Intrinsic value of Methanex - MEOH

Previous Close

$71.00

  Intrinsic Value

$2,011

stock screener

  Rating & Target

str. buy

+999%

Previous close

$71.00

 
Intrinsic value

$2,011

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of MEOH 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -10.24
  53.20
  48.38
  44.04
  40.14
  36.62
  33.46
  30.62
  28.05
  25.75
  23.67
  21.81
  20.13
  18.61
  17.25
  16.03
  14.92
  13.93
  13.04
  12.23
  11.51
  10.86
  10.27
  9.75
  9.27
  8.84
  8.46
  8.11
  7.80
  7.52
  7.27
Revenue, $m
  1,998
  4,689
  6,958
  10,023
  14,046
  19,190
  25,611
  33,452
  42,836
  53,866
  66,618
  81,145
  97,476
  115,620
  135,566
  157,293
  180,767
  205,950
  232,803
  261,286
  291,362
  323,004
  356,190
  390,906
  427,151
  464,931
  504,266
  545,183
  587,723
  631,934
  677,878
Variable operating expenses, $m
 
  2,711
  4,022
  5,793
  8,118
  11,092
  14,803
  19,335
  24,759
  31,135
  38,505
  46,902
  56,341
  66,828
  78,357
  90,915
  104,483
  119,039
  134,560
  151,023
  168,407
  186,697
  205,878
  225,944
  246,893
  268,730
  291,466
  315,116
  339,704
  365,258
  391,813
Fixed operating expenses, $m
 
  850
  869
  888
  908
  928
  948
  969
  990
  1,012
  1,034
  1,057
  1,080
  1,104
  1,128
  1,153
  1,179
  1,204
  1,231
  1,258
  1,286
  1,314
  1,343
  1,372
  1,403
  1,433
  1,465
  1,497
  1,530
  1,564
  1,598
Total operating expenses, $m
  1,970
  3,561
  4,891
  6,681
  9,026
  12,020
  15,751
  20,304
  25,749
  32,147
  39,539
  47,959
  57,421
  67,932
  79,485
  92,068
  105,662
  120,243
  135,791
  152,281
  169,693
  188,011
  207,221
  227,316
  248,296
  270,163
  292,931
  316,613
  341,234
  366,822
  393,411
Operating income, $m
  28
  1,129
  2,067
  3,341
  5,020
  7,170
  9,860
  13,148
  17,087
  21,719
  27,079
  33,186
  40,055
  47,687
  56,081
  65,224
  75,105
  85,707
  97,012
  109,004
  121,669
  134,994
  148,969
  163,590
  178,855
  194,767
  211,335
  228,570
  246,489
  265,112
  284,466
EBITDA, $m
  256
  1,597
  2,762
  4,343
  6,423
  9,087
  12,418
  16,490
  21,366
  27,101
  33,734
  41,293
  49,793
  59,238
  69,624
  80,938
  93,164
  106,281
  120,269
  135,107
  150,776
  167,262
  184,553
  202,642
  221,527
  241,214
  261,711
  283,034
  305,202
  328,243
  352,186
Interest expense (income), $m
  83
  94
  193
  332
  519
  764
  1,078
  1,470
  1,948
  2,520
  3,193
  3,971
  4,857
  5,853
  6,960
  8,176
  9,501
  10,933
  12,469
  14,107
  15,844
  17,679
  19,609
  21,633
  23,750
  25,961
  28,265
  30,665
  33,160
  35,755
  38,452
Earnings before tax, $m
  -38
  1,035
  1,874
  3,010
  4,501
  6,406
  8,782
  11,678
  15,139
  19,199
  23,886
  29,215
  35,198
  41,834
  49,121
  57,048
  65,604
  74,774
  84,543
  94,897
  105,825
  117,315
  129,360
  141,957
  155,105
  168,806
  183,070
  197,905
  213,328
  229,357
  246,014
Tax expense, $m
  -10
  279
  506
  813
  1,215
  1,730
  2,371
  3,153
  4,088
  5,184
  6,449
  7,888
  9,503
  11,295
  13,263
  15,403
  17,713
  20,189
  22,827
  25,622
  28,573
  31,675
  34,927
  38,328
  41,878
  45,578
  49,429
  53,434
  57,599
  61,926
  66,424
Net income, $m
  -13
  755
  1,368
  2,197
  3,286
  4,677
  6,411
  8,525
  11,051
  14,015
  17,437
  21,327
  25,694
  30,539
  35,858
  41,645
  47,891
  54,585
  61,716
  69,275
  77,252
  85,640
  94,433
  103,629
  113,226
  123,229
  133,641
  144,471
  155,730
  167,431
  179,591

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  224
  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
  4,557
  7,062
  10,479
  15,094
  21,153
  28,900
  38,571
  50,379
  64,513
  81,124
  100,329
  122,207
  146,801
  174,126
  204,166
  236,886
  272,239
  310,166
  350,607
  393,502
  438,799
  486,452
  536,430
  588,714
  643,299
  700,198
  759,436
  821,059
  885,124
  951,708
  1,020,900
Adjusted assets (=assets-cash), $m
  4,333
  7,062
  10,479
  15,094
  21,153
  28,900
  38,571
  50,379
  64,513
  81,124
  100,329
  122,207
  146,801
  174,126
  204,166
  236,886
  272,239
  310,166
  350,607
  393,502
  438,799
  486,452
  536,430
  588,714
  643,299
  700,198
  759,436
  821,059
  885,124
  951,708
  1,020,900
Revenue / Adjusted assets
  0.461
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
  0.664
Average production assets, $m
  3,139
  4,685
  6,951
  10,013
  14,032
  19,171
  25,585
  33,418
  42,794
  53,812
  66,552
  81,064
  97,379
  115,504
  135,430
  157,135
  180,586
  205,745
  232,570
  261,024
  291,071
  322,681
  355,834
  390,515
  426,724
  464,466
  503,761
  544,638
  587,135
  631,302
  677,200
Working capital, $m
  419
  -492
  -731
  -1,052
  -1,475
  -2,015
  -2,689
  -3,512
  -4,498
  -5,656
  -6,995
  -8,520
  -10,235
  -12,140
  -14,234
  -16,516
  -18,981
  -21,625
  -24,444
  -27,435
  -30,593
  -33,915
  -37,400
  -41,045
  -44,851
  -48,818
  -52,948
  -57,244
  -61,711
  -66,353
  -71,177
Total debt, $m
  1,556
  3,225
  5,531
  8,647
  12,736
  17,965
  24,493
  32,464
  42,004
  53,216
  66,180
  80,947
  97,549
  115,993
  136,270
  158,356
  182,219
  207,820
  235,118
  264,072
  294,647
  326,813
  360,548
  395,840
  432,685
  471,091
  511,077
  552,672
  595,917
  640,861
  687,565
Total liabilities, $m
  2,960
  4,767
  7,073
  10,189
  14,278
  19,508
  26,035
  34,006
  43,546
  54,758
  67,722
  82,489
  99,091
  117,535
  137,812
  159,898
  183,761
  209,362
  236,660
  265,614
  296,189
  328,355
  362,091
  397,382
  434,227
  472,633
  512,619
  554,215
  597,459
  642,403
  689,108
Total equity, $m
  1,597
  2,295
  3,406
  4,906
  6,875
  9,393
  12,535
  16,373
  20,967
  26,365
  32,607
  39,717
  47,710
  56,591
  66,354
  76,988
  88,478
  100,804
  113,947
  127,888
  142,610
  158,097
  174,340
  191,332
  209,072
  227,564
  246,817
  266,844
  287,665
  309,305
  331,793
Total liabilities and equity, $m
  4,557
  7,062
  10,479
  15,095
  21,153
  28,901
  38,570
  50,379
  64,513
  81,123
  100,329
  122,206
  146,801
  174,126
  204,166
  236,886
  272,239
  310,166
  350,607
  393,502
  438,799
  486,452
  536,431
  588,714
  643,299
  700,197
  759,436
  821,059
  885,124
  951,708
  1,020,901
Debt-to-equity ratio
  0.974
  1.410
  1.620
  1.760
  1.850
  1.910
  1.950
  1.980
  2.000
  2.020
  2.030
  2.040
  2.040
  2.050
  2.050
  2.060
  2.060
  2.060
  2.060
  2.060
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
  2.070
Adjusted equity ratio
  0.317
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325
  0.325

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  755
  1,368
  2,197
  3,286
  4,677
  6,411
  8,525
  11,051
  14,015
  17,437
  21,327
  25,694
  30,539
  35,858
  41,645
  47,891
  54,585
  61,716
  69,275
  77,252
  85,640
  94,433
  103,629
  113,226
  123,229
  133,641
  144,471
  155,730
  167,431
  179,591
Depreciation, amort., depletion, $m
  228
  468
  695
  1,001
  1,403
  1,917
  2,559
  3,342
  4,279
  5,381
  6,655
  8,106
  9,738
  11,550
  13,543
  15,714
  18,059
  20,574
  23,257
  26,102
  29,107
  32,268
  35,583
  39,052
  42,672
  46,447
  50,376
  54,464
  58,713
  63,130
  67,720
Funds from operations, $m
  204
  1,224
  2,063
  3,198
  4,689
  6,594
  8,969
  11,867
  15,331
  19,397
  24,092
  29,434
  35,432
  42,090
  49,401
  57,359
  65,949
  75,159
  84,973
  95,378
  106,359
  117,908
  130,016
  142,680
  155,899
  169,675
  184,017
  198,935
  214,443
  230,561
  247,311
Change in working capital, $m
  -46
  -171
  -238
  -322
  -422
  -540
  -674
  -823
  -985
  -1,158
  -1,339
  -1,525
  -1,715
  -1,905
  -2,094
  -2,281
  -2,465
  -2,644
  -2,820
  -2,991
  -3,158
  -3,322
  -3,484
  -3,645
  -3,806
  -3,967
  -4,130
  -4,296
  -4,467
  -4,642
  -4,824
Cash from operations, $m
  250
  1,395
  2,301
  3,520
  5,111
  7,134
  9,644
  12,690
  16,316
  20,555
  25,431
  30,959
  37,147
  43,995
  51,496
  59,640
  68,414
  77,803
  87,793
  98,368
  109,517
  121,231
  133,501
  146,325
  159,704
  173,642
  188,147
  203,231
  218,910
  235,203
  252,135
Maintenance CAPEX, $m
  0
  -306
  -468
  -695
  -1,001
  -1,403
  -1,917
  -2,559
  -3,342
  -4,279
  -5,381
  -6,655
  -8,106
  -9,738
  -11,550
  -13,543
  -15,714
  -18,059
  -20,574
  -23,257
  -26,102
  -29,107
  -32,268
  -35,583
  -39,052
  -42,672
  -46,447
  -50,376
  -54,464
  -58,713
  -63,130
New CAPEX, $m
  -100
  -1,627
  -2,266
  -3,061
  -4,019
  -5,139
  -6,415
  -7,833
  -9,375
  -11,019
  -12,739
  -14,512
  -16,315
  -18,125
  -19,926
  -21,705
  -23,451
  -25,158
  -26,826
  -28,454
  -30,047
  -31,610
  -33,152
  -34,682
  -36,208
  -37,743
  -39,295
  -40,876
  -42,497
  -44,167
  -45,897
Cash from investing activities, $m
  -88
  -1,933
  -2,734
  -3,756
  -5,020
  -6,542
  -8,332
  -10,392
  -12,717
  -15,298
  -18,120
  -21,167
  -24,421
  -27,863
  -31,476
  -35,248
  -39,165
  -43,217
  -47,400
  -51,711
  -56,149
  -60,717
  -65,420
  -70,265
  -75,260
  -80,415
  -85,742
  -91,252
  -96,961
  -102,880
  -109,027
Free cash flow, $m
  162
  -538
  -434
  -237
  91
  592
  1,312
  2,299
  3,599
  5,257
  7,310
  9,791
  12,726
  16,132
  20,019
  24,392
  29,250
  34,586
  40,393
  46,657
  53,368
  60,513
  68,081
  76,060
  84,445
  93,227
  102,405
  111,978
  121,949
  132,322
  143,107
Issuance/(repayment) of debt, $m
  12
  1,657
  2,306
  3,115
  4,090
  5,229
  6,528
  7,971
  9,540
  11,212
  12,963
  14,768
  16,602
  18,444
  20,277
  22,087
  23,863
  25,601
  27,298
  28,954
  30,575
  32,166
  33,735
  35,292
  36,845
  38,406
  39,986
  41,595
  43,244
  44,944
  46,705
Issuance/(repurchase) of shares, $m
  2
  39
  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  
  -94
  1,696
  2,306
  3,115
  4,090
  5,229
  6,528
  7,971
  9,540
  11,212
  12,963
  14,768
  16,602
  18,444
  20,277
  22,087
  23,863
  25,601
  27,298
  28,954
  30,575
  32,166
  33,735
  35,292
  36,845
  38,406
  39,986
  41,595
  43,244
  44,944
  46,705
Total cash flow (excl. dividends), $m
  68
  1,158
  1,873
  2,879
  4,181
  5,821
  7,839
  10,269
  13,139
  16,469
  20,273
  24,559
  29,328
  34,575
  40,296
  46,479
  53,113
  60,187
  67,690
  75,612
  83,943
  92,679
  101,816
  111,352
  121,290
  131,634
  142,391
  153,574
  165,193
  177,266
  189,811
Retained Cash Flow (-), $m
  123
  -794
  -1,110
  -1,500
  -1,969
  -2,518
  -3,143
  -3,838
  -4,593
  -5,399
  -6,242
  -7,110
  -7,993
  -8,880
  -9,763
  -10,634
  -11,490
  -12,326
  -13,143
  -13,941
  -14,721
  -15,487
  -16,243
  -16,992
  -17,740
  -18,492
  -19,253
  -20,027
  -20,821
  -21,640
  -22,487
Prev. year cash balance distribution, $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 flow adjustment, $m
 
  80
  122
  181
  261
  365
  499
  666
  870
  1,114
  1,401
  1,732
  2,110
  2,534
  3,006
  3,525
  4,090
  4,700
  5,355
  6,053
  6,793
  7,575
  8,398
  9,261
  10,164
  11,106
  12,088
  13,111
  14,175
  15,281
  16,430
Cash available for distribution, $m
 
  364
  762
  1,379
  2,212
  3,303
  4,696
  6,432
  8,546
  11,071
  14,032
  17,449
  21,334
  25,695
  30,533
  35,844
  41,623
  47,861
  54,547
  61,671
  69,222
  77,192
  85,573
  94,360
  103,549
  113,142
  123,139
  133,546
  144,372
  155,627
  167,324
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
 
  349
  698
  1,200
  1,821
  2,560
  3,408
  4,345
  5,341
  6,359
  7,356
  8,286
  9,104
  9,770
  10,250
  10,523
  10,577
  10,414
  10,045
  9,496
  8,796
  7,984
  7,100
  6,184
  5,274
  4,401
  3,593
  2,866
  2,234
  1,699
  1,260
Current shareholders' claim on cash, %
  100
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4
  99.4

Methanex Corp is a Canada-based producer and supplier of methanol to a range of international markets. The Company operates production sites in Canada, Chile, Egypt, New Zealand, the United States, as well as Trinidad and Tobago. Its global operations are supported by a global supply chain of terminals, storage facilities and a fleet of methanol ocean tankers. The Company's subsidiary, Waterfront Shipping Company Limited, operates its fleet, which is made up of over 20 vessels ranging from 3,000 to 50,000 deadweight tons of capacity. It has over three production facilities in New Zealand that supply methanol primarily to customers in Asia Pacific. The Company operates over two plants in Trinidad, Titan and Atlas, which supply methanol to markets in North America, Europe, Asia Pacific and South America. Its joint venture facility in Egypt supplies methanol to markets in Europe and Asia Pacific. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

FINANCIAL RATIOS  of  Methanex (MEOH)

Valuation Ratios
P/E Ratio -490.6
Price to Sales 3.2
Price to Book 4
Price to Tangible Book
Price to Cash Flow 25.5
Price to Free Cash Flow 42.5
Growth Rates
Sales Growth Rate -10.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -76.5%
Cap. Spend. - 3 Yr. Gr. Rate -29.6%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 94.1%
Total Debt to Equity 97.4%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 6.1%
Return On Total Capital -0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 6.6%
Return On Equity -0.8%
Return On Equity - 3 Yr. Avg. 12.4%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 25.3%
Gross Margin - 3 Yr. Avg. 28.4%
EBITDA Margin 13.7%
EBITDA Margin - 3 Yr. Avg. 20.8%
Operating Margin 1.4%
Oper. Margin - 3 Yr. Avg. 11.2%
Pre-Tax Margin -1.9%
Pre-Tax Margin - 3 Yr. Avg. 9.4%
Net Profit Margin -0.7%
Net Profit Margin - 3 Yr. Avg. 7.5%
Effective Tax Rate 26.3%
Eff/ Tax Rate - 3 Yr. Avg. 18.3%
Payout Ratio -761.5%

MEOH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MEOH stock intrinsic value calculation we used $3061 million for the last fiscal year's total revenue generated by Methanex. The default revenue input number comes from 2016 income statement of Methanex. 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 MEOH stock valuation model: a) initial revenue growth rate of 53.2% 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 4.3%, whose default value for MEOH is calculated based on our internal credit rating of Methanex, 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 Methanex.
    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 MEOH stock the variable cost ratio is equal to 57.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $832 million in the base year in the intrinsic value calculation for MEOH stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6% for Methanex.

Corporate tax rate of 27% is the nominal tax rate for Methanex. 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 MEOH stock is equal to 2.6%.

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 MEOH are equal to 99.9%.

Life of production assets of 10 years is the average useful life of capital assets used in Methanex 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 MEOH is equal to -10.5%. 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 - $1501 million for Methanex - 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 87 million for Methanex 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 Methanex at the current share price and the inputted number of shares is $6.2 billion.

RELATED COMPANIES Price Int.Val. Rating
TANH Tantech Holdin 1.43 1.01  str.sell
BP BP ADR 44.54 52.68  buy
OCIP OCI Partners 11.45 33.65  str.buy

COMPANY NEWS

▶ Methanex Corporation Notice of Cash Dividend   [Jul-19-18 06:02PM  GlobeNewswire]
▶ Chemical Production on the Upswing: 5 Growth Stocks to Buy   [Jul-06-18 11:10AM  InvestorPlace]
▶ 4 Stocks to Tap the Rebound in Canadian Economy   [May-21-18 09:26AM  Zacks]
▶ [$$] ValueAct's Spring Fund Takes an Interest in Unifi   [May-19-18 12:01AM  Barrons.com]
▶ May Materials Dividend Stock Picks   [May-06-18 02:02PM  Simply Wall St.]
▶ 4 Canadian Stocks to Buy in May as GDP Rebounds   [May-03-18 09:01AM  Zacks]
▶ [$$] Pinnacle Foods and Jana Partners Break Bread   [Apr-28-18 12:01AM  Barrons.com]
▶ Methanex Reports on Annual General Meeting of Shareholders   [Apr-27-18 01:30PM  GlobeNewswire]
▶ Methanex Corporation Notice of Cash Dividend   [Apr-25-18 07:52PM  GlobeNewswire]
▶ Methanex: 1Q Earnings Snapshot   [06:47PM  Associated Press]
▶ 5 Stocks In Clear Upward Trends   [Apr-20-18 12:44PM  Benzinga]
Financial statements of MEOH
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

ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2018. All rigths reserved.