Intrinsic value of Everest Re Group - RE

Previous Close

$262.50

  Intrinsic Value

$2,015

stock screener

  Rating & Target

str. buy

+668%

  Value-price divergence*

0%

Previous close

$262.50

 
Intrinsic value

$2,015

 
Up/down potential

+668%

 
Rating

str. buy

 
Value-price divergence*

0%

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

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

We calculate the intrinsic value of RE 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 10.8

 

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, %
  -1.92
  16.90
  15.71
  14.64
  13.68
  12.81
  12.03
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.21
  6.98
  6.79
  6.61
  6.45
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
Revenue, $m
  0
  6,811
  7,881
  9,034
  10,270
  11,585
  12,978
  14,448
  15,993
  17,611
  19,304
  21,070
  22,910
  24,826
  26,818
  28,889
  31,041
  33,278
  35,602
  38,018
  40,530
  43,143
  45,862
  48,693
  51,641
  54,713
  57,916
  61,258
  64,744
  68,385
  72,187
Variable operating expenses, $m
 
  1,076
  1,245
  1,427
  1,623
  1,830
  2,051
  2,283
  2,527
  2,783
  3,050
  3,329
  3,620
  3,923
  4,237
  4,564
  4,905
  5,258
  5,625
  6,007
  6,404
  6,817
  7,246
  7,693
  8,159
  8,645
  9,151
  9,679
  10,230
  10,805
  11,406
Fixed operating expenses, $m
 
  3,946
  4,045
  4,146
  4,250
  4,356
  4,465
  4,576
  4,691
  4,808
  4,928
  5,052
  5,178
  5,307
  5,440
  5,576
  5,715
  5,858
  6,005
  6,155
  6,309
  6,466
  6,628
  6,794
  6,964
  7,138
  7,316
  7,499
  7,687
  7,879
  8,076
Total operating expenses, $m
  4,690
  5,022
  5,290
  5,573
  5,873
  6,186
  6,516
  6,859
  7,218
  7,591
  7,978
  8,381
  8,798
  9,230
  9,677
  10,140
  10,620
  11,116
  11,630
  12,162
  12,713
  13,283
  13,874
  14,487
  15,123
  15,783
  16,467
  17,178
  17,917
  18,684
  19,482
Operating income, $m
  1,136
  1,788
  2,591
  3,461
  4,397
  5,399
  6,463
  7,589
  8,775
  10,021
  11,326
  12,690
  14,113
  15,596
  17,141
  18,749
  20,422
  22,162
  23,973
  25,857
  27,818
  29,860
  31,988
  34,206
  36,518
  38,931
  41,450
  44,080
  46,828
  49,701
  52,706
EBITDA, $m
  1,136
  1,788
  2,591
  3,461
  4,397
  5,399
  6,463
  7,589
  8,775
  10,021
  11,326
  12,690
  14,113
  15,596
  17,141
  18,749
  20,422
  22,162
  23,973
  25,857
  27,818
  29,860
  31,988
  34,206
  36,518
  38,931
  41,450
  44,080
  46,828
  49,701
  52,706
Interest expense (income), $m
  36
  36
  164
  303
  452
  613
  783
  964
  1,154
  1,355
  1,564
  1,784
  2,013
  2,252
  2,500
  2,758
  3,027
  3,306
  3,596
  3,897
  4,210
  4,536
  4,875
  5,227
  5,594
  5,977
  6,375
  6,790
  7,224
  7,676
  8,148
Earnings before tax, $m
  1,100
  1,752
  2,426
  3,158
  3,945
  4,786
  5,680
  6,625
  7,621
  8,666
  9,761
  10,906
  12,100
  13,345
  14,641
  15,991
  17,395
  18,856
  20,377
  21,960
  23,608
  25,324
  27,113
  28,978
  30,924
  32,954
  35,074
  37,289
  39,605
  42,026
  44,558
Tax expense, $m
  104
  473
  655
  853
  1,065
  1,292
  1,534
  1,789
  2,058
  2,340
  2,636
  2,945
  3,267
  3,603
  3,953
  4,317
  4,697
  5,091
  5,502
  5,929
  6,374
  6,838
  7,321
  7,824
  8,349
  8,898
  9,470
  10,068
  10,693
  11,347
  12,031
Net income, $m
  996
  1,279
  1,771
  2,305
  2,880
  3,494
  4,146
  4,836
  5,563
  6,326
  7,126
  7,961
  8,833
  9,742
  10,688
  11,673
  12,698
  13,765
  14,875
  16,030
  17,234
  18,487
  19,793
  21,154
  22,574
  24,057
  25,604
  27,221
  28,911
  30,679
  32,528

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  21,322
  24,947
  28,866
  33,092
  37,618
  42,435
  47,539
  52,923
  58,581
  64,511
  70,710
  77,180
  83,921
  90,938
  98,235
  105,821
  113,705
  121,898
  130,412
  139,262
  148,463
  158,034
  167,994
  178,362
  189,162
  200,415
  212,148
  224,387
  237,159
  250,494
  264,422
Adjusted assets (=assets-cash), $m
  21,322
  24,947
  28,866
  33,092
  37,618
  42,435
  47,539
  52,923
  58,581
  64,511
  70,710
  77,180
  83,921
  90,938
  98,235
  105,821
  113,705
  121,898
  130,412
  139,262
  148,463
  158,034
  167,994
  178,362
  189,162
  200,415
  212,148
  224,387
  237,159
  250,494
  264,422
Revenue / Adjusted assets
  0.000
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
  0.273
Average production assets, $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
Working capital, $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
Total debt, $m
  633
  2,878
  5,312
  7,936
  10,747
  13,738
  16,908
  20,251
  23,765
  27,447
  31,297
  35,315
  39,501
  43,858
  48,390
  53,101
  57,997
  63,084
  68,372
  73,867
  79,582
  85,525
  91,710
  98,149
  104,855
  111,844
  119,130
  126,730
  134,662
  142,943
  151,592
Total liabilities, $m
  13,246
  15,492
  17,926
  20,550
  23,361
  26,352
  29,522
  32,865
  36,379
  40,061
  43,911
  47,929
  52,115
  56,472
  61,004
  65,715
  70,611
  75,698
  80,986
  86,481
  92,196
  98,139
  104,324
  110,763
  117,469
  124,458
  131,744
  139,344
  147,276
  155,557
  164,206
Total equity, $m
  8,075
  9,455
  10,940
  12,542
  14,257
  16,083
  18,017
  20,058
  22,202
  24,450
  26,799
  29,251
  31,806
  34,465
  37,231
  40,106
  43,094
  46,199
  49,426
  52,780
  56,268
  59,895
  63,670
  67,599
  71,692
  75,957
  80,404
  85,043
  89,883
  94,937
  100,216
Total liabilities and equity, $m
  21,321
  24,947
  28,866
  33,092
  37,618
  42,435
  47,539
  52,923
  58,581
  64,511
  70,710
  77,180
  83,921
  90,937
  98,235
  105,821
  113,705
  121,897
  130,412
  139,261
  148,464
  158,034
  167,994
  178,362
  189,161
  200,415
  212,148
  224,387
  237,159
  250,494
  264,422
Debt-to-equity ratio
  0.078
  0.300
  0.490
  0.630
  0.750
  0.850
  0.940
  1.010
  1.070
  1.120
  1.170
  1.210
  1.240
  1.270
  1.300
  1.320
  1.350
  1.370
  1.380
  1.400
  1.410
  1.430
  1.440
  1.450
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.510
Adjusted equity ratio
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379
  0.379

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  996
  1,279
  1,771
  2,305
  2,880
  3,494
  4,146
  4,836
  5,563
  6,326
  7,126
  7,961
  8,833
  9,742
  10,688
  11,673
  12,698
  13,765
  14,875
  16,030
  17,234
  18,487
  19,793
  21,154
  22,574
  24,057
  25,604
  27,221
  28,911
  30,679
  32,528
Depreciation, amort., depletion, $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
Funds from operations, $m
  1,650
  1,279
  1,771
  2,305
  2,880
  3,494
  4,146
  4,836
  5,563
  6,326
  7,126
  7,961
  8,833
  9,742
  10,688
  11,673
  12,698
  13,765
  14,875
  16,030
  17,234
  18,487
  19,793
  21,154
  22,574
  24,057
  25,604
  27,221
  28,911
  30,679
  32,528
Change in working capital, $m
  277
  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 operations, $m
  1,373
  1,279
  1,771
  2,305
  2,880
  3,494
  4,146
  4,836
  5,563
  6,326
  7,126
  7,961
  8,833
  9,742
  10,688
  11,673
  12,698
  13,765
  14,875
  16,030
  17,234
  18,487
  19,793
  21,154
  22,574
  24,057
  25,604
  27,221
  28,911
  30,679
  32,528
Maintenance CAPEX, $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
New CAPEX, $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 investing activities, $m
  -658
  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
Free cash flow, $m
  715
  1,279
  1,771
  2,305
  2,880
  3,494
  4,146
  4,836
  5,563
  6,326
  7,126
  7,961
  8,833
  9,742
  10,688
  11,673
  12,698
  13,765
  14,875
  16,030
  17,234
  18,487
  19,793
  21,154
  22,574
  24,057
  25,604
  27,221
  28,911
  30,679
  32,528
Issuance/(repayment) of debt, $m
  0
  2,245
  2,434
  2,624
  2,810
  2,992
  3,169
  3,343
  3,514
  3,682
  3,850
  4,018
  4,186
  4,357
  4,532
  4,711
  4,896
  5,088
  5,287
  5,496
  5,714
  5,944
  6,185
  6,439
  6,706
  6,989
  7,286
  7,600
  7,931
  8,281
  8,650
Issuance/(repurchase) of shares, $m
  -376
  101
  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  
  -376
  2,346
  2,434
  2,624
  2,810
  2,992
  3,169
  3,343
  3,514
  3,682
  3,850
  4,018
  4,186
  4,357
  4,532
  4,711
  4,896
  5,088
  5,287
  5,496
  5,714
  5,944
  6,185
  6,439
  6,706
  6,989
  7,286
  7,600
  7,931
  8,281
  8,650
Total cash flow (excl. dividends), $m
  393
  3,625
  4,205
  4,930
  5,690
  6,486
  7,316
  8,179
  9,077
  10,009
  10,976
  11,979
  13,019
  14,099
  15,220
  16,384
  17,594
  18,853
  20,162
  21,526
  22,948
  24,430
  25,977
  27,593
  29,281
  31,045
  32,890
  34,821
  36,843
  38,960
  41,177
Retained Cash Flow (-), $m
  -466
  -1,380
  -1,485
  -1,602
  -1,715
  -1,826
  -1,934
  -2,040
  -2,145
  -2,247
  -2,350
  -2,452
  -2,555
  -2,659
  -2,766
  -2,875
  -2,988
  -3,105
  -3,227
  -3,354
  -3,487
  -3,627
  -3,775
  -3,930
  -4,093
  -4,265
  -4,447
  -4,638
  -4,841
  -5,054
  -5,279
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
 
  2,245
  2,720
  3,328
  3,975
  4,660
  5,381
  6,139
  6,932
  7,761
  8,626
  9,527
  10,464
  11,440
  12,454
  13,509
  14,606
  15,748
  16,935
  18,172
  19,460
  20,803
  22,203
  23,663
  25,188
  26,780
  28,444
  30,183
  32,002
  33,906
  35,898
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  2,153
  2,490
  2,896
  3,273
  3,612
  3,905
  4,147
  4,333
  4,458
  4,522
  4,524
  4,465
  4,350
  4,181
  3,966
  3,712
  3,426
  3,119
  2,798
  2,473
  2,152
  1,842
  1,551
  1,283
  1,042
  830
  648
  495
  370
  270
Current shareholders' claim on cash, %
  100
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1
  99.1

Everest Re Group, Ltd., through its subsidiaries, provides reinsurance and insurance products. The company operates in five segments: U.S. Reinsurance, International, Bermuda, Insurance, and Mt. Logan Re. The U.S. Reinsurance segment writes property and casualty reinsurance; and specialty lines of business, including marine, aviation, surety, and accident and health insurance through reinsurance brokers, as well as directly with ceding companies in the Unites States. The International segment writes foreign property and casualty reinsurance in Canada, Singapore, Brazil, Miami, and New Jersey. The Bermuda segment provides reinsurance and insurance to property and casualty markets through brokers and directly with ceding companies in Bermuda; and reinsurance to the United Kingdom and European markets. The Insurance segment writes property and casualty insurance products directly, as well as through general agents, brokers, and surplus lines brokers in the United States and Canada. The Mt. Logan Re segment provides insurance products against catastrophe risks. The company also provides property and casualty reinsurance and insurance coverages, such as errors and omissions liability, directors' and officers' liability, medical malpractice, and worker’s compensation products. Everest Re Group, Ltd. was founded in 1973 and is headquartered in Hamilton, Bermuda.

FINANCIAL RATIOS  of  Everest Re Group (RE)

Valuation Ratios
P/E Ratio 10.8
Price to Sales 1.8
Price to Book 1.3
Price to Tangible Book
Price to Cash Flow 7.8
Price to Free Cash Flow 7.8
Growth Rates
Sales Growth Rate -1.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 7.8%
Total Debt to Equity 7.8%
Interest Coverage 32
Management Effectiveness
Return On Assets 4.9%
Ret/ On Assets - 3 Yr. Avg. 5.3%
Return On Total Capital 11.8%
Ret/ On T. Cap. - 3 Yr. Avg. 13.1%
Return On Equity 12.7%
Return On Equity - 3 Yr. Avg. 14.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 19.5%
EBITDA Margin - 3 Yr. Avg. 22%
Operating Margin 19.5%
Oper. Margin - 3 Yr. Avg. 22%
Pre-Tax Margin 18.9%
Pre-Tax Margin - 3 Yr. Avg. 21.3%
Net Profit Margin 17.1%
Net Profit Margin - 3 Yr. Avg. 18%
Effective Tax Rate 9.5%
Eff/ Tax Rate - 3 Yr. Avg. 11.2%
Payout Ratio 19.6%

RE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RE stock intrinsic value calculation we used $5826 million for the last fiscal year's total revenue generated by Everest Re Group. The default revenue input number comes from 2016 income statement of Everest Re Group. 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 RE stock valuation model: a) initial revenue growth rate of 16.9% 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 4.3%, whose default value for RE is calculated based on our internal credit rating of Everest Re Group, 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 Everest Re Group.
    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 RE stock the variable cost ratio is equal to 15.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3850 million in the base year in the intrinsic value calculation for RE 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 5.7% for Everest Re Group.

Corporate tax rate of 27% is the nominal tax rate for Everest Re Group. 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 RE 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 RE are equal to 0%.

Life of production assets of 10 years is the average useful life of capital assets used in Everest Re Group 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 RE is equal to 0%. 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 - $8075 million for Everest Re Group - 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 41.229 million for Everest Re Group 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 Everest Re Group at the current share price and the inputted number of shares is $10.8 billion.

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COMPANY NEWS

▶ Everest Re Group Ltd. Publishes 2016 Global Loss Triangles   [Aug-16-17 01:21PM  Business Wire]
▶ Everest Re beats 2Q profit forecasts   [Jul-24-17 09:51PM  Associated Press]
▶ Seeking Value in Bermuda: Everest Re Group   [Jun-28-17 11:28AM  GuruFocus.com]
▶ 3 Top Reinsurance Stocks for 2017   [Jun-27-17 08:03AM  Motley Fool]
▶ Reinsurance Companies: What You Need to Know   [Jun-14-17 01:06PM  Motley Fool]
▶ Everest Re Group Announces Dividend   [May-17-17 03:31PM  Business Wire]
▶ Everest Insurance® Hires Keith Lavigne   [10:48AM  Business Wire]
▶ Everest Re beats 1Q profit forecasts   [Apr-24-17 05:12PM  Associated Press]
▶ Everest Insurance® Launches Life Sciences Practice   [Apr-07-17 11:40AM  Business Wire]
▶ E&P stocks to buy and sell: Analyst   [Mar-31-17 02:34PM  CNBC Videos]
▶ Everest Re Group Announces Dividend   [Feb-22-17 04:20PM  Business Wire]
▶ Should You Avoid Everest Re Group Ltd (RE)?   [Dec-02-16 09:26AM  at Insider Monkey]
▶ Everest Re Group Increases Dividend   [Nov-22-16 05:47PM  at Investopedia]
Stock chart of RE Financial statements of RE
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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