Intrinsic value of RELX ADR - RELX

Previous Close

$21.78

  Intrinsic Value

$24.24

stock screener

  Rating & Target

hold

+11%

  Value-price divergence*

0%

Previous close

$21.78

 
Intrinsic value

$24.24

 
Up/down potential

+11%

 
Rating

hold

 
Value-price divergence*

0%

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

We calculate the intrinsic value of RELX 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 43.7

 

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, %
  15.47
  15.50
  14.45
  13.51
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.30
  7.97
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
Revenue, $m
  8,382
  9,681
  11,080
  12,577
  14,168
  15,852
  17,628
  19,493
  21,447
  23,488
  25,618
  27,837
  30,146
  32,547
  35,043
  37,637
  40,333
  43,134
  46,046
  49,074
  52,224
  55,502
  58,915
  62,470
  66,175
  70,038
  74,067
  78,273
  82,665
  87,252
  92,046
Variable operating expenses, $m
 
  7,150
  8,071
  9,056
  10,104
  11,213
  12,381
  13,609
  14,895
  16,239
  17,641
  18,325
  19,845
  21,426
  23,069
  24,776
  26,551
  28,395
  30,312
  32,305
  34,379
  36,536
  38,783
  41,123
  43,562
  46,105
  48,758
  51,526
  54,417
  57,437
  60,593
Fixed operating expenses, $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
Total operating expenses, $m
  6,354
  7,150
  8,071
  9,056
  10,104
  11,213
  12,381
  13,609
  14,895
  16,239
  17,641
  18,325
  19,845
  21,426
  23,069
  24,776
  26,551
  28,395
  30,312
  32,305
  34,379
  36,536
  38,783
  41,123
  43,562
  46,105
  48,758
  51,526
  54,417
  57,437
  60,593
Operating income, $m
  2,028
  2,531
  3,009
  3,520
  4,064
  4,640
  5,247
  5,884
  6,551
  7,249
  7,977
  9,512
  10,301
  11,122
  11,975
  12,861
  13,782
  14,739
  15,735
  16,769
  17,846
  18,966
  20,132
  21,347
  22,613
  23,933
  25,310
  26,747
  28,247
  29,815
  31,453
EBITDA, $m
  2,757
  3,631
  4,156
  4,717
  5,314
  5,946
  6,612
  7,312
  8,044
  8,810
  9,609
  10,441
  11,307
  12,208
  13,144
  14,117
  15,128
  16,179
  17,271
  18,407
  19,589
  20,818
  22,098
  23,432
  24,821
  26,270
  27,782
  29,359
  31,006
  32,727
  34,525
Interest expense (income), $m
  195
  211
  286
  368
  455
  547
  645
  749
  857
  971
  1,090
  1,213
  1,343
  1,477
  1,617
  1,762
  1,913
  2,070
  2,233
  2,402
  2,578
  2,761
  2,952
  3,151
  3,358
  3,573
  3,798
  4,032
  4,277
  4,533
  4,800
Earnings before tax, $m
  1,791
  2,321
  2,723
  3,153
  3,610
  4,093
  4,601
  5,135
  5,694
  6,278
  6,887
  8,299
  8,959
  9,645
  10,358
  11,099
  11,869
  12,670
  13,502
  14,367
  15,267
  16,204
  17,180
  18,196
  19,255
  20,359
  21,512
  22,714
  23,970
  25,282
  26,654
Tax expense, $m
  370
  627
  735
  851
  975
  1,105
  1,242
  1,387
  1,537
  1,695
  1,860
  2,241
  2,419
  2,604
  2,797
  2,997
  3,205
  3,421
  3,646
  3,879
  4,122
  4,375
  4,639
  4,913
  5,199
  5,497
  5,808
  6,133
  6,472
  6,826
  7,197
Net income, $m
  1,411
  1,694
  1,988
  2,302
  2,635
  2,988
  3,359
  3,749
  4,157
  4,583
  5,028
  6,058
  6,540
  7,041
  7,561
  8,102
  8,665
  9,249
  9,856
  10,488
  11,145
  11,829
  12,541
  13,283
  14,056
  14,862
  15,704
  16,582
  17,498
  18,456
  19,457

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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
Total assets, $m
  16,197
  18,476
  21,145
  24,001
  27,038
  30,253
  33,641
  37,200
  40,929
  44,825
  48,890
  53,124
  57,531
  62,113
  66,877
  71,827
  76,971
  82,317
  87,875
  93,653
  99,665
  105,920
  112,433
  119,217
  126,287
  133,660
  141,350
  149,376
  157,757
  166,512
  175,661
Adjusted assets (=assets-cash), $m
  16,000
  18,476
  21,145
  24,001
  27,038
  30,253
  33,641
  37,200
  40,929
  44,825
  48,890
  53,124
  57,531
  62,113
  66,877
  71,827
  76,971
  82,317
  87,875
  93,653
  99,665
  105,920
  112,433
  119,217
  126,287
  133,660
  141,350
  149,376
  157,757
  166,512
  175,661
Revenue / Adjusted assets
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
  0.524
Average production assets, $m
  4,396
  5,073
  5,806
  6,590
  7,424
  8,307
  9,237
  10,214
  11,238
  12,308
  13,424
  14,587
  15,797
  17,055
  18,363
  19,722
  21,134
  22,602
  24,128
  25,715
  27,365
  29,083
  30,871
  32,734
  34,675
  36,700
  38,811
  41,015
  43,316
  45,720
  48,232
Working capital, $m
  -3,595
  -968
  -1,108
  -1,258
  -1,417
  -1,585
  -1,763
  -1,949
  -2,145
  -2,349
  -2,562
  -2,784
  -3,015
  -3,255
  -3,504
  -3,764
  -4,033
  -4,313
  -4,605
  -4,907
  -5,222
  -5,550
  -5,891
  -6,247
  -6,617
  -7,004
  -7,407
  -7,827
  -8,266
  -8,725
  -9,205
Total debt, $m
  5,888
  7,735
  9,935
  12,288
  14,790
  17,439
  20,231
  23,164
  26,236
  29,447
  32,796
  36,285
  39,916
  43,692
  47,618
  51,697
  55,935
  60,341
  64,920
  69,681
  74,635
  79,789
  85,156
  90,746
  96,572
  102,646
  108,983
  115,597
  122,503
  129,717
  137,256
Total liabilities, $m
  13,376
  15,224
  17,424
  19,777
  22,279
  24,928
  27,720
  30,653
  33,725
  36,936
  40,285
  43,774
  47,405
  51,181
  55,107
  59,186
  63,424
  67,830
  72,409
  77,170
  82,124
  87,278
  92,645
  98,235
  104,061
  110,135
  116,472
  123,086
  129,992
  137,206
  144,745
Total equity, $m
  2,820
  3,252
  3,722
  4,224
  4,759
  5,324
  5,921
  6,547
  7,203
  7,889
  8,605
  9,350
  10,125
  10,932
  11,770
  12,642
  13,547
  14,488
  15,466
  16,483
  17,541
  18,642
  19,788
  20,982
  22,227
  23,524
  24,878
  26,290
  27,765
  29,306
  30,916
Total liabilities and equity, $m
  16,196
  18,476
  21,146
  24,001
  27,038
  30,252
  33,641
  37,200
  40,928
  44,825
  48,890
  53,124
  57,530
  62,113
  66,877
  71,828
  76,971
  82,318
  87,875
  93,653
  99,665
  105,920
  112,433
  119,217
  126,288
  133,659
  141,350
  149,376
  157,757
  166,512
  175,661
Debt-to-equity ratio
  2.088
  2.380
  2.670
  2.910
  3.110
  3.280
  3.420
  3.540
  3.640
  3.730
  3.810
  3.880
  3.940
  4.000
  4.050
  4.090
  4.130
  4.160
  4.200
  4.230
  4.250
  4.280
  4.300
  4.320
  4.340
  4.360
  4.380
  4.400
  4.410
  4.430
  4.440
Adjusted equity ratio
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,411
  1,694
  1,988
  2,302
  2,635
  2,988
  3,359
  3,749
  4,157
  4,583
  5,028
  6,058
  6,540
  7,041
  7,561
  8,102
  8,665
  9,249
  9,856
  10,488
  11,145
  11,829
  12,541
  13,283
  14,056
  14,862
  15,704
  16,582
  17,498
  18,456
  19,457
Depreciation, amort., depletion, $m
  729
  1,100
  1,147
  1,197
  1,250
  1,306
  1,365
  1,428
  1,493
  1,561
  1,632
  929
  1,006
  1,086
  1,170
  1,256
  1,346
  1,440
  1,537
  1,638
  1,743
  1,852
  1,966
  2,085
  2,209
  2,338
  2,472
  2,612
  2,759
  2,912
  3,072
Funds from operations, $m
  1,284
  2,794
  3,135
  3,498
  3,885
  4,294
  4,724
  5,176
  5,650
  6,144
  6,660
  6,987
  7,546
  8,127
  8,731
  9,359
  10,011
  10,689
  11,393
  12,126
  12,888
  13,681
  14,507
  15,368
  16,265
  17,200
  18,176
  19,194
  20,257
  21,368
  22,529
Change in working capital, $m
  -761
  -130
  -140
  -150
  -159
  -168
  -178
  -187
  -195
  -204
  -213
  -222
  -231
  -240
  -250
  -259
  -270
  -280
  -291
  -303
  -315
  -328
  -341
  -355
  -370
  -386
  -403
  -421
  -439
  -459
  -479
Cash from operations, $m
  2,045
  2,924
  3,275
  3,648
  4,044
  4,462
  4,902
  5,363
  5,845
  6,348
  6,873
  7,209
  7,777
  8,367
  8,981
  9,618
  10,280
  10,969
  11,684
  12,429
  13,203
  14,009
  14,849
  15,723
  16,635
  17,586
  18,579
  19,615
  20,697
  21,827
  23,009
Maintenance CAPEX, $m
  0
  -280
  -323
  -370
  -420
  -473
  -529
  -588
  -651
  -716
  -784
  -855
  -929
  -1,006
  -1,086
  -1,170
  -1,256
  -1,346
  -1,440
  -1,537
  -1,638
  -1,743
  -1,852
  -1,966
  -2,085
  -2,209
  -2,338
  -2,472
  -2,612
  -2,759
  -2,912
New CAPEX, $m
  -405
  -677
  -733
  -784
  -834
  -883
  -930
  -977
  -1,024
  -1,070
  -1,116
  -1,163
  -1,210
  -1,258
  -1,308
  -1,359
  -1,412
  -1,468
  -1,526
  -1,587
  -1,650
  -1,718
  -1,788
  -1,863
  -1,941
  -2,024
  -2,112
  -2,204
  -2,301
  -2,404
  -2,512
Cash from investing activities, $m
  -812
  -957
  -1,056
  -1,154
  -1,254
  -1,356
  -1,459
  -1,565
  -1,675
  -1,786
  -1,900
  -2,018
  -2,139
  -2,264
  -2,394
  -2,529
  -2,668
  -2,814
  -2,966
  -3,124
  -3,288
  -3,461
  -3,640
  -3,829
  -4,026
  -4,233
  -4,450
  -4,676
  -4,913
  -5,163
  -5,424
Free cash flow, $m
  1,233
  1,967
  2,218
  2,494
  2,790
  3,107
  3,442
  3,797
  4,171
  4,563
  4,973
  5,191
  5,638
  6,103
  6,586
  7,089
  7,612
  8,155
  8,719
  9,305
  9,915
  10,549
  11,208
  11,894
  12,609
  13,353
  14,129
  14,939
  15,783
  16,664
  17,585
Issuance/(repayment) of debt, $m
  478
  2,044
  2,200
  2,353
  2,503
  2,649
  2,792
  2,933
  3,072
  3,211
  3,349
  3,489
  3,631
  3,776
  3,925
  4,079
  4,239
  4,405
  4,579
  4,762
  4,953
  5,155
  5,367
  5,590
  5,826
  6,075
  6,337
  6,614
  6,906
  7,214
  7,539
Issuance/(repurchase) of shares, $m
  -858
  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  
  -392
  2,044
  2,200
  2,353
  2,503
  2,649
  2,792
  2,933
  3,072
  3,211
  3,349
  3,489
  3,631
  3,776
  3,925
  4,079
  4,239
  4,405
  4,579
  4,762
  4,953
  5,155
  5,367
  5,590
  5,826
  6,075
  6,337
  6,614
  6,906
  7,214
  7,539
Total cash flow (excl. dividends), $m
  879
  4,011
  4,418
  4,847
  5,293
  5,756
  6,235
  6,730
  7,243
  7,773
  8,322
  8,681
  9,269
  9,879
  10,511
  11,168
  11,851
  12,560
  13,298
  14,067
  14,868
  15,703
  16,575
  17,485
  18,435
  19,428
  20,466
  21,552
  22,689
  23,878
  25,123
Retained Cash Flow (-), $m
  -214
  -432
  -470
  -503
  -535
  -566
  -596
  -626
  -656
  -686
  -715
  -745
  -776
  -807
  -838
  -871
  -905
  -941
  -978
  -1,017
  -1,058
  -1,101
  -1,146
  -1,194
  -1,244
  -1,297
  -1,354
  -1,413
  -1,475
  -1,541
  -1,610
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
 
  3,579
  3,948
  4,345
  4,759
  5,190
  5,638
  6,104
  6,587
  7,088
  7,607
  7,935
  8,493
  9,072
  9,673
  10,297
  10,945
  11,619
  12,320
  13,050
  13,810
  14,602
  15,428
  16,290
  17,190
  18,131
  19,113
  20,140
  21,214
  22,337
  23,513
Discount rate, %
 
  6.90
  7.25
  7.61
  7.99
  8.39
  8.81
  9.25
  9.71
  10.19
  10.70
  11.24
  11.80
  12.39
  13.01
  13.66
  14.34
  15.06
  15.81
  16.61
  17.44
  18.31
  19.22
  20.18
  21.19
  22.25
  23.37
  24.53
  25.76
  27.05
  28.40
PV of cash for distribution, $m
 
  3,348
  3,433
  3,487
  3,499
  3,469
  3,398
  3,287
  3,139
  2,958
  2,751
  2,459
  2,227
  1,987
  1,745
  1,508
  1,282
  1,070
  877
  705
  555
  428
  322
  237
  171
  119
  81
  54
  35
  22
  13
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

RELX PLC provides information and analytics for professional and business customers in North America, Europe, and internationally. The company’s Scientific, Technical & Medical segment offers information, analytics, and tools that help customers make decisions. This segment provides research, reference, and education content; and database and decision tools for scientists, academic institutions, educators, research leaders and administrators, medical researchers, doctors, nurses, and allied health professionals and students, as well as hospitals, research institutions, health insurers, managed healthcare organizations, research-intensive corporations, and governments. Its Risk & Business Analytics segment offers data, analytics, and decision tools to personal, commercial, and life insurance carriers, as well as to government; filtering solutions; identity, fraud, and clinical analytics solutions to the healthcare sector; risk and identity management, fraud detection and prevention, credit risk decisioning, and compliance solutions for financial institutions, as well as for corporate customers in retail, telecommunications, and utilities sectors; and receivables management solutions. This segment also provides tracing, identity verification, and anti-money laundering solutions; risk-related information to the legal industry; supply chain integration and data solutions for the agriculture industry; information and data services, and online services; and other services. The company’s Legal segment offers information and analytics to professionals in legal, corporate, government, and non-profit organizations. Its Exhibitions segment organizes exhibitions and conferences in various industries. The company was formerly known as Reed Elsevier PLC and changed its name to RELX PLC in June 2015. RELX PLC was founded in 1894 and is based in London, the United Kingdom.

FINANCIAL RATIOS  of  RELX ADR (RELX)

Valuation Ratios
P/E Ratio 31.5
Price to Sales 5.3
Price to Book 15.8
Price to Tangible Book
Price to Cash Flow 21.8
Price to Free Cash Flow 27.1
Growth Rates
Sales Growth Rate 15.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 8.6%
Cap. Spend. - 3 Yr. Gr. Rate 1.6%
Financial Strength
Quick Ratio 0
Current Ratio 0
LT Debt to Equity 158.8%
Total Debt to Equity 208.8%
Interest Coverage 10
Management Effectiveness
Return On Assets 10.5%
Ret/ On Assets - 3 Yr. Avg. 10.1%
Return On Total Capital 17.6%
Ret/ On T. Cap. - 3 Yr. Avg. 17%
Return On Equity 52%
Return On Equity - 3 Yr. Avg. 47.3%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 63.9%
Gross Margin - 3 Yr. Avg. 64.5%
EBITDA Margin 32.4%
EBITDA Margin - 3 Yr. Avg. 32.7%
Operating Margin 24.2%
Oper. Margin - 3 Yr. Avg. 24.4%
Pre-Tax Margin 21.4%
Pre-Tax Margin - 3 Yr. Avg. 21.5%
Net Profit Margin 16.8%
Net Profit Margin - 3 Yr. Avg. 16.8%
Effective Tax Rate 20.7%
Eff/ Tax Rate - 3 Yr. Avg. 21.7%
Payout Ratio 58.8%

RELX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RELX stock intrinsic value calculation we used $8382 million for the last fiscal year's total revenue generated by RELX ADR. The default revenue input number comes from 2016 income statement of RELX 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 RELX stock valuation model: a) initial revenue growth rate of 15.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.9%, whose default value for RELX is calculated based on our internal credit rating of RELX 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 RELX 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 RELX stock the variable cost ratio is equal to 75.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for RELX 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 3.7% for RELX ADR.

Corporate tax rate of 27% is the nominal tax rate for RELX 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 RELX 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 RELX are equal to 52.4%.

Life of production assets of 15.7 years is the average useful life of capital assets used in RELX 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 RELX is equal to -10%. 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 - $2820 million for RELX 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 2008.44 million for RELX 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 RELX ADR at the current share price and the inputted number of shares is $43.7 billion.

RELATED COMPANIES Price Int.Val. Rating
TRI Thomson Reuter 45.85 40.22  hold
RENX RELX ADR 20.82 22.54  hold
INFO IHS Markit 45.75 111.74  str.buy
Stock chart of RELX Financial statements of RELX
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.