Intrinsic value of MetLife - MET

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$52.26

  Intrinsic Value

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  Value-price divergence*

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$52.26

 
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Our model is not good at valuating stocks of financial companies, such as MET.

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

We calculate the intrinsic value of MET 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 57.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -9.19
  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
  0
  64,746
  66,235
  67,937
  69,848
  71,966
  74,289
  76,819
  79,558
  82,508
  85,675
  89,062
  92,677
  96,525
  100,616
  104,956
  109,555
  114,424
  119,573
  125,013
  130,757
  136,818
  143,210
  149,947
  157,046
  164,522
  172,394
  180,680
  189,399
  198,571
  208,219
Variable operating expenses, $m
 
  56,699
  57,981
  59,448
  61,094
  62,919
  64,920
  67,100
  69,459
  72,001
  74,729
  76,725
  79,839
  83,154
  86,678
  90,417
  94,379
  98,574
  103,009
  107,696
  112,644
  117,865
  123,372
  129,176
  135,291
  141,732
  148,513
  155,651
  163,162
  171,064
  179,375
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
  62,599
  56,699
  57,981
  59,448
  61,094
  62,919
  64,920
  67,100
  69,459
  72,001
  74,729
  76,725
  79,839
  83,154
  86,678
  90,417
  94,379
  98,574
  103,009
  107,696
  112,644
  117,865
  123,372
  129,176
  135,291
  141,732
  148,513
  155,651
  163,162
  171,064
  179,375
Operating income, $m
  1,006
  8,047
  8,253
  8,489
  8,754
  9,047
  9,369
  9,719
  10,099
  10,507
  10,946
  12,337
  12,838
  13,371
  13,938
  14,539
  15,176
  15,851
  16,564
  17,317
  18,113
  18,953
  19,838
  20,771
  21,755
  22,790
  23,881
  25,029
  26,236
  27,507
  28,844
EBITDA, $m
  1,658
  9,027
  9,234
  9,471
  9,738
  10,033
  10,357
  10,710
  11,092
  11,503
  11,944
  12,417
  12,921
  13,457
  14,027
  14,632
  15,274
  15,953
  16,670
  17,429
  18,230
  19,075
  19,966
  20,905
  21,895
  22,937
  24,034
  25,190
  26,405
  27,684
  29,029
Interest expense (income), $m
  1,202
  1,135
  523
  1,599
  2,829
  4,210
  5,740
  7,419
  9,247
  11,225
  13,357
  15,645
  18,093
  20,704
  23,485
  26,440
  29,576
  32,900
  36,418
  40,138
  44,068
  48,219
  52,598
  57,216
  62,084
  67,213
  72,615
  78,303
  84,290
  90,589
  97,217
Earnings before tax, $m
  -195
  6,912
  7,730
  6,890
  5,925
  4,837
  3,629
  2,301
  852
  -718
  -2,411
  -3,308
  -5,255
  -7,333
  -9,547
  -11,901
  -14,400
  -17,049
  -19,854
  -22,820
  -25,955
  -29,266
  -32,760
  -36,445
  -40,329
  -44,423
  -48,734
  -53,274
  -58,053
  -63,082
  -68,373
Tax expense, $m
  -999
  1,866
  2,087
  1,860
  1,600
  1,306
  980
  621
  230
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  800
  5,046
  5,643
  5,030
  4,325
  3,531
  2,649
  1,680
  622
  -718
  -2,411
  -3,308
  -5,255
  -7,333
  -9,547
  -11,901
  -14,400
  -17,049
  -19,854
  -22,820
  -25,955
  -29,266
  -32,760
  -36,445
  -40,329
  -44,423
  -48,734
  -53,274
  -58,053
  -63,082
  -68,373

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
  0
Total assets, $m
  898,764
  911,909
  932,883
  956,858
  983,774
  1,013,599
  1,046,324
  1,081,958
  1,120,531
  1,162,087
  1,206,685
  1,254,397
  1,305,307
  1,359,513
  1,417,121
  1,478,252
  1,543,034
  1,611,607
  1,684,125
  1,760,748
  1,841,649
  1,927,015
  2,017,040
  2,111,933
  2,211,914
  2,317,217
  2,428,087
  2,544,785
  2,667,585
  2,796,776
  2,932,663
Adjusted assets (=assets-cash), $m
  898,764
  911,909
  932,883
  956,858
  983,774
  1,013,599
  1,046,324
  1,081,958
  1,120,531
  1,162,087
  1,206,685
  1,254,397
  1,305,307
  1,359,513
  1,417,121
  1,478,252
  1,543,034
  1,611,607
  1,684,125
  1,760,748
  1,841,649
  1,927,015
  2,017,040
  2,111,933
  2,211,914
  2,317,217
  2,428,087
  2,544,785
  2,667,585
  2,796,776
  2,932,663
Revenue / Adjusted assets
  0.000
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
Average production assets, $m
  1,850
  842
  861
  883
  908
  936
  966
  999
  1,034
  1,073
  1,114
  1,158
  1,205
  1,255
  1,308
  1,364
  1,424
  1,488
  1,554
  1,625
  1,700
  1,779
  1,862
  1,949
  2,042
  2,139
  2,241
  2,349
  2,462
  2,581
  2,707
Working capital, $m
  0
  259
  265
  272
  279
  288
  297
  307
  318
  330
  343
  356
  371
  386
  402
  420
  438
  458
  478
  500
  523
  547
  573
  600
  628
  658
  690
  723
  758
  794
  833
Total debt, $m
  19,913
  9,176
  28,052
  49,630
  73,855
  100,697
  130,149
  162,220
  196,936
  234,336
  274,474
  317,415
  363,235
  412,020
  463,867
  518,885
  577,188
  638,905
  704,170
  773,131
  845,942
  922,771
  1,003,794
  1,089,198
  1,179,181
  1,273,953
  1,373,736
  1,478,765
  1,589,285
  1,705,556
  1,827,855
Total liabilities, $m
  831,455
  820,718
  839,594
  861,172
  885,397
  912,239
  941,691
  973,762
  1,008,478
  1,045,878
  1,086,016
  1,128,957
  1,174,777
  1,223,562
  1,275,409
  1,330,427
  1,388,730
  1,450,447
  1,515,712
  1,584,673
  1,657,484
  1,734,313
  1,815,336
  1,900,740
  1,990,723
  2,085,495
  2,185,278
  2,290,307
  2,400,827
  2,517,098
  2,639,397
Total equity, $m
  67,309
  91,191
  93,288
  95,686
  98,377
  101,360
  104,632
  108,196
  112,053
  116,209
  120,668
  125,440
  130,531
  135,951
  141,712
  147,825
  154,303
  161,161
  168,412
  176,075
  184,165
  192,701
  201,704
  211,193
  221,191
  231,722
  242,809
  254,479
  266,759
  279,678
  293,266
Total liabilities and equity, $m
  898,764
  911,909
  932,882
  956,858
  983,774
  1,013,599
  1,046,323
  1,081,958
  1,120,531
  1,162,087
  1,206,684
  1,254,397
  1,305,308
  1,359,513
  1,417,121
  1,478,252
  1,543,033
  1,611,608
  1,684,124
  1,760,748
  1,841,649
  1,927,014
  2,017,040
  2,111,933
  2,211,914
  2,317,217
  2,428,087
  2,544,786
  2,667,586
  2,796,776
  2,932,663
Debt-to-equity ratio
  0.296
  0.100
  0.300
  0.520
  0.750
  0.990
  1.240
  1.500
  1.760
  2.020
  2.270
  2.530
  2.780
  3.030
  3.270
  3.510
  3.740
  3.960
  4.180
  4.390
  4.590
  4.790
  4.980
  5.160
  5.330
  5.500
  5.660
  5.810
  5.960
  6.100
  6.230
Adjusted equity ratio
  0.075
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  800
  5,046
  5,643
  5,030
  4,325
  3,531
  2,649
  1,680
  622
  -718
  -2,411
  -3,308
  -5,255
  -7,333
  -9,547
  -11,901
  -14,400
  -17,049
  -19,854
  -22,820
  -25,955
  -29,266
  -32,760
  -36,445
  -40,329
  -44,423
  -48,734
  -53,274
  -58,053
  -63,082
  -68,373
Depreciation, amort., depletion, $m
  652
  980
  981
  982
  984
  986
  988
  990
  993
  995
  998
  79
  83
  86
  90
  93
  98
  102
  106
  111
  116
  122
  128
  134
  140
  146
  154
  161
  169
  177
  185
Funds from operations, $m
  31,497
  6,025
  6,624
  6,012
  5,309
  4,517
  3,637
  2,670
  1,615
  278
  -1,413
  -3,228
  -5,172
  -7,247
  -9,458
  -11,808
  -14,303
  -16,947
  -19,747
  -22,709
  -25,839
  -29,144
  -32,632
  -36,311
  -40,190
  -44,276
  -48,581
  -53,113
  -57,884
  -62,905
  -68,188
Change in working capital, $m
  16,670
  5
  6
  7
  8
  8
  9
  10
  11
  12
  13
  14
  14
  15
  16
  17
  18
  19
  21
  22
  23
  24
  26
  27
  28
  30
  31
  33
  35
  37
  39
Cash from operations, $m
  14,827
  5,220
  6,618
  6,005
  5,302
  4,509
  3,628
  2,660
  1,604
  266
  -1,425
  -3,242
  -5,187
  -7,263
  -9,474
  -11,825
  -14,321
  -16,967
  -19,768
  -22,731
  -25,862
  -29,168
  -32,658
  -36,338
  -40,218
  -44,306
  -48,612
  -53,147
  -57,919
  -62,942
  -68,226
Maintenance CAPEX, $m
  0
  -55
  -58
  -59
  -60
  -62
  -64
  -66
  -68
  -71
  -73
  -76
  -79
  -83
  -86
  -90
  -93
  -98
  -102
  -106
  -111
  -116
  -122
  -128
  -134
  -140
  -146
  -154
  -161
  -169
  -177
New CAPEX, $m
  -1,515
  -42
  -19
  -22
  -25
  -28
  -30
  -33
  -36
  -38
  -41
  -44
  -47
  -50
  -53
  -56
  -60
  -63
  -67
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -108
  -113
  -119
  -125
Cash from investing activities, $m
  -5,850
  -97
  -77
  -81
  -85
  -90
  -94
  -99
  -104
  -109
  -114
  -120
  -126
  -133
  -139
  -146
  -153
  -161
  -169
  -177
  -186
  -195
  -205
  -216
  -226
  -237
  -248
  -262
  -274
  -288
  -302
Free cash flow, $m
  8,977
  5,124
  6,541
  5,924
  5,216
  4,419
  3,534
  2,561
  1,500
  157
  -1,540
  -3,362
  -5,313
  -7,395
  -9,613
  -11,971
  -14,474
  -17,128
  -19,937
  -22,908
  -26,048
  -29,364
  -32,863
  -36,553
  -40,444
  -44,543
  -48,861
  -53,408
  -58,194
  -63,230
  -68,529
Issuance/(repayment) of debt, $m
  -1,309
  -10,737
  18,877
  21,578
  24,225
  26,843
  29,452
  32,071
  34,716
  37,400
  40,138
  42,941
  45,819
  48,785
  51,848
  55,017
  58,304
  61,716
  65,266
  68,961
  72,812
  76,829
  81,023
  85,404
  89,983
  94,772
  99,783
  105,028
  110,520
  116,272
  122,298
Issuance/(repurchase) of shares, $m
  -372
  29,495
  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  
  -1,711
  18,758
  18,877
  21,578
  24,225
  26,843
  29,452
  32,071
  34,716
  37,400
  40,138
  42,941
  45,819
  48,785
  51,848
  55,017
  58,304
  61,716
  65,266
  68,961
  72,812
  76,829
  81,023
  85,404
  89,983
  94,772
  99,783
  105,028
  110,520
  116,272
  122,298
Total cash flow (excl. dividends), $m
  6,964
  -5,613
  25,418
  27,502
  29,441
  31,262
  32,986
  34,632
  36,216
  37,557
  38,598
  39,578
  40,507
  41,390
  42,234
  43,046
  43,829
  44,589
  45,329
  46,053
  46,764
  47,465
  48,160
  48,850
  49,539
  50,229
  50,922
  51,620
  52,326
  53,042
  53,770
Retained Cash Flow (-), $m
  640
  -23,882
  -2,097
  -2,398
  -2,692
  -2,983
  -3,272
  -3,563
  -3,857
  -4,156
  -4,460
  -4,771
  -5,091
  -5,421
  -5,761
  -6,113
  -6,478
  -6,857
  -7,252
  -7,662
  -8,090
  -8,537
  -9,003
  -9,489
  -9,998
  -10,530
  -11,087
  -11,670
  -12,280
  -12,919
  -13,589
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
 
  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
 
  0
  23,320
  25,104
  26,749
  28,279
  29,713
  31,068
  32,358
  33,401
  34,138
  34,807
  35,416
  35,969
  36,474
  36,933
  37,351
  37,732
  38,077
  38,390
  38,674
  38,929
  39,157
  39,361
  39,541
  39,699
  39,835
  39,951
  40,046
  40,123
  40,181
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  0
  20,276
  20,148
  19,671
  18,905
  17,907
  16,729
  15,419
  13,942
  12,348
  10,785
  9,286
  7,878
  6,581
  5,410
  4,374
  3,474
  2,710
  2,073
  1,554
  1,140
  818
  574
  392
  261
  170
  107
  65
  39
  22
Current shareholders' claim on cash, %
  100
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0
  66.0

MetLife, Inc. provides life insurance, annuities, employee benefits, and asset management products in the United States, Japan, Latin America, Asia, Europe, and the Middle East. It operates in six segments: Retail; Group, Voluntary & Worksite Benefits; Corporate Benefit Funding; Latin America; Asia; and Europe, the Middle East and Africa. The company provides variable, universal, term, and whole life products; individual disability income products; personal lines property and casualty insurance, including private passenger automobile, homeowners, and personal excess liability insurance; and variable and fixed annuities for asset accumulation and distribution needs, as well as mutual funds and other securities products. It also offers group insurance products, such as variable, universal, and term life products; dental, group short- and long-term disability, and accidental death and dismemberment coverages; and voluntary and worksite products consisting of personal lines property and casualty insurance, as well as LTC, prepaid legal plans, and critical illness products. In addition, the company provides annuity and investment products comprising guaranteed interest products and other stable value products, income annuities, and separate account contracts for the investment management of defined benefit and defined contribution plan assets; and structured settlements and products to fund postretirement benefits and company-, bank- or trust-owned life insurance, as well as health insurance, group medical, credit insurance, endowment, retirement, and savings products. It serves individuals and corporations, as well as other institutions and their employees. The company sells its products through sales forces, third-party organizations, independent agents, and property and casualty specialists, as well as through career agency, bancassurance, direct marketing, brokerage, and e-commerce channels. MetLife, Inc. was founded in 1863 and is based in New York, New York.

FINANCIAL RATIOS  of  MetLife (MET)

Valuation Ratios
P/E Ratio 71.6
Price to Sales 0.9
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 3.9
Price to Free Cash Flow 4.3
Growth Rates
Sales Growth Rate -9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.7%
Cap. Spend. - 3 Yr. Gr. Rate -4.2%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 29.2%
Total Debt to Equity 29.6%
Interest Coverage 1
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 4.7%
Return On Equity 1.2%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 2.6%
EBITDA Margin - 3 Yr. Avg. 10.2%
Operating Margin 1.6%
Oper. Margin - 3 Yr. Avg. 9.2%
Pre-Tax Margin -0.3%
Pre-Tax Margin - 3 Yr. Avg. 7.5%
Net Profit Margin 1.3%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 512.3%
Eff/ Tax Rate - 3 Yr. Avg. 189.7%
Payout Ratio 229.9%

MET stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MET stock intrinsic value calculation we used $63476 million for the last fiscal year's total revenue generated by MetLife. The default revenue input number comes from 2016 income statement of MetLife. 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 MET 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 6.9%, whose default value for MET is calculated based on our internal credit rating of MetLife, 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 MetLife.
    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 MET stock the variable cost ratio is equal to 87.6%.

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 MET 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 5.7% for MetLife.

Corporate tax rate of 27% is the nominal tax rate for MetLife. 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 MET 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 MET are equal to 1.3%.

Life of production assets of 14.6 years is the average useful life of capital assets used in MetLife 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 MET is equal to 0.4%. 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 - $67309 million for MetLife - 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 1094.61 million for MetLife 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 MetLife at the current share price and the inputted number of shares is $57.2 billion.


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COMPANY NEWS

▶ MetLife Releases Annual Corporate Responsibility Report   [Jun-21-17 10:30AM  Business Wire]
▶ How to Get America to Invest in America   [Jun-20-17 07:12AM  Bloomberg Video]
▶ These Stocks Have Changed Direction   [02:00PM  TheStreet.com]
▶ Cary-based MetLife exec could be in line for CEO spot   [03:20PM  American City Business Journals]
▶ MetLife Announces Senior Leadership Changes   [08:00AM  Business Wire]
▶ ETFs with exposure to MetLife, Inc. : June 12, 2017   [Jun-12-17 02:13PM  Capital Cube]
▶ MetLife Statement on House Passage of Financial CHOICE Act   [Jun-08-17 04:43PM  Business Wire]
▶ Matus Says Haircuts, Not Cars Show U.S. Economic Health   [Jun-01-17 10:41AM  Bloomberg Video]
▶ U.S. Energy's Future Outside of Paris Agreement   [09:10AM  Bloomberg Video]
▶ Get Started: Business owners upbeat, but not about economy   [May-30-17 12:48PM  Associated Press]
▶ Rosy Financials, Bull; Three-Day Weekend: Best of Kass   [May-26-17 09:00PM  TheStreet.com]
▶ Small business owners expect to ramp up hiring: U.S. Chamber report   [02:05PM  American City Business Journals]
▶ Sears Gets Some Breathing Room From Its Creditors   [May-23-17 09:09AM  Bloomberg]
▶ MetLife expands in Cary: A win for Raleigh's Highwoods   [06:00PM  American City Business Journals]
▶ MetLife Announces Uniphore as Winner of collab   [May-19-17 06:21AM  Business Wire]
▶ Learjet crashes short of runway, killing 2 crew members   [May-15-17 10:49PM  Associated Press]
▶ Bank adds 1,200 North Carolina jobs stalled by anti-LGBT law   [May-10-17 06:39AM  Associated Press]
▶ Bank expands in North Carolina after 'bathroom bill' changes   [May-09-17 03:53PM  Associated Press]
▶ How to play ahead of jobs report   [May-04-17 07:38PM  CNBC Videos]
▶ MetLife Is On the Move Thursday   [01:22PM  TheStreet.com]
▶ [$$] AIG Swings to Profit, Helped by Cost Cuts   [12:21AM  The Wall Street Journal]
▶ [$$] AIG Swings to Profit, Helped by Cost Cuts   [05:21PM  The Wall Street Journal]
▶ MetLife beats 1Q profit forecasts   [04:52PM  Associated Press]
▶ MetLife Announces First Quarter 2017 Results   [04:15PM  Business Wire]
▶ [$$] MetLifes Systemically Important Case   [Apr-28-17 10:50PM  The Wall Street Journal]
▶ [$$] MetLife's Systemically Important Case   [06:56PM  The Wall Street Journal]
▶ Alicia's Angels Round 2 pick: MET   [Apr-27-17 02:38PM  CNBC Videos]
▶ MetLife Declares Second Quarter 2017 Common Stock Dividend   [Apr-25-17 04:15PM  Business Wire]
▶ MetLife asks court to put hold on 'too big to fail' case   [Apr-24-17 05:10PM  Associated Press]
Stock chart of MET Financial statements of MET Annual reports of MET
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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