Intrinsic value of Methanex - MEOH

Previous Close

$50.00

  Intrinsic Value

$519.74

stock screener

  Rating & Target

str. buy

+939%

  Value-price divergence*

+2929%

Previous close

$50.00

 
Intrinsic value

$519.74

 
Up/down potential

+939%

 
Rating

str. buy

 
Value-price divergence*

+2929%

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

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

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 4.4

 

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
  42.90
  39.11
  35.70
  32.63
  29.87
  27.38
  25.14
  23.13
  21.31
  19.68
  18.21
  16.89
  15.70
  14.63
  13.67
  12.80
  12.02
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.79
Revenue, $m
  1,998
  2,855
  3,972
  5,390
  7,148
  9,283
  11,825
  14,798
  18,220
  22,104
  26,455
  31,273
  36,556
  42,297
  48,487
  55,115
  62,172
  69,647
  77,531
  85,818
  94,503
  103,582
  113,057
  122,929
  133,205
  143,892
  155,002
  166,547
  178,545
  191,014
  203,975
Variable operating expenses, $m
 
  511
  711
  965
  1,280
  1,662
  2,117
  2,649
  3,261
  3,957
  4,735
  5,598
  6,544
  7,571
  8,679
  9,866
  11,129
  12,467
  13,878
  15,361
  16,916
  18,541
  20,237
  22,004
  23,844
  25,757
  27,745
  29,812
  31,960
  34,192
  36,511
Fixed operating expenses, $m
 
  1,671
  1,713
  1,755
  1,799
  1,844
  1,890
  1,938
  1,986
  2,036
  2,087
  2,139
  2,192
  2,247
  2,303
  2,361
  2,420
  2,480
  2,542
  2,606
  2,671
  2,738
  2,806
  2,876
  2,948
  3,022
  3,097
  3,175
  3,254
  3,336
  3,419
Total operating expenses, $m
  1,970
  2,182
  2,424
  2,720
  3,079
  3,506
  4,007
  4,587
  5,247
  5,993
  6,822
  7,737
  8,736
  9,818
  10,982
  12,227
  13,549
  14,947
  16,420
  17,967
  19,587
  21,279
  23,043
  24,880
  26,792
  28,779
  30,842
  32,987
  35,214
  37,528
  39,930
Operating income, $m
  28
  673
  1,548
  2,670
  4,070
  5,777
  7,818
  10,211
  12,973
  16,112
  19,633
  23,537
  27,821
  32,479
  37,505
  42,889
  48,623
  54,700
  61,111
  67,851
  74,916
  82,303
  90,013
  98,049
  106,413
  115,114
  124,159
  133,561
  143,331
  153,487
  164,044
EBITDA, $m
  256
  998
  2,000
  3,283
  4,883
  6,834
  9,164
  11,896
  15,047
  18,628
  22,644
  27,097
  31,982
  37,294
  43,024
  49,163
  55,701
  62,628
  69,937
  77,620
  85,674
  94,095
  102,884
  112,043
  121,577
  131,494
  141,804
  152,520
  163,657
  175,232
  187,265
Interest expense (income), $m
  83
  81
  149
  236
  348
  486
  654
  854
  1,087
  1,356
  1,662
  2,003
  2,382
  2,797
  3,249
  3,735
  4,256
  4,811
  5,398
  6,018
  6,669
  7,352
  8,066
  8,810
  9,586
  10,394
  11,234
  12,107
  13,015
  13,958
  14,938
Earnings before tax, $m
  -38
  592
  1,400
  2,433
  3,722
  5,291
  7,164
  9,358
  11,886
  14,755
  17,971
  21,533
  25,438
  29,682
  34,256
  39,154
  44,367
  49,889
  55,712
  61,833
  68,246
  74,951
  81,948
  89,238
  96,827
  104,720
  112,925
  121,453
  130,317
  139,529
  149,106
Tax expense, $m
  -10
  160
  378
  657
  1,005
  1,429
  1,934
  2,527
  3,209
  3,984
  4,852
  5,814
  6,868
  8,014
  9,249
  10,571
  11,979
  13,470
  15,042
  16,695
  18,426
  20,237
  22,126
  24,094
  26,143
  28,274
  30,490
  32,792
  35,186
  37,673
  40,259
Net income, $m
  -13
  432
  1,022
  1,776
  2,717
  3,863
  5,230
  6,831
  8,676
  10,771
  13,119
  15,719
  18,570
  21,668
  25,007
  28,582
  32,388
  36,419
  40,670
  45,138
  49,820
  54,714
  59,822
  65,144
  70,684
  76,445
  82,435
  88,661
  95,131
  101,856
  108,848

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
  6,193
  8,616
  11,691
  15,506
  20,137
  25,651
  32,099
  39,523
  47,948
  57,385
  67,838
  79,298
  91,751
  105,178
  119,556
  134,863
  151,077
  168,180
  186,156
  204,995
  224,690
  245,242
  266,658
  288,948
  312,130
  336,229
  361,274
  387,300
  414,347
  442,461
Adjusted assets (=assets-cash), $m
  4,333
  6,193
  8,616
  11,691
  15,506
  20,137
  25,651
  32,099
  39,523
  47,948
  57,385
  67,838
  79,298
  91,751
  105,178
  119,556
  134,863
  151,077
  168,180
  186,156
  204,995
  224,690
  245,242
  266,658
  288,948
  312,130
  336,229
  361,274
  387,300
  414,347
  442,461
Revenue / Adjusted assets
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
  0.461
Average production assets, $m
  3,139
  4,485
  6,240
  8,467
  11,230
  14,584
  18,577
  23,247
  28,624
  34,725
  41,560
  49,130
  57,430
  66,449
  76,173
  86,586
  97,672
  109,415
  121,801
  134,820
  148,463
  162,727
  177,612
  193,122
  209,265
  226,055
  243,508
  261,646
  280,495
  300,083
  320,444
Working capital, $m
  419
  357
  496
  674
  894
  1,160
  1,478
  1,850
  2,278
  2,763
  3,307
  3,909
  4,570
  5,287
  6,061
  6,889
  7,771
  8,706
  9,691
  10,727
  11,813
  12,948
  14,132
  15,366
  16,651
  17,987
  19,375
  20,818
  22,318
  23,877
  25,497
Total debt, $m
  1,556
  2,752
  4,377
  6,441
  9,001
  12,108
  15,808
  20,135
  25,116
  30,769
  37,101
  44,115
  51,805
  60,161
  69,170
  78,818
  89,089
  99,969
  111,445
  123,507
  136,147
  149,363
  163,154
  177,523
  192,480
  208,036
  224,206
  241,011
  258,474
  276,623
  295,487
Total liabilities, $m
  2,960
  4,156
  5,781
  7,845
  10,405
  13,512
  17,212
  21,539
  26,520
  32,173
  38,505
  45,519
  53,209
  61,565
  70,574
  80,222
  90,493
  101,373
  112,849
  124,911
  137,551
  150,767
  164,558
  178,927
  193,884
  209,440
  225,610
  242,415
  259,878
  278,027
  296,891
Total equity, $m
  1,597
  2,038
  2,835
  3,846
  5,101
  6,625
  8,439
  10,561
  13,003
  15,775
  18,880
  22,319
  26,089
  30,186
  34,603
  39,334
  44,370
  49,704
  55,331
  61,245
  67,443
  73,923
  80,685
  87,730
  95,064
  102,691
  110,620
  118,859
  127,422
  136,320
  145,570
Total liabilities and equity, $m
  4,557
  6,194
  8,616
  11,691
  15,506
  20,137
  25,651
  32,100
  39,523
  47,948
  57,385
  67,838
  79,298
  91,751
  105,177
  119,556
  134,863
  151,077
  168,180
  186,156
  204,994
  224,690
  245,243
  266,657
  288,948
  312,131
  336,230
  361,274
  387,300
  414,347
  442,461
Debt-to-equity ratio
  0.974
  1.350
  1.540
  1.670
  1.760
  1.830
  1.870
  1.910
  1.930
  1.950
  1.970
  1.980
  1.990
  1.990
  2.000
  2.000
  2.010
  2.010
  2.010
  2.020
  2.020
  2.020
  2.020
  2.020
  2.020
  2.030
  2.030
  2.030
  2.030
  2.030
  2.030
Adjusted equity ratio
  0.317
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329
  0.329

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -13
  432
  1,022
  1,776
  2,717
  3,863
  5,230
  6,831
  8,676
  10,771
  13,119
  15,719
  18,570
  21,668
  25,007
  28,582
  32,388
  36,419
  40,670
  45,138
  49,820
  54,714
  59,822
  65,144
  70,684
  76,445
  82,435
  88,661
  95,131
  101,856
  108,848
Depreciation, amort., depletion, $m
  228
  325
  452
  614
  814
  1,057
  1,346
  1,685
  2,074
  2,516
  3,012
  3,560
  4,162
  4,815
  5,520
  6,274
  7,078
  7,929
  8,826
  9,770
  10,758
  11,792
  12,870
  13,994
  15,164
  16,381
  17,645
  18,960
  20,326
  21,745
  23,221
Funds from operations, $m
  204
  757
  1,474
  2,390
  3,531
  4,919
  6,576
  8,516
  10,751
  13,288
  16,131
  19,279
  22,732
  26,483
  30,527
  34,856
  39,466
  44,347
  49,496
  54,907
  60,578
  66,506
  72,692
  79,138
  85,848
  92,826
  100,081
  107,621
  115,457
  123,602
  132,068
Change in working capital, $m
  -46
  107
  140
  177
  220
  267
  318
  372
  428
  485
  544
  602
  660
  718
  774
  829
  882
  934
  986
  1,036
  1,086
  1,135
  1,184
  1,234
  1,284
  1,336
  1,389
  1,443
  1,500
  1,559
  1,620
Cash from operations, $m
  250
  650
  1,334
  2,213
  3,311
  4,653
  6,258
  8,144
  10,323
  12,802
  15,587
  18,677
  22,071
  25,765
  29,753
  34,028
  38,584
  43,413
  48,511
  53,872
  59,492
  65,371
  71,508
  77,904
  84,563
  91,490
  98,692
  106,178
  113,957
  122,043
  130,448
Maintenance CAPEX, $m
  0
  -227
  -325
  -452
  -614
  -814
  -1,057
  -1,346
  -1,685
  -2,074
  -2,516
  -3,012
  -3,560
  -4,162
  -4,815
  -5,520
  -6,274
  -7,078
  -7,929
  -8,826
  -9,770
  -10,758
  -11,792
  -12,870
  -13,994
  -15,164
  -16,381
  -17,645
  -18,960
  -20,326
  -21,745
New CAPEX, $m
  -100
  -1,347
  -1,754
  -2,228
  -2,763
  -3,354
  -3,993
  -4,671
  -5,377
  -6,101
  -6,835
  -7,570
  -8,300
  -9,019
  -9,724
  -10,413
  -11,086
  -11,743
  -12,386
  -13,019
  -13,643
  -14,264
  -14,885
  -15,510
  -16,143
  -16,790
  -17,453
  -18,138
  -18,849
  -19,588
  -20,361
Cash from investing activities, $m
  -88
  -1,574
  -2,079
  -2,680
  -3,377
  -4,168
  -5,050
  -6,017
  -7,062
  -8,175
  -9,351
  -10,582
  -11,860
  -13,181
  -14,539
  -15,933
  -17,360
  -18,821
  -20,315
  -21,845
  -23,413
  -25,022
  -26,677
  -28,380
  -30,137
  -31,954
  -33,834
  -35,783
  -37,809
  -39,914
  -42,106
Free cash flow, $m
  162
  -924
  -745
  -467
  -66
  485
  1,208
  2,128
  3,262
  4,627
  6,235
  8,095
  10,211
  12,585
  15,214
  18,095
  21,223
  24,592
  28,196
  32,027
  36,079
  40,349
  44,832
  49,524
  54,426
  59,536
  64,858
  70,394
  76,149
  82,129
  88,342
Issuance/(repayment) of debt, $m
  17
  1,250
  1,625
  2,064
  2,560
  3,107
  3,700
  4,327
  4,981
  5,653
  6,333
  7,014
  7,690
  8,356
  9,009
  9,648
  10,271
  10,880
  11,476
  12,062
  12,641
  13,216
  13,791
  14,370
  14,957
  15,556
  16,170
  16,805
  17,463
  18,149
  18,865
Issuance/(repurchase) of shares, $m
  2
  178
  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
  1,428
  1,625
  2,064
  2,560
  3,107
  3,700
  4,327
  4,981
  5,653
  6,333
  7,014
  7,690
  8,356
  9,009
  9,648
  10,271
  10,880
  11,476
  12,062
  12,641
  13,216
  13,791
  14,370
  14,957
  15,556
  16,170
  16,805
  17,463
  18,149
  18,865
Total cash flow (excl. dividends), $m
  68
  504
  880
  1,597
  2,494
  3,592
  4,908
  6,455
  8,243
  10,280
  12,568
  15,109
  17,901
  20,941
  24,223
  27,743
  31,494
  35,472
  39,672
  44,089
  48,720
  53,565
  58,622
  63,894
  69,382
  75,092
  81,029
  87,199
  93,612
  100,277
  107,207
Retained Cash Flow (-), $m
  123
  -611
  -797
  -1,012
  -1,255
  -1,524
  -1,814
  -2,122
  -2,442
  -2,772
  -3,105
  -3,439
  -3,770
  -4,097
  -4,417
  -4,730
  -5,036
  -5,335
  -5,627
  -5,914
  -6,198
  -6,480
  -6,762
  -7,046
  -7,333
  -7,627
  -7,929
  -8,240
  -8,562
  -8,898
  -9,250
Prev. year cash balance distribution, $m
 
  170
  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
 
  63
  83
  585
  1,239
  2,069
  3,094
  4,333
  5,801
  7,508
  9,463
  11,670
  14,131
  16,844
  19,806
  23,012
  26,458
  30,138
  34,045
  38,174
  42,522
  47,085
  51,860
  56,848
  62,049
  67,465
  73,100
  78,959
  85,050
  91,379
  97,957
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  59
  72
  465
  900
  1,360
  1,826
  2,274
  2,680
  3,023
  3,282
  3,446
  3,507
  3,467
  3,332
  3,117
  2,840
  2,520
  2,178
  1,833
  1,502
  1,198
  929
  701
  513
  365
  251
  168
  108
  68
  41
Current shareholders' claim on cash, %
  100
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7
  95.7

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 -345.5
Price to Sales 2.2
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 18
Price to Free Cash Flow 29.9
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 $1998 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 42.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7.2%, 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 17.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1630 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 5.4% 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 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 MEOH are equal to 157.1%.

Life of production assets of 13.8 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 12.5%. 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 - $1597 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 88.507 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 $4.4 billion.

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COMPANY NEWS

▶ ETFs with exposure to Methanex Corp. : August 11, 2017   [Aug-11-17 05:58PM  Capital Cube]
▶ Methanex posts 2Q profit   [Jul-27-17 11:46PM  Associated Press]
▶ Methanex Reports Second Quarter 2017 Earnings   [Jul-26-17 05:10PM  GlobeNewswire]
▶ Methanex Corporation Notice of Cash Dividend   [Jul-20-17 06:15PM  GlobeNewswire]
▶ Top Ranked Value Stocks to Buy for May 22nd   [May-22-17 08:57AM  Zacks]
▶ Top Ranked Income Stocks to Buy for May 19th   [May-19-17 10:27AM  Zacks]
▶ Top Ranked Value Stocks to Buy for May 18th   [May-18-17 06:40AM  Zacks]
▶ Top Ranked Income Stocks to Buy for May 15th   [May-15-17 10:33AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for May 12th   [May-12-17 10:37AM  Zacks]
▶ Top Ranked Value Stocks to Buy for May 8th   [May-08-17 10:12AM  Zacks]
▶ Top Ranked Income Stocks to Buy for May 4th   [May-04-17 10:40AM  Zacks]
▶ Top Ranked Growth Stocks to Buy for May 2nd   [May-02-17 11:48AM  Zacks]
▶ ETFs with exposure to Methanex Corp. : May 1, 2017   [May-01-17 04:06PM  Capital Cube]
▶ Methanex Corporation-Notice of Cash Dividend   [Apr-27-17 06:20PM  Marketwired]
▶ Methanex beats 1Q profit forecasts   [Apr-26-17 05:58PM  Associated Press]
▶ New Strong Buy Stocks for April 19th   [Apr-19-17 09:52AM  Zacks]
▶ Why Methanex (MEOH) Stock Might be a Great Pick   [Mar-31-17 08:50AM  Zacks]
▶ Methanex Comments on 13D Filing by Largest Shareholder   [Mar-27-17 08:30AM  Marketwired]
▶ Methanex Announces a 5% Share Repurchase Program   [Mar-06-17 08:30AM  Marketwired]
▶ Methanex Corporation - Notice of Cash Dividend   [Jan-26-17 05:00PM  Marketwired]
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.

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