Intrinsic value of Leucadia National - LUK

Previous Close

$24.99

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$24.99

 
Intrinsic value premium content
 
Up/down potential premium content
 
Rating premium content
 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying
Our model is not good at valuating stocks of financial companies, such as LUK.

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

We calculate the intrinsic value of LUK 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 9.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -7.31
  10.80
  10.22
  9.70
  9.23
  8.81
  8.42
  8.08
  7.77
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.07
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
Revenue, $m
  10,033
  11,117
  12,253
  13,441
  14,681
  15,974
  17,320
  18,720
  20,175
  21,687
  23,259
  24,892
  26,590
  28,355
  30,191
  32,101
  34,090
  36,160
  38,318
  40,568
  42,914
  45,362
  47,918
  50,588
  53,377
  56,293
  59,342
  62,532
  65,869
  69,363
  73,020
Variable operating expenses, $m
 
  10,765
  11,847
  12,979
  14,161
  15,393
  16,676
  18,010
  19,396
  20,837
  22,335
  23,720
  25,338
  27,020
  28,769
  30,589
  32,484
  34,457
  36,513
  38,657
  40,893
  43,226
  45,661
  48,205
  50,863
  53,641
  56,547
  59,586
  62,766
  66,095
  69,581
Fixed operating expenses, $m
 
  35
  36
  37
  38
  38
  39
  40
  41
  42
  44
  45
  46
  47
  48
  49
  50
  52
  53
  54
  56
  57
  59
  60
  61
  63
  65
  66
  68
  70
  71
Total operating expenses, $m
  9,762
  10,800
  11,883
  13,016
  14,199
  15,431
  16,715
  18,050
  19,437
  20,879
  22,379
  23,765
  25,384
  27,067
  28,817
  30,638
  32,534
  34,509
  36,566
  38,711
  40,949
  43,283
  45,720
  48,265
  50,924
  53,704
  56,612
  59,652
  62,834
  66,165
  69,652
Operating income, $m
  271
  317
  370
  425
  482
  542
  605
  670
  737
  807
  880
  1,128
  1,207
  1,289
  1,374
  1,463
  1,555
  1,652
  1,752
  1,857
  1,966
  2,080
  2,199
  2,323
  2,453
  2,589
  2,731
  2,879
  3,035
  3,198
  3,368
EBITDA, $m
  438
  620
  686
  755
  827
  902
  980
  1,062
  1,146
  1,234
  1,326
  1,421
  1,520
  1,622
  1,729
  1,840
  1,956
  2,077
  2,203
  2,334
  2,470
  2,613
  2,762
  2,918
  3,081
  3,251
  3,429
  3,615
  3,809
  4,013
  4,227
Interest expense (income), $m
  957
  921
  724
  1,084
  1,460
  1,853
  2,262
  2,688
  3,131
  3,592
  4,071
  4,569
  5,086
  5,623
  6,182
  6,763
  7,368
  7,998
  8,653
  9,336
  10,049
  10,792
  11,567
  12,376
  13,221
  14,104
  15,028
  15,993
  17,003
  18,059
  19,165
Earnings before tax, $m
  316
  -604
  -354
  -659
  -978
  -1,310
  -1,657
  -2,018
  -2,394
  -2,785
  -3,190
  -3,441
  -3,879
  -4,334
  -4,808
  -5,300
  -5,813
  -6,346
  -6,901
  -7,480
  -8,083
  -8,712
  -9,368
  -10,053
  -10,768
  -11,516
  -12,297
  -13,114
  -13,968
  -14,862
  -15,797
Tax expense, $m
  122
  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
Net income, $m
  130
  -604
  -354
  -659
  -978
  -1,310
  -1,657
  -2,018
  -2,394
  -2,785
  -3,190
  -3,441
  -3,879
  -4,334
  -4,808
  -5,300
  -5,813
  -6,346
  -6,901
  -7,480
  -8,083
  -8,712
  -9,368
  -10,053
  -10,768
  -11,516
  -12,297
  -13,114
  -13,968
  -14,862
  -15,797

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,408
  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
  45,071
  36,210
  39,911
  43,782
  47,822
  52,033
  56,416
  60,976
  65,717
  70,643
  75,763
  81,083
  86,613
  92,362
  98,342
  104,564
  111,041
  117,786
  124,815
  132,142
  139,785
  147,760
  156,085
  164,781
  173,867
  183,365
  193,297
  203,686
  214,557
  225,937
  237,851
Adjusted assets (=assets-cash), $m
  32,663
  36,210
  39,911
  43,782
  47,822
  52,033
  56,416
  60,976
  65,717
  70,643
  75,763
  81,083
  86,613
  92,362
  98,342
  104,564
  111,041
  117,786
  124,815
  132,142
  139,785
  147,760
  156,085
  164,781
  173,867
  183,365
  193,297
  203,686
  214,557
  225,937
  237,851
Revenue / Adjusted assets
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
Average production assets, $m
  2,078
  2,301
  2,536
  2,782
  3,039
  3,307
  3,585
  3,875
  4,176
  4,489
  4,815
  5,153
  5,504
  5,870
  6,250
  6,645
  7,057
  7,485
  7,932
  8,398
  8,883
  9,390
  9,919
  10,472
  11,049
  11,653
  12,284
  12,944
  13,635
  14,358
  15,115
Working capital, $m
  856
  -19,743
  -21,761
  -23,871
  -26,074
  -28,370
  -30,760
  -33,246
  -35,831
  -38,517
  -41,308
  -44,209
  -47,224
  -50,359
  -53,619
  -57,012
  -60,543
  -64,221
  -68,053
  -72,048
  -76,215
  -80,563
  -85,103
  -89,844
  -94,798
  -99,977
  -105,392
  -111,056
  -116,984
  -123,188
  -129,684
Total debt, $m
  18,669
  6,704
  10,035
  13,518
  17,155
  20,944
  24,890
  28,994
  33,260
  37,694
  42,301
  47,090
  52,067
  57,241
  62,623
  68,223
  74,052
  80,123
  86,449
  93,043
  99,921
  107,099
  114,592
  122,418
  130,596
  139,144
  148,082
  157,432
  167,217
  177,458
  188,181
Total liabilities, $m
  34,943
  32,589
  35,920
  39,403
  43,040
  46,829
  50,775
  54,879
  59,145
  63,579
  68,186
  72,975
  77,952
  83,126
  88,508
  94,108
  99,937
  106,008
  112,334
  118,928
  125,806
  132,984
  140,477
  148,303
  156,481
  165,029
  173,967
  183,317
  193,102
  203,343
  214,066
Total equity, $m
  10,128
  3,621
  3,991
  4,378
  4,782
  5,203
  5,642
  6,098
  6,572
  7,064
  7,576
  8,108
  8,661
  9,236
  9,834
  10,456
  11,104
  11,779
  12,482
  13,214
  13,978
  14,776
  15,609
  16,478
  17,387
  18,337
  19,330
  20,369
  21,456
  22,594
  23,785
Total liabilities and equity, $m
  45,071
  36,210
  39,911
  43,781
  47,822
  52,032
  56,417
  60,977
  65,717
  70,643
  75,762
  81,083
  86,613
  92,362
  98,342
  104,564
  111,041
  117,787
  124,816
  132,142
  139,784
  147,760
  156,086
  164,781
  173,868
  183,366
  193,297
  203,686
  214,558
  225,937
  237,851
Debt-to-equity ratio
  1.843
  1.850
  2.510
  3.090
  3.590
  4.030
  4.410
  4.750
  5.060
  5.340
  5.580
  5.810
  6.010
  6.200
  6.370
  6.520
  6.670
  6.800
  6.930
  7.040
  7.150
  7.250
  7.340
  7.430
  7.510
  7.590
  7.660
  7.730
  7.790
  7.850
  7.910
Adjusted equity ratio
  -0.054
  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
  130
  -604
  -354
  -659
  -978
  -1,310
  -1,657
  -2,018
  -2,394
  -2,785
  -3,190
  -3,441
  -3,879
  -4,334
  -4,808
  -5,300
  -5,813
  -6,346
  -6,901
  -7,480
  -8,083
  -8,712
  -9,368
  -10,053
  -10,768
  -11,516
  -12,297
  -13,114
  -13,968
  -14,862
  -15,797
Depreciation, amort., depletion, $m
  167
  302
  316
  330
  344
  359
  375
  392
  409
  427
  445
  293
  313
  333
  355
  378
  401
  425
  451
  477
  505
  534
  564
  595
  628
  662
  698
  735
  775
  816
  859
Funds from operations, $m
  592
  -302
  -39
  -329
  -633
  -951
  -1,282
  -1,627
  -1,985
  -2,358
  -2,745
  -3,148
  -3,566
  -4,001
  -4,453
  -4,923
  -5,412
  -5,921
  -6,451
  -7,003
  -7,578
  -8,178
  -8,804
  -9,458
  -10,141
  -10,854
  -11,599
  -12,378
  -13,193
  -14,046
  -14,938
Change in working capital, $m
  -12
  -1,924
  -2,018
  -2,110
  -2,203
  -2,296
  -2,390
  -2,486
  -2,585
  -2,686
  -2,791
  -2,901
  -3,015
  -3,135
  -3,260
  -3,392
  -3,531
  -3,678
  -3,832
  -3,995
  -4,167
  -4,348
  -4,539
  -4,741
  -4,954
  -5,178
  -5,415
  -5,665
  -5,927
  -6,204
  -6,496
Cash from operations, $m
  604
  1,052
  1,979
  1,781
  1,570
  1,345
  1,108
  860
  599
  328
  46
  -247
  -551
  -866
  -1,193
  -1,530
  -1,880
  -2,243
  -2,618
  -3,008
  -3,411
  -3,830
  -4,265
  -4,717
  -5,187
  -5,675
  -6,184
  -6,714
  -7,266
  -7,842
  -8,443
Maintenance CAPEX, $m
  0
  -118
  -131
  -144
  -158
  -173
  -188
  -204
  -220
  -237
  -255
  -274
  -293
  -313
  -333
  -355
  -378
  -401
  -425
  -451
  -477
  -505
  -534
  -564
  -595
  -628
  -662
  -698
  -735
  -775
  -816
New CAPEX, $m
  -319
  -224
  -235
  -246
  -257
  -268
  -279
  -290
  -301
  -313
  -325
  -338
  -351
  -365
  -380
  -395
  -412
  -429
  -447
  -466
  -486
  -507
  -529
  -553
  -577
  -604
  -631
  -660
  -691
  -723
  -757
Cash from investing activities, $m
  -640
  -342
  -366
  -390
  -415
  -441
  -467
  -494
  -521
  -550
  -580
  -612
  -644
  -678
  -713
  -750
  -790
  -830
  -872
  -917
  -963
  -1,012
  -1,063
  -1,117
  -1,172
  -1,232
  -1,293
  -1,358
  -1,426
  -1,498
  -1,573
Free cash flow, $m
  -36
  710
  1,613
  1,391
  1,155
  905
  642
  366
  78
  -222
  -534
  -859
  -1,195
  -1,544
  -1,906
  -2,281
  -2,670
  -3,073
  -3,490
  -3,924
  -4,374
  -4,842
  -5,328
  -5,833
  -6,359
  -6,907
  -7,477
  -8,072
  -8,692
  -9,340
  -10,015
Issuance/(repayment) of debt, $m
  216
  -1,828
  3,331
  3,484
  3,636
  3,790
  3,945
  4,104
  4,266
  4,434
  4,608
  4,788
  4,977
  5,174
  5,382
  5,600
  5,829
  6,071
  6,326
  6,595
  6,878
  7,177
  7,493
  7,826
  8,178
  8,548
  8,939
  9,350
  9,784
  10,241
  10,723
Issuance/(repurchase) of shares, $m
  -94
  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
  236
  484
Cash from financing (excl. dividends), $m  
  322
  -1,828
  3,331
  3,484
  3,636
  3,790
  3,945
  4,104
  4,266
  4,434
  4,608
  4,788
  4,977
  5,174
  5,382
  5,600
  5,829
  6,071
  6,326
  6,595
  6,878
  7,177
  7,493
  7,826
  8,178
  8,548
  8,939
  9,350
  9,784
  10,477
  11,207
Total cash flow (excl. dividends), $m
  260
  -1,117
  4,944
  4,875
  4,791
  4,695
  4,587
  4,470
  4,344
  4,212
  4,073
  3,930
  3,782
  3,630
  3,476
  3,319
  3,160
  2,998
  2,835
  2,671
  2,504
  2,336
  2,165
  1,993
  1,819
  1,641
  1,462
  1,278
  1,092
  902
  707
Retained Cash Flow (-), $m
  273
  -5,375
  -370
  -387
  -404
  -421
  -438
  -456
  -474
  -493
  -512
  -532
  -553
  -575
  -598
  -622
  -648
  -675
  -703
  -733
  -764
  -797
  -833
  -870
  -909
  -950
  -993
  -1,039
  -1,087
  -1,138
  -1,191
Prev. year cash balance distribution, $m
 
  11,882
  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
 
  5,390
  4,574
  4,488
  4,387
  4,273
  4,149
  4,014
  3,870
  3,719
  3,561
  3,398
  3,229
  3,055
  2,878
  2,697
  2,512
  2,324
  2,133
  1,938
  1,740
  1,538
  1,333
  1,124
  910
  692
  468
  240
  5
  0
  0
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  5,167
  4,187
  3,905
  3,612
  3,312
  3,011
  2,712
  2,419
  2,136
  1,867
  1,613
  1,378
  1,162
  966
  792
  638
  506
  393
  298
  221
  159
  111
  74
  46
  27
  14
  5
  0
  0
  0
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
  98.8
  96.5

Leucadia National Corporation, a diversified holding company, engages in investment banking and capital markets, beef processing, manufacturing, oil and gas exploration and production, and asset management activities. Its services include equities research, sales, and trading; financing, securities lending, and other brokerage; wealth management; fixed income sales and trading; trade execution in foreign exchange, spot, forward, swap, and option contracts across currencies; equity and debt capital markets, as well as financial advisory in the areas of mergers and acquisition, restructuring, and recapitalization; equity and debt financing to companies, financial sponsors, and government entities; and investment management services to pension funds, insurance companies, and other institutional investors. The company also provides investment advisory, portfolio management, and operational services to accredited investors and qualified purchasers; and online foreign exchange trading and related services. In addition, it develops and owns residential and mixed-use real estate properties in California, New York, Florida, Virginia, South Carolina, and Maine; provides capital solutions, investment sales advisory, research, and services for multifamily and commercial properties; and purchases automobile installment contracts, as well as leases used Harley-Davidson motorcycles. Further, it processes and markets beef, beef by-products, pork, and leather; owns oil and gas properties in the Bakken field, as well as leases and develops oil and gas properties in Texas and Oklahoma; owns and operates 27 automobile dealerships; offers fixed wireless broadband services in Italy; manufactures and markets plastic netting and wood products; and mines gold and silver ores. The company was formerly known as Talcott National Corp. and changed its name to Leucadia National Corporation in June 1980. Leucadia National Corporation was founded in 1968 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Leucadia National (LUK)

Valuation Ratios
P/E Ratio 69.1
Price to Sales 0.9
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 14.9
Price to Free Cash Flow 31.5
Growth Rates
Sales Growth Rate -7.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.8%
Cap. Spend. - 3 Yr. Gr. Rate 14%
Financial Strength
Quick Ratio 24
Current Ratio 0
LT Debt to Equity 179.1%
Total Debt to Equity 184.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.6%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital 0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.6%
Return On Equity 1.3%
Return On Equity - 3 Yr. Avg. 2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 31.7%
Gross Margin - 3 Yr. Avg. 30.2%
EBITDA Margin 14.4%
EBITDA Margin - 3 Yr. Avg. 13.2%
Operating Margin 2.7%
Oper. Margin - 3 Yr. Avg. 2.8%
Pre-Tax Margin 3.1%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin 1.3%
Net Profit Margin - 3 Yr. Avg. 1.9%
Effective Tax Rate 38.6%
Eff/ Tax Rate - 3 Yr. Avg. 50.5%
Payout Ratio 70%

LUK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LUK stock intrinsic value calculation we used $10033 million for the last fiscal year's total revenue generated by Leucadia National. The default revenue input number comes from 2016 income statement of Leucadia National. 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 LUK stock valuation model: a) initial revenue growth rate of 10.8% 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 4.3%, whose default value for LUK is calculated based on our internal credit rating of Leucadia National, 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 Leucadia National.
    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 LUK stock the variable cost ratio is equal to 97%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $34 million in the base year in the intrinsic value calculation for LUK 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 10.8% for Leucadia National.

Corporate tax rate of 27% is the nominal tax rate for Leucadia National. 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 LUK 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 LUK are equal to 20.7%.

Life of production assets of 17.6 years is the average useful life of capital assets used in Leucadia National 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 LUK is equal to -177.6%. 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 - $10128 million for Leucadia National - 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 366.544 million for Leucadia National 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 Leucadia National at the current share price and the inputted number of shares is $9.2 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
HRL Hormel Foods 34.94 prem.  prem.
TSN Tyson Foods Cl 62.79 prem.  prem.
HLI Houlihan Lokey 34.39 prem.  prem.
GHL Greenhill 19.50 prem.  prem.

COMPANY NEWS

▶ [$$] Jefferies Revenue Rises on Investment Banking Unit   [08:13AM  The Wall Street Journal]
▶ M Science Launches M Data Enhanced   [Jun-06-17 08:00AM  Business Wire]
▶ Wall St. CEO: Here are 20 things every intern should know   [Jun-01-17 09:18AM  Yahoo Finance]
▶ FXCM Group Names Brendan Callan as CEO   [02:00AM  GlobeNewswire]
▶ Leucadia Turns Things Around on Jefferies Recovery   [Apr-28-17 07:03PM  Motley Fool]
▶ Leucadia posts 1Q profit   [Apr-27-17 06:56PM  Associated Press]
▶ M Science Adds Senior Analyst Byrne Hobart   [08:00AM  Business Wire]
▶ Backstone Buys Into Permian For $2 Billion   [Apr-23-17 01:00AM  Oilprice.com]
▶ Top Ranked Growth Stocks to Buy for April 18th   [Apr-18-17 12:19PM  Zacks]
▶ Top Ranked Growth Stocks to Buy for April 13th   [Apr-13-17 12:22PM  Zacks]
▶ Why is P/B Ratio a Great Valuation Metric?   [Apr-12-17 08:24AM  Zacks]
▶ Get Ready To Be Surprised This Earnings Season   [Apr-11-17 03:20PM  Zacks]
▶ Top Ranked Growth Stocks to Buy for April 3rd   [Apr-03-17 10:51AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for March 31st   [Mar-31-17 10:54AM  Zacks]
▶ [$$] Former banker fined for sharing information on WhatsApp   [Mar-30-17 09:57AM  Financial Times]
▶ Top Ranked Growth Stocks to Buy for March 28th   [Mar-28-17 11:22AM  Zacks]
▶ Why Bank Stocks are Getting Crushed   [Mar-21-17 05:55PM  at Barrons.com]
▶ Blank check co. plans to take Woodlands LNG co. public   [Mar-14-17 12:05PM  at bizjournals.com]
▶ Leucadia Shows Investors the Beef as Revenue, Profit Soar   [Feb-27-17 01:03PM  at Motley Fool]
▶ FXCM Reports Monthly Metrics   [06:30AM  GlobeNewswire]
▶ FXCM US Reaches Settlement with CFTC on SNB Related Matter   [Feb-13-17 04:00PM  GlobeNewswire]
▶ FXCM Discusses Impact of U.S. Exit   [Feb-12-17 08:00PM  GlobeNewswire]
Stock chart of LUK Financial statements of LUK Annual reports of LUK
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.