Intrinsic value of MasTec - MTZ

Previous Close

$45.90

  Intrinsic Value

$1,712

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+7%

Previous close

$45.90

 
Intrinsic value

$1,712

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+7%

*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
  53.40
  48.56
  44.20
  40.28
  36.76
  33.58
  30.72
  28.15
  25.83
  23.75
  21.88
  20.19
  18.67
  17.30
  16.07
  14.97
  13.97
  13.07
  12.26
  11.54
  10.88
  10.30
  9.77
  9.29
  8.86
  8.47
  8.13
  7.81
  7.53
  7.28
Revenue, $m
  5,135
  7,877
  11,702
  16,875
  23,673
  32,374
  43,245
  56,531
  72,444
  91,159
  112,811
  137,489
  165,246
  196,097
  230,027
  266,998
  306,954
  349,832
  395,561
  444,075
  495,313
  549,224
  605,771
  664,933
  726,703
  791,094
  858,136
  927,878
  1,000,387
  1,075,746
  1,154,057
Variable operating expenses, $m
 
  5,335
  7,877
  11,315
  15,833
  21,615
  28,840
  37,670
  48,246
  60,684
  75,074
  91,376
  109,823
  130,327
  152,877
  177,448
  204,003
  232,499
  262,891
  295,134
  329,187
  365,016
  402,598
  441,917
  482,969
  525,764
  570,320
  616,671
  664,861
  714,945
  766,991
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
  6,754
  9,331
  12,805
  17,361
  23,181
  30,445
  39,315
  49,932
  62,412
  76,846
  93,192
  111,684
  132,235
  154,833
  179,452
  206,058
  234,605
  265,050
  297,347
  331,455
  367,341
  404,981
  444,359
  485,472
  528,330
  572,950
  619,367
  667,624
  717,777
  769,894
Operating income, $m
  273
  1,124
  2,371
  4,070
  6,313
  9,193
  12,800
  17,215
  22,512
  28,747
  35,965
  44,297
  53,562
  63,862
  75,195
  87,546
  100,897
  115,226
  130,511
  146,729
  163,858
  181,883
  200,791
  220,574
  241,230
  262,764
  285,186
  308,511
  332,763
  357,969
  384,163
EBITDA, $m
  438
  1,332
  2,632
  4,402
  6,739
  9,739
  13,496
  18,096
  23,612
  30,105
  37,623
  46,196
  55,844
  66,570
  78,371
  91,233
  105,136
  120,057
  135,974
  152,861
  170,698
  189,468
  209,156
  229,756
  251,266
  273,689
  297,036
  321,325
  346,578
  372,825
  400,100
Interest expense (income), $m
  48
  46
  98
  169
  266
  394
  557
  760
  1,009
  1,308
  1,658
  2,064
  2,526
  3,046
  3,624
  4,260
  4,953
  5,701
  6,505
  7,362
  8,271
  9,231
  10,241
  11,300
  12,409
  13,566
  14,773
  16,029
  17,336
  18,694
  20,106
Earnings before tax, $m
  226
  1,077
  2,273
  3,900
  6,046
  8,799
  12,243
  16,455
  21,502
  27,439
  34,307
  42,234
  51,035
  60,816
  71,570
  83,286
  95,944
  109,525
  124,006
  139,367
  155,588
  172,652
  190,550
  209,273
  228,821
  249,198
  270,413
  292,482
  315,427
  339,275
  364,057
Tax expense, $m
  92
  291
  614
  1,053
  1,632
  2,376
  3,306
  4,443
  5,806
  7,409
  9,263
  11,403
  13,780
  16,420
  19,324
  22,487
  25,905
  29,572
  33,482
  37,629
  42,009
  46,616
  51,449
  56,504
  61,782
  67,283
  73,012
  78,970
  85,165
  91,604
  98,295
Net income, $m
  131
  786
  1,660
  2,847
  4,414
  6,423
  8,937
  12,012
  15,697
  20,030
  25,044
  30,831
  37,256
  44,396
  52,246
  60,798
  70,039
  79,953
  90,525
  101,738
  113,579
  126,036
  139,102
  152,770
  167,040
  181,914
  197,401
  213,512
  230,262
  247,671
  265,762

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
  4,824
  7,166
  10,334
  14,497
  19,825
  26,482
  34,618
  44,362
  55,823
  69,082
  84,194
  101,192
  120,084
  140,862
  163,501
  187,970
  214,226
  242,230
  271,938
  303,315
  336,328
  370,956
  407,185
  445,011
  484,442
  525,497
  568,205
  612,607
  658,754
  706,710
Adjusted assets (=assets-cash), $m
  3,144
  4,824
  7,166
  10,334
  14,497
  19,825
  26,482
  34,618
  44,362
  55,823
  69,082
  84,194
  101,192
  120,084
  140,862
  163,501
  187,970
  214,226
  242,230
  271,938
  303,315
  336,328
  370,956
  407,185
  445,011
  484,442
  525,497
  568,205
  612,607
  658,754
  706,710
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
  1,142
  1,697
  2,447
  3,433
  4,694
  6,271
  8,197
  10,504
  13,218
  16,358
  19,936
  23,961
  28,434
  33,354
  38,715
  44,508
  50,726
  57,356
  64,391
  71,820
  79,637
  87,837
  96,415
  105,372
  114,709
  124,430
  134,542
  145,056
  155,983
  167,338
Working capital, $m
  562
  906
  1,346
  1,941
  2,722
  3,723
  4,973
  6,501
  8,331
  10,483
  12,973
  15,811
  19,003
  22,551
  26,453
  30,705
  35,300
  40,231
  45,490
  51,069
  56,961
  63,161
  69,664
  76,467
  83,571
  90,976
  98,686
  106,706
  115,044
  123,711
  132,717
Total debt, $m
  1,026
  2,080
  3,605
  5,667
  8,377
  11,846
  16,180
  21,476
  27,820
  35,281
  43,912
  53,751
  64,816
  77,115
  90,641
  105,379
  121,308
  138,401
  156,631
  175,972
  196,398
  217,890
  240,432
  264,017
  288,642
  314,312
  341,038
  368,841
  397,747
  427,789
  459,008
Total liabilities, $m
  2,087
  3,140
  4,665
  6,727
  9,437
  12,906
  17,240
  22,536
  28,880
  36,341
  44,972
  54,811
  65,876
  78,175
  91,701
  106,439
  122,368
  139,461
  157,691
  177,032
  197,458
  218,950
  241,492
  265,077
  289,702
  315,372
  342,098
  369,901
  398,807
  428,849
  460,068
Total equity, $m
  1,097
  1,683
  2,501
  3,606
  5,059
  6,919
  9,242
  12,082
  15,482
  19,482
  24,110
  29,384
  35,316
  41,909
  49,161
  57,062
  65,601
  74,765
  84,538
  94,906
  105,857
  117,379
  129,464
  142,108
  155,309
  169,070
  183,398
  198,303
  213,800
  229,905
  246,642
Total liabilities and equity, $m
  3,184
  4,823
  7,166
  10,333
  14,496
  19,825
  26,482
  34,618
  44,362
  55,823
  69,082
  84,195
  101,192
  120,084
  140,862
  163,501
  187,969
  214,226
  242,229
  271,938
  303,315
  336,329
  370,956
  407,185
  445,011
  484,442
  525,496
  568,204
  612,607
  658,754
  706,710
Debt-to-equity ratio
  0.935
  1.240
  1.440
  1.570
  1.660
  1.710
  1.750
  1.780
  1.800
  1.810
  1.820
  1.830
  1.840
  1.840
  1.840
  1.850
  1.850
  1.850
  1.850
  1.850
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
  1.860
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
  786
  1,660
  2,847
  4,414
  6,423
  8,937
  12,012
  15,697
  20,030
  25,044
  30,831
  37,256
  44,396
  52,246
  60,798
  70,039
  79,953
  90,525
  101,738
  113,579
  126,036
  139,102
  152,770
  167,040
  181,914
  197,401
  213,512
  230,262
  247,671
  265,762
Depreciation, amort., depletion, $m
  165
  208
  261
  333
  427
  547
  697
  880
  1,100
  1,358
  1,657
  1,899
  2,282
  2,708
  3,177
  3,687
  4,239
  4,831
  5,463
  6,132
  6,840
  7,585
  8,365
  9,182
  10,035
  10,925
  11,850
  12,814
  13,815
  14,856
  15,937
Funds from operations, $m
  92
  995
  1,921
  3,180
  4,840
  6,970
  9,634
  12,892
  16,797
  21,389
  26,701
  32,729
  39,538
  47,104
  55,423
  64,486
  74,278
  84,784
  95,987
  107,870
  120,419
  133,621
  147,467
  161,952
  177,075
  192,839
  209,252
  226,326
  244,077
  262,526
  281,699
Change in working capital, $m
  -114
  315
  440
  595
  782
  1,001
  1,250
  1,528
  1,830
  2,152
  2,490
  2,838
  3,192
  3,548
  3,902
  4,252
  4,595
  4,931
  5,259
  5,579
  5,892
  6,200
  6,503
  6,804
  7,104
  7,405
  7,710
  8,020
  8,338
  8,666
  9,006
Cash from operations, $m
  206
  680
  1,481
  2,585
  4,058
  5,969
  8,384
  11,365
  14,967
  19,237
  24,212
  29,891
  36,346
  43,556
  51,521
  60,234
  69,683
  79,853
  90,728
  102,291
  114,527
  127,421
  140,964
  155,148
  169,971
  185,434
  201,542
  218,305
  235,738
  253,860
  272,693
Maintenance CAPEX, $m
  0
  -71
  -109
  -162
  -233
  -327
  -447
  -597
  -781
  -1,000
  -1,259
  -1,558
  -1,899
  -2,282
  -2,708
  -3,177
  -3,687
  -4,239
  -4,831
  -5,463
  -6,132
  -6,840
  -7,585
  -8,365
  -9,182
  -10,035
  -10,925
  -11,850
  -12,814
  -13,815
  -14,856
New CAPEX, $m
  -117
  -399
  -555
  -750
  -986
  -1,262
  -1,576
  -1,926
  -2,307
  -2,714
  -3,139
  -3,578
  -4,025
  -4,473
  -4,920
  -5,361
  -5,794
  -6,217
  -6,631
  -7,035
  -7,429
  -7,817
  -8,199
  -8,578
  -8,957
  -9,337
  -9,721
  -10,113
  -10,514
  -10,927
  -11,355
Cash from investing activities, $m
  -141
  -470
  -664
  -912
  -1,219
  -1,589
  -2,023
  -2,523
  -3,088
  -3,714
  -4,398
  -5,136
  -5,924
  -6,755
  -7,628
  -8,538
  -9,481
  -10,456
  -11,462
  -12,498
  -13,561
  -14,657
  -15,784
  -16,943
  -18,139
  -19,372
  -20,646
  -21,963
  -23,328
  -24,742
  -26,211
Free cash flow, $m
  65
  210
  818
  1,673
  2,840
  4,381
  6,361
  8,841
  11,879
  15,522
  19,813
  24,755
  30,422
  36,801
  43,893
  51,697
  60,202
  69,397
  79,266
  89,794
  100,965
  112,764
  125,180
  138,205
  151,832
  166,062
  180,896
  196,342
  212,411
  229,118
  246,482
Issuance/(repayment) of debt, $m
  -14
  1,093
  1,525
  2,062
  2,710
  3,469
  4,334
  5,296
  6,344
  7,461
  8,631
  9,838
  11,065
  12,299
  13,526
  14,739
  15,929
  17,093
  18,230
  19,340
  20,426
  21,492
  22,543
  23,585
  24,625
  25,670
  26,727
  27,803
  28,906
  30,042
  31,219
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
  1,093
  1,525
  2,062
  2,710
  3,469
  4,334
  5,296
  6,344
  7,461
  8,631
  9,838
  11,065
  12,299
  13,526
  14,739
  15,929
  17,093
  18,230
  19,340
  20,426
  21,492
  22,543
  23,585
  24,625
  25,670
  26,727
  27,803
  28,906
  30,042
  31,219
Total cash flow (excl. dividends), $m
  34
  1,303
  2,342
  3,736
  5,550
  7,849
  10,694
  14,137
  18,222
  22,983
  28,445
  34,593
  41,488
  49,099
  57,419
  66,435
  76,131
  86,490
  97,497
  109,134
  121,391
  134,256
  147,723
  161,790
  176,457
  191,732
  207,623
  224,145
  241,317
  259,160
  277,701
Retained Cash Flow (-), $m
  -157
  -586
  -817
  -1,106
  -1,453
  -1,860
  -2,323
  -2,839
  -3,401
  -4,000
  -4,627
  -5,274
  -5,932
  -6,593
  -7,251
  -7,901
  -8,539
  -9,164
  -9,773
  -10,368
  -10,950
  -11,522
  -12,085
  -12,644
  -13,201
  -13,761
  -14,328
  -14,905
  -15,496
  -16,106
  -16,736
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
 
  717
  1,525
  2,630
  4,097
  5,990
  8,371
  11,298
  14,821
  18,984
  23,817
  29,319
  35,556
  42,506
  50,168
  58,534
  67,592
  77,327
  87,723
  98,766
  110,440
  122,734
  135,638
  149,146
  163,256
  177,970
  193,295
  209,240
  225,820
  243,055
  260,965
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
 
  671
  1,328
  2,117
  3,026
  4,027
  5,081
  6,136
  7,135
  8,020
  8,737
  9,232
  9,496
  9,505
  9,266
  8,802
  8,149
  7,354
  6,469
  5,546
  4,633
  3,768
  2,984
  2,299
  1,721
  1,252
  883
  604
  401
  257
  159
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. is an infrastructure construction company. The Company operates primarily across North America through a range of industries. The Company operates through five segments: Communications, Oil and Gas, Electrical Transmission, Power Generation and Industrial, and Other. Its primary activities include the engineering, building, installation, maintenance and upgrade of communications, energy and utility infrastructure, such as wireless, wireline/fiber, satellite communications and customer fulfillment activities; petroleum and natural gas pipeline infrastructure; electrical utility transmission and distribution; conventional and renewable power generation, and industrial infrastructure. The Company offered its services primarily under the MasTec service mark and had operations across 510 locations as of December 31, 2016. It provides services under master service and other service agreements, which are generally multi-year agreements.

FINANCIAL RATIOS  of  MasTec (MTZ)

Valuation Ratios
P/E Ratio 28.9
Price to Sales 0.7
Price to Book 3.5
Price to Tangible Book
Price to Cash Flow 18.4
Price to Free Cash Flow 42.6
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 53.4% 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 81.36 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

▶ ETFs with exposure to MasTec, Inc. : September 22, 2017   [Sep-22-17 11:15AM  Capital Cube]
▶ Bull of the Day: MasTec (MTZ)   [06:00AM  Zacks]
▶ Mastec Earns IBD Rating Upgrade   [03:00AM  Investor's Business Daily]
▶ Stocks Showing Improved Relative Strength: Mastec   [03:00AM  Investor's Business Daily]
▶ MasTec, Inc. Value Analysis (NYSE:MTZ) : August 19, 2017   [Aug-18-17 08:26PM  Capital Cube]
▶ Bull of the Day: MasTec (MTZ)   [07:00AM  Zacks]
▶ ETFs with exposure to MasTec, Inc. : August 7, 2017   [Aug-07-17 04:42PM  Capital Cube]
▶ Soaring Sales Lift MasTec to New Records   [Aug-04-17 08:36AM  Motley Fool]
▶ ETFs with exposure to MasTec, Inc. : July 28, 2017   [Jul-28-17 04:36PM  Capital Cube]
▶ ETFs with exposure to MasTec, Inc. : July 18, 2017   [Jul-18-17 01:58PM  Capital Cube]
▶ Blank check company backed by MasTec files $250 million IPO   [Jul-14-17 10:00AM  American City Business Journals]
▶ ETFs with exposure to MasTec, Inc. : July 7, 2017   [Jul-07-17 03:12PM  Capital Cube]
▶ ETFs with exposure to MasTec, Inc. : June 26, 2017   [Jun-26-17 04:27PM  Capital Cube]
▶ Stocks Up; Why Apple, Microsoft Can Beat The S&P 500 In 2017   [Jun-19-17 03:07PM  Investor's Business Daily]
▶ ETFs with exposure to MasTec, Inc. : June 15, 2017   [Jun-15-17 02:40PM  Capital Cube]
▶ MasTec, Inc. Value Analysis (NYSE:MTZ) : May 19, 2017   [May-19-17 02:34PM  Capital Cube]
▶ 3 Market-Beating Growth Stocks   [May-10-17 04:26PM  Zacks]
▶ Why MasTec, Inc's Shares Popped 10% Today   [May-05-17 03:25PM  Motley Fool]
▶ MasTec Keeps Building Higher   [May-04-17 10:45PM  Motley Fool]
▶ Stocks Surging on the Big Breakout   [Apr-25-17 12:35PM  Zacks]
▶ 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]
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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