Intrinsic value of Nomura Holdings ADR - NMR

Previous Close

$5.76

  Intrinsic Value

$1.54

stock screener

  Rating & Target

str. sell

-73%

  Value-price divergence*

+1861%

Previous close

$5.76

 
Intrinsic value

$1.54

 
Up/down potential

-73%

 
Rating

str. sell

 
Value-price divergence*

+1861%

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

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

We calculate the intrinsic value of NMR 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 22.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -10.75
  2.10
  2.39
  2.65
  2.89
  3.10
  3.29
  3.46
  3.61
  3.75
  3.88
  3.99
  4.09
  4.18
  4.26
  4.34
  4.40
  4.46
  4.52
  4.56
  4.61
  4.65
  4.68
  4.71
  4.74
  4.77
  4.79
  4.81
  4.83
  4.85
  4.86
Revenue, $m
  15,000
  15,315
  15,681
  16,097
  16,561
  17,074
  17,636
  18,246
  18,905
  19,614
  20,374
  21,187
  22,054
  22,976
  23,955
  24,994
  26,094
  27,259
  28,490
  29,790
  31,163
  32,611
  34,139
  35,748
  37,444
  39,229
  41,109
  43,087
  45,169
  47,359
  49,662
Variable operating expenses, $m
 
  2,512
  2,572
  2,640
  2,716
  2,800
  2,892
  2,992
  3,100
  3,217
  3,341
  3,475
  3,617
  3,768
  3,929
  4,099
  4,279
  4,470
  4,672
  4,886
  5,111
  5,348
  5,599
  5,863
  6,141
  6,434
  6,742
  7,066
  7,408
  7,767
  8,145
Fixed operating expenses, $m
 
  11,589
  11,878
  12,175
  12,480
  12,792
  13,111
  13,439
  13,775
  14,120
  14,473
  14,834
  15,205
  15,585
  15,975
  16,374
  16,784
  17,203
  17,634
  18,074
  18,526
  18,989
  19,464
  19,951
  20,449
  20,961
  21,485
  22,022
  22,572
  23,137
  23,715
Total operating expenses, $m
  13,563
  14,101
  14,450
  14,815
  15,196
  15,592
  16,003
  16,431
  16,875
  17,337
  17,814
  18,309
  18,822
  19,353
  19,904
  20,473
  21,063
  21,673
  22,306
  22,960
  23,637
  24,337
  25,063
  25,814
  26,590
  27,395
  28,227
  29,088
  29,980
  30,904
  31,860
Operating income, $m
  1,438
  1,215
  1,231
  1,282
  1,366
  1,482
  1,632
  1,814
  2,029
  2,278
  2,560
  2,878
  3,231
  3,622
  4,051
  4,520
  5,031
  5,585
  6,184
  6,830
  7,526
  8,274
  9,076
  9,935
  10,853
  11,835
  12,882
  13,999
  15,189
  16,455
  17,802
EBITDA, $m
  2,129
  1,319
  1,338
  1,391
  1,478
  1,598
  1,752
  1,938
  2,158
  2,411
  2,699
  3,022
  3,381
  3,778
  4,214
  4,690
  5,208
  5,770
  6,378
  7,033
  7,738
  8,496
  9,308
  10,178
  11,108
  12,102
  13,162
  14,292
  15,496
  16,777
  18,140
Interest expense (income), $m
  3,067
  7,593
  7,383
  7,657
  7,969
  8,317
  8,702
  9,123
  9,581
  10,075
  10,607
  11,177
  11,787
  12,437
  13,128
  13,863
  14,642
  15,467
  16,340
  17,264
  18,239
  19,269
  20,355
  21,500
  22,707
  23,979
  25,318
  26,728
  28,212
  29,773
  31,416
Earnings before tax, $m
  1,438
  -6,379
  -6,152
  -6,376
  -6,603
  -6,835
  -7,070
  -7,309
  -7,551
  -7,797
  -8,047
  -8,299
  -8,555
  -8,814
  -9,077
  -9,342
  -9,611
  -9,882
  -10,156
  -10,433
  -10,713
  -10,995
  -11,279
  -11,566
  -11,854
  -12,144
  -12,436
  -12,729
  -13,023
  -13,318
  -13,613
Tax expense, $m
  197
  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
Net income, $m
  1,145
  -6,379
  -6,152
  -6,376
  -6,603
  -6,835
  -7,070
  -7,309
  -7,551
  -7,797
  -8,047
  -8,299
  -8,555
  -8,814
  -9,077
  -9,342
  -9,611
  -9,882
  -10,156
  -10,433
  -10,713
  -10,995
  -11,279
  -11,566
  -11,854
  -12,144
  -12,436
  -12,729
  -13,023
  -13,318
  -13,613

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  33,941
  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
  357,710
  364,643
  373,358
  383,256
  394,316
  406,529
  419,894
  434,417
  450,113
  466,999
  485,102
  504,452
  525,084
  547,038
  570,357
  595,091
  621,293
  649,018
  678,330
  709,294
  741,980
  776,464
  812,823
  851,143
  891,512
  934,026
  978,782
  1,025,887
  1,075,452
  1,127,592
  1,182,432
Adjusted assets (=assets-cash), $m
  323,769
  364,643
  373,358
  383,256
  394,316
  406,529
  419,894
  434,417
  450,113
  466,999
  485,102
  504,452
  525,084
  547,038
  570,357
  595,091
  621,293
  649,018
  678,330
  709,294
  741,980
  776,464
  812,823
  851,143
  891,512
  934,026
  978,782
  1,025,887
  1,075,452
  1,127,592
  1,182,432
Revenue / Adjusted assets
  0.046
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
  0.042
Average production assets, $m
  1,019
  1,041
  1,066
  1,095
  1,126
  1,161
  1,199
  1,241
  1,286
  1,334
  1,385
  1,441
  1,500
  1,562
  1,629
  1,700
  1,774
  1,854
  1,937
  2,026
  2,119
  2,218
  2,321
  2,431
  2,546
  2,668
  2,795
  2,930
  3,071
  3,220
  3,377
Working capital, $m
  0
  7,658
  7,841
  8,048
  8,281
  8,537
  8,818
  9,123
  9,452
  9,807
  10,187
  10,593
  11,027
  11,488
  11,978
  12,497
  13,047
  13,629
  14,245
  14,895
  15,582
  16,306
  17,069
  17,874
  18,722
  19,615
  20,554
  21,544
  22,584
  23,679
  24,831
Total debt, $m
  216,956
  210,932
  218,775
  227,683
  237,637
  248,629
  260,658
  273,729
  287,854
  303,052
  319,345
  336,760
  355,329
  375,087
  396,074
  418,335
  441,916
  466,870
  493,250
  521,118
  550,535
  581,570
  614,294
  648,781
  685,114
  723,376
  763,657
  806,052
  850,660
  897,586
  946,941
Total liabilities, $m
  334,203
  328,179
  336,022
  344,930
  354,884
  365,876
  377,905
  390,976
  405,101
  420,299
  436,592
  454,007
  472,576
  492,334
  513,321
  535,582
  559,163
  584,117
  610,497
  638,365
  667,782
  698,817
  731,541
  766,028
  802,361
  840,623
  880,904
  923,299
  967,907
  1,014,833
  1,064,188
Total equity, $m
  23,507
  36,464
  37,336
  38,326
  39,432
  40,653
  41,989
  43,442
  45,011
  46,700
  48,510
  50,445
  52,508
  54,704
  57,036
  59,509
  62,129
  64,902
  67,833
  70,929
  74,198
  77,646
  81,282
  85,114
  89,151
  93,403
  97,878
  102,589
  107,545
  112,759
  118,243
Total liabilities and equity, $m
  357,710
  364,643
  373,358
  383,256
  394,316
  406,529
  419,894
  434,418
  450,112
  466,999
  485,102
  504,452
  525,084
  547,038
  570,357
  595,091
  621,292
  649,019
  678,330
  709,294
  741,980
  776,463
  812,823
  851,142
  891,512
  934,026
  978,782
  1,025,888
  1,075,452
  1,127,592
  1,182,431
Debt-to-equity ratio
  9.229
  5.780
  5.860
  5.940
  6.030
  6.120
  6.210
  6.300
  6.400
  6.490
  6.580
  6.680
  6.770
  6.860
  6.940
  7.030
  7.110
  7.190
  7.270
  7.350
  7.420
  7.490
  7.560
  7.620
  7.680
  7.740
  7.800
  7.860
  7.910
  7.960
  8.010
Adjusted equity ratio
  0.073
  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
  1,145
  -6,379
  -6,152
  -6,376
  -6,603
  -6,835
  -7,070
  -7,309
  -7,551
  -7,797
  -8,047
  -8,299
  -8,555
  -8,814
  -9,077
  -9,342
  -9,611
  -9,882
  -10,156
  -10,433
  -10,713
  -10,995
  -11,279
  -11,566
  -11,854
  -12,144
  -12,436
  -12,729
  -13,023
  -13,318
  -13,613
Depreciation, amort., depletion, $m
  691
  104
  107
  109
  113
  116
  120
  124
  129
  133
  139
  144
  150
  156
  163
  170
  177
  185
  194
  203
  212
  222
  232
  243
  255
  267
  280
  293
  307
  322
  338
Funds from operations, $m
  17,647
  -6,275
  -6,045
  -6,266
  -6,491
  -6,719
  -6,950
  -7,185
  -7,423
  -7,664
  -7,908
  -8,155
  -8,405
  -8,658
  -8,914
  -9,172
  -9,433
  -9,697
  -9,963
  -10,231
  -10,501
  -10,773
  -11,047
  -11,323
  -11,599
  -11,877
  -12,156
  -12,436
  -12,716
  -12,996
  -13,275
Change in working capital, $m
  6,866
  157
  183
  208
  232
  256
  281
  305
  330
  355
  380
  406
  433
  461
  490
  519
  550
  582
  616
  650
  686
  724
  764
  805
  848
  893
  940
  989
  1,041
  1,095
  1,152
Cash from operations, $m
  10,781
  -6,432
  -6,228
  -6,474
  -6,723
  -6,975
  -7,231
  -7,490
  -7,752
  -8,019
  -8,288
  -8,561
  -8,838
  -9,119
  -9,404
  -9,692
  -9,984
  -10,279
  -10,578
  -10,881
  -11,187
  -11,497
  -11,811
  -12,127
  -12,447
  -12,770
  -13,096
  -13,425
  -13,757
  -14,091
  -14,427
Maintenance CAPEX, $m
  0
  -102
  -104
  -107
  -109
  -113
  -116
  -120
  -124
  -129
  -133
  -139
  -144
  -150
  -156
  -163
  -170
  -177
  -185
  -194
  -203
  -212
  -222
  -232
  -243
  -255
  -267
  -280
  -293
  -307
  -322
New CAPEX, $m
  -2,827
  -23
  -25
  -28
  -32
  -35
  -38
  -41
  -45
  -48
  -52
  -55
  -59
  -63
  -67
  -71
  -75
  -79
  -84
  -88
  -93
  -98
  -104
  -109
  -115
  -121
  -128
  -135
  -142
  -149
  -157
Cash from investing activities, $m
  -206
  -125
  -129
  -135
  -141
  -148
  -154
  -161
  -169
  -177
  -185
  -194
  -203
  -213
  -223
  -234
  -245
  -256
  -269
  -282
  -296
  -310
  -326
  -341
  -358
  -376
  -395
  -415
  -435
  -456
  -479
Free cash flow, $m
  10,575
  -6,557
  -6,357
  -6,609
  -6,864
  -7,123
  -7,385
  -7,651
  -7,921
  -8,195
  -8,473
  -8,755
  -9,041
  -9,332
  -9,626
  -9,925
  -10,228
  -10,536
  -10,847
  -11,163
  -11,483
  -11,808
  -12,136
  -12,469
  -12,806
  -13,146
  -13,491
  -13,839
  -14,191
  -14,547
  -14,906
Issuance/(repayment) of debt, $m
  683
  -6,024
  7,843
  8,908
  9,954
  10,992
  12,028
  13,071
  14,126
  15,198
  16,293
  17,415
  18,569
  19,758
  20,988
  22,261
  23,581
  24,953
  26,381
  27,868
  29,417
  31,035
  32,723
  34,488
  36,333
  38,262
  40,281
  42,395
  44,608
  46,926
  49,355
Issuance/(repurchase) of shares, $m
  -169
  19,336
  7,023
  7,365
  7,709
  8,056
  8,407
  8,761
  9,121
  9,486
  9,857
  10,234
  10,618
  11,010
  11,409
  11,816
  12,231
  12,655
  13,088
  13,530
  13,982
  14,443
  14,915
  15,398
  15,891
  16,396
  16,912
  17,439
  17,979
  18,532
  19,097
Cash from financing (excl. dividends), $m  
  9,308
  13,312
  14,866
  16,273
  17,663
  19,048
  20,435
  21,832
  23,247
  24,684
  26,150
  27,649
  29,187
  30,768
  32,397
  34,077
  35,812
  37,608
  39,469
  41,398
  43,399
  45,478
  47,638
  49,886
  52,224
  54,658
  57,193
  59,834
  62,587
  65,458
  68,452
Total cash flow (excl. dividends), $m
  19,532
  6,755
  8,510
  9,664
  10,800
  11,925
  13,050
  14,181
  15,325
  16,489
  17,676
  18,894
  20,146
  21,436
  22,770
  24,151
  25,584
  27,072
  28,621
  30,234
  31,916
  33,670
  35,502
  37,417
  39,418
  41,511
  43,702
  45,995
  48,396
  50,911
  53,547
Retained Cash Flow (-), $m
  66
  -19,336
  -7,023
  -7,365
  -7,709
  -8,056
  -8,407
  -8,761
  -9,121
  -9,486
  -9,857
  -10,234
  -10,618
  -11,010
  -11,409
  -11,816
  -12,231
  -12,655
  -13,088
  -13,530
  -13,982
  -14,443
  -14,915
  -15,398
  -15,891
  -16,396
  -16,912
  -17,439
  -17,979
  -18,532
  -19,097
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
 
  -12,581
  1,486
  2,299
  3,090
  3,869
  4,643
  5,420
  6,204
  7,003
  7,820
  8,660
  9,527
  10,426
  11,361
  12,335
  13,353
  14,418
  15,534
  16,704
  17,934
  19,227
  20,587
  22,019
  23,527
  25,116
  26,790
  28,555
  30,417
  32,380
  34,450
Discount rate, %
 
  12.50
  13.13
  13.78
  14.47
  15.19
  15.95
  16.75
  17.59
  18.47
  19.39
  20.36
  21.38
  22.45
  23.57
  24.75
  25.99
  27.29
  28.65
  30.08
  31.59
  33.17
  34.82
  36.57
  38.39
  40.31
  42.33
  44.45
  46.67
  49.00
  51.45
PV of cash for distribution, $m
 
  -11,183
  1,162
  1,561
  1,800
  1,907
  1,910
  1,833
  1,697
  1,524
  1,329
  1,128
  932
  749
  587
  447
  331
  239
  167
  113
  74
  47
  29
  17
  10
  5
  3
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  53.2
  44.2
  36.5
  30.0
  24.7
  20.2
  16.5
  13.5
  11.0
  9.0
  7.3
  6.0
  4.9
  4.0
  3.3
  2.7
  2.2
  1.8
  1.5
  1.2
  1.0
  0.8
  0.7
  0.6
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2

Nomura Holdings, Inc. provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It operates through three segments: Retail, Asset Management, and Wholesale. The Retail segment offers various financial products and investment services for individuals and corporations. As of March 31, 2016, this segment operated a network of 159 branches. The Asset Management segment is involved in the development and management of investment trusts, which offers low risk/low return products and high risk/high return products, as well as products for various investor needs; and provision of investment advisory services to public pension funds, private pension funds, governments and their agencies, central banks, and institutional investors. The Wholesale segment engages in the research, sale, trading, and market-making of fixed income and equity-related products. It is also involved in underwriting various securities and other financial instruments, which include various stocks, convertible and exchangeable securities, investment grade debt, sovereign and emerging market debt, high yield debt, structured securities, and other securities; arranging private placements, as well as other capital raising activities; and the provision of financial advisory services on business transactions, including mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts, and risk solutions. In addition, this segment offers various financial instruments, such as equity securities, debt securities, investment trusts, and variable annuity insurance products for the short, medium, and long-term. The company was formerly known as The Nomura Securities Co., Ltd. and changed its name to Nomura Holdings, Inc. in October 2001. Nomura Holdings, Inc. was founded in 1925 and is headquartered in Tokyo, Japan.

FINANCIAL RATIOS  of  Nomura Holdings ADR (NMR)

Valuation Ratios
P/E Ratio 18.2
Price to Sales 1.4
Price to Book 0.9
Price to Tangible Book
Price to Cash Flow 1.9
Price to Free Cash Flow 2.6
Growth Rates
Sales Growth Rate -10.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 55%
Cap. Spend. - 3 Yr. Gr. Rate 3.6%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 301.1%
Total Debt to Equity 922.9%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 1%
Return On Total Capital 0.5%
Ret/ On T. Cap. - 3 Yr. Avg. 0.7%
Return On Equity 4.9%
Return On Equity - 3 Yr. Avg. 7.5%
Asset Turnover 0
Profitability Ratios
Gross Margin 81%
Gross Margin - 3 Yr. Avg. 83%
EBITDA Margin 34.6%
EBITDA Margin - 3 Yr. Avg. 38.7%
Operating Margin 9.6%
Oper. Margin - 3 Yr. Avg. 15.8%
Pre-Tax Margin 9.6%
Pre-Tax Margin - 3 Yr. Avg. 15.8%
Net Profit Margin 7.6%
Net Profit Margin - 3 Yr. Avg. 10.3%
Effective Tax Rate 13.7%
Eff/ Tax Rate - 3 Yr. Avg. 29.6%
Payout Ratio 63%

NMR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NMR stock intrinsic value calculation we used $15000 million for the last fiscal year's total revenue generated by Nomura Holdings ADR. The default revenue input number comes from 2016 income statement of Nomura Holdings ADR. 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 NMR stock valuation model: a) initial revenue growth rate of 2.1% 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 12.5%, whose default value for NMR is calculated based on our internal credit rating of Nomura Holdings ADR, 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 Nomura Holdings ADR.
    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 NMR stock the variable cost ratio is equal to 16.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $11306 million in the base year in the intrinsic value calculation for NMR 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 3.5% for Nomura Holdings ADR.

Corporate tax rate of 27% is the nominal tax rate for Nomura Holdings ADR. 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 NMR 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 NMR are equal to 6.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Nomura Holdings ADR 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 NMR is equal to 50%. 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 - $23507 million for Nomura Holdings ADR - 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 3822.29 million for Nomura Holdings ADR 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 Nomura Holdings ADR at the current share price and the inputted number of shares is $22.0 billion.

RELATED COMPANIES Price Int.Val. Rating
GS Goldman Sachs 222.15 1,349.80  str.buy

COMPANY NEWS

▶ Nomura's Sakaki Sees Yen Rising to 100 Against Dollar   [Aug-08-17 09:23PM  Bloomberg Video]
▶ Nomura posts 1Q profit   [Jul-28-17 08:05PM  Associated Press]
▶ Nomura's Rochester Sees More Downside for U.S. Dollar   [Jul-18-17 03:11AM  Bloomberg Video]
▶ [$$] Nomura is back in expansion mode   [Jul-02-17 10:55AM  Financial Times]
▶ Nomura Chooses Frankfurt as EU Base After Brexit   [Jun-21-17 11:05PM  Bloomberg]
▶ A Profitable Play on Southeast Asia's Convenience Stores   [Jun-20-17 10:00AM  TheStreet.com]
▶ Nomura's Zhao Says China's Growth Momentum Peaked in 1Q   [Jun-07-17 10:59PM  Bloomberg Video]
▶ Nomura's Overseas Revival Has Legs   [Apr-27-17 06:31AM  Bloomberg]
▶ [$$] Czech koruna set to strengthen as CNB removes floor   [Mar-29-17 07:41AM  at Financial Times]
▶ Nomura posts 3Q profit   [Jan-31-17 05:01AM  Associated Press]
▶ Value Investment Opportunity or Irrational Exuberance?   [Jan-05-17 11:43AM  GuruFocus.com]
▶ Nomura lists 'grey swan' risks for 2017   [Dec-08-16 09:45AM  CNBC Videos]
▶ Nomura's Lost in Translation Moment   [Oct-28-16 12:57AM  at Bloomberg]
▶ Nomura to Maintain Profit Abroad After Cutting 900 Jobs   [Oct-26-16 08:57PM  at Bloomberg]
▶ Nomura Americas CEO Gets Guaranteed Pay, Riling Bankers   [Aug-16-16 02:40PM  at Bloomberg]
▶ 3 American Century Funds You Need to Know!   [10:30AM  at Investopedia]
▶ [$$] Nomura Swings to Profit Thanks to Overseas Cost Cutting   [07:35AM  at The Wall Street Journal]
Stock chart of NMR Financial statements of NMR
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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