Monkey]
Stock chart of KAR Financial statements of KAR
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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