Intrinsic value of Las Vegas Sands - LVS

Previous Close

$70.50

  Intrinsic Value

$48.76

stock screener

  Rating & Target

sell

-31%

Previous close

$70.50

 
Intrinsic value

$48.76

 
Up/down potential

-31%

 
Rating

sell

We calculate the intrinsic value of LVS 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 55.8

 

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, %
  -2.38
  18.50
  17.15
  15.94
  14.84
  13.86
  12.97
  12.17
  11.46
  10.81
  10.23
  9.71
  9.24
  8.81
  8.43
  8.09
  7.78
  7.50
  7.25
  7.03
  6.82
  6.64
  6.48
  6.33
  6.20
  6.08
  5.97
  5.87
  5.79
  5.71
  5.64
Revenue, $m
  11,410
  13,521
  15,840
  18,364
  21,089
  24,012
  27,126
  30,429
  33,915
  37,582
  41,426
  45,448
  49,645
  54,020
  58,575
  63,313
  68,238
  73,357
  78,677
  84,205
  89,951
  95,925
  102,138
  108,603
  115,332
  122,341
  129,643
  137,256
  145,197
  153,482
  162,133
Variable operating expenses, $m
 
  10,235
  11,991
  13,901
  15,965
  18,177
  20,535
  23,035
  25,674
  28,449
  31,360
  34,404
  37,582
  40,894
  44,341
  47,928
  51,657
  55,532
  59,558
  63,743
  68,093
  72,615
  77,318
  82,212
  87,306
  92,612
  98,140
  103,903
  109,914
  116,186
  122,734
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
  8,922
  10,235
  11,991
  13,901
  15,965
  18,177
  20,535
  23,035
  25,674
  28,449
  31,360
  34,404
  37,582
  40,894
  44,341
  47,928
  51,657
  55,532
  59,558
  63,743
  68,093
  72,615
  77,318
  82,212
  87,306
  92,612
  98,140
  103,903
  109,914
  116,186
  122,734
Operating income, $m
  2,488
  3,286
  3,849
  4,462
  5,125
  5,835
  6,592
  7,394
  8,241
  9,132
  10,067
  11,044
  12,064
  13,127
  14,234
  15,385
  16,582
  17,826
  19,118
  20,462
  21,858
  23,310
  24,820
  26,390
  28,026
  29,729
  31,503
  33,353
  35,283
  37,296
  39,398
EBITDA, $m
  3,637
  4,651
  5,449
  6,317
  7,255
  8,260
  9,332
  10,468
  11,667
  12,929
  14,251
  15,635
  17,079
  18,584
  20,151
  21,781
  23,475
  25,236
  27,066
  28,968
  30,944
  32,999
  35,137
  37,361
  39,676
  42,087
  44,599
  47,218
  49,950
  52,800
  55,776
Interest expense (income), $m
  214
  330
  421
  522
  631
  749
  876
  1,011
  1,154
  1,305
  1,464
  1,631
  1,805
  1,987
  2,176
  2,374
  2,579
  2,792
  3,014
  3,245
  3,484
  3,733
  3,992
  4,261
  4,541
  4,833
  5,136
  5,453
  5,783
  6,127
  6,486
Earnings before tax, $m
  2,255
  2,956
  3,428
  3,940
  4,493
  5,085
  5,716
  6,383
  7,087
  7,827
  8,603
  9,413
  10,259
  11,140
  12,058
  13,012
  14,003
  15,034
  16,104
  17,217
  18,374
  19,577
  20,828
  22,129
  23,485
  24,896
  26,367
  27,901
  29,500
  31,170
  32,913
Tax expense, $m
  239
  798
  925
  1,064
  1,213
  1,373
  1,543
  1,723
  1,914
  2,113
  2,323
  2,542
  2,770
  3,008
  3,256
  3,513
  3,781
  4,059
  4,348
  4,649
  4,961
  5,286
  5,623
  5,975
  6,341
  6,722
  7,119
  7,533
  7,965
  8,416
  8,886
Net income, $m
  1,670
  2,158
  2,502
  2,877
  3,280
  3,712
  4,172
  4,660
  5,174
  5,714
  6,280
  6,872
  7,489
  8,132
  8,802
  9,498
  10,222
  10,975
  11,756
  12,569
  13,413
  14,291
  15,204
  16,154
  17,144
  18,174
  19,248
  20,367
  21,535
  22,754
  24,026

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,128
  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
  20,469
  21,738
  25,466
  29,524
  33,905
  38,604
  43,611
  48,921
  54,526
  60,421
  66,602
  73,067
  79,816
  86,850
  94,172
  101,789
  109,708
  117,938
  126,490
  135,378
  144,615
  154,220
  164,209
  174,602
  185,422
  196,689
  208,430
  220,670
  233,435
  246,756
  260,663
Adjusted assets (=assets-cash), $m
  18,341
  21,738
  25,466
  29,524
  33,905
  38,604
  43,611
  48,921
  54,526
  60,421
  66,602
  73,067
  79,816
  86,850
  94,172
  101,789
  109,708
  117,938
  126,490
  135,378
  144,615
  154,220
  164,209
  174,602
  185,422
  196,689
  208,430
  220,670
  233,435
  246,756
  260,663
Revenue / Adjusted assets
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
Average production assets, $m
  15,905
  18,848
  22,081
  25,599
  29,398
  33,472
  37,814
  42,418
  47,277
  52,389
  57,748
  63,354
  69,206
  75,305
  81,654
  88,258
  95,124
  102,260
  109,676
  117,382
  125,391
  133,719
  142,380
  151,392
  160,773
  170,543
  180,723
  191,336
  202,404
  213,955
  226,013
Working capital, $m
  292
  -1,974
  -2,313
  -2,681
  -3,079
  -3,506
  -3,960
  -4,443
  -4,952
  -5,487
  -6,048
  -6,635
  -7,248
  -7,887
  -8,552
  -9,244
  -9,963
  -10,710
  -11,487
  -12,294
  -13,133
  -14,005
  -14,912
  -15,856
  -16,839
  -17,862
  -18,928
  -20,039
  -21,199
  -22,408
  -23,671
Total debt, $m
  9,595
  12,041
  14,912
  18,036
  21,410
  25,028
  28,884
  32,972
  37,288
  41,827
  46,586
  51,565
  56,761
  62,177
  67,816
  73,681
  79,778
  86,115
  92,700
  99,544
  106,657
  114,052
  121,744
  129,747
  138,078
  146,754
  155,794
  165,219
  175,048
  185,305
  196,014
Total liabilities, $m
  14,292
  16,738
  19,609
  22,733
  26,107
  29,725
  33,581
  37,669
  41,985
  46,524
  51,283
  56,262
  61,458
  66,874
  72,513
  78,378
  84,475
  90,812
  97,397
  104,241
  111,354
  118,749
  126,441
  134,444
  142,775
  151,451
  160,491
  169,916
  179,745
  190,002
  200,711
Total equity, $m
  6,177
  5,000
  5,857
  6,790
  7,798
  8,879
  10,031
  11,252
  12,541
  13,897
  15,318
  16,805
  18,358
  19,975
  21,660
  23,412
  25,233
  27,126
  29,093
  31,137
  33,262
  35,471
  37,768
  40,159
  42,647
  45,239
  47,939
  50,754
  53,690
  56,754
  59,953
Total liabilities and equity, $m
  20,469
  21,738
  25,466
  29,523
  33,905
  38,604
  43,612
  48,921
  54,526
  60,421
  66,601
  73,067
  79,816
  86,849
  94,173
  101,790
  109,708
  117,938
  126,490
  135,378
  144,616
  154,220
  164,209
  174,603
  185,422
  196,690
  208,430
  220,670
  233,435
  246,756
  260,664
Debt-to-equity ratio
  1.553
  2.410
  2.550
  2.660
  2.750
  2.820
  2.880
  2.930
  2.970
  3.010
  3.040
  3.070
  3.090
  3.110
  3.130
  3.150
  3.160
  3.170
  3.190
  3.200
  3.210
  3.220
  3.220
  3.230
  3.240
  3.240
  3.250
  3.260
  3.260
  3.270
  3.270
Adjusted equity ratio
  0.221
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230
  0.230

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,670
  2,158
  2,502
  2,877
  3,280
  3,712
  4,172
  4,660
  5,174
  5,714
  6,280
  6,872
  7,489
  8,132
  8,802
  9,498
  10,222
  10,975
  11,756
  12,569
  13,413
  14,291
  15,204
  16,154
  17,144
  18,174
  19,248
  20,367
  21,535
  22,754
  24,026
Depreciation, amort., depletion, $m
  1,149
  1,366
  1,600
  1,855
  2,130
  2,426
  2,740
  3,074
  3,426
  3,796
  4,185
  4,591
  5,015
  5,457
  5,917
  6,396
  6,893
  7,410
  7,948
  8,506
  9,086
  9,690
  10,317
  10,970
  11,650
  12,358
  13,096
  13,865
  14,667
  15,504
  16,378
Funds from operations, $m
  4,591
  3,523
  4,102
  4,732
  5,410
  6,138
  6,913
  7,734
  8,600
  9,510
  10,465
  11,463
  12,504
  13,589
  14,719
  15,894
  17,115
  18,385
  19,704
  21,075
  22,499
  23,981
  25,522
  27,125
  28,794
  30,532
  32,344
  34,232
  36,202
  38,258
  40,404
Change in working capital, $m
  548
  -308
  -339
  -369
  -398
  -427
  -455
  -482
  -509
  -535
  -561
  -587
  -613
  -639
  -665
  -692
  -719
  -747
  -777
  -807
  -839
  -872
  -907
  -944
  -983
  -1,023
  -1,066
  -1,111
  -1,159
  -1,210
  -1,263
Cash from operations, $m
  4,043
  3,832
  4,441
  5,100
  5,808
  6,565
  7,367
  8,216
  9,109
  10,046
  11,026
  12,050
  13,117
  14,228
  15,384
  16,586
  17,834
  19,132
  20,480
  21,882
  23,338
  24,853
  26,429
  28,069
  29,776
  31,556
  33,410
  35,344
  37,361
  39,467
  41,667
Maintenance CAPEX, $m
  0
  -1,153
  -1,366
  -1,600
  -1,855
  -2,130
  -2,426
  -2,740
  -3,074
  -3,426
  -3,796
  -4,185
  -4,591
  -5,015
  -5,457
  -5,917
  -6,396
  -6,893
  -7,410
  -7,948
  -8,506
  -9,086
  -9,690
  -10,317
  -10,970
  -11,650
  -12,358
  -13,096
  -13,865
  -14,667
  -15,504
New CAPEX, $m
  -1,445
  -2,944
  -3,232
  -3,519
  -3,799
  -4,074
  -4,342
  -4,604
  -4,860
  -5,111
  -5,359
  -5,606
  -5,852
  -6,099
  -6,349
  -6,604
  -6,866
  -7,136
  -7,415
  -7,706
  -8,010
  -8,328
  -8,661
  -9,012
  -9,381
  -9,770
  -10,180
  -10,612
  -11,069
  -11,550
  -12,058
Cash from investing activities, $m
  -1,442
  -4,097
  -4,598
  -5,119
  -5,654
  -6,204
  -6,768
  -7,344
  -7,934
  -8,537
  -9,155
  -9,791
  -10,443
  -11,114
  -11,806
  -12,521
  -13,262
  -14,029
  -14,825
  -15,654
  -16,516
  -17,414
  -18,351
  -19,329
  -20,351
  -21,420
  -22,538
  -23,708
  -24,934
  -26,217
  -27,562
Free cash flow, $m
  2,601
  -265
  -158
  -19
  154
  360
  600
  872
  1,175
  1,508
  1,870
  2,259
  2,674
  3,114
  3,578
  4,064
  4,573
  5,103
  5,655
  6,228
  6,823
  7,439
  8,078
  8,739
  9,425
  10,135
  10,872
  11,635
  12,428
  13,250
  14,105
Issuance/(repayment) of debt, $m
  309
  2,613
  2,871
  3,125
  3,374
  3,618
  3,856
  4,088
  4,316
  4,539
  4,759
  4,978
  5,197
  5,416
  5,639
  5,865
  6,097
  6,337
  6,585
  6,843
  7,113
  7,395
  7,692
  8,003
  8,331
  8,676
  9,040
  9,424
  9,830
  10,257
  10,708
Issuance/(repurchase) of shares, $m
  17
  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  
  279
  2,613
  2,871
  3,125
  3,374
  3,618
  3,856
  4,088
  4,316
  4,539
  4,759
  4,978
  5,197
  5,416
  5,639
  5,865
  6,097
  6,337
  6,585
  6,843
  7,113
  7,395
  7,692
  8,003
  8,331
  8,676
  9,040
  9,424
  9,830
  10,257
  10,708
Total cash flow (excl. dividends), $m
  2,858
  2,349
  2,713
  3,106
  3,528
  3,978
  4,456
  4,960
  5,491
  6,047
  6,630
  7,237
  7,871
  8,530
  9,216
  9,929
  10,670
  11,440
  12,240
  13,071
  13,936
  14,834
  15,769
  16,742
  17,756
  18,812
  19,912
  21,060
  22,257
  23,507
  24,813
Retained Cash Flow (-), $m
  640
  -784
  -857
  -933
  -1,008
  -1,081
  -1,152
  -1,221
  -1,289
  -1,356
  -1,422
  -1,487
  -1,552
  -1,618
  -1,684
  -1,752
  -1,821
  -1,893
  -1,967
  -2,044
  -2,125
  -2,209
  -2,297
  -2,391
  -2,488
  -2,592
  -2,700
  -2,815
  -2,936
  -3,064
  -3,199
Prev. year cash balance distribution, $m
 
  1,961
  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
 
  3,526
  1,856
  2,173
  2,520
  2,898
  3,304
  3,739
  4,202
  4,692
  5,208
  5,750
  6,319
  6,913
  7,532
  8,177
  8,849
  9,547
  10,273
  11,027
  11,811
  12,625
  13,472
  14,352
  15,267
  16,220
  17,212
  18,245
  19,321
  20,444
  21,614
Discount rate, %
 
  5.90
  6.20
  6.50
  6.83
  7.17
  7.53
  7.91
  8.30
  8.72
  9.15
  9.61
  10.09
  10.60
  11.13
  11.68
  12.27
  12.88
  13.52
  14.20
  14.91
  15.65
  16.44
  17.26
  18.12
  19.03
  19.98
  20.98
  22.03
  23.13
  24.29
PV of cash for distribution, $m
 
  3,329
  1,645
  1,799
  1,935
  2,049
  2,137
  2,195
  2,220
  2,211
  2,169
  2,096
  1,993
  1,867
  1,720
  1,559
  1,390
  1,217
  1,048
  885
  733
  595
  474
  369
  280
  208
  151
  107
  73
  49
  32
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

Las Vegas Sands Corp. is a developer of destination properties (integrated resorts) that feature accommodations, gaming, entertainment and retail, convention and exhibition facilities, celebrity chef restaurants and other amenities. The Company owns and operates integrated resorts in Asia and the United States. The Company's principal operating and developmental activities occur in three geographic areas: Macao, Singapore and the United States. In Macao, the Company's segments include The Venetian Macao; Sands Cotai Central; The Parisian Macao; Four Seasons Macao; Sands Macao, and Other Asia (comprises the Company's ferry operations and various other operations). In Singapore, the Company's segments include Marina Bay Sands. In the United States, the Company's segments include Las Vegas Operating Properties and Sands Bethlehem. The Company also offers players club loyalty programs at its properties, which provides access to rewards, privileges and members-only events.

FINANCIAL RATIOS  of  Las Vegas Sands (LVS)

Valuation Ratios
P/E Ratio 33.6
Price to Sales 4.9
Price to Book 9.1
Price to Tangible Book
Price to Cash Flow 13.9
Price to Free Cash Flow 21.6
Growth Rates
Sales Growth Rate -2.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.5%
Cap. Spend. - 3 Yr. Gr. Rate 8.9%
Financial Strength
Quick Ratio 13
Current Ratio 0
LT Debt to Equity 152.6%
Total Debt to Equity 155.3%
Interest Coverage 12
Management Effectiveness
Return On Assets 9%
Ret/ On Assets - 3 Yr. Avg. 10.8%
Return On Total Capital 10.5%
Ret/ On T. Cap. - 3 Yr. Avg. 12.9%
Return On Equity 25.7%
Return On Equity - 3 Yr. Avg. 30.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 48.8%
Gross Margin - 3 Yr. Avg. 47.8%
EBITDA Margin 31.7%
EBITDA Margin - 3 Yr. Avg. 33.3%
Operating Margin 21.8%
Oper. Margin - 3 Yr. Avg. 24.7%
Pre-Tax Margin 19.8%
Pre-Tax Margin - 3 Yr. Avg. 22.8%
Net Profit Margin 14.6%
Net Profit Margin - 3 Yr. Avg. 17%
Effective Tax Rate 10.6%
Eff/ Tax Rate - 3 Yr. Avg. 8.7%
Payout Ratio 174.2%

LVS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LVS stock intrinsic value calculation we used $11410 million for the last fiscal year's total revenue generated by Las Vegas Sands. The default revenue input number comes from 2016 income statement of Las Vegas Sands. 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 LVS stock valuation model: a) initial revenue growth rate of 18.5% 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 5.9%, whose default value for LVS is calculated based on our internal credit rating of Las Vegas Sands, 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 Las Vegas Sands.
    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 LVS stock the variable cost ratio is equal to 75.7%.

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 LVS 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 Las Vegas Sands.

Corporate tax rate of 27% is the nominal tax rate for Las Vegas Sands. 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 LVS 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 LVS are equal to 139.4%.

Life of production assets of 13.8 years is the average useful life of capital assets used in Las Vegas Sands 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 LVS is equal to -14.6%. 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 - $6177 million for Las Vegas Sands - 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 791.354 million for Las Vegas Sands 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 Las Vegas Sands at the current share price and the inputted number of shares is $55.8 billion.

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Financial statements of LVS
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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