Intrinsic value of Altria Group - MO

Previous Close

$71.79

  Intrinsic Value

$43.15

stock screener

  Rating & Target

sell

-40%

Previous close

$71.79

 
Intrinsic value

$43.15

 
Up/down potential

-40%

 
Rating

sell

We calculate the intrinsic value of MO 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 137.7

 

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, %
  1.22
  2.20
  2.48
  2.73
  2.96
  3.16
  3.35
  3.51
  3.66
  3.79
  3.92
  4.02
  4.12
  4.21
  4.29
  4.36
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
Revenue, $m
  25,744
  26,310
  26,963
  27,699
  28,519
  29,421
  30,406
  31,474
  32,626
  33,864
  35,190
  36,606
  38,114
  39,718
  41,422
  43,227
  45,140
  47,162
  49,300
  51,558
  53,941
  56,454
  59,104
  61,896
  64,838
  67,935
  71,195
  74,626
  78,236
  82,033
  86,026
Variable operating expenses, $m
 
  17,879
  18,310
  18,796
  19,336
  19,931
  20,580
  21,284
  22,044
  22,861
  23,735
  24,140
  25,135
  26,193
  27,316
  28,507
  29,768
  31,102
  32,512
  34,001
  35,573
  37,230
  38,978
  40,819
  42,759
  44,801
  46,951
  49,214
  51,594
  54,098
  56,732
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
  3,940
  17,879
  18,310
  18,796
  19,336
  19,931
  20,580
  21,284
  22,044
  22,861
  23,735
  24,140
  25,135
  26,193
  27,316
  28,507
  29,768
  31,102
  32,512
  34,001
  35,573
  37,230
  38,978
  40,819
  42,759
  44,801
  46,951
  49,214
  51,594
  54,098
  56,732
Operating income, $m
  21,804
  8,431
  8,653
  8,904
  9,183
  9,490
  9,826
  10,189
  10,582
  11,003
  11,455
  12,465
  12,979
  13,525
  14,105
  14,720
  15,371
  16,060
  16,788
  17,557
  18,368
  19,224
  20,127
  21,078
  22,079
  23,134
  24,244
  25,412
  26,642
  27,935
  29,294
EBITDA, $m
  22,008
  9,437
  9,671
  9,935
  10,229
  10,552
  10,905
  11,288
  11,702
  12,146
  12,621
  13,129
  13,670
  14,246
  14,856
  15,504
  16,190
  16,915
  17,682
  18,492
  19,347
  20,248
  21,198
  22,200
  23,255
  24,366
  25,535
  26,765
  28,060
  29,422
  30,854
Interest expense (income), $m
  775
  805
  849
  898
  953
  1,014
  1,082
  1,156
  1,235
  1,322
  1,414
  1,513
  1,619
  1,732
  1,852
  1,979
  2,114
  2,257
  2,409
  2,569
  2,737
  2,916
  3,104
  3,302
  3,511
  3,731
  3,962
  4,206
  4,463
  4,733
  5,016
Earnings before tax, $m
  21,852
  7,626
  7,804
  8,006
  8,230
  8,476
  8,744
  9,034
  9,346
  9,681
  10,040
  10,952
  11,360
  11,793
  12,253
  12,741
  13,257
  13,803
  14,379
  14,988
  15,631
  16,309
  17,023
  17,776
  18,569
  19,403
  20,282
  21,206
  22,179
  23,202
  24,278
Tax expense, $m
  7,608
  2,059
  2,107
  2,162
  2,222
  2,288
  2,361
  2,439
  2,523
  2,614
  2,711
  2,957
  3,067
  3,184
  3,308
  3,440
  3,579
  3,727
  3,882
  4,047
  4,220
  4,403
  4,596
  4,799
  5,013
  5,239
  5,476
  5,726
  5,988
  6,265
  6,555
Net income, $m
  14,239
  5,567
  5,697
  5,844
  6,008
  6,187
  6,383
  6,595
  6,823
  7,067
  7,329
  7,995
  8,293
  8,609
  8,945
  9,301
  9,678
  10,076
  10,497
  10,942
  11,411
  11,905
  12,427
  12,976
  13,555
  14,164
  14,806
  15,481
  16,191
  16,937
  17,723

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,569
  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
  45,932
  42,300
  43,349
  44,533
  45,851
  47,301
  48,884
  50,601
  52,453
  54,443
  56,575
  58,851
  61,277
  63,856
  66,594
  69,498
  72,572
  75,824
  79,261
  82,891
  86,722
  90,763
  95,023
  99,512
  104,241
  109,220
  114,461
  119,977
  125,781
  131,886
  138,306
Adjusted assets (=assets-cash), $m
  41,363
  42,300
  43,349
  44,533
  45,851
  47,301
  48,884
  50,601
  52,453
  54,443
  56,575
  58,851
  61,277
  63,856
  66,594
  69,498
  72,572
  75,824
  79,261
  82,891
  86,722
  90,763
  95,023
  99,512
  104,241
  109,220
  114,461
  119,977
  125,781
  131,886
  138,306
Revenue / Adjusted assets
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
  0.622
Average production assets, $m
  14,002
  14,313
  14,668
  15,069
  15,514
  16,005
  16,541
  17,122
  17,748
  18,422
  19,143
  19,913
  20,734
  21,607
  22,533
  23,516
  24,556
  25,656
  26,819
  28,048
  29,344
  30,711
  32,153
  33,672
  35,272
  36,957
  38,730
  40,596
  42,560
  44,626
  46,798
Working capital, $m
  -115
  -4,788
  -4,907
  -5,041
  -5,190
  -5,355
  -5,534
  -5,728
  -5,938
  -6,163
  -6,405
  -6,662
  -6,937
  -7,229
  -7,539
  -7,867
  -8,215
  -8,584
  -8,973
  -9,384
  -9,817
  -10,275
  -10,757
  -11,265
  -11,800
  -12,364
  -12,957
  -13,582
  -14,239
  -14,930
  -15,657
Total debt, $m
  13,881
  14,643
  15,485
  16,434
  17,491
  18,654
  19,924
  21,301
  22,786
  24,383
  26,092
  27,918
  29,863
  31,932
  34,128
  36,456
  38,922
  41,530
  44,286
  47,197
  50,270
  53,511
  56,927
  60,528
  64,320
  68,313
  72,517
  76,941
  81,595
  86,491
  91,640
Total liabilities, $m
  33,162
  33,924
  34,766
  35,715
  36,772
  37,935
  39,205
  40,582
  42,067
  43,664
  45,373
  47,199
  49,144
  51,213
  53,409
  55,737
  58,203
  60,811
  63,567
  66,478
  69,551
  72,792
  76,208
  79,809
  83,601
  87,594
  91,798
  96,222
  100,876
  105,772
  110,921
Total equity, $m
  12,770
  8,375
  8,583
  8,818
  9,078
  9,366
  9,679
  10,019
  10,386
  10,780
  11,202
  11,653
  12,133
  12,644
  13,186
  13,761
  14,369
  15,013
  15,694
  16,412
  17,171
  17,971
  18,815
  19,703
  20,640
  21,626
  22,663
  23,756
  24,905
  26,113
  27,385
Total liabilities and equity, $m
  45,932
  42,299
  43,349
  44,533
  45,850
  47,301
  48,884
  50,601
  52,453
  54,444
  56,575
  58,852
  61,277
  63,857
  66,595
  69,498
  72,572
  75,824
  79,261
  82,890
  86,722
  90,763
  95,023
  99,512
  104,241
  109,220
  114,461
  119,978
  125,781
  131,885
  138,306
Debt-to-equity ratio
  1.087
  1.750
  1.800
  1.860
  1.930
  1.990
  2.060
  2.130
  2.190
  2.260
  2.330
  2.400
  2.460
  2.530
  2.590
  2.650
  2.710
  2.770
  2.820
  2.880
  2.930
  2.980
  3.030
  3.070
  3.120
  3.160
  3.200
  3.240
  3.280
  3.310
  3.350
Adjusted equity ratio
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198
  0.198

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14,239
  5,567
  5,697
  5,844
  6,008
  6,187
  6,383
  6,595
  6,823
  7,067
  7,329
  7,995
  8,293
  8,609
  8,945
  9,301
  9,678
  10,076
  10,497
  10,942
  11,411
  11,905
  12,427
  12,976
  13,555
  14,164
  14,806
  15,481
  16,191
  16,937
  17,723
Depreciation, amort., depletion, $m
  204
  1,006
  1,017
  1,031
  1,046
  1,062
  1,080
  1,099
  1,120
  1,143
  1,167
  664
  691
  720
  751
  784
  819
  855
  894
  935
  978
  1,024
  1,072
  1,122
  1,176
  1,232
  1,291
  1,353
  1,419
  1,488
  1,560
Funds from operations, $m
  3,007
  6,572
  6,714
  6,875
  7,053
  7,249
  7,463
  7,694
  7,943
  8,210
  8,496
  8,659
  8,984
  9,329
  9,696
  10,085
  10,496
  10,931
  11,391
  11,876
  12,389
  12,929
  13,499
  14,099
  14,731
  15,396
  16,097
  16,834
  17,609
  18,425
  19,283
Change in working capital, $m
  -784
  -103
  -119
  -134
  -149
  -164
  -179
  -194
  -210
  -225
  -241
  -258
  -275
  -292
  -310
  -329
  -348
  -368
  -389
  -411
  -434
  -457
  -482
  -508
  -535
  -564
  -593
  -624
  -657
  -691
  -727
Cash from operations, $m
  3,791
  6,676
  6,833
  7,009
  7,203
  7,413
  7,642
  7,888
  8,152
  8,435
  8,737
  8,916
  9,258
  9,621
  10,006
  10,413
  10,844
  11,299
  11,780
  12,287
  12,822
  13,387
  13,981
  14,607
  15,266
  15,960
  16,690
  17,458
  18,266
  19,116
  20,010
Maintenance CAPEX, $m
  0
  -467
  -477
  -489
  -502
  -517
  -534
  -551
  -571
  -592
  -614
  -638
  -664
  -691
  -720
  -751
  -784
  -819
  -855
  -894
  -935
  -978
  -1,024
  -1,072
  -1,122
  -1,176
  -1,232
  -1,291
  -1,353
  -1,419
  -1,488
New CAPEX, $m
  -189
  -311
  -355
  -401
  -446
  -491
  -536
  -581
  -627
  -673
  -721
  -770
  -821
  -873
  -927
  -982
  -1,040
  -1,100
  -1,163
  -1,228
  -1,296
  -1,367
  -1,441
  -1,519
  -1,600
  -1,685
  -1,774
  -1,866
  -1,964
  -2,066
  -2,172
Cash from investing activities, $m
  3,708
  -778
  -832
  -890
  -948
  -1,008
  -1,070
  -1,132
  -1,198
  -1,265
  -1,335
  -1,408
  -1,485
  -1,564
  -1,647
  -1,733
  -1,824
  -1,919
  -2,018
  -2,122
  -2,231
  -2,345
  -2,465
  -2,591
  -2,722
  -2,861
  -3,006
  -3,157
  -3,317
  -3,485
  -3,660
Free cash flow, $m
  7,499
  5,898
  6,001
  6,119
  6,254
  6,406
  6,573
  6,756
  6,955
  7,170
  7,402
  7,508
  7,774
  8,057
  8,359
  8,680
  9,020
  9,380
  9,762
  10,165
  10,591
  11,041
  11,516
  12,016
  12,544
  13,099
  13,685
  14,301
  14,949
  15,632
  16,350
Issuance/(repayment) of debt, $m
  1,043
  762
  841
  950
  1,057
  1,163
  1,270
  1,377
  1,486
  1,596
  1,710
  1,826
  1,945
  2,069
  2,196
  2,328
  2,466
  2,608
  2,757
  2,911
  3,072
  3,241
  3,417
  3,600
  3,792
  3,993
  4,204
  4,424
  4,654
  4,896
  5,149
Issuance/(repurchase) of shares, $m
  -1,030
  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  
  -787
  762
  841
  950
  1,057
  1,163
  1,270
  1,377
  1,486
  1,596
  1,710
  1,826
  1,945
  2,069
  2,196
  2,328
  2,466
  2,608
  2,757
  2,911
  3,072
  3,241
  3,417
  3,600
  3,792
  3,993
  4,204
  4,424
  4,654
  4,896
  5,149
Total cash flow (excl. dividends), $m
  6,712
  6,660
  6,842
  7,069
  7,311
  7,569
  7,842
  8,133
  8,441
  8,767
  9,112
  9,334
  9,719
  10,126
  10,555
  11,008
  11,486
  11,989
  12,518
  13,076
  13,664
  14,282
  14,932
  15,616
  16,336
  17,093
  17,888
  18,725
  19,604
  20,528
  21,499
Retained Cash Flow (-), $m
  -9,890
  -174
  -208
  -234
  -261
  -287
  -313
  -340
  -367
  -394
  -422
  -451
  -480
  -511
  -542
  -575
  -609
  -644
  -681
  -719
  -759
  -800
  -843
  -889
  -936
  -986
  -1,038
  -1,092
  -1,149
  -1,209
  -1,271
Prev. year cash balance distribution, $m
 
  4,569
  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
 
  11,055
  6,635
  6,835
  7,050
  7,282
  7,529
  7,793
  8,074
  8,372
  8,690
  8,883
  9,239
  9,615
  10,013
  10,433
  10,877
  11,345
  11,838
  12,358
  12,905
  13,482
  14,089
  14,728
  15,400
  16,107
  16,850
  17,632
  18,455
  19,319
  20,228
Discount rate, %
 
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
 
  10,509
  5,965
  5,782
  5,580
  5,360
  5,120
  4,863
  4,589
  4,301
  4,000
  3,632
  3,323
  3,012
  2,703
  2,399
  2,105
  1,824
  1,560
  1,315
  1,093
  893
  718
  567
  440
  334
  248
  181
  128
  89
  60
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

Altria Group, Inc. is a holding company. The Company's segments include smokeable products, smokeless products and wine. The Company's subsidiaries include Philip Morris USA Inc. (PM USA), which is engaged in the manufacture and sale of cigarettes in the United States; John Middleton Co. (Middleton), which is engaged in the manufacture and sale of machine-made cigars and pipe tobacco, and UST LLC (UST), which, through its subsidiaries, including U.S. Smokeless Tobacco Company LLC (USSTC) and Ste. Michelle Wine Estates Ltd. (Ste. Michelle), is engaged in the manufacture and sale of smokeless tobacco products and wine. Its other operating companies include Nu Mark LLC (Nu Mark), a subsidiary that is engaged in the manufacture and sale of tobacco products, and Philip Morris Capital Corporation (PMCC), a subsidiary that maintains a portfolio of finance assets. Other subsidiaries include Altria Group Distribution Company and Altria Client Services LLC.

FINANCIAL RATIOS  of  Altria Group (MO)

Valuation Ratios
P/E Ratio 9.8
Price to Sales 5.4
Price to Book 10.9
Price to Tangible Book
Price to Cash Flow 36.8
Price to Free Cash Flow 38.7
Growth Rates
Sales Growth Rate 1.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -17.5%
Cap. Spend. - 3 Yr. Gr. Rate 7.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 108.7%
Total Debt to Equity 108.7%
Interest Coverage 29
Management Effectiveness
Return On Assets 38.1%
Ret/ On Assets - 3 Yr. Avg. 23.9%
Return On Total Capital 67.2%
Ret/ On T. Cap. - 3 Yr. Avg. 42.2%
Return On Equity 182%
Return On Equity - 3 Yr. Avg. 167.3%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 45%
Gross Margin - 3 Yr. Avg. 43.4%
EBITDA Margin 88.7%
EBITDA Margin - 3 Yr. Avg. 53.4%
Operating Margin 84.7%
Oper. Margin - 3 Yr. Avg. 49.2%
Pre-Tax Margin 84.9%
Pre-Tax Margin - 3 Yr. Avg. 49.4%
Net Profit Margin 55.3%
Net Profit Margin - 3 Yr. Avg. 32.2%
Effective Tax Rate 34.8%
Eff/ Tax Rate - 3 Yr. Avg. 34.9%
Payout Ratio 31.7%

MO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MO stock intrinsic value calculation we used $25744 million for the last fiscal year's total revenue generated by Altria Group. The default revenue input number comes from 2016 income statement of Altria Group. 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 MO stock valuation model: a) initial revenue growth rate of 2.2% 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 5.2%, whose default value for MO is calculated based on our internal credit rating of Altria Group, 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 Altria Group.
    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 MO stock the variable cost ratio is equal to 68%.

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 MO 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 5.8% for Altria Group.

Corporate tax rate of 27% is the nominal tax rate for Altria Group. 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 MO 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 MO are equal to 54.4%.

Life of production assets of 94.5 years is the average useful life of capital assets used in Altria Group 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 MO is equal to -18.2%. 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 - $12770 million for Altria Group - 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 1918.61 million for Altria Group 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 Altria Group at the current share price and the inputted number of shares is $137.7 billion.

RELATED COMPANIES Price Int.Val. Rating
PM Philip Morris 107.68 16.06  str.sell
VGR Vector Group 22.69 3.98  str.sell
XXII 22nd Century G 2.61 0.06  str.sell
TPB Turning Point 17.77 63.84  str.buy
BTI British Americ 65.78 40.34  sell

COMPANY NEWS

▶ Bulls betting on these 3 staples   [Dec-14-17 01:30PM  CNBC Videos]
▶ Top 10 Biggest Tobacco Companies in the World in 2017   [Dec-13-17 05:19PM  Insider Monkey]
▶ The Most Important Dividend Stock Chart Youll Ever See   [Dec-11-17 07:47AM  Motley Fool]
▶ Altria Group Declares Quarterly Dividend   [Dec-07-17 12:32PM  GuruFocus.com]
▶ Better Buy: Altria Group vs. Anheuser-Busch InBev   [Nov-28-17 03:31PM  Motley Fool]
▶ Big Tobacco's anti-smoking ads begin after decade of delay   [Nov-21-17 03:47PM  Associated Press]
▶ Anti-smoking ads forced to begin after years of delay   [01:33PM  Yahoo Finance Video]
▶ Top Staples Dividend Picks For The Day   [Nov-15-17 03:02PM  Simply Wall St.]
▶ Heck Yeah! Altria Still Has That Allure   [Nov-06-17 02:08PM  Barrons.com]
▶ Why Altria Groups Margins Expanded in 3Q17   [Nov-01-17 10:33AM  Market Realist]
▶ Better Buy: Altria Group vs. Verizon   [Oct-31-17 09:00PM  Motley Fool]
▶ Philip Morriss Big Smokeless Bet   [Oct-29-17 11:21PM  The Wall Street Journal]
▶ Behind Philip Morris's Smokeless Bet   [10:10PM  The Wall Street Journal]
▶ Altria Keeps Making More From Less   [10:13AM  Motley Fool]
▶ [$$] Marlboro Hurt by California's Cigarette Tax Increase, Altria Says   [Oct-26-17 02:19PM  The Wall Street Journal]
▶ Altria beats 3Q profit forecasts   [07:35AM  Associated Press]
▶ Philip Morris International Inc. Is a Smoking Deal Go Long!   [Oct-20-17 11:52AM  InvestorPlace]
▶ Why Analysts Expect Altrias Net Margin to Rise in 3Q17   [Oct-19-17 05:36PM  Market Realist]
▶ Altria to Host Webcast of Its Investor Day   [10:30AM  Business Wire]
▶ Could Altria Group Be a Millionaire-Maker Stock?   [Oct-17-17 09:30AM  Motley Fool]
▶ Philip Morris: Still Smoking?   [Oct-16-17 11:04AM  Barrons.com]
Financial statements of MO
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

VALUATION THEORY       ASSET ALLOCATION

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

Copyright © X-FIN.com 2005-2017. All rigths reserved.