Intrinsic value of Owens Corning - OC

Previous Close

$68.35

  Intrinsic Value

$257.14

stock screener

  Rating & Target

str. buy

+276%

  Value-price divergence*

+1199%

Previous close

$68.35

 
Intrinsic value

$257.14

 
Up/down potential

+276%

 
Rating

str. buy

 
Value-price divergence*

+1199%

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

We calculate the intrinsic value of OC 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 7.7

 

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, %
  6.11
  20.10
  18.59
  17.23
  16.01
  14.91
  13.92
  13.02
  12.22
  11.50
  10.85
  10.27
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.20
  6.08
  5.98
  5.88
  5.79
  5.71
Revenue, $m
  5,677
  6,818
  8,086
  9,479
  10,996
  12,635
  14,394
  16,268
  18,257
  20,356
  22,565
  24,881
  27,304
  29,834
  32,471
  35,216
  38,072
  41,041
  44,126
  47,333
  50,665
  54,128
  57,729
  61,474
  65,370
  69,426
  73,650
  78,051
  82,639
  87,424
  92,417
Variable operating expenses, $m
 
  3,771
  4,447
  5,190
  6,000
  6,874
  7,812
  8,812
  9,873
  10,993
  12,171
  13,273
  14,566
  15,916
  17,322
  18,787
  20,310
  21,894
  23,540
  25,250
  27,028
  28,876
  30,796
  32,794
  34,873
  37,036
  39,290
  41,638
  44,085
  46,638
  49,301
Fixed operating expenses, $m
 
  1,911
  1,958
  2,007
  2,058
  2,109
  2,162
  2,216
  2,271
  2,328
  2,386
  2,446
  2,507
  2,570
  2,634
  2,700
  2,767
  2,836
  2,907
  2,980
  3,054
  3,131
  3,209
  3,289
  3,371
  3,456
  3,542
  3,631
  3,721
  3,815
  3,910
Total operating expenses, $m
  4,979
  5,682
  6,405
  7,197
  8,058
  8,983
  9,974
  11,028
  12,144
  13,321
  14,557
  15,719
  17,073
  18,486
  19,956
  21,487
  23,077
  24,730
  26,447
  28,230
  30,082
  32,007
  34,005
  36,083
  38,244
  40,492
  42,832
  45,269
  47,806
  50,453
  53,211
Operating income, $m
  698
  1,137
  1,680
  2,281
  2,939
  3,652
  4,420
  5,240
  6,113
  7,035
  8,008
  9,162
  10,232
  11,349
  12,515
  13,730
  14,995
  16,311
  17,679
  19,102
  20,582
  22,122
  23,723
  25,390
  27,126
  28,934
  30,818
  32,783
  34,832
  36,972
  39,206
EBITDA, $m
  1,041
  1,586
  2,189
  2,854
  3,582
  4,371
  5,221
  6,128
  7,092
  8,113
  9,187
  10,315
  11,497
  12,732
  14,020
  15,362
  16,759
  18,213
  19,724
  21,296
  22,931
  24,630
  26,399
  28,239
  30,156
  32,151
  34,231
  36,400
  38,662
  41,023
  43,489
Interest expense (income), $m
  118
  124
  170
  222
  278
  339
  406
  477
  552
  633
  718
  807
  901
  999
  1,101
  1,208
  1,319
  1,434
  1,554
  1,679
  1,809
  1,944
  2,084
  2,229
  2,381
  2,538
  2,702
  2,873
  3,051
  3,237
  3,430
Earnings before tax, $m
  590
  1,013
  1,510
  2,060
  2,661
  3,313
  4,014
  4,764
  5,560
  6,403
  7,290
  8,355
  9,331
  10,350
  11,414
  12,522
  13,676
  14,876
  16,125
  17,423
  18,774
  20,178
  21,640
  23,161
  24,745
  26,395
  28,116
  29,910
  31,781
  33,735
  35,775
Tax expense, $m
  188
  273
  408
  556
  718
  895
  1,084
  1,286
  1,501
  1,729
  1,968
  2,256
  2,519
  2,795
  3,082
  3,381
  3,692
  4,017
  4,354
  4,704
  5,069
  5,448
  5,843
  6,253
  6,681
  7,127
  7,591
  8,076
  8,581
  9,108
  9,659
Net income, $m
  393
  739
  1,102
  1,504
  1,943
  2,419
  2,930
  3,478
  4,059
  4,674
  5,322
  6,099
  6,811
  7,556
  8,332
  9,141
  9,983
  10,860
  11,771
  12,719
  13,705
  14,730
  15,797
  16,908
  18,064
  19,269
  20,524
  21,834
  23,200
  24,626
  26,116

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  112
  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
  7,741
  9,164
  10,868
  12,740
  14,780
  16,983
  19,346
  21,866
  24,539
  27,361
  30,329
  33,443
  36,700
  40,100
  43,644
  47,334
  51,172
  55,162
  59,309
  63,619
  68,098
  72,753
  77,593
  82,626
  87,863
  93,314
  98,992
  104,907
  111,074
  117,505
  124,216
Adjusted assets (=assets-cash), $m
  7,629
  9,164
  10,868
  12,740
  14,780
  16,983
  19,346
  21,866
  24,539
  27,361
  30,329
  33,443
  36,700
  40,100
  43,644
  47,334
  51,172
  55,162
  59,309
  63,619
  68,098
  72,753
  77,593
  82,626
  87,863
  93,314
  98,992
  104,907
  111,074
  117,505
  124,216
Revenue / Adjusted assets
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
  0.744
Average production assets, $m
  4,103
  4,929
  5,846
  6,853
  7,950
  9,135
  10,407
  11,762
  13,200
  14,718
  16,315
  17,989
  19,741
  21,570
  23,477
  25,461
  27,526
  29,672
  31,903
  34,222
  36,631
  39,135
  41,738
  44,446
  47,263
  50,195
  53,249
  56,431
  59,748
  63,207
  66,817
Working capital, $m
  623
  620
  736
  863
  1,001
  1,150
  1,310
  1,480
  1,661
  1,852
  2,053
  2,264
  2,485
  2,715
  2,955
  3,205
  3,465
  3,735
  4,015
  4,307
  4,610
  4,926
  5,253
  5,594
  5,949
  6,318
  6,702
  7,103
  7,520
  7,956
  8,410
Total debt, $m
  2,104
  2,886
  3,755
  4,710
  5,750
  6,873
  8,079
  9,364
  10,727
  12,166
  13,680
  15,268
  16,929
  18,663
  20,470
  22,352
  24,310
  26,345
  28,460
  30,658
  32,942
  35,316
  37,784
  40,351
  43,022
  45,802
  48,698
  51,715
  54,860
  58,140
  61,562
Total liabilities, $m
  3,892
  4,674
  5,543
  6,498
  7,538
  8,661
  9,867
  11,152
  12,515
  13,954
  15,468
  17,056
  18,717
  20,451
  22,258
  24,140
  26,098
  28,133
  30,248
  32,446
  34,730
  37,104
  39,572
  42,139
  44,810
  47,590
  50,486
  53,503
  56,648
  59,928
  63,350
Total equity, $m
  3,849
  4,490
  5,325
  6,243
  7,242
  8,322
  9,480
  10,714
  12,024
  13,407
  14,861
  16,387
  17,983
  19,649
  21,385
  23,193
  25,074
  27,030
  29,062
  31,173
  33,368
  35,649
  38,020
  40,487
  43,053
  45,724
  48,506
  51,405
  54,426
  57,578
  60,866
Total liabilities and equity, $m
  7,741
  9,164
  10,868
  12,741
  14,780
  16,983
  19,347
  21,866
  24,539
  27,361
  30,329
  33,443
  36,700
  40,100
  43,643
  47,333
  51,172
  55,163
  59,310
  63,619
  68,098
  72,753
  77,592
  82,626
  87,863
  93,314
  98,992
  104,908
  111,074
  117,506
  124,216
Debt-to-equity ratio
  0.547
  0.640
  0.710
  0.750
  0.790
  0.830
  0.850
  0.870
  0.890
  0.910
  0.920
  0.930
  0.940
  0.950
  0.960
  0.960
  0.970
  0.970
  0.980
  0.980
  0.990
  0.990
  0.990
  1.000
  1.000
  1.000
  1.000
  1.010
  1.010
  1.010
  1.010
Adjusted equity ratio
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490
  0.490

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  393
  739
  1,102
  1,504
  1,943
  2,419
  2,930
  3,478
  4,059
  4,674
  5,322
  6,099
  6,811
  7,556
  8,332
  9,141
  9,983
  10,860
  11,771
  12,719
  13,705
  14,730
  15,797
  16,908
  18,064
  19,269
  20,524
  21,834
  23,200
  24,626
  26,116
Depreciation, amort., depletion, $m
  343
  450
  508
  573
  643
  719
  801
  888
  980
  1,077
  1,179
  1,153
  1,265
  1,383
  1,505
  1,632
  1,764
  1,902
  2,045
  2,194
  2,348
  2,509
  2,676
  2,849
  3,030
  3,218
  3,413
  3,617
  3,830
  4,052
  4,283
Funds from operations, $m
  951
  1,189
  1,611
  2,077
  2,586
  3,138
  3,731
  4,365
  5,039
  5,751
  6,501
  7,252
  8,077
  8,938
  9,837
  10,773
  11,748
  12,762
  13,816
  14,913
  16,053
  17,239
  18,473
  19,757
  21,094
  22,486
  23,938
  25,451
  27,030
  28,678
  30,399
Change in working capital, $m
  8
  104
  115
  127
  138
  149
  160
  171
  181
  191
  201
  211
  221
  230
  240
  250
  260
  270
  281
  292
  303
  315
  328
  341
  355
  369
  384
  400
  417
  435
  454
Cash from operations, $m
  943
  1,085
  1,495
  1,950
  2,448
  2,989
  3,571
  4,195
  4,858
  5,560
  6,300
  7,042
  7,856
  8,708
  9,597
  10,523
  11,488
  12,492
  13,535
  14,621
  15,750
  16,924
  18,145
  19,416
  20,739
  22,117
  23,553
  25,051
  26,613
  28,243
  29,945
Maintenance CAPEX, $m
  0
  -263
  -316
  -375
  -439
  -510
  -586
  -667
  -754
  -846
  -943
  -1,046
  -1,153
  -1,265
  -1,383
  -1,505
  -1,632
  -1,764
  -1,902
  -2,045
  -2,194
  -2,348
  -2,509
  -2,676
  -2,849
  -3,030
  -3,218
  -3,413
  -3,617
  -3,830
  -4,052
New CAPEX, $m
  -373
  -827
  -916
  -1,007
  -1,097
  -1,185
  -1,271
  -1,355
  -1,438
  -1,518
  -1,597
  -1,675
  -1,752
  -1,829
  -1,906
  -1,985
  -2,065
  -2,146
  -2,231
  -2,318
  -2,409
  -2,504
  -2,603
  -2,708
  -2,817
  -2,932
  -3,054
  -3,182
  -3,317
  -3,460
  -3,610
Cash from investing activities, $m
  -815
  -1,090
  -1,232
  -1,382
  -1,536
  -1,695
  -1,857
  -2,022
  -2,192
  -2,364
  -2,540
  -2,721
  -2,905
  -3,094
  -3,289
  -3,490
  -3,697
  -3,910
  -4,133
  -4,363
  -4,603
  -4,852
  -5,112
  -5,384
  -5,666
  -5,962
  -6,272
  -6,595
  -6,934
  -7,290
  -7,662
Free cash flow, $m
  128
  -5
  263
  568
  911
  1,294
  1,714
  2,172
  2,666
  3,196
  3,760
  4,321
  4,951
  5,614
  6,308
  7,034
  7,791
  8,581
  9,402
  10,258
  11,147
  12,071
  13,033
  14,033
  15,073
  16,155
  17,282
  18,455
  19,678
  20,953
  22,283
Issuance/(repayment) of debt, $m
  226
  785
  869
  955
  1,040
  1,124
  1,205
  1,285
  1,363
  1,439
  1,514
  1,588
  1,661
  1,734
  1,807
  1,882
  1,958
  2,035
  2,115
  2,198
  2,284
  2,374
  2,468
  2,567
  2,671
  2,780
  2,895
  3,017
  3,145
  3,280
  3,423
Issuance/(repurchase) of shares, $m
  -247
  11
  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  
  -7
  796
  869
  955
  1,040
  1,124
  1,205
  1,285
  1,363
  1,439
  1,514
  1,588
  1,661
  1,734
  1,807
  1,882
  1,958
  2,035
  2,115
  2,198
  2,284
  2,374
  2,468
  2,567
  2,671
  2,780
  2,895
  3,017
  3,145
  3,280
  3,423
Total cash flow (excl. dividends), $m
  103
  791
  1,132
  1,523
  1,952
  2,417
  2,920
  3,457
  4,029
  4,635
  5,274
  5,909
  6,612
  7,348
  8,115
  8,916
  9,749
  10,616
  11,518
  12,456
  13,431
  14,446
  15,501
  16,600
  17,744
  18,935
  20,177
  21,472
  22,823
  24,233
  25,706
Retained Cash Flow (-), $m
  -110
  -750
  -835
  -918
  -999
  -1,080
  -1,158
  -1,235
  -1,310
  -1,383
  -1,455
  -1,526
  -1,596
  -1,666
  -1,737
  -1,808
  -1,881
  -1,955
  -2,032
  -2,112
  -2,195
  -2,281
  -2,371
  -2,466
  -2,566
  -2,671
  -2,782
  -2,899
  -3,022
  -3,151
  -3,288
Prev. year cash balance distribution, $m
 
  109
  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
 
  149
  297
  605
  952
  1,338
  1,762
  2,222
  2,720
  3,252
  3,819
  4,383
  5,017
  5,682
  6,379
  7,108
  7,868
  8,660
  9,485
  10,344
  11,236
  12,165
  13,130
  14,133
  15,178
  16,264
  17,395
  18,574
  19,802
  21,082
  22,417
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
 
  142
  267
  512
  754
  985
  1,198
  1,387
  1,546
  1,671
  1,758
  1,792
  1,805
  1,780
  1,722
  1,634
  1,523
  1,392
  1,250
  1,101
  951
  806
  669
  544
  433
  337
  256
  190
  138
  97
  67
Current shareholders' claim on cash, %
  100
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9

Owens Corning, together with its subsidiaries, produces and sells glass fiber reinforcements and other materials for composites; and residential and commercial building materials worldwide. It operates in three segments: Composites, Insulation, and Roofing. The Composites segment manufactures, fabricates, and sells glass reinforcements in the form of fiber; and manufactures and sells glass fiber products in the form of fabrics, non-wovens, and other specialized products. Its products are used in pipe, roofing shingles, sporting goods, consumer electronics, telecommunications cables, boats, aviation, defense, automotive, industrial containers, and wind-energy applications in the building and construction, transportation, consumer, industrial, and power and energy markets. The Insulation segment manufactures and sells fiberglass insulation into residential, commercial, industrial, and other markets for thermal and acoustical applications; and manufactures and sells glass fiber pipe insulation, flexible duct media, bonded and granulated mineral fiber insulation, and foam insulation used in above- and below-grade construction applications. This segment sells its products primarily to the insulation installers, home centers, lumberyards, retailers, and distributors. The Roofing segment manufactures and sells residential roofing shingles, oxidized asphalt materials, and roofing components used in residential and commercial construction, and specialty applications, as well as synthetic packaging materials. This segment sells its products through home centers, lumberyards, retailers, distributors, and contractors, as well as to roofing contractors for built-up roofing asphalt systems and to manufacturers in automotive, chemical, rubber, and construction industries. Owens Corning was founded in 1938 and is headquartered in Toledo, Ohio.

FINANCIAL RATIOS  of  Owens Corning (OC)

Valuation Ratios
P/E Ratio 19.6
Price to Sales 1.4
Price to Book 2
Price to Tangible Book
Price to Cash Flow 8.2
Price to Free Cash Flow 13.5
Growth Rates
Sales Growth Rate 6.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7%
Cap. Spend. - 3 Yr. Gr. Rate 2.5%
Financial Strength
Quick Ratio 37
Current Ratio 0.1
LT Debt to Equity 54.6%
Total Debt to Equity 54.7%
Interest Coverage 6
Management Effectiveness
Return On Assets 6.3%
Ret/ On Assets - 3 Yr. Avg. 5.5%
Return On Total Capital 6.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.5%
Return On Equity 10.4%
Return On Equity - 3 Yr. Avg. 8.4%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 24.9%
Gross Margin - 3 Yr. Avg. 21.7%
EBITDA Margin 18.5%
EBITDA Margin - 3 Yr. Avg. 15.7%
Operating Margin 12.3%
Oper. Margin - 3 Yr. Avg. 9.7%
Pre-Tax Margin 10.4%
Pre-Tax Margin - 3 Yr. Avg. 7.8%
Net Profit Margin 6.9%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 31.9%
Eff/ Tax Rate - 3 Yr. Avg. 20.2%
Payout Ratio 20.6%

OC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the OC stock intrinsic value calculation we used $5677 million for the last fiscal year's total revenue generated by Owens Corning. The default revenue input number comes from 2016 income statement of Owens Corning. 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 OC stock valuation model: a) initial revenue growth rate of 20.1% 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 5.2%, whose default value for OC is calculated based on our internal credit rating of Owens Corning, 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 Owens Corning.
    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 OC stock the variable cost ratio is equal to 55.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1864 million in the base year in the intrinsic value calculation for OC 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 5.9% for Owens Corning.

Corporate tax rate of 27% is the nominal tax rate for Owens Corning. 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 OC 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 OC are equal to 72.3%.

Life of production assets of 15.6 years is the average useful life of capital assets used in Owens Corning 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 OC is equal to 9.1%. 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 - $3849 million for Owens Corning - 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 111.924 million for Owens Corning 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 Owens Corning at the current share price and the inputted number of shares is $7.7 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ ETFs with exposure to Owens Corning : August 8, 2017   [Aug-08-17 04:59PM  Capital Cube]
▶ Owens Corning beats Street 2Q forecasts   [Jul-26-17 03:23PM  Associated Press]
▶ 5 Stock Picks with Earnings Beat Potential   [Jul-21-17 03:54AM  Zacks]
▶ Owens Corning Announces Senior Note Offering   [08:40AM  Business Wire]
▶ Owens Corning Declares Second-Quarter 2017 Dividend   [Jun-15-17 07:30AM  Business Wire]
▶ Owens Corning Value Analysis (NYSE:OC) : June 2, 2017   [Jun-02-17 03:00PM  Capital Cube]
▶ KB, Toll, Lennox Lead Housing Index to Post-Election High   [May-18-17 12:27PM  TheStreet.com]
▶ Here's how Pittsburgh Corning acquisition will impact Pittsburgh   [May-16-17 08:00AM  American City Business Journals]
▶ Owens Corning to acquire Pittsburgh Corning   [08:15AM  American City Business Journals]
▶ Stocks Modestly Higher; These 3 Stocks Reach Buy Zones   [May-05-17 03:01PM  Investor's Business Daily]
▶ ETFs with exposure to Owens Corning : May 1, 2017   [May-01-17 04:14PM  Capital Cube]
▶ Which Companies Are Now Outperforming 95% Of All Stocks?   [11:29AM  Investor's Business Daily]
▶ Owens Corning beats Street 1Q forecasts   [Apr-26-17 07:46AM  Associated Press]
▶ Top Value Stocks of 2017   [Apr-21-17 09:04AM  Motley Fool]
▶ Homebuilders Set Post-Election Highs, Materials Stocks Lag   [Apr-20-17 10:29AM  TheStreet.com]
▶ Top Ranked Value Stocks to Buy for April 3rd   [Apr-03-17 10:05AM  Zacks]
▶ [$$] Owens Corning: Raise the Roof   [05:43AM  Barrons.com]
▶ Top Ranked Value Stocks to Buy for March 31st   [Mar-31-17 10:46AM  Zacks]
▶ Jacobs (JEC) Clinches Decomplexing Project from ONEgas   [Mar-30-17 09:23AM  Investopedia]
▶ Owens Corning Stock: Buy at the High?   [10:49AM  at Motley Fool]
Financial statements of OC
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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