Intrinsic value of LKQ - LKQ

Previous Close

$34.51

  Intrinsic Value

$44.24

stock screener

  Rating & Target

buy

+28%

  Value-price divergence*

+7%

Previous close

$34.51

 
Intrinsic value

$44.24

 
Up/down potential

+28%

 
Rating

buy

 
Value-price divergence*

+7%

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

We calculate the intrinsic value of LKQ 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 10.6

 

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, %
  19.34
  22.00
  20.30
  18.77
  17.39
  16.15
  15.04
  14.03
  13.13
  12.32
  11.59
  10.93
  10.33
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
  6.86
  6.67
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
Revenue, $m
  8,584
  10,472
  12,598
  14,963
  17,566
  20,403
  23,471
  26,766
  30,280
  34,010
  37,950
  42,098
  46,448
  51,001
  55,755
  60,711
  65,871
  71,240
  76,821
  82,623
  88,651
  94,916
  101,427
  108,197
  115,237
  122,561
  130,185
  138,124
  146,396
  155,018
  164,010
Variable operating expenses, $m
 
  9,379
  11,221
  13,270
  15,525
  17,983
  20,641
  23,495
  26,541
  29,772
  33,186
  36,474
  40,243
  44,188
  48,306
  52,600
  57,071
  61,723
  66,559
  71,585
  76,808
  82,236
  87,878
  93,743
  99,842
  106,188
  112,794
  119,672
  126,839
  134,309
  142,100
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
  7,839
  9,379
  11,221
  13,270
  15,525
  17,983
  20,641
  23,495
  26,541
  29,772
  33,186
  36,474
  40,243
  44,188
  48,306
  52,600
  57,071
  61,723
  66,559
  71,585
  76,808
  82,236
  87,878
  93,743
  99,842
  106,188
  112,794
  119,672
  126,839
  134,309
  142,100
Operating income, $m
  745
  1,094
  1,378
  1,693
  2,041
  2,420
  2,830
  3,270
  3,740
  4,238
  4,764
  5,624
  6,205
  6,813
  7,448
  8,110
  8,800
  9,517
  10,263
  11,038
  11,843
  12,680
  13,550
  14,454
  15,394
  16,373
  17,391
  18,452
  19,557
  20,709
  21,910
EBITDA, $m
  951
  1,474
  1,774
  2,107
  2,473
  2,873
  3,305
  3,768
  4,263
  4,788
  5,343
  5,927
  6,540
  7,181
  7,850
  8,548
  9,274
  10,030
  10,816
  11,633
  12,482
  13,364
  14,280
  15,233
  16,225
  17,256
  18,329
  19,447
  20,612
  21,826
  23,092
Interest expense (income), $m
  86
  115
  152
  193
  240
  290
  346
  406
  470
  539
  612
  689
  770
  855
  944
  1,037
  1,134
  1,235
  1,340
  1,449
  1,563
  1,681
  1,803
  1,931
  2,063
  2,201
  2,344
  2,493
  2,648
  2,810
  2,979
Earnings before tax, $m
  677
  979
  1,226
  1,500
  1,802
  2,130
  2,484
  2,864
  3,269
  3,699
  4,152
  4,935
  5,435
  5,958
  6,504
  7,073
  7,665
  8,282
  8,922
  9,588
  10,280
  10,999
  11,746
  12,523
  13,331
  14,172
  15,047
  15,959
  16,909
  17,899
  18,931
Tax expense, $m
  220
  264
  331
  405
  486
  575
  671
  773
  883
  999
  1,121
  1,332
  1,467
  1,609
  1,756
  1,910
  2,070
  2,236
  2,409
  2,589
  2,776
  2,970
  3,172
  3,381
  3,599
  3,827
  4,063
  4,309
  4,565
  4,833
  5,111
Net income, $m
  464
  715
  895
  1,095
  1,315
  1,555
  1,813
  2,091
  2,387
  2,700
  3,031
  3,602
  3,967
  4,349
  4,748
  5,163
  5,596
  6,046
  6,513
  6,999
  7,504
  8,029
  8,575
  9,142
  9,732
  10,346
  10,985
  11,650
  12,343
  13,066
  13,820

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  227
  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
  8,303
  9,852
  11,852
  14,076
  16,525
  19,194
  22,080
  25,179
  28,486
  31,994
  35,701
  39,603
  43,695
  47,978
  52,450
  57,113
  61,967
  67,018
  72,269
  77,726
  83,397
  89,291
  95,416
  101,784
  108,407
  115,298
  122,470
  129,938
  137,720
  145,831
  154,290
Adjusted assets (=assets-cash), $m
  8,076
  9,852
  11,852
  14,076
  16,525
  19,194
  22,080
  25,179
  28,486
  31,994
  35,701
  39,603
  43,695
  47,978
  52,450
  57,113
  61,967
  67,018
  72,269
  77,726
  83,397
  89,291
  95,416
  101,784
  108,407
  115,298
  122,470
  129,938
  137,720
  145,831
  154,290
Revenue / Adjusted assets
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
  1.063
Average production assets, $m
  1,154
  1,403
  1,688
  2,005
  2,354
  2,734
  3,145
  3,587
  4,058
  4,557
  5,085
  5,641
  6,224
  6,834
  7,471
  8,135
  8,827
  9,546
  10,294
  11,071
  11,879
  12,719
  13,591
  14,498
  15,442
  16,423
  17,445
  18,509
  19,617
  20,772
  21,977
Working capital, $m
  2,357
  2,681
  3,225
  3,831
  4,497
  5,223
  6,009
  6,852
  7,752
  8,707
  9,715
  10,777
  11,891
  13,056
  14,273
  15,542
  16,863
  18,237
  19,666
  21,151
  22,695
  24,299
  25,965
  27,698
  29,501
  31,376
  33,327
  35,360
  37,477
  39,685
  41,987
Total debt, $m
  3,342
  4,334
  5,522
  6,843
  8,298
  9,883
  11,598
  13,438
  15,402
  17,487
  19,689
  22,006
  24,437
  26,981
  29,637
  32,407
  35,291
  38,290
  41,410
  44,651
  48,020
  51,521
  55,159
  58,942
  62,876
  66,969
  71,229
  75,665
  80,287
  85,106
  90,130
Total liabilities, $m
  4,860
  5,852
  7,040
  8,361
  9,816
  11,401
  13,116
  14,956
  16,920
  19,005
  21,207
  23,524
  25,955
  28,499
  31,155
  33,925
  36,809
  39,808
  42,928
  46,169
  49,538
  53,039
  56,677
  60,460
  64,394
  68,487
  72,747
  77,183
  81,805
  86,624
  91,648
Total equity, $m
  3,443
  4,000
  4,812
  5,715
  6,709
  7,793
  8,965
  10,223
  11,565
  12,990
  14,495
  16,079
  17,740
  19,479
  21,295
  23,188
  25,159
  27,209
  29,341
  31,557
  33,859
  36,252
  38,739
  41,324
  44,013
  46,811
  49,723
  52,755
  55,914
  59,207
  62,642
Total liabilities and equity, $m
  8,303
  9,852
  11,852
  14,076
  16,525
  19,194
  22,081
  25,179
  28,485
  31,995
  35,702
  39,603
  43,695
  47,978
  52,450
  57,113
  61,968
  67,017
  72,269
  77,726
  83,397
  89,291
  95,416
  101,784
  108,407
  115,298
  122,470
  129,938
  137,719
  145,831
  154,290
Debt-to-equity ratio
  0.971
  1.080
  1.150
  1.200
  1.240
  1.270
  1.290
  1.310
  1.330
  1.350
  1.360
  1.370
  1.380
  1.390
  1.390
  1.400
  1.400
  1.410
  1.410
  1.410
  1.420
  1.420
  1.420
  1.430
  1.430
  1.430
  1.430
  1.430
  1.440
  1.440
  1.440
Adjusted equity ratio
  0.398
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406
  0.406

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  464
  715
  895
  1,095
  1,315
  1,555
  1,813
  2,091
  2,387
  2,700
  3,031
  3,602
  3,967
  4,349
  4,748
  5,163
  5,596
  6,046
  6,513
  6,999
  7,504
  8,029
  8,575
  9,142
  9,732
  10,346
  10,985
  11,650
  12,343
  13,066
  13,820
Depreciation, amort., depletion, $m
  206
  381
  396
  413
  432
  452
  475
  498
  524
  551
  579
  303
  335
  367
  402
  437
  475
  513
  553
  595
  639
  684
  731
  779
  830
  883
  938
  995
  1,055
  1,117
  1,182
Funds from operations, $m
  547
  1,096
  1,291
  1,508
  1,747
  2,007
  2,288
  2,589
  2,910
  3,251
  3,610
  3,906
  4,302
  4,717
  5,150
  5,601
  6,070
  6,559
  7,067
  7,595
  8,143
  8,713
  9,306
  9,922
  10,562
  11,229
  11,923
  12,645
  13,398
  14,183
  15,001
Change in working capital, $m
  -88
  483
  544
  605
  666
  726
  785
  843
  900
  955
  1,009
  1,062
  1,114
  1,165
  1,217
  1,269
  1,321
  1,374
  1,429
  1,485
  1,543
  1,604
  1,667
  1,733
  1,802
  1,875
  1,952
  2,032
  2,118
  2,207
  2,302
Cash from operations, $m
  635
  612
  747
  903
  1,081
  1,281
  1,503
  1,746
  2,010
  2,296
  2,601
  2,844
  3,188
  3,551
  3,933
  4,332
  4,749
  5,185
  5,638
  6,109
  6,600
  7,109
  7,639
  8,189
  8,760
  9,354
  9,971
  10,613
  11,280
  11,976
  12,699
Maintenance CAPEX, $m
  0
  -62
  -75
  -91
  -108
  -127
  -147
  -169
  -193
  -218
  -245
  -273
  -303
  -335
  -367
  -402
  -437
  -475
  -513
  -553
  -595
  -639
  -684
  -731
  -779
  -830
  -883
  -938
  -995
  -1,055
  -1,117
New CAPEX, $m
  -207
  -250
  -285
  -317
  -349
  -380
  -411
  -441
  -471
  -500
  -528
  -556
  -583
  -610
  -637
  -664
  -692
  -719
  -748
  -777
  -808
  -839
  -873
  -907
  -943
  -981
  -1,022
  -1,064
  -1,108
  -1,155
  -1,205
Cash from investing activities, $m
  -1,710
  -312
  -360
  -408
  -457
  -507
  -558
  -610
  -664
  -718
  -773
  -829
  -886
  -945
  -1,004
  -1,066
  -1,129
  -1,194
  -1,261
  -1,330
  -1,403
  -1,478
  -1,557
  -1,638
  -1,722
  -1,811
  -1,905
  -2,002
  -2,103
  -2,210
  -2,322
Free cash flow, $m
  -1,075
  300
  387
  495
  624
  774
  944
  1,135
  1,347
  1,578
  1,828
  2,015
  2,302
  2,607
  2,928
  3,266
  3,620
  3,991
  4,377
  4,779
  5,197
  5,631
  6,082
  6,551
  7,037
  7,542
  8,066
  8,611
  9,177
  9,766
  10,378
Issuance/(repayment) of debt, $m
  1,239
  1,058
  1,188
  1,321
  1,454
  1,586
  1,715
  1,841
  1,964
  2,084
  2,202
  2,317
  2,431
  2,544
  2,656
  2,769
  2,884
  3,000
  3,119
  3,242
  3,369
  3,501
  3,639
  3,783
  3,934
  4,093
  4,260
  4,436
  4,622
  4,818
  5,025
Issuance/(repurchase) of shares, $m
  8
  3
  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  
  1,226
  1,061
  1,188
  1,321
  1,454
  1,586
  1,715
  1,841
  1,964
  2,084
  2,202
  2,317
  2,431
  2,544
  2,656
  2,769
  2,884
  3,000
  3,119
  3,242
  3,369
  3,501
  3,639
  3,783
  3,934
  4,093
  4,260
  4,436
  4,622
  4,818
  5,025
Total cash flow (excl. dividends), $m
  147
  1,361
  1,575
  1,817
  2,079
  2,360
  2,659
  2,976
  3,311
  3,662
  4,030
  4,332
  4,733
  5,150
  5,585
  6,036
  6,504
  6,991
  7,496
  8,020
  8,565
  9,132
  9,721
  10,333
  10,971
  11,635
  12,326
  13,047
  13,799
  14,584
  15,403
Retained Cash Flow (-), $m
  -328
  -718
  -812
  -903
  -994
  -1,084
  -1,172
  -1,258
  -1,342
  -1,425
  -1,505
  -1,584
  -1,662
  -1,739
  -1,816
  -1,893
  -1,971
  -2,050
  -2,132
  -2,216
  -2,303
  -2,393
  -2,487
  -2,585
  -2,689
  -2,797
  -2,912
  -3,032
  -3,159
  -3,293
  -3,434
Prev. year cash balance distribution, $m
 
  161
  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
 
  805
  763
  914
  1,085
  1,276
  1,487
  1,718
  1,968
  2,237
  2,525
  2,748
  3,071
  3,412
  3,769
  4,143
  4,533
  4,940
  5,364
  5,805
  6,263
  6,739
  7,234
  7,748
  8,282
  8,837
  9,415
  10,015
  10,640
  11,290
  11,968
Discount rate, %
 
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
 
  749
  657
  722
  781
  829
  865
  886
  891
  879
  852
  786
  735
  674
  605
  533
  459
  387
  320
  258
  203
  156
  117
  85
  61
  42
  28
  18
  11
  7
  4
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

LKQ Corporation, together with its subsidiaries, distributes replacement parts, components, and systems used in the repair and maintenance of vehicles in North America, Europe, and Taiwan. It operates in three segments: North America, Europe, and Specialty. The company distributes bumper covers, automotive body panels, lights, and automotive glass products, such as windshields; salvage products, including mechanical and collision parts comprising engines, transmissions, door assemblies, sheet metal products, lights, and bumper assemblies; scrap metal and other materials to metals recyclers; and brake pads, discs and sensors, clutches, steering and suspension products, filters, and oil and automotive fluids, as well as electrical products, including spark plugs and batteries. It also operates self service retail operations under the LKQ Pick Your Part name. In addition, the company distributes recreational vehicle appliances and air conditioners, towing hitches, truck bed covers, vehicle protection products, cargo management products, wheels, tires, and suspension products. It primarily serves collision and mechanical repair shops, new and used car dealerships, as well as retail customers. The company was founded in 1998 and is headquartered in Chicago, Illinois.

FINANCIAL RATIOS  of  LKQ (LKQ)

Valuation Ratios
P/E Ratio 22.9
Price to Sales 1.2
Price to Book 3.1
Price to Tangible Book
Price to Cash Flow 16.7
Price to Free Cash Flow 24.8
Growth Rates
Sales Growth Rate 19.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 21.8%
Cap. Spend. - 3 Yr. Gr. Rate 18.1%
Financial Strength
Quick Ratio 3
Current Ratio 0.4
LT Debt to Equity 95.1%
Total Debt to Equity 97.1%
Interest Coverage 9
Management Effectiveness
Return On Assets 7.5%
Ret/ On Assets - 3 Yr. Avg. 8.1%
Return On Total Capital 8.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.8%
Return On Equity 14.2%
Return On Equity - 3 Yr. Avg. 14.6%
Asset Turnover 1.2
Profitability Ratios
Gross Margin 39%
Gross Margin - 3 Yr. Avg. 39.3%
EBITDA Margin 11.3%
EBITDA Margin - 3 Yr. Avg. 11.4%
Operating Margin 8.7%
Oper. Margin - 3 Yr. Avg. 9.4%
Pre-Tax Margin 7.9%
Pre-Tax Margin - 3 Yr. Avg. 8.5%
Net Profit Margin 5.4%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 32.5%
Eff/ Tax Rate - 3 Yr. Avg. 33.7%
Payout Ratio 0%

LKQ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LKQ stock intrinsic value calculation we used $8584 million for the last fiscal year's total revenue generated by LKQ. The default revenue input number comes from 2016 income statement of LKQ. 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 LKQ stock valuation model: a) initial revenue growth rate of 22% 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 7.4%, whose default value for LKQ is calculated based on our internal credit rating of LKQ, 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 LKQ.
    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 LKQ stock the variable cost ratio is equal to 90.2%.

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 LKQ 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 LKQ.

Corporate tax rate of 27% is the nominal tax rate for LKQ. 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 LKQ 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 LKQ are equal to 13.4%.

Life of production assets of 18.6 years is the average useful life of capital assets used in LKQ 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 LKQ is equal to 25.6%. 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 - $3443 million for LKQ - 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 307.502 million for LKQ 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 LKQ at the current share price and the inputted number of shares is $10.6 billion.

RELATED COMPANIES Price Int.Val. Rating
GPC Genuine Parts 82.25 93.70  hold
PRTS U.S. Auto Part 2.76 0.89  str.sell
ORLY O'Reilly A 201.58 196.90  hold
DORM Dorman Product 65.60 67.93  hold
CPRT Copart 32.23 95.01  str.buy

COMPANY NEWS

▶ ETFs with exposure to LKQ Corp. : August 16, 2017   [Aug-16-17 06:03PM  Capital Cube]
▶ LKQ beats Street 2Q forecasts   [Jul-27-17 10:40PM  Associated Press]
▶ North American Growth Gives LKQ a Boost   [12:46PM  Motley Fool]
▶ LKQ Corp. Value Analysis (NASDAQ:LKQ) : July 10, 2017   [Jul-10-17 04:15PM  Capital Cube]
▶ Growing Book Values for 7 Cheap Stocks   [Jun-20-17 04:02PM  GuruFocus.com]
▶ ETFs with exposure to LKQ Corp. : June 14, 2017   [Jun-14-17 01:40PM  Capital Cube]
▶ ETFs with exposure to LKQ Corp. : June 2, 2017   [Jun-02-17 02:16PM  Capital Cube]
▶ LKQ Corporation Leadership Transition Becomes Effective   [Jun-01-17 08:30AM  GlobeNewswire]
▶ Car Auction Stock In Double Bottom Pattern With Earnings Due   [May-24-17 11:54AM  Investor's Business Daily]
▶ LKQ Corporation to Present at Upcoming Investor Conference   [May-19-17 10:00AM  GlobeNewswire]
▶ ETFs with exposure to LKQ Corp. : May 15, 2017   [May-15-17 04:02PM  Capital Cube]
▶ ETFs with exposure to LKQ Corp. : May 4, 2017   [May-04-17 04:07PM  Capital Cube]
▶ LKQ tops Street 1Q forecasts   [07:24AM  Associated Press]
▶ 8 Undervalued Stocks With Growing Book Values   [Apr-18-17 06:37PM  GuruFocus.com]
▶ ETFs with exposure to LKQ Corp. : April 7, 2017   [Apr-07-17 05:00PM  Capital Cube]
▶ LKQ Corporation Announces Leadership Transition   [Mar-09-17 05:02PM  GlobeNewswire]
▶ ALLDATA Signs Reseller Agreement with Rhiag Group in Italy   [Mar-06-17 04:45PM  GlobeNewswire]
▶ Is LKQ Corporation (LKQ) Right For Your Portfolio?   [Nov-25-16 08:14PM  at Insider Monkey]
▶ LKQ Corporation to Present at Upcoming Investor Conferences   [Nov-21-16 04:15PM  GlobeNewswire]
▶ When Is The PEG Ratio Superior To The P/E Ratio? Part 2   [Nov-04-16 04:02PM  at Insider Monkey]
▶ LKQ Sees Tougher Times Ahead As Growth Slows   [12:55PM  at Motley Fool]
Stock chart of LKQ Financial statements of LKQ
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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