Intrinsic value of Macy's - M

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$29.48

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$29.48

 
Intrinsic value

$43.23

 
Up/down potential

+47%

 
Rating

buy

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

We calculate the intrinsic value of M 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 9.0

 

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, %
  -4.80
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  25,778
  26,294
  26,898
  27,590
  28,366
  29,226
  30,169
  31,197
  32,309
  33,507
  34,793
  36,169
  37,637
  39,200
  40,861
  42,623
  44,491
  46,468
  48,559
  50,769
  53,101
  55,563
  58,158
  60,895
  63,777
  66,814
  70,010
  73,375
  76,916
  80,641
  84,559
Variable operating expenses, $m
 
  11,667
  11,926
  12,222
  12,555
  12,924
  13,329
  13,769
  14,246
  14,760
  15,312
  15,512
  16,142
  16,812
  17,524
  18,280
  19,081
  19,929
  20,826
  21,774
  22,774
  23,830
  24,943
  26,117
  27,353
  28,655
  30,026
  31,469
  32,988
  34,585
  36,266
Fixed operating expenses, $m
 
  13,690
  14,032
  14,383
  14,743
  15,111
  15,489
  15,876
  16,273
  16,680
  17,097
  17,524
  17,962
  18,411
  18,872
  19,343
  19,827
  20,323
  20,831
  21,352
  21,885
  22,432
  22,993
  23,568
  24,157
  24,761
  25,380
  26,015
  26,665
  27,332
  28,015
Total operating expenses, $m
  24,463
  25,357
  25,958
  26,605
  27,298
  28,035
  28,818
  29,645
  30,519
  31,440
  32,409
  33,036
  34,104
  35,223
  36,396
  37,623
  38,908
  40,252
  41,657
  43,126
  44,659
  46,262
  47,936
  49,685
  51,510
  53,416
  55,406
  57,484
  59,653
  61,917
  64,281
Operating income, $m
  1,315
  937
  940
  984
  1,068
  1,190
  1,352
  1,551
  1,789
  2,067
  2,384
  3,132
  3,533
  3,976
  4,465
  4,999
  5,583
  6,216
  6,902
  7,643
  8,442
  9,300
  10,222
  11,210
  12,267
  13,397
  14,604
  15,891
  17,263
  18,724
  20,278
EBITDA, $m
  2,373
  2,045
  2,064
  2,127
  2,232
  2,378
  2,565
  2,792
  3,061
  3,371
  3,724
  4,120
  4,560
  5,046
  5,580
  6,163
  6,797
  7,485
  8,228
  9,029
  9,891
  10,817
  11,810
  12,872
  14,008
  15,221
  16,515
  17,894
  19,362
  20,925
  22,586
Interest expense (income), $m
  396
  361
  378
  397
  420
  445
  473
  503
  537
  573
  612
  654
  698
  746
  797
  851
  908
  968
  1,033
  1,101
  1,172
  1,248
  1,328
  1,412
  1,501
  1,595
  1,693
  1,797
  1,906
  2,021
  2,142
Earnings before tax, $m
  952
  576
  563
  587
  648
  746
  879
  1,048
  1,253
  1,494
  1,773
  2,479
  2,834
  3,230
  3,668
  4,149
  4,675
  5,248
  5,870
  6,543
  7,269
  8,052
  8,894
  9,798
  10,766
  11,802
  12,911
  14,094
  15,357
  16,702
  18,136
Tax expense, $m
  341
  156
  152
  158
  175
  201
  237
  283
  338
  403
  479
  669
  765
  872
  990
  1,120
  1,262
  1,417
  1,585
  1,767
  1,963
  2,174
  2,401
  2,645
  2,907
  3,187
  3,486
  3,805
  4,146
  4,510
  4,897
Net income, $m
  619
  421
  411
  429
  473
  544
  642
  765
  914
  1,091
  1,294
  1,810
  2,069
  2,358
  2,678
  3,029
  3,413
  3,831
  4,285
  4,776
  5,307
  5,878
  6,493
  7,152
  7,859
  8,616
  9,425
  10,289
  11,210
  12,193
  13,239

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,297
  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
  19,851
  18,930
  19,365
  19,863
  20,422
  21,041
  21,720
  22,460
  23,261
  24,123
  25,049
  26,039
  27,096
  28,221
  29,417
  30,686
  32,031
  33,455
  34,960
  36,550
  38,230
  40,002
  41,871
  43,841
  45,916
  48,102
  50,403
  52,826
  55,375
  58,057
  60,878
Adjusted assets (=assets-cash), $m
  18,554
  18,930
  19,365
  19,863
  20,422
  21,041
  21,720
  22,460
  23,261
  24,123
  25,049
  26,039
  27,096
  28,221
  29,417
  30,686
  32,031
  33,455
  34,960
  36,550
  38,230
  40,002
  41,871
  43,841
  45,916
  48,102
  50,403
  52,826
  55,375
  58,057
  60,878
Revenue / Adjusted assets
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
  1.389
Average production assets, $m
  7,823
  7,967
  8,150
  8,360
  8,595
  8,855
  9,141
  9,453
  9,790
  10,153
  10,542
  10,959
  11,404
  11,877
  12,381
  12,915
  13,481
  14,080
  14,713
  15,383
  16,090
  16,835
  17,622
  18,451
  19,325
  20,245
  21,213
  22,233
  23,306
  24,434
  25,621
Working capital, $m
  1,979
  999
  1,022
  1,048
  1,078
  1,111
  1,146
  1,185
  1,228
  1,273
  1,322
  1,374
  1,430
  1,490
  1,553
  1,620
  1,691
  1,766
  1,845
  1,929
  2,018
  2,111
  2,210
  2,314
  2,424
  2,539
  2,660
  2,788
  2,923
  3,064
  3,213
Total debt, $m
  6,871
  6,865
  7,222
  7,631
  8,089
  8,596
  9,153
  9,760
  10,417
  11,124
  11,883
  12,695
  13,562
  14,485
  15,465
  16,506
  17,608
  18,776
  20,010
  21,314
  22,691
  24,145
  25,677
  27,292
  28,994
  30,787
  32,674
  34,660
  36,751
  38,950
  41,263
Total liabilities, $m
  15,528
  15,522
  15,879
  16,288
  16,746
  17,253
  17,810
  18,417
  19,074
  19,781
  20,540
  21,352
  22,219
  23,142
  24,122
  25,163
  26,265
  27,433
  28,667
  29,971
  31,348
  32,802
  34,334
  35,949
  37,651
  39,444
  41,331
  43,317
  45,408
  47,607
  49,920
Total equity, $m
  4,323
  3,407
  3,486
  3,575
  3,676
  3,787
  3,910
  4,043
  4,187
  4,342
  4,509
  4,687
  4,877
  5,080
  5,295
  5,524
  5,766
  6,022
  6,293
  6,579
  6,881
  7,200
  7,537
  7,891
  8,265
  8,658
  9,073
  9,509
  9,968
  10,450
  10,958
Total liabilities and equity, $m
  19,851
  18,929
  19,365
  19,863
  20,422
  21,040
  21,720
  22,460
  23,261
  24,123
  25,049
  26,039
  27,096
  28,222
  29,417
  30,687
  32,031
  33,455
  34,960
  36,550
  38,229
  40,002
  41,871
  43,840
  45,916
  48,102
  50,404
  52,826
  55,376
  58,057
  60,878
Debt-to-equity ratio
  1.589
  2.010
  2.070
  2.130
  2.200
  2.270
  2.340
  2.410
  2.490
  2.560
  2.640
  2.710
  2.780
  2.850
  2.920
  2.990
  3.050
  3.120
  3.180
  3.240
  3.300
  3.350
  3.410
  3.460
  3.510
  3.560
  3.600
  3.650
  3.690
  3.730
  3.770
Adjusted equity ratio
  0.163
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180
  0.180

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  619
  421
  411
  429
  473
  544
  642
  765
  914
  1,091
  1,294
  1,810
  2,069
  2,358
  2,678
  3,029
  3,413
  3,831
  4,285
  4,776
  5,307
  5,878
  6,493
  7,152
  7,859
  8,616
  9,425
  10,289
  11,210
  12,193
  13,239
Depreciation, amort., depletion, $m
  1,058
  1,107
  1,124
  1,143
  1,164
  1,187
  1,213
  1,241
  1,272
  1,304
  1,339
  987
  1,027
  1,070
  1,115
  1,163
  1,214
  1,268
  1,326
  1,386
  1,450
  1,517
  1,588
  1,662
  1,741
  1,824
  1,911
  2,003
  2,100
  2,201
  2,308
Funds from operations, $m
  1,657
  1,528
  1,535
  1,571
  1,637
  1,732
  1,855
  2,006
  2,186
  2,395
  2,633
  2,797
  3,096
  3,428
  3,793
  4,192
  4,627
  5,099
  5,610
  6,162
  6,756
  7,395
  8,080
  8,814
  9,600
  10,440
  11,336
  12,292
  13,310
  14,394
  15,547
Change in working capital, $m
  -144
  20
  23
  26
  29
  33
  36
  39
  42
  46
  49
  52
  56
  59
  63
  67
  71
  75
  79
  84
  89
  94
  99
  104
  110
  115
  121
  128
  135
  142
  149
Cash from operations, $m
  1,801
  1,201
  1,512
  1,545
  1,608
  1,699
  1,819
  1,967
  2,144
  2,349
  2,585
  2,745
  3,041
  3,369
  3,730
  4,125
  4,556
  5,024
  5,531
  6,078
  6,668
  7,301
  7,982
  8,710
  9,491
  10,324
  11,214
  12,164
  13,175
  14,252
  15,398
Maintenance CAPEX, $m
  0
  -705
  -718
  -734
  -753
  -774
  -798
  -824
  -852
  -882
  -915
  -950
  -987
  -1,027
  -1,070
  -1,115
  -1,163
  -1,214
  -1,268
  -1,326
  -1,386
  -1,450
  -1,517
  -1,588
  -1,662
  -1,741
  -1,824
  -1,911
  -2,003
  -2,100
  -2,201
New CAPEX, $m
  -912
  -144
  -183
  -209
  -235
  -261
  -286
  -311
  -337
  -363
  -390
  -417
  -445
  -474
  -503
  -534
  -566
  -599
  -634
  -669
  -707
  -746
  -787
  -829
  -873
  -920
  -969
  -1,020
  -1,073
  -1,129
  -1,187
Cash from investing activities, $m
  -187
  -849
  -901
  -943
  -988
  -1,035
  -1,084
  -1,135
  -1,189
  -1,245
  -1,305
  -1,367
  -1,432
  -1,501
  -1,573
  -1,649
  -1,729
  -1,813
  -1,902
  -1,995
  -2,093
  -2,196
  -2,304
  -2,417
  -2,535
  -2,661
  -2,793
  -2,931
  -3,076
  -3,229
  -3,388
Free cash flow, $m
  1,614
  352
  611
  601
  619
  664
  735
  832
  955
  1,104
  1,280
  1,378
  1,609
  1,868
  2,156
  2,476
  2,827
  3,211
  3,629
  4,083
  4,575
  5,106
  5,678
  6,294
  6,955
  7,663
  8,422
  9,233
  10,100
  11,024
  12,010
Issuance/(repayment) of debt, $m
  -688
  303
  357
  408
  458
  508
  557
  607
  657
  707
  759
  812
  867
  923
  981
  1,041
  1,103
  1,167
  1,234
  1,304
  1,377
  1,453
  1,532
  1,615
  1,702
  1,792
  1,887
  1,986
  2,090
  2,199
  2,313
Issuance/(repurchase) of shares, $m
  -280
  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  
  -967
  303
  357
  408
  458
  508
  557
  607
  657
  707
  759
  812
  867
  923
  981
  1,041
  1,103
  1,167
  1,234
  1,304
  1,377
  1,453
  1,532
  1,615
  1,702
  1,792
  1,887
  1,986
  2,090
  2,199
  2,313
Total cash flow (excl. dividends), $m
  647
  655
  968
  1,009
  1,078
  1,172
  1,292
  1,439
  1,612
  1,812
  2,039
  2,190
  2,475
  2,790
  3,137
  3,516
  3,929
  4,378
  4,863
  5,387
  5,952
  6,559
  7,211
  7,909
  8,657
  9,456
  10,309
  11,219
  12,190
  13,223
  14,323
Retained Cash Flow (-), $m
  -73
  -72
  -78
  -90
  -101
  -111
  -122
  -133
  -144
  -155
  -167
  -178
  -190
  -203
  -215
  -228
  -242
  -256
  -271
  -286
  -302
  -319
  -336
  -355
  -374
  -393
  -414
  -436
  -459
  -483
  -508
Prev. year cash balance distribution, $m
 
  988
  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
 
  1,571
  889
  920
  977
  1,060
  1,170
  1,306
  1,468
  1,657
  1,873
  2,012
  2,285
  2,588
  2,922
  3,288
  3,687
  4,122
  4,592
  5,101
  5,650
  6,240
  6,874
  7,555
  8,283
  9,062
  9,895
  10,783
  11,731
  12,741
  13,815
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  1,471
  775
  741
  722
  713
  710
  709
  707
  700
  687
  633
  610
  579
  540
  494
  445
  392
  339
  286
  237
  192
  151
  116
  87
  64
  45
  31
  21
  13
  8
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

Macy’s, Inc., together with its subsidiaries, operates stores, Websites, and mobile applications. Its stores and Websites sell a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. The company also operates stores that offer a range of women's, men's, and children's apparel; shoes; fashion accessories; housewares; home textiles; intimate apparel; and jewelry. As of January 4, 2017, it operated approximately 880 stores in the United States, the District of Columbia, Guam, and Puerto Rico under the Macy’s, Bloomingdale’s, Bloomingdale’s Outlet, Macy’s Backstage, and Bluemercury brands, as well as Websites, including macys.com, bloomingdales.com, and bluemercury.com. In addition, it operates as a beauty products and spa retailer. The company was formerly known as Federated Department Stores, Inc. and changed its name to Macy’s, Inc. in June 2007. Macy’s, Inc. was founded in 1830 and is based in Cincinnati, Ohio.

FINANCIAL RATIOS  of  Macy's (M)

Valuation Ratios
P/E Ratio 14.5
Price to Sales 0.3
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 5
Price to Free Cash Flow 10.1
Growth Rates
Sales Growth Rate -4.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.1%
Cap. Spend. - 3 Yr. Gr. Rate 1.1%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 151.8%
Total Debt to Equity 158.9%
Interest Coverage 3
Management Effectiveness
Return On Assets 4.3%
Ret/ On Assets - 3 Yr. Avg. 6.3%
Return On Total Capital 5.4%
Ret/ On T. Cap. - 3 Yr. Avg. 8.6%
Return On Equity 14.4%
Return On Equity - 3 Yr. Avg. 21%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 39.4%
Gross Margin - 3 Yr. Avg. 39.5%
EBITDA Margin 9.3%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 5.1%
Oper. Margin - 3 Yr. Avg. 7.5%
Pre-Tax Margin 3.7%
Pre-Tax Margin - 3 Yr. Avg. 6.1%
Net Profit Margin 2.4%
Net Profit Margin - 3 Yr. Avg. 3.9%
Effective Tax Rate 35.8%
Eff/ Tax Rate - 3 Yr. Avg. 36.1%
Payout Ratio 74.2%

M stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the M stock intrinsic value calculation we used $25778 million for the last fiscal year's total revenue generated by Macy's. The default revenue input number comes from 2017 income statement of Macy's. 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 M stock valuation model: a) initial revenue growth rate of 2% 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 6.8%, whose default value for M is calculated based on our internal credit rating of Macy's, 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 Macy's.
    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 M stock the variable cost ratio is equal to 44.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $13356 million in the base year in the intrinsic value calculation for M stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.5% for Macy's.

Corporate tax rate of 27% is the nominal tax rate for Macy's. 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 M 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 M are equal to 30.3%.

Life of production assets of 11.1 years is the average useful life of capital assets used in Macy's 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 M is equal to 3.8%. 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 - $4323 million for Macy's - 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 306.005 million for Macy's 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 Macy's at the current share price and the inputted number of shares is $9.0 billion.


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Stock chart of M Financial statements of M
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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