Intrinsic value of RELX ADR - RENX

Previous Close

$22.75

  Intrinsic Value

$24.35

stock screener

  Rating & Target

hold

+7%

Previous close

$22.75

 
Intrinsic value

$24.35

 
Up/down potential

+7%

 
Rating

hold

We calculate the intrinsic value of RENX 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 48.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  -2,749
  -3,147
  -3,572
  -4,024
  -4,502
  -5,006
  -5,536
  -6,091
  -6,671
  -7,276
  -7,906
  -8,562
  -9,243
  -9,952
  -10,689
  -11,455
  -12,250
  -13,077
  -13,937
  -14,832
  -15,763
  -16,732
  -17,741
  -18,794
  -19,891
  -21,035
  -22,230
  -23,477
  -24,780
  -26,141
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
  -369
  -397
  -425
  -452
  -478
  -504
  -530
  -555
  -580
  -605
  -630
  -656
  -682
  -709
  -737
  -766
  -796
  -827
  -860
  -895
  -931
  -969
  -1,010
  -1,052
  -1,097
  -1,144
  -1,194
  -1,247
  -1,303
  -1,362
Cash from operations, $m
  2,045
  3,163
  3,532
  3,923
  4,337
  4,772
  5,229
  5,706
  6,205
  6,724
  7,265
  7,617
  8,202
  8,809
  9,440
  10,095
  10,776
  11,484
  12,220
  12,986
  13,783
  14,612
  15,477
  16,378
  17,317
  18,297
  19,320
  20,388
  21,505
  22,671
  23,891
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
  2,206
  2,476
  2,769
  3,083
  3,417
  3,769
  4,141
  4,530
  4,938
  5,365
  5,600
  6,063
  6,545
  7,046
  7,566
  8,108
  8,670
  9,255
  9,862
  10,494
  11,152
  11,836
  12,548
  13,291
  14,064
  14,871
  15,712
  16,591
  17,508
  18,467
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
  4,250
  4,676
  5,123
  5,586
  6,065
  6,561
  7,073
  7,602
  8,149
  8,714
  9,089
  9,694
  10,321
  10,971
  11,646
  12,347
  13,075
  13,834
  14,624
  15,447
  16,306
  17,203
  18,139
  19,117
  20,139
  21,208
  22,326
  23,497
  24,722
  26,006
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
 
  3,818
  4,206
  4,620
  5,051
  5,500
  5,965
  6,447
  6,946
  7,463
  7,999
  8,344
  8,918
  9,514
  10,132
  10,774
  11,441
  12,134
  12,856
  13,607
  14,390
  15,205
  16,056
  16,945
  17,872
  18,841
  19,854
  20,914
  22,022
  23,181
  24,395
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
 
  3,571
  3,657
  3,708
  3,715
  3,677
  3,595
  3,471
  3,310
  3,115
  2,893
  2,585
  2,338
  2,084
  1,828
  1,578
  1,340
  1,117
  915
  735
  578
  445
  336
  247
  177
  124
  84
  56
  36
  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 NV is a holding company, which holds interests in RELX Group plc. RELX Group is a global provider of information and analytics for professional and business customers across industries. The Company operates in four segments: Scientific, Technical & Medical; Risk & Business Analytics; Legal, and Exhibitions. The Company's Scientific, Technical & Medical segment provides information and analytics that help institutions and professionals progress science and advance healthcare. The Risk & Business Analytics segment provides solutions and decision tools that combine public and industry-specific content with technology and analytics. The Legal segment is a provider of information and analytics to professionals in legal, corporate, government and non-profit organizations. Its Exhibitions segment consists of Reed Exhibitions, which is an exhibitions business, with events in over 30 countries.

FINANCIAL RATIOS  of  RELX ADR (RENX)

Valuation Ratios
P/E Ratio 32.9
Price to Sales 5.5
Price to Book 16.5
Price to Tangible Book
Price to Cash Flow 22.7
Price to Free Cash Flow 28.3
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%

RENX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the RENX 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 RENX 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 RENX 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 RENX 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 RENX 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 RENX 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 RENX 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 RENX is equal to -28.4%. 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 2109.95 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 $48.0 billion.

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Financial statements of RENX
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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