Intrinsic value of Praxair - PX

Previous Close

$133.59

  Intrinsic Value

$71.62

stock screener

  Rating & Target

sell

-46%

  Value-price divergence*

-49%

Previous close

$133.59

 
Intrinsic value

$71.62

 
Up/down potential

-46%

 
Rating

sell

 
Value-price divergence*

-49%

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

We calculate the intrinsic value of PX 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 38.2

 

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, %
  -2.25
  8.70
  8.33
  8.00
  7.70
  7.43
  7.18
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
Revenue, $m
  10,534
  11,450
  12,404
  13,396
  14,427
  15,499
  16,613
  17,770
  18,973
  20,224
  21,525
  22,879
  24,288
  25,756
  27,287
  28,882
  30,546
  32,283
  34,096
  35,990
  37,970
  40,039
  42,203
  44,467
  46,836
  49,316
  51,913
  54,632
  57,482
  60,467
  63,596
Variable operating expenses, $m
 
  7,496
  8,094
  8,717
  9,364
  10,036
  10,735
  11,461
  12,215
  13,000
  13,817
  14,354
  15,239
  16,160
  17,120
  18,121
  19,165
  20,254
  21,392
  22,581
  23,822
  25,121
  26,478
  27,899
  29,385
  30,941
  32,571
  34,277
  36,065
  37,938
  39,901
Fixed operating expenses, $m
 
  1,444
  1,480
  1,517
  1,555
  1,594
  1,634
  1,675
  1,717
  1,760
  1,804
  1,849
  1,895
  1,942
  1,991
  2,041
  2,092
  2,144
  2,198
  2,252
  2,309
  2,367
  2,426
  2,486
  2,548
  2,612
  2,678
  2,744
  2,813
  2,883
  2,955
Total operating expenses, $m
  8,296
  8,940
  9,574
  10,234
  10,919
  11,630
  12,369
  13,136
  13,932
  14,760
  15,621
  16,203
  17,134
  18,102
  19,111
  20,162
  21,257
  22,398
  23,590
  24,833
  26,131
  27,488
  28,904
  30,385
  31,933
  33,553
  35,249
  37,021
  38,878
  40,821
  42,856
Operating income, $m
  2,238
  2,510
  2,830
  3,162
  3,509
  3,869
  4,244
  4,634
  5,041
  5,464
  5,905
  6,676
  7,155
  7,654
  8,176
  8,720
  9,289
  9,884
  10,506
  11,157
  11,838
  12,552
  13,299
  14,082
  14,902
  15,762
  16,665
  17,611
  18,604
  19,646
  20,740
EBITDA, $m
  3,360
  3,795
  4,195
  4,612
  5,045
  5,497
  5,966
  6,455
  6,964
  7,493
  8,044
  8,619
  9,217
  9,842
  10,493
  11,173
  11,884
  12,626
  13,402
  14,214
  15,063
  15,952
  16,883
  17,858
  18,880
  19,951
  21,073
  22,251
  23,486
  24,781
  26,140
Interest expense (income), $m
  189
  315
  357
  400
  446
  493
  542
  593
  646
  701
  759
  818
  880
  945
  1,012
  1,082
  1,155
  1,232
  1,311
  1,394
  1,481
  1,572
  1,666
  1,766
  1,869
  1,978
  2,091
  2,210
  2,335
  2,466
  2,602
Earnings before tax, $m
  2,048
  2,196
  2,473
  2,762
  3,063
  3,376
  3,702
  4,041
  4,394
  4,762
  5,146
  5,857
  6,274
  6,709
  7,164
  7,638
  8,134
  8,653
  9,195
  9,763
  10,357
  10,980
  11,632
  12,316
  13,033
  13,785
  14,573
  15,401
  16,269
  17,181
  18,137
Tax expense, $m
  551
  593
  668
  746
  827
  911
  999
  1,091
  1,186
  1,286
  1,389
  1,581
  1,694
  1,812
  1,934
  2,062
  2,196
  2,336
  2,483
  2,636
  2,796
  2,965
  3,141
  3,325
  3,519
  3,722
  3,935
  4,158
  4,393
  4,639
  4,897
Net income, $m
  1,500
  1,603
  1,805
  2,016
  2,236
  2,464
  2,702
  2,950
  3,208
  3,477
  3,757
  4,276
  4,580
  4,898
  5,229
  5,576
  5,938
  6,316
  6,712
  7,127
  7,561
  8,015
  8,492
  8,991
  9,514
  10,063
  10,638
  11,242
  11,876
  12,542
  13,240

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  524
  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
  19,332
  20,447
  22,151
  23,922
  25,763
  27,677
  29,665
  31,732
  33,880
  36,114
  38,437
  40,855
  43,372
  45,994
  48,726
  51,575
  54,546
  57,648
  60,886
  64,268
  67,803
  71,498
  75,362
  79,405
  83,636
  88,064
  92,701
  97,558
  102,646
  107,977
  113,564
Adjusted assets (=assets-cash), $m
  18,808
  20,447
  22,151
  23,922
  25,763
  27,677
  29,665
  31,732
  33,880
  36,114
  38,437
  40,855
  43,372
  45,994
  48,726
  51,575
  54,546
  57,648
  60,886
  64,268
  67,803
  71,498
  75,362
  79,405
  83,636
  88,064
  92,701
  97,558
  102,646
  107,977
  113,564
Revenue / Adjusted assets
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
  0.560
Average production assets, $m
  11,813
  12,836
  13,905
  15,017
  16,173
  17,374
  18,623
  19,920
  21,269
  22,671
  24,129
  25,647
  27,227
  28,873
  30,588
  32,377
  34,242
  36,189
  38,222
  40,345
  42,564
  44,884
  47,309
  49,847
  52,503
  55,283
  58,194
  61,243
  64,437
  67,784
  71,291
Working capital, $m
  402
  515
  558
  603
  649
  697
  748
  800
  854
  910
  969
  1,030
  1,093
  1,159
  1,228
  1,300
  1,375
  1,453
  1,534
  1,620
  1,709
  1,802
  1,899
  2,001
  2,108
  2,219
  2,336
  2,458
  2,587
  2,721
  2,862
Total debt, $m
  9,515
  10,192
  11,440
  12,739
  14,088
  15,491
  16,949
  18,463
  20,038
  21,675
  23,378
  25,151
  26,996
  28,917
  30,920
  33,008
  35,186
  37,460
  39,833
  42,313
  44,903
  47,612
  50,445
  53,408
  56,509
  59,755
  63,154
  66,714
  70,443
  74,351
  78,446
Total liabilities, $m
  14,311
  14,988
  16,236
  17,535
  18,884
  20,287
  21,745
  23,259
  24,834
  26,471
  28,174
  29,947
  31,792
  33,713
  35,716
  37,804
  39,982
  42,256
  44,629
  47,109
  49,699
  52,408
  55,241
  58,204
  61,305
  64,551
  67,950
  71,510
  75,239
  79,147
  83,242
Total equity, $m
  5,021
  5,459
  5,914
  6,387
  6,879
  7,390
  7,921
  8,472
  9,046
  9,642
  10,263
  10,908
  11,580
  12,280
  13,010
  13,770
  14,564
  15,392
  16,256
  17,160
  18,103
  19,090
  20,122
  21,201
  22,331
  23,513
  24,751
  26,048
  27,406
  28,830
  30,322
Total liabilities and equity, $m
  19,332
  20,447
  22,150
  23,922
  25,763
  27,677
  29,666
  31,731
  33,880
  36,113
  38,437
  40,855
  43,372
  45,993
  48,726
  51,574
  54,546
  57,648
  60,885
  64,269
  67,802
  71,498
  75,363
  79,405
  83,636
  88,064
  92,701
  97,558
  102,645
  107,977
  113,564
Debt-to-equity ratio
  1.895
  1.870
  1.930
  1.990
  2.050
  2.100
  2.140
  2.180
  2.220
  2.250
  2.280
  2.310
  2.330
  2.350
  2.380
  2.400
  2.420
  2.430
  2.450
  2.470
  2.480
  2.490
  2.510
  2.520
  2.530
  2.540
  2.550
  2.560
  2.570
  2.580
  2.590
Adjusted equity ratio
  0.262
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267
  0.267

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,500
  1,603
  1,805
  2,016
  2,236
  2,464
  2,702
  2,950
  3,208
  3,477
  3,757
  4,276
  4,580
  4,898
  5,229
  5,576
  5,938
  6,316
  6,712
  7,127
  7,561
  8,015
  8,492
  8,991
  9,514
  10,063
  10,638
  11,242
  11,876
  12,542
  13,240
Depreciation, amort., depletion, $m
  1,122
  1,284
  1,365
  1,449
  1,537
  1,628
  1,723
  1,821
  1,923
  2,029
  2,140
  1,943
  2,063
  2,187
  2,317
  2,453
  2,594
  2,742
  2,896
  3,056
  3,225
  3,400
  3,584
  3,776
  3,978
  4,188
  4,409
  4,640
  4,882
  5,135
  5,401
Funds from operations, $m
  2,820
  2,887
  3,170
  3,466
  3,773
  4,092
  4,425
  4,771
  5,131
  5,506
  5,896
  6,219
  6,643
  7,085
  7,547
  8,029
  8,532
  9,058
  9,608
  10,183
  10,785
  11,416
  12,076
  12,767
  13,491
  14,251
  15,047
  15,882
  16,758
  17,677
  18,641
Change in working capital, $m
  47
  41
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  63
  66
  69
  72
  75
  78
  82
  85
  89
  93
  97
  102
  107
  112
  117
  122
  128
  134
  141
Cash from operations, $m
  2,773
  2,846
  3,127
  3,421
  3,726
  4,044
  4,375
  4,719
  5,077
  5,449
  5,838
  6,158
  6,579
  7,019
  7,478
  7,957
  8,457
  8,980
  9,526
  10,098
  10,696
  11,322
  11,978
  12,665
  13,385
  14,139
  14,930
  15,760
  16,630
  17,543
  18,500
Maintenance CAPEX, $m
  0
  -895
  -972
  -1,053
  -1,138
  -1,225
  -1,316
  -1,411
  -1,509
  -1,611
  -1,717
  -1,828
  -1,943
  -2,063
  -2,187
  -2,317
  -2,453
  -2,594
  -2,742
  -2,896
  -3,056
  -3,225
  -3,400
  -3,584
  -3,776
  -3,978
  -4,188
  -4,409
  -4,640
  -4,882
  -5,135
New CAPEX, $m
  -1,465
  -1,023
  -1,069
  -1,112
  -1,156
  -1,201
  -1,248
  -1,297
  -1,349
  -1,402
  -1,459
  -1,518
  -1,580
  -1,646
  -1,715
  -1,788
  -1,865
  -1,947
  -2,033
  -2,123
  -2,219
  -2,320
  -2,426
  -2,538
  -2,656
  -2,780
  -2,911
  -3,049
  -3,194
  -3,347
  -3,507
Cash from investing activities, $m
  -1,770
  -1,918
  -2,041
  -2,165
  -2,294
  -2,426
  -2,564
  -2,708
  -2,858
  -3,013
  -3,176
  -3,346
  -3,523
  -3,709
  -3,902
  -4,105
  -4,318
  -4,541
  -4,775
  -5,019
  -5,275
  -5,545
  -5,826
  -6,122
  -6,432
  -6,758
  -7,099
  -7,458
  -7,834
  -8,229
  -8,642
Free cash flow, $m
  1,003
  928
  1,086
  1,255
  1,433
  1,618
  1,810
  2,011
  2,219
  2,436
  2,662
  2,812
  3,056
  3,311
  3,575
  3,851
  4,139
  4,439
  4,752
  5,079
  5,421
  5,778
  6,152
  6,543
  6,953
  7,382
  7,831
  8,302
  8,796
  9,314
  9,858
Issuance/(repayment) of debt, $m
  357
  1,201
  1,248
  1,298
  1,350
  1,403
  1,458
  1,515
  1,575
  1,637
  1,703
  1,772
  1,845
  1,922
  2,003
  2,088
  2,178
  2,273
  2,374
  2,479
  2,591
  2,709
  2,833
  2,963
  3,101
  3,246
  3,399
  3,560
  3,729
  3,908
  4,095
Issuance/(repurchase) of shares, $m
  -89
  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  
  213
  1,201
  1,248
  1,298
  1,350
  1,403
  1,458
  1,515
  1,575
  1,637
  1,703
  1,772
  1,845
  1,922
  2,003
  2,088
  2,178
  2,273
  2,374
  2,479
  2,591
  2,709
  2,833
  2,963
  3,101
  3,246
  3,399
  3,560
  3,729
  3,908
  4,095
Total cash flow (excl. dividends), $m
  1,233
  2,129
  2,334
  2,554
  2,782
  3,020
  3,268
  3,525
  3,794
  4,073
  4,365
  4,584
  4,901
  5,232
  5,578
  5,939
  6,317
  6,712
  7,126
  7,559
  8,012
  8,487
  8,985
  9,507
  10,054
  10,628
  11,230
  11,862
  12,526
  13,222
  13,953
Retained Cash Flow (-), $m
  -632
  -438
  -455
  -473
  -492
  -511
  -531
  -552
  -574
  -596
  -620
  -646
  -672
  -700
  -730
  -761
  -793
  -828
  -865
  -903
  -944
  -987
  -1,032
  -1,079
  -1,130
  -1,182
  -1,238
  -1,297
  -1,358
  -1,423
  -1,492
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
 
  1,690
  1,880
  2,081
  2,291
  2,509
  2,737
  2,974
  3,220
  3,477
  3,744
  3,939
  4,229
  4,532
  4,849
  5,179
  5,524
  5,884
  6,261
  6,655
  7,068
  7,500
  7,953
  8,427
  8,924
  9,445
  9,992
  10,565
  11,167
  11,799
  12,461
Discount rate, %
 
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.85
  11.40
  11.97
  12.57
  13.19
  13.85
  14.55
  15.27
  16.04
  16.84
  17.68
  18.57
  19.49
  20.47
  21.49
  22.57
  23.69
  24.88
  26.12
  27.43
  28.80
  30.24
  31.75
  33.34
PV of cash for distribution, $m
 
  1,564
  1,596
  1,610
  1,601
  1,569
  1,517
  1,445
  1,358
  1,257
  1,146
  1,008
  891
  775
  663
  556
  458
  370
  292
  226
  171
  126
  90
  63
  43
  29
  18
  11
  7
  4
  2
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

Praxair, Inc. produces, sells, and distributes atmospheric, process, and specialty gases, as well as surface coatings in North America, Europe, South America, and Asia. The company offers atmospheric gases, such as oxygen, nitrogen, argon, and rare gases; and process gases comprising carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. It also designs, engineers, and builds equipment that produces industrial gases; and manufactures precious metal and ceramic sputtering targets used primarily in the production of semiconductors. In addition, the company supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders to the aircraft, energy, printing, primary metals, petrochemical, textile, and other industries. Further, it provides electric arc, plasma and wire spray, and high-velocity oxy-fuel equipment; and distributes hardgoods and welding equipment purchased from independent manufacturers. The company sells its products primarily through independent distributors. It serves various industries, such as healthcare, petroleum refining, manufacturing, beverage carbonation, fiber-optics, steel making, aerospace, chemicals, and water treatment. Praxair, Inc. was founded in 1907 and is headquartered in Danbury, Connecticut.

FINANCIAL RATIOS  of  Praxair (PX)

Valuation Ratios
P/E Ratio 25.4
Price to Sales 3.6
Price to Book 7.6
Price to Tangible Book
Price to Cash Flow 13.7
Price to Free Cash Flow 29.1
Growth Rates
Sales Growth Rate -2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.9%
Cap. Spend. - 3 Yr. Gr. Rate -6.2%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 177.6%
Total Debt to Equity 189.5%
Interest Coverage 12
Management Effectiveness
Return On Assets 8.7%
Ret/ On Assets - 3 Yr. Avg. 8.9%
Return On Total Capital 10.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.9%
Return On Equity 31.9%
Return On Equity - 3 Yr. Avg. 30.2%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 44.4%
Gross Margin - 3 Yr. Avg. 44.1%
EBITDA Margin 31.9%
EBITDA Margin - 3 Yr. Avg. 31.5%
Operating Margin 21.2%
Oper. Margin - 3 Yr. Avg. 21.3%
Pre-Tax Margin 19.4%
Pre-Tax Margin - 3 Yr. Avg. 19.7%
Net Profit Margin 14.2%
Net Profit Margin - 3 Yr. Avg. 14.1%
Effective Tax Rate 26.9%
Eff/ Tax Rate - 3 Yr. Avg. 28%
Payout Ratio 57.1%

PX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PX stock intrinsic value calculation we used $10534 million for the last fiscal year's total revenue generated by Praxair. The default revenue input number comes from 2016 income statement of Praxair. 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 PX stock valuation model: a) initial revenue growth rate of 8.7% 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 8.1%, whose default value for PX is calculated based on our internal credit rating of Praxair, 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 Praxair.
    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 PX stock the variable cost ratio is equal to 65.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1409 million in the base year in the intrinsic value calculation for PX 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 Praxair.

Corporate tax rate of 27% is the nominal tax rate for Praxair. 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 PX 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 PX are equal to 112.1%.

Life of production assets of 13.2 years is the average useful life of capital assets used in Praxair 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 PX is equal to 4.5%. 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 - $5021 million for Praxair - 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 285.809 million for Praxair 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 Praxair at the current share price and the inputted number of shares is $38.2 billion.

RELATED COMPANIES Price Int.Val. Rating
APD Air Products&C 148.08 68.08  str.sell
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LYB LyondellBasell 87.66 608.04  str.buy

COMPANY NEWS

▶ Praxair beats 2Q profit forecasts   [Jul-27-17 03:45PM  Associated Press]
▶ Praxair Reports Second-Quarter 2017 Results   [06:01AM  Business Wire]
▶ Jerome Dodson Comments on Praxair   [Jul-25-17 07:23PM  GuruFocus.com]
▶ Why Analysts Expect a Turnaround for DuPont in 2Q17   [Jul-21-17 08:08AM  Market Realist]
▶ What Praxair Has on Deck in South Korea   [Jul-19-17 07:36AM  Market Realist]
▶ Wall Streets Views and Recommendations for Praxair   [Jul-07-17 09:08AM  Market Realist]
▶ Can Praxair Manage Its Interest Expense?   [07:39AM  Market Realist]
▶ Where Does Praxair Stock Stand at the End of 1H17?   [Jul-06-17 05:35PM  Market Realist]
▶ ETFs with exposure to Praxair, Inc. : July 3, 2017   [Jul-03-17 03:43PM  Capital Cube]
▶ Linde to terminate ADRs due to Praxair merger   [Jun-23-17 08:20AM  Reuters]
▶ ETFs with exposure to Praxair, Inc. : June 22, 2017   [Jun-22-17 04:17PM  Capital Cube]
▶ Why APDs Latest Valuations Matter   [09:06AM  Market Realist]
▶ APD to Pay Its Third Dividend This Year   [09:09AM  Market Realist]
▶ DuPont-DOW Merger Clears One More Hurdle   [Jun-19-17 08:31AM  Market Realist]
▶ Praxair: Cramer's Top Takeaways   [Jun-17-17 06:41AM  TheStreet.com]
▶ THE DAY AHEAD-North America, June 2   [Jun-01-17 05:46PM  Reuters]
▶ [$$] Linde, Praxair Boards Approve Merger   [04:20PM  The Wall Street Journal]
▶ Linde and Praxair Sign Accord   [01:43PM  TheStreet.com]
▶ Inside Praxair: The Latest Valuations   [09:08AM  Market Realist]
▶ [$$] Linde/Praxair: hot gases escaping   [04:41AM  Financial Times]
▶ Understanding Praxairs Dividend Yield Today   [May-31-17 03:05PM  Market Realist]
▶ 2 Top Helium Stocks to Buy in 2017   [May-30-17 12:07PM  Motley Fool]
▶ Stock Market News for May 25, 2017   [May-25-17 10:25AM  Zacks]
▶ Praxair, Linde Agree To $70 Billion Deal As Chemical Romances Bloom   [May-24-17 04:18PM  Investor's Business Daily]
▶ Praxair Introduces XactCO2 for Bars and Restaurants   [May-23-17 10:37AM  Market Realist]
▶ Praxair: Big Breakout Opens the Way Higher   [May-08-17 03:46PM  TheStreet.com]
▶ Linde chairman defends Praxair deal - paper   [May-05-17 01:11PM  Reuters]
Stock chart of PX Financial statements of PX
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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