Intrinsic value of L Brands - LB

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$49.84

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$49.84

 
Intrinsic value

$23.72

 
Up/down potential

-52%

 
Rating

str. sell

 
Value-price divergence* premium content

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

We calculate the intrinsic value of LB 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 14.1

 

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, %
  3.46
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  12,574
  12,838
  13,145
  13,493
  13,883
  14,313
  14,783
  15,295
  15,847
  16,442
  17,079
  17,760
  18,487
  19,260
  20,081
  20,951
  21,874
  22,850
  23,882
  24,972
  26,123
  27,337
  28,617
  29,966
  31,388
  32,884
  34,460
  36,119
  37,864
  39,699
  41,630
Variable operating expenses, $m
 
  10,524
  10,773
  11,055
  11,370
  11,718
  12,099
  12,512
  12,960
  13,441
  13,957
  14,373
  14,961
  15,586
  16,251
  16,956
  17,702
  18,492
  19,327
  20,210
  21,141
  22,123
  23,159
  24,251
  25,401
  26,613
  27,888
  29,230
  30,642
  32,128
  33,690
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
  10,571
  10,524
  10,773
  11,055
  11,370
  11,718
  12,099
  12,512
  12,960
  13,441
  13,957
  14,373
  14,961
  15,586
  16,251
  16,956
  17,702
  18,492
  19,327
  20,210
  21,141
  22,123
  23,159
  24,251
  25,401
  26,613
  27,888
  29,230
  30,642
  32,128
  33,690
Operating income, $m
  2,003
  2,314
  2,372
  2,439
  2,513
  2,595
  2,685
  2,782
  2,888
  3,001
  3,123
  3,387
  3,526
  3,673
  3,830
  3,996
  4,172
  4,358
  4,555
  4,763
  4,982
  5,214
  5,458
  5,715
  5,986
  6,272
  6,572
  6,889
  7,221
  7,571
  7,940
EBITDA, $m
  2,521
  2,810
  2,878
  2,954
  3,039
  3,133
  3,236
  3,348
  3,469
  3,599
  3,739
  3,888
  4,047
  4,216
  4,396
  4,587
  4,789
  5,002
  5,228
  5,467
  5,719
  5,984
  6,265
  6,560
  6,871
  7,199
  7,544
  7,907
  8,289
  8,691
  9,113
Interest expense (income), $m
  387
  388
  175
  184
  195
  206
  219
  234
  249
  266
  284
  303
  324
  346
  370
  395
  421
  449
  479
  510
  543
  578
  615
  654
  695
  738
  783
  831
  881
  934
  990
Earnings before tax, $m
  1,696
  1,926
  2,198
  2,255
  2,318
  2,389
  2,465
  2,549
  2,638
  2,735
  2,838
  3,084
  3,202
  3,327
  3,460
  3,601
  3,751
  3,909
  4,076
  4,253
  4,439
  4,636
  4,843
  5,062
  5,292
  5,534
  5,789
  6,058
  6,340
  6,637
  6,950
Tax expense, $m
  538
  520
  593
  609
  626
  645
  666
  688
  712
  738
  766
  833
  864
  898
  934
  972
  1,013
  1,055
  1,101
  1,148
  1,199
  1,252
  1,308
  1,367
  1,429
  1,494
  1,563
  1,636
  1,712
  1,792
  1,876
Net income, $m
  1,158
  1,406
  1,604
  1,646
  1,692
  1,744
  1,800
  1,860
  1,926
  1,997
  2,072
  2,251
  2,337
  2,429
  2,526
  2,629
  2,738
  2,854
  2,976
  3,105
  3,241
  3,384
  3,535
  3,695
  3,863
  4,040
  4,226
  4,422
  4,628
  4,845
  5,073

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,934
  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
  8,170
  6,368
  6,520
  6,693
  6,886
  7,100
  7,333
  7,587
  7,861
  8,156
  8,472
  8,810
  9,170
  9,553
  9,961
  10,393
  10,850
  11,334
  11,846
  12,387
  12,958
  13,560
  14,195
  14,864
  15,569
  16,312
  17,093
  17,916
  18,782
  19,692
  20,650
Adjusted assets (=assets-cash), $m
  6,236
  6,368
  6,520
  6,693
  6,886
  7,100
  7,333
  7,587
  7,861
  8,156
  8,472
  8,810
  9,170
  9,553
  9,961
  10,393
  10,850
  11,334
  11,846
  12,387
  12,958
  13,560
  14,195
  14,864
  15,569
  16,312
  17,093
  17,916
  18,782
  19,692
  20,650
Revenue / Adjusted assets
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
  2.016
Average production assets, $m
  2,947
  3,004
  3,076
  3,157
  3,249
  3,349
  3,459
  3,579
  3,708
  3,847
  3,997
  4,156
  4,326
  4,507
  4,699
  4,903
  5,119
  5,347
  5,588
  5,844
  6,113
  6,397
  6,696
  7,012
  7,345
  7,695
  8,064
  8,452
  8,860
  9,290
  9,741
Working capital, $m
  1,451
  -462
  -473
  -486
  -500
  -515
  -532
  -551
  -570
  -592
  -615
  -639
  -666
  -693
  -723
  -754
  -787
  -823
  -860
  -899
  -940
  -984
  -1,030
  -1,079
  -1,130
  -1,184
  -1,241
  -1,300
  -1,363
  -1,429
  -1,499
Total debt, $m
  5,736
  2,568
  2,705
  2,861
  3,035
  3,227
  3,437
  3,665
  3,912
  4,177
  4,462
  4,766
  5,090
  5,435
  5,802
  6,190
  6,602
  7,038
  7,499
  7,985
  8,499
  9,041
  9,613
  10,215
  10,849
  11,518
  12,221
  12,961
  13,740
  14,560
  15,422
Total liabilities, $m
  8,899
  5,731
  5,868
  6,024
  6,198
  6,390
  6,600
  6,828
  7,075
  7,340
  7,625
  7,929
  8,253
  8,598
  8,965
  9,353
  9,765
  10,201
  10,662
  11,148
  11,662
  12,204
  12,776
  13,378
  14,012
  14,681
  15,384
  16,124
  16,903
  17,723
  18,585
Total equity, $m
  -729
  637
  652
  669
  689
  710
  733
  759
  786
  816
  847
  881
  917
  955
  996
  1,039
  1,085
  1,133
  1,185
  1,239
  1,296
  1,356
  1,420
  1,486
  1,557
  1,631
  1,709
  1,792
  1,878
  1,969
  2,065
Total liabilities and equity, $m
  8,170
  6,368
  6,520
  6,693
  6,887
  7,100
  7,333
  7,587
  7,861
  8,156
  8,472
  8,810
  9,170
  9,553
  9,961
  10,392
  10,850
  11,334
  11,847
  12,387
  12,958
  13,560
  14,196
  14,864
  15,569
  16,312
  17,093
  17,916
  18,781
  19,692
  20,650
Debt-to-equity ratio
  -7.868
  4.030
  4.150
  4.270
  4.410
  4.540
  4.690
  4.830
  4.980
  5.120
  5.270
  5.410
  5.550
  5.690
  5.820
  5.960
  6.080
  6.210
  6.330
  6.450
  6.560
  6.670
  6.770
  6.870
  6.970
  7.060
  7.150
  7.230
  7.320
  7.390
  7.470
Adjusted equity ratio
  -0.427
  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
  1,158
  1,406
  1,604
  1,646
  1,692
  1,744
  1,800
  1,860
  1,926
  1,997
  2,072
  2,251
  2,337
  2,429
  2,526
  2,629
  2,738
  2,854
  2,976
  3,105
  3,241
  3,384
  3,535
  3,695
  3,863
  4,040
  4,226
  4,422
  4,628
  4,845
  5,073
Depreciation, amort., depletion, $m
  518
  497
  505
  515
  526
  538
  552
  566
  582
  598
  616
  501
  521
  543
  566
  591
  617
  644
  673
  704
  736
  771
  807
  845
  885
  927
  972
  1,018
  1,067
  1,119
  1,174
Funds from operations, $m
  2,066
  1,903
  2,110
  2,161
  2,219
  2,282
  2,351
  2,426
  2,508
  2,595
  2,688
  2,752
  2,858
  2,972
  3,092
  3,220
  3,355
  3,498
  3,649
  3,809
  3,977
  4,155
  4,342
  4,540
  4,748
  4,967
  5,198
  5,440
  5,696
  5,964
  6,247
Change in working capital, $m
  176
  -10
  -11
  -13
  -14
  -15
  -17
  -18
  -20
  -21
  -23
  -25
  -26
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
  -44
  -46
  -49
  -51
  -54
  -57
  -60
  -63
  -66
  -70
Cash from operations, $m
  1,890
  2,118
  2,121
  2,174
  2,233
  2,297
  2,368
  2,445
  2,527
  2,616
  2,711
  2,776
  2,885
  3,000
  3,122
  3,251
  3,388
  3,533
  3,686
  3,848
  4,019
  4,199
  4,388
  4,588
  4,799
  5,021
  5,254
  5,500
  5,759
  6,030
  6,316
Maintenance CAPEX, $m
  0
  -355
  -362
  -371
  -380
  -391
  -404
  -417
  -431
  -447
  -464
  -482
  -501
  -521
  -543
  -566
  -591
  -617
  -644
  -673
  -704
  -736
  -771
  -807
  -845
  -885
  -927
  -972
  -1,018
  -1,067
  -1,119
New CAPEX, $m
  -990
  -58
  -72
  -82
  -91
  -101
  -110
  -120
  -129
  -139
  -149
  -159
  -170
  -181
  -192
  -204
  -216
  -228
  -241
  -255
  -269
  -284
  -300
  -316
  -333
  -350
  -369
  -388
  -408
  -430
  -452
Cash from investing activities, $m
  -833
  -413
  -434
  -453
  -471
  -492
  -514
  -537
  -560
  -586
  -613
  -641
  -671
  -702
  -735
  -770
  -807
  -845
  -885
  -928
  -973
  -1,020
  -1,071
  -1,123
  -1,178
  -1,235
  -1,296
  -1,360
  -1,426
  -1,497
  -1,571
Free cash flow, $m
  1,057
  1,705
  1,687
  1,722
  1,761
  1,805
  1,855
  1,908
  1,967
  2,030
  2,099
  2,136
  2,214
  2,298
  2,387
  2,481
  2,581
  2,688
  2,800
  2,919
  3,045
  3,178
  3,318
  3,466
  3,622
  3,786
  3,958
  4,140
  4,332
  4,533
  4,745
Issuance/(repayment) of debt, $m
  -21
  -3,132
  137
  156
  174
  192
  210
  228
  247
  265
  285
  304
  324
  345
  367
  389
  412
  436
  461
  487
  514
  542
  571
  602
  635
  668
  703
  740
  779
  820
  862
Issuance/(repurchase) of shares, $m
  -415
  2,792
  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  
  -397
  -340
  137
  156
  174
  192
  210
  228
  247
  265
  285
  304
  324
  345
  367
  389
  412
  436
  461
  487
  514
  542
  571
  602
  635
  668
  703
  740
  779
  820
  862
Total cash flow (excl. dividends), $m
  654
  -1,427
  1,824
  1,877
  1,935
  1,997
  2,065
  2,137
  2,214
  2,296
  2,383
  2,440
  2,538
  2,643
  2,753
  2,870
  2,993
  3,124
  3,261
  3,406
  3,559
  3,720
  3,890
  4,068
  4,256
  4,454
  4,662
  4,881
  5,111
  5,353
  5,607
Retained Cash Flow (-), $m
  470
  -3,264
  -15
  -17
  -19
  -21
  -23
  -25
  -27
  -29
  -32
  -34
  -36
  -38
  -41
  -43
  -46
  -48
  -51
  -54
  -57
  -60
  -63
  -67
  -71
  -74
  -78
  -82
  -87
  -91
  -96
Prev. year cash balance distribution, $m
 
  1,898
  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
 
  0
  1,809
  1,860
  1,916
  1,976
  2,041
  2,111
  2,186
  2,266
  2,352
  2,406
  2,502
  2,604
  2,712
  2,827
  2,948
  3,075
  3,210
  3,352
  3,502
  3,660
  3,826
  4,001
  4,186
  4,380
  4,584
  4,798
  5,024
  5,262
  5,512
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  0
  1,536
  1,439
  1,338
  1,236
  1,131
  1,026
  922
  819
  720
  615
  527
  446
  371
  304
  244
  193
  150
  114
  84
  61
  44
  30
  20
  13
  8
  5
  3
  2
  1
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

L Brands, Inc. operates as a specialty retailer of women’s intimate and other apparel, beauty and personal care products, and accessories. The company operates in three segments: Victoria’s Secret, Bath & Body Works, and Victoria's Secret and Bath & Body Works International. Its products include loungewear, bras, panties, swimwear, athletic attire, fragrances, shower gels and lotions, aromatherapy, soaps and sanitizers, home fragrances, handbags, jewelry, and personal care accessories. The company offers its products under the Victoria’s Secret, Pink, Bath & Body Works, La Senza, Henri Bendel, C.O. Bigelow, White Barn Candle Company, and other brand names. L Brands, Inc. sells its merchandise through company-owned specialty retail stores in the United States, Canada, and the United Kingdom, which are primarily mall-based; through its Websites; and through franchises, licenses, and wholesale partners. As of January 31, 2016, the company operated 2,721 retail stores in the United States; 270 retail stores in Canada; and 14 retail stores in the United Kingdom. It also operated 221 La Senza stores in 29 countries; 125 Bath & Body Works stores in 30 countries; 19 Victoria's Secret stores in 7 Middle Eastern countries; and 373 Victoria’s Secret Beauty and Accessories stores, and various small-format locations in approximately 75 countries. The company was formerly known as Limited Brands, Inc. and changed its name to L Brands, Inc. in March 2013. L Brands, Inc. was founded in 1963 and is headquartered in Columbus, Ohio.

FINANCIAL RATIOS  of  L Brands (LB)

Valuation Ratios
P/E Ratio 12.3
Price to Sales 1.1
Price to Book -19.6
Price to Tangible Book
Price to Cash Flow 7.5
Price to Free Cash Flow 15.8
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 36.2%
Cap. Spend. - 3 Yr. Gr. Rate 7.5%
Financial Strength
Quick Ratio 54
Current Ratio 0.1
LT Debt to Equity -781.9%
Total Debt to Equity -786.8%
Interest Coverage 5
Management Effectiveness
Return On Assets 17.1%
Ret/ On Assets - 3 Yr. Avg. 17.4%
Return On Total Capital 22.1%
Ret/ On T. Cap. - 3 Yr. Avg. 23%
Return On Equity -234.4%
Return On Equity - 3 Yr. Avg. -622.1%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 40.8%
Gross Margin - 3 Yr. Avg. 41.9%
EBITDA Margin 20.7%
EBITDA Margin - 3 Yr. Avg. 21.2%
Operating Margin 15.9%
Oper. Margin - 3 Yr. Avg. 17%
Pre-Tax Margin 13.5%
Pre-Tax Margin - 3 Yr. Avg. 14.6%
Net Profit Margin 9.2%
Net Profit Margin - 3 Yr. Avg. 9.5%
Effective Tax Rate 31.7%
Eff/ Tax Rate - 3 Yr. Avg. 34.4%
Payout Ratio 109.5%

LB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LB stock intrinsic value calculation we used $12574 million for the last fiscal year's total revenue generated by L Brands. The default revenue input number comes from 2017 income statement of L Brands. 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 LB stock valuation model: a) initial revenue growth rate of 2.1% 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 8.1%, whose default value for LB is calculated based on our internal credit rating of L Brands, 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 L Brands.
    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 LB stock the variable cost ratio is equal to 82%.

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 LB 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 6.8% for L Brands.

Corporate tax rate of 27% is the nominal tax rate for L Brands. 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 LB 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 LB are equal to 23.4%.

Life of production assets of 8.3 years is the average useful life of capital assets used in L Brands 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 LB is equal to -3.6%. 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 - $-729 million for L Brands - 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 282.59 million for L Brands 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 L Brands at the current share price and the inputted number of shares is $14.1 billion.


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COMPANY NEWS

▶ 10 Ridiculous Yet Amazing Luxury Products for Dogs   [Apr-23-17 12:01PM  TheStreet.com]
▶ Retail And E-Commerce News And Stocks To Watch   [Apr-19-17 05:31PM  Investor's Business Daily]
▶ Victoria's Secret Owner Is Struggling   [12:55PM  GuruFocus.com]
▶ Victoria's Secret Reveals The 2017 What Is Sexy? List   [Apr-13-17 11:00AM  PR Newswire]
▶ Why the 'bralette' is a problem for Victoria's Secret   [Apr-08-17 03:34PM  Yahoo Finance]
▶ Concerns of the Week; Retail Improves: Best of Kass   [Apr-07-17 09:00PM  TheStreet.com]
▶ The Hot Stock: L Brands Soars 11%   [04:17PM  Barrons.com]
▶ Why Nordstrom Inc. Stock Popped Today   [02:08PM  Motley Fool]
▶ Bizarro! Amazon is Down, Macy's is Up   [01:06PM  Barrons.com]
▶ L Brands Reports March 2017 Sales   [07:15AM  GlobeNewswire]
▶ L Brands Rating Downgraded at Citi   [11:26AM  TheStreet.com]
▶ Jim Cramer -- I'm Worried About the Mall   [Mar-28-17 10:58AM  TheStreet.com]
▶ Cramer's Stop Trading: LB   [09:55AM  CNBC Videos]
▶ 3 Risky Dividend Stocks You Must Sell Now   [Mar-26-17 08:08AM  Forbes]
▶ If You're Retired, Consider Buying These 3 Stocks   [Mar-18-17 11:13AM  at Motley Fool]
▶ [$$] As Retailers Go Silent, Big Data Fills the Void   [12:08AM  at The Wall Street Journal]
▶ [$$] As Retailers Go Silent, Big Data Fills the Void   [Mar-15-17 04:24PM  at The Wall Street Journal]
▶ This titanic stock market has that sinking feeling   [Mar-14-17 07:41AM  at MarketWatch]
▶ [$$] Investors place derivatives bet against US shopping malls   [Mar-02-17 11:01PM  at Financial Times]
▶ L Brands Reports February 2017 Sales   [07:15AM  GlobeNewswire]
▶ [$$] Malls Woes Hurt Victorias Secret, Bath & Body Works   [Feb-23-17 08:52PM  at The Wall Street Journal]
▶ The Biggest Loser: L Brands Drops 15.8%   [04:41PM  at Barrons.com]
▶ [$$] Malls' Woes Hurt Victoria's Secret, Bath & Body Works   [12:27PM  at The Wall Street Journal]
Stock chart of LB Financial statements of LB
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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