Intrinsic value of MasTec - MTZ

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$43.55

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$43.55

 
Intrinsic value

$451.83

 
Up/down potential

+937%

 
Rating

str. buy

 
Value-price divergence* premium content

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

We calculate the intrinsic value of MTZ 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 3.7

 

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, %
  22.03
  30.70
  28.13
  25.82
  23.74
  21.86
  20.18
  18.66
  17.29
  16.06
  14.96
  13.96
  13.06
  12.26
  11.53
  10.88
  10.29
  9.76
  9.29
  8.86
  8.47
  8.12
  7.81
  7.53
  7.28
  7.05
  6.84
  6.66
  6.49
  6.35
  6.21
Revenue, $m
  5,135
  6,711
  8,599
  10,819
  13,388
  16,314
  19,606
  23,264
  27,287
  31,670
  36,406
  41,489
  46,910
  52,660
  58,733
  65,123
  71,825
  78,837
  86,158
  93,789
  101,734
  110,000
  118,593
  127,524
  136,805
  146,450
  156,474
  166,896
  177,735
  189,013
  200,751
Variable operating expenses, $m
 
  4,560
  5,815
  7,290
  8,997
  10,942
  13,130
  15,561
  18,234
  21,147
  24,295
  27,574
  31,176
  34,998
  39,034
  43,281
  47,735
  52,395
  57,261
  62,332
  67,613
  73,106
  78,817
  84,753
  90,921
  97,331
  103,993
  110,920
  118,124
  125,618
  133,420
Fixed operating expenses, $m
 
  1,419
  1,454
  1,490
  1,528
  1,566
  1,605
  1,645
  1,686
  1,728
  1,772
  1,816
  1,861
  1,908
  1,956
  2,004
  2,055
  2,106
  2,159
  2,213
  2,268
  2,325
  2,383
  2,442
  2,503
  2,566
  2,630
  2,696
  2,763
  2,832
  2,903
Total operating expenses, $m
  4,862
  5,979
  7,269
  8,780
  10,525
  12,508
  14,735
  17,206
  19,920
  22,875
  26,067
  29,390
  33,037
  36,906
  40,990
  45,285
  49,790
  54,501
  59,420
  64,545
  69,881
  75,431
  81,200
  87,195
  93,424
  99,897
  106,623
  113,616
  120,887
  128,450
  136,323
Operating income, $m
  273
  733
  1,331
  2,039
  2,863
  3,806
  4,871
  6,058
  7,366
  8,794
  10,339
  12,099
  13,872
  15,754
  17,743
  19,838
  22,035
  24,336
  26,738
  29,244
  31,853
  34,569
  37,393
  40,329
  43,381
  46,553
  49,851
  53,281
  56,849
  60,562
  64,428
EBITDA, $m
  438
  925
  1,549
  2,288
  3,147
  4,131
  5,241
  6,479
  7,842
  9,331
  10,942
  12,672
  14,520
  16,481
  18,554
  20,737
  23,027
  25,424
  27,928
  30,539
  33,258
  36,088
  39,031
  42,090
  45,270
  48,575
  52,012
  55,585
  59,303
  63,172
  67,200
Interest expense (income), $m
  48
  46
  76
  111
  153
  201
  256
  318
  386
  461
  544
  632
  728
  829
  937
  1,051
  1,170
  1,296
  1,427
  1,564
  1,707
  1,856
  2,011
  2,172
  2,340
  2,513
  2,694
  2,882
  3,077
  3,280
  3,492
Earnings before tax, $m
  226
  686
  1,255
  1,927
  2,710
  3,605
  4,615
  5,740
  6,980
  8,332
  9,796
  11,467
  13,144
  14,925
  16,806
  18,787
  20,865
  23,040
  25,311
  27,679
  30,146
  32,713
  35,382
  38,157
  41,041
  44,039
  47,157
  50,399
  53,771
  57,282
  60,937
Tax expense, $m
  92
  185
  339
  520
  732
  973
  1,246
  1,550
  1,885
  2,250
  2,645
  3,096
  3,549
  4,030
  4,538
  5,072
  5,634
  6,221
  6,834
  7,473
  8,139
  8,832
  9,553
  10,302
  11,081
  11,891
  12,732
  13,608
  14,518
  15,466
  16,453
Net income, $m
  131
  501
  916
  1,407
  1,978
  2,632
  3,369
  4,190
  5,095
  6,083
  7,151
  8,371
  9,595
  10,895
  12,269
  13,714
  15,231
  16,819
  18,477
  20,206
  22,007
  23,880
  25,829
  27,854
  29,960
  32,149
  34,424
  36,791
  39,253
  41,816
  44,484

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  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
  0
Total assets, $m
  3,183
  4,110
  5,266
  6,626
  8,198
  9,990
  12,006
  14,246
  16,710
  19,394
  22,294
  25,407
  28,726
  32,247
  35,966
  39,879
  43,983
  48,277
  52,760
  57,433
  62,299
  67,361
  72,623
  78,092
  83,775
  89,681
  95,820
  102,202
  108,840
  115,746
  122,934
Adjusted assets (=assets-cash), $m
  3,144
  4,110
  5,266
  6,626
  8,198
  9,990
  12,006
  14,246
  16,710
  19,394
  22,294
  25,407
  28,726
  32,247
  35,966
  39,879
  43,983
  48,277
  52,760
  57,433
  62,299
  67,361
  72,623
  78,092
  83,775
  89,681
  95,820
  102,202
  108,840
  115,746
  122,934
Revenue / Adjusted assets
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
  1.633
Average production assets, $m
  744
  973
  1,247
  1,569
  1,941
  2,366
  2,843
  3,373
  3,957
  4,592
  5,279
  6,016
  6,802
  7,636
  8,516
  9,443
  10,415
  11,431
  12,493
  13,599
  14,751
  15,950
  17,196
  18,491
  19,837
  21,235
  22,689
  24,200
  25,772
  27,407
  29,109
Working capital, $m
  562
  772
  989
  1,244
  1,540
  1,876
  2,255
  2,675
  3,138
  3,642
  4,187
  4,771
  5,395
  6,056
  6,754
  7,489
  8,260
  9,066
  9,908
  10,786
  11,699
  12,650
  13,638
  14,665
  15,733
  16,842
  17,995
  19,193
  20,440
  21,736
  23,086
Total debt, $m
  1,026
  1,616
  2,368
  3,253
  4,277
  5,444
  6,756
  8,214
  9,818
  11,565
  13,454
  15,480
  17,641
  19,933
  22,354
  24,901
  27,573
  30,368
  33,287
  36,329
  39,497
  42,792
  46,217
  49,778
  53,478
  57,323
  61,319
  65,474
  69,795
  74,290
  78,970
Total liabilities, $m
  2,087
  2,676
  3,428
  4,313
  5,337
  6,504
  7,816
  9,274
  10,878
  12,625
  14,514
  16,540
  18,701
  20,993
  23,414
  25,961
  28,633
  31,428
  34,347
  37,389
  40,557
  43,852
  47,277
  50,838
  54,538
  58,383
  62,379
  66,534
  70,855
  75,350
  80,030
Total equity, $m
  1,097
  1,434
  1,838
  2,312
  2,861
  3,487
  4,190
  4,972
  5,832
  6,768
  7,781
  8,867
  10,025
  11,254
  12,552
  13,918
  15,350
  16,849
  18,413
  20,044
  21,742
  23,509
  25,345
  27,254
  29,238
  31,299
  33,441
  35,669
  37,985
  40,395
  42,904
Total liabilities and equity, $m
  3,184
  4,110
  5,266
  6,625
  8,198
  9,991
  12,006
  14,246
  16,710
  19,393
  22,295
  25,407
  28,726
  32,247
  35,966
  39,879
  43,983
  48,277
  52,760
  57,433
  62,299
  67,361
  72,622
  78,092
  83,776
  89,682
  95,820
  102,203
  108,840
  115,745
  122,934
Debt-to-equity ratio
  0.935
  1.130
  1.290
  1.410
  1.490
  1.560
  1.610
  1.650
  1.680
  1.710
  1.730
  1.750
  1.760
  1.770
  1.780
  1.790
  1.800
  1.800
  1.810
  1.810
  1.820
  1.820
  1.820
  1.830
  1.830
  1.830
  1.830
  1.840
  1.840
  1.840
  1.840
Adjusted equity ratio
  0.337
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349
  0.349

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  131
  501
  916
  1,407
  1,978
  2,632
  3,369
  4,190
  5,095
  6,083
  7,151
  8,371
  9,595
  10,895
  12,269
  13,714
  15,231
  16,819
  18,477
  20,206
  22,007
  23,880
  25,829
  27,854
  29,960
  32,149
  34,424
  36,791
  39,253
  41,816
  44,484
Depreciation, amort., depletion, $m
  165
  192
  218
  249
  284
  325
  370
  421
  476
  537
  602
  573
  648
  727
  811
  899
  992
  1,089
  1,190
  1,295
  1,405
  1,519
  1,638
  1,761
  1,889
  2,022
  2,161
  2,305
  2,454
  2,610
  2,772
Funds from operations, $m
  92
  693
  1,134
  1,656
  2,263
  2,957
  3,739
  4,611
  5,572
  6,620
  7,753
  8,944
  10,243
  11,622
  13,080
  14,614
  16,223
  17,908
  19,667
  21,501
  23,411
  25,399
  27,466
  29,615
  31,849
  34,171
  36,585
  39,096
  41,708
  44,426
  47,256
Change in working capital, $m
  -114
  181
  217
  255
  295
  337
  379
  421
  463
  504
  545
  585
  623
  661
  698
  735
  771
  806
  842
  878
  914
  951
  988
  1,027
  1,067
  1,109
  1,153
  1,199
  1,246
  1,297
  1,350
Cash from operations, $m
  206
  498
  917
  1,401
  1,967
  2,620
  3,361
  4,191
  5,109
  6,116
  7,209
  8,359
  9,620
  10,961
  12,381
  13,879
  15,453
  17,101
  18,825
  20,624
  22,498
  24,449
  26,478
  28,588
  30,782
  33,062
  35,432
  37,897
  40,461
  43,129
  45,906
Maintenance CAPEX, $m
  0
  -71
  -93
  -119
  -149
  -185
  -225
  -271
  -321
  -377
  -437
  -503
  -573
  -648
  -727
  -811
  -899
  -992
  -1,089
  -1,190
  -1,295
  -1,405
  -1,519
  -1,638
  -1,761
  -1,889
  -2,022
  -2,161
  -2,305
  -2,454
  -2,610
New CAPEX, $m
  -117
  -230
  -274
  -322
  -372
  -424
  -477
  -530
  -583
  -636
  -687
  -737
  -786
  -834
  -881
  -927
  -972
  -1,017
  -1,062
  -1,107
  -1,152
  -1,198
  -1,246
  -1,295
  -1,346
  -1,398
  -1,454
  -1,511
  -1,572
  -1,635
  -1,702
Cash from investing activities, $m
  -141
  -301
  -367
  -441
  -521
  -609
  -702
  -801
  -904
  -1,013
  -1,124
  -1,240
  -1,359
  -1,482
  -1,608
  -1,738
  -1,871
  -2,009
  -2,151
  -2,297
  -2,447
  -2,603
  -2,765
  -2,933
  -3,107
  -3,287
  -3,476
  -3,672
  -3,877
  -4,089
  -4,312
Free cash flow, $m
  65
  197
  551
  960
  1,446
  2,011
  2,658
  3,389
  4,205
  5,103
  6,084
  7,120
  8,261
  9,480
  10,774
  12,141
  13,581
  15,093
  16,675
  18,327
  20,050
  21,845
  23,713
  25,656
  27,675
  29,774
  31,956
  34,225
  36,585
  39,039
  41,594
Issuance/(repayment) of debt, $m
  -14
  629
  753
  885
  1,024
  1,167
  1,312
  1,458
  1,604
  1,747
  1,888
  2,026
  2,161
  2,292
  2,421
  2,547
  2,672
  2,795
  2,918
  3,042
  3,167
  3,295
  3,426
  3,560
  3,700
  3,845
  3,996
  4,155
  4,321
  4,496
  4,680
Issuance/(repurchase) of shares, $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
Cash from financing (excl. dividends), $m  
  -29
  629
  753
  885
  1,024
  1,167
  1,312
  1,458
  1,604
  1,747
  1,888
  2,026
  2,161
  2,292
  2,421
  2,547
  2,672
  2,795
  2,918
  3,042
  3,167
  3,295
  3,426
  3,560
  3,700
  3,845
  3,996
  4,155
  4,321
  4,496
  4,680
Total cash flow (excl. dividends), $m
  34
  826
  1,303
  1,845
  2,469
  3,178
  3,971
  4,848
  5,808
  6,851
  7,973
  9,146
  10,422
  11,772
  13,195
  14,689
  16,253
  17,888
  19,593
  21,369
  23,218
  25,140
  27,139
  29,216
  31,375
  33,619
  35,953
  38,380
  40,906
  43,535
  46,273
Retained Cash Flow (-), $m
  -157
  -337
  -403
  -474
  -549
  -625
  -703
  -782
  -860
  -937
  -1,012
  -1,086
  -1,158
  -1,229
  -1,298
  -1,366
  -1,432
  -1,499
  -1,565
  -1,631
  -1,698
  -1,766
  -1,837
  -1,909
  -1,983
  -2,061
  -2,142
  -2,227
  -2,316
  -2,410
  -2,509
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
 
  488
  900
  1,371
  1,921
  2,552
  3,267
  4,066
  4,949
  5,914
  6,960
  8,060
  9,263
  10,543
  11,897
  13,323
  14,821
  16,389
  18,029
  19,739
  21,520
  23,374
  25,302
  27,307
  29,391
  31,558
  33,810
  36,153
  38,589
  41,125
  43,765
Discount rate, %
 
  6.80
  7.14
  7.50
  7.87
  8.27
  8.68
  9.11
  9.57
  10.05
  10.55
  11.08
  11.63
  12.21
  12.82
  13.46
  14.14
  14.84
  15.59
  16.37
  17.18
  18.04
  18.94
  19.89
  20.89
  21.93
  23.03
  24.18
  25.39
  26.66
  27.99
PV of cash for distribution, $m
 
  457
  784
  1,103
  1,418
  1,716
  1,983
  2,208
  2,382
  2,498
  2,553
  2,538
  2,474
  2,358
  2,197
  2,003
  1,787
  1,559
  1,329
  1,108
  903
  718
  557
  421
  310
  222
  155
  104
  68
  43
  27
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

MasTec, Inc., an infrastructure construction company, provides engineering, building, installation, maintenance, and upgrade services for communications, energy, and utility infrastructure primarily in the United States and Canada. It operates through five segments: Communications, Oil and Gas, Electrical Transmission, Power Generation and Industrial, and Other. The company builds underground and overhead distribution systems, including trenches, conduits, cable, and power lines, which provide wireless and wireline/fiber communications; natural gas, crude oil, and refined product transport pipelines; electrical power generation, transmission, and distribution systems; power generation infrastructure, such as renewable energy; heavy industrial plants; and compressor and pump stations, and treatment plants. It also installs electrical and other energy distribution and transmission systems, power generation facilities, buried and aerial fiber optic cables, coaxial cables, copper lines, satellite dishes, home security, and home automation in various environments. In addition, the company offers maintenance and upgrade support services comprising maintenance of customersÂ’ distribution facilities, networks, and infrastructure, including natural gas and petroleum pipeline, communications, electrical distribution and transmission, and power generation infrastructure; emergency services for accidents or storm damage; and routine replacements and upgrades to overhauls. Its customers include public and private energy providers, pipeline operators, wireless service providers, satellite and broadband operators, local and long distance carriers, and government entities. The company was founded in 1929 and is headquartered in Coral Gables, Florida.

FINANCIAL RATIOS  of  MasTec (MTZ)

Valuation Ratios
P/E Ratio 27.4
Price to Sales 0.7
Price to Book 3.3
Price to Tangible Book
Price to Cash Flow 17.4
Price to Free Cash Flow 40.4
Growth Rates
Sales Growth Rate 22%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 39.3%
Cap. Spend. - 3 Yr. Gr. Rate -1.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 87.6%
Total Debt to Equity 93.5%
Interest Coverage 6
Management Effectiveness
Return On Assets 5.2%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 6.4%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 12.9%
Return On Equity - 3 Yr. Avg. 5.3%
Asset Turnover 1.7
Profitability Ratios
Gross Margin 13.5%
Gross Margin - 3 Yr. Avg. 12.9%
EBITDA Margin 8.5%
EBITDA Margin - 3 Yr. Avg. 6.9%
Operating Margin 5.3%
Oper. Margin - 3 Yr. Avg. 3.4%
Pre-Tax Margin 4.4%
Pre-Tax Margin - 3 Yr. Avg. 2.4%
Net Profit Margin 2.6%
Net Profit Margin - 3 Yr. Avg. 1.1%
Effective Tax Rate 40.7%
Eff/ Tax Rate - 3 Yr. Avg. 20.5%
Payout Ratio 0%

MTZ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MTZ stock intrinsic value calculation we used $5135 million for the last fiscal year's total revenue generated by MasTec. The default revenue input number comes from 2016 income statement of MasTec. 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 MTZ stock valuation model: a) initial revenue growth rate of 30.7% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.8%, whose default value for MTZ is calculated based on our internal credit rating of MasTec, 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 MasTec.
    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 MTZ stock the variable cost ratio is equal to 68.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1384 million in the base year in the intrinsic value calculation for MTZ 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 4.7% for MasTec.

Corporate tax rate of 27% is the nominal tax rate for MasTec. 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 MTZ 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 MTZ are equal to 14.5%.

Life of production assets of 10.5 years is the average useful life of capital assets used in MasTec 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 MTZ is equal to 11.5%. 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 - $1097 million for MasTec - 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 84.145 million for MasTec 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 MasTec at the current share price and the inputted number of shares is $3.7 billion.


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COMPANY NEWS

▶ MasTec Stock Gaining on D.A. Davidson Upgrade   [Apr-13-17 11:34AM  TheStreet.com]
▶ Stock Expecting 2,450% Growth Builds Base Ahead Of Q1 Earnings   [Apr-07-17 03:11PM  Investor's Business Daily]
▶ Top Ranked Growth Stocks to Buy for March 29th   [Mar-29-17 10:05AM  Zacks]
▶ Why MasTec, Inc.'s Shares Popped 12% on Friday   [Feb-03-17 02:32PM  at Motley Fool]
▶ Why Shares of MasTec, Inc. Jumped 11% Today   [Jan-24-17 04:23PM  at Motley Fool]
▶ What's in the Pipeline at Energy Transfer Partners LP?   [Dec-08-16 12:42PM  at Motley Fool]
▶ Should You Buy MasTec, Inc. (MTZ)?   [Nov-29-16 06:35AM  at Insider Monkey]
▶ These 3 Companies Doubled in 2016   [09:14AM  at Motley Fool]
▶ MasTec, Inc. Stock Up 10% Today: Here's Why   [Nov-09-16 09:57PM  at Motley Fool]
Stock chart of MTZ Financial statements of MTZ
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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