Intrinsic value of Revlon Cl A - REV

Previous Close

$17.45

  Intrinsic Value

$69.70

stock screener

  Rating & Target

str. buy

+299%

  Value-price divergence*

+1071%

Previous close

$17.45

 
Intrinsic value

$69.70

 
Up/down potential

+299%

 
Rating

str. buy

 
Value-price divergence*

+1071%

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

We calculate the intrinsic value of REV 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 0.9

 

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, %
  21.94
  35.20
  32.18
  29.46
  27.02
  24.81
  22.83
  21.05
  19.44
  18.00
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
Revenue, $m
  2,334
  3,156
  4,171
  5,400
  6,859
  8,561
  10,515
  12,729
  15,204
  17,940
  20,937
  24,188
  27,690
  31,436
  35,421
  39,639
  44,086
  48,757
  53,651
  58,765
  64,101
  69,659
  75,444
  81,460
  87,713
  94,212
  100,965
  107,984
  115,279
  122,865
  130,756
Variable operating expenses, $m
 
  2,778
  3,650
  4,704
  5,957
  7,418
  9,096
  10,996
  13,120
  15,470
  18,042
  20,764
  23,770
  26,986
  30,407
  34,028
  37,845
  41,855
  46,056
  50,446
  55,026
  59,798
  64,764
  69,928
  75,297
  80,875
  86,672
  92,697
  98,960
  105,472
  112,246
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
  2,196
  2,778
  3,650
  4,704
  5,957
  7,418
  9,096
  10,996
  13,120
  15,470
  18,042
  20,764
  23,770
  26,986
  30,407
  34,028
  37,845
  41,855
  46,056
  50,446
  55,026
  59,798
  64,764
  69,928
  75,297
  80,875
  86,672
  92,697
  98,960
  105,472
  112,246
Operating income, $m
  138
  378
  521
  695
  902
  1,143
  1,420
  1,733
  2,083
  2,471
  2,895
  3,424
  3,920
  4,450
  5,014
  5,611
  6,241
  6,902
  7,595
  8,319
  9,074
  9,861
  10,680
  11,532
  12,417
  13,337
  14,293
  15,286
  16,319
  17,393
  18,510
EBITDA, $m
  261
  540
  714
  924
  1,174
  1,465
  1,799
  2,178
  2,601
  3,070
  3,582
  4,139
  4,738
  5,379
  6,061
  6,782
  7,543
  8,342
  9,180
  10,055
  10,968
  11,919
  12,909
  13,938
  15,008
  16,120
  17,275
  18,476
  19,724
  21,022
  22,372
Interest expense (income), $m
  92
  110
  112
  161
  219
  289
  370
  464
  570
  688
  819
  962
  1,117
  1,285
  1,464
  1,654
  1,856
  2,068
  2,292
  2,526
  2,770
  3,025
  3,291
  3,567
  3,855
  4,154
  4,464
  4,787
  5,123
  5,471
  5,834
Earnings before tax, $m
  9
  267
  409
  535
  683
  854
  1,049
  1,269
  1,514
  1,783
  2,076
  2,462
  2,803
  3,165
  3,551
  3,957
  4,385
  4,834
  5,303
  5,793
  6,304
  6,836
  7,389
  7,964
  8,562
  9,183
  9,829
  10,499
  11,197
  11,922
  12,676
Tax expense, $m
  26
  72
  111
  144
  184
  231
  283
  343
  409
  481
  561
  665
  757
  855
  959
  1,068
  1,184
  1,305
  1,432
  1,564
  1,702
  1,846
  1,995
  2,150
  2,312
  2,479
  2,654
  2,835
  3,023
  3,219
  3,423
Net income, $m
  -22
  195
  299
  390
  498
  623
  766
  926
  1,105
  1,301
  1,516
  1,797
  2,046
  2,311
  2,592
  2,889
  3,201
  3,529
  3,871
  4,229
  4,602
  4,990
  5,394
  5,814
  6,250
  6,704
  7,175
  7,665
  8,174
  8,703
  9,254

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  187
  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
  3,024
  4,088
  5,403
  6,995
  8,884
  11,089
  13,621
  16,488
  19,694
  23,239
  27,120
  31,332
  35,868
  40,720
  45,882
  51,346
  57,106
  63,157
  69,496
  76,121
  83,032
  90,232
  97,726
  105,518
  113,619
  122,036
  130,784
  139,875
  149,325
  159,152
  169,373
Adjusted assets (=assets-cash), $m
  2,837
  4,088
  5,403
  6,995
  8,884
  11,089
  13,621
  16,488
  19,694
  23,239
  27,120
  31,332
  35,868
  40,720
  45,882
  51,346
  57,106
  63,157
  69,496
  76,121
  83,032
  90,232
  97,726
  105,518
  113,619
  122,036
  130,784
  139,875
  149,325
  159,152
  169,373
Revenue / Adjusted assets
  0.823
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
  0.772
Average production assets, $m
  745
  1,007
  1,331
  1,723
  2,188
  2,731
  3,354
  4,060
  4,850
  5,723
  6,679
  7,716
  8,833
  10,028
  11,299
  12,645
  14,063
  15,554
  17,115
  18,746
  20,448
  22,221
  24,067
  25,986
  27,981
  30,054
  32,208
  34,447
  36,774
  39,194
  41,711
Working capital, $m
  415
  347
  459
  594
  754
  942
  1,157
  1,400
  1,672
  1,973
  2,303
  2,661
  3,046
  3,458
  3,896
  4,360
  4,849
  5,363
  5,902
  6,464
  7,051
  7,663
  8,299
  8,961
  9,648
  10,363
  11,106
  11,878
  12,681
  13,515
  14,383
Total debt, $m
  2,692
  2,732
  3,916
  5,348
  7,049
  9,033
  11,312
  13,892
  16,778
  19,968
  23,461
  27,251
  31,334
  35,701
  40,347
  45,264
  50,448
  55,894
  61,599
  67,562
  73,782
  80,262
  87,006
  94,019
  101,310
  108,886
  116,759
  124,941
  133,446
  142,290
  151,489
Total liabilities, $m
  3,638
  3,679
  4,863
  6,295
  7,996
  9,980
  12,259
  14,839
  17,725
  20,915
  24,408
  28,198
  32,281
  36,648
  41,294
  46,211
  51,395
  56,841
  62,546
  68,509
  74,729
  81,209
  87,953
  94,966
  102,257
  109,833
  117,706
  125,888
  134,393
  143,237
  152,436
Total equity, $m
  -615
  409
  540
  699
  888
  1,109
  1,362
  1,649
  1,969
  2,324
  2,712
  3,133
  3,587
  4,072
  4,588
  5,135
  5,711
  6,316
  6,950
  7,612
  8,303
  9,023
  9,773
  10,552
  11,362
  12,204
  13,078
  13,988
  14,933
  15,915
  16,937
Total liabilities and equity, $m
  3,023
  4,088
  5,403
  6,994
  8,884
  11,089
  13,621
  16,488
  19,694
  23,239
  27,120
  31,331
  35,868
  40,720
  45,882
  51,346
  57,106
  63,157
  69,496
  76,121
  83,032
  90,232
  97,726
  105,518
  113,619
  122,037
  130,784
  139,876
  149,326
  159,152
  169,373
Debt-to-equity ratio
  -4.377
  6.680
  7.250
  7.650
  7.930
  8.150
  8.300
  8.430
  8.520
  8.590
  8.650
  8.700
  8.740
  8.770
  8.790
  8.820
  8.830
  8.850
  8.860
  8.880
  8.890
  8.900
  8.900
  8.910
  8.920
  8.920
  8.930
  8.930
  8.940
  8.940
  8.940
Adjusted equity ratio
  -0.279
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -22
  195
  299
  390
  498
  623
  766
  926
  1,105
  1,301
  1,516
  1,797
  2,046
  2,311
  2,592
  2,889
  3,201
  3,529
  3,871
  4,229
  4,602
  4,990
  5,394
  5,814
  6,250
  6,704
  7,175
  7,665
  8,174
  8,703
  9,254
Depreciation, amort., depletion, $m
  123
  162
  192
  228
  272
  322
  380
  445
  518
  599
  687
  714
  818
  929
  1,046
  1,171
  1,302
  1,440
  1,585
  1,736
  1,893
  2,058
  2,228
  2,406
  2,591
  2,783
  2,982
  3,190
  3,405
  3,629
  3,862
Funds from operations, $m
  63
  357
  491
  619
  770
  945
  1,146
  1,371
  1,623
  1,900
  2,203
  2,512
  2,864
  3,239
  3,638
  4,060
  4,503
  4,969
  5,456
  5,965
  6,495
  7,048
  7,623
  8,220
  8,841
  9,487
  10,157
  10,854
  11,579
  12,332
  13,116
Change in working capital, $m
  -54
  90
  112
  135
  160
  187
  215
  243
  272
  301
  330
  358
  385
  412
  438
  464
  489
  514
  538
  563
  587
  611
  636
  662
  688
  715
  743
  772
  803
  834
  868
Cash from operations, $m
  117
  267
  379
  484
  609
  758
  931
  1,128
  1,351
  1,599
  1,873
  2,154
  2,479
  2,827
  3,200
  3,596
  4,014
  4,455
  4,918
  5,402
  5,909
  6,436
  6,986
  7,558
  8,153
  8,772
  9,414
  10,082
  10,776
  11,498
  12,248
Maintenance CAPEX, $m
  0
  -69
  -93
  -123
  -159
  -203
  -253
  -311
  -376
  -449
  -530
  -618
  -714
  -818
  -929
  -1,046
  -1,171
  -1,302
  -1,440
  -1,585
  -1,736
  -1,893
  -2,058
  -2,228
  -2,406
  -2,591
  -2,783
  -2,982
  -3,190
  -3,405
  -3,629
New CAPEX, $m
  -59
  -262
  -324
  -392
  -465
  -543
  -624
  -706
  -790
  -873
  -956
  -1,037
  -1,117
  -1,195
  -1,271
  -1,346
  -1,418
  -1,490
  -1,561
  -1,632
  -1,702
  -1,773
  -1,845
  -1,919
  -1,995
  -2,073
  -2,154
  -2,239
  -2,327
  -2,420
  -2,517
Cash from investing activities, $m
  -1,088
  -331
  -417
  -515
  -624
  -746
  -877
  -1,017
  -1,166
  -1,322
  -1,486
  -1,655
  -1,831
  -2,013
  -2,200
  -2,392
  -2,589
  -2,792
  -3,001
  -3,217
  -3,438
  -3,666
  -3,903
  -4,147
  -4,401
  -4,664
  -4,937
  -5,221
  -5,517
  -5,825
  -6,146
Free cash flow, $m
  -971
  -64
  -38
  -31
  -15
  12
  54
  111
  185
  277
  388
  499
  647
  814
  1,000
  1,204
  1,425
  1,663
  1,917
  2,186
  2,471
  2,770
  3,083
  3,411
  3,752
  4,108
  4,477
  4,861
  5,259
  5,673
  6,102
Issuance/(repayment) of debt, $m
  900
  40
  1,184
  1,433
  1,701
  1,984
  2,279
  2,580
  2,885
  3,190
  3,493
  3,791
  4,082
  4,367
  4,646
  4,918
  5,184
  5,446
  5,705
  5,962
  6,220
  6,480
  6,744
  7,013
  7,290
  7,576
  7,873
  8,182
  8,505
  8,844
  9,199
Issuance/(repurchase) of shares, $m
  -3
  829
  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  
  833
  869
  1,184
  1,433
  1,701
  1,984
  2,279
  2,580
  2,885
  3,190
  3,493
  3,791
  4,082
  4,367
  4,646
  4,918
  5,184
  5,446
  5,705
  5,962
  6,220
  6,480
  6,744
  7,013
  7,290
  7,576
  7,873
  8,182
  8,505
  8,844
  9,199
Total cash flow (excl. dividends), $m
  -140
  805
  1,146
  1,401
  1,685
  1,997
  2,333
  2,692
  3,071
  3,468
  3,881
  4,289
  4,729
  5,182
  5,646
  6,121
  6,609
  7,109
  7,622
  8,149
  8,691
  9,250
  9,827
  10,424
  11,043
  11,684
  12,350
  13,043
  13,764
  14,516
  15,301
Retained Cash Flow (-), $m
  27
  -1,024
  -132
  -159
  -189
  -220
  -253
  -287
  -321
  -354
  -388
  -421
  -454
  -485
  -516
  -546
  -576
  -605
  -634
  -662
  -691
  -720
  -749
  -779
  -810
  -842
  -875
  -909
  -945
  -983
  -1,022
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
 
  -219
  1,015
  1,242
  1,496
  1,776
  2,080
  2,405
  2,750
  3,113
  3,493
  3,868
  4,276
  4,696
  5,130
  5,575
  6,033
  6,503
  6,988
  7,486
  8,000
  8,530
  9,078
  9,645
  10,233
  10,842
  11,475
  12,134
  12,819
  13,534
  14,279
Discount rate, %
 
  15.10
  15.86
  16.65
  17.48
  18.35
  19.27
  20.24
  21.25
  22.31
  23.43
  24.60
  25.83
  27.12
  28.47
  29.90
  31.39
  32.96
  34.61
  36.34
  38.16
  40.06
  42.07
  44.17
  46.38
  48.70
  51.13
  53.69
  56.38
  59.19
  62.15
PV of cash for distribution, $m
 
  -190
  756
  783
  786
  765
  722
  662
  589
  508
  426
  344
  271
  208
  154
  110
  76
  51
  33
  21
  12
  7
  4
  2
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Revlon, Inc. manufactures, markets, and sells beauty and personal care products worldwide. The company's Consumer segment offers cosmetics, hair color and hair care, beauty tools, anti-perspirant deodorants, fragrances, and skincare products. This segment’s cosmetics include face makeup products comprising foundation, powder, blush, and concealers; lip makeup products, such as lipstick, lip gloss, and lip liner; eye makeup products, including mascaras, eyeliners, eye shadows, and brow products; nail color and care products; and makeup removers. It also offers beauty tools comprising nail, eye, and manicure and pedicure grooming tools, as well as eye lash curlers and makeup brushes; and perfumes, eau de toilettes, colognes, and body sprays. This segment markets its products primarily under the Revlon, Almay, SinfulColors, Pure Ice, Revlon ColorSilk, Llongueras, Charlie, Jean Naté, Mitchum, Natural Honey, and Gatineau brands through the retailers, chain drug and food stores, chemist shops, hypermarkets, general merchandise stores, e-commerce, television shopping, department stores, specialty cosmetic stores, and perfumeries. Its Professional segment offers hair color, hair care, and hair treatment products to hair and nail salons and distributors under Revlon Professional brand name; men's shampoos, conditioners, gels, and other hair care and grooming products under the American Crew and d:fi brands; nail enhancement systems, and nail color and treatment products under the CND brand; hair products under Orofluido, UniqOne, and Intercosmo brands; and multi-cultural hair products under the Creme of Nature brand name. Revlon, Inc. sells its products through sales force, sales representatives, and independent distributors, as well as licenses its trademarks to manufacturers for complementary beauty-related products and accessories. The company was founded in 1932 and is headquartered in New York, New York.

FINANCIAL RATIOS  of  Revlon Cl A (REV)

Valuation Ratios
P/E Ratio -42
Price to Sales 0.4
Price to Book -1.5
Price to Tangible Book
Price to Cash Flow 7.9
Price to Free Cash Flow 15.9
Growth Rates
Sales Growth Rate 21.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 22.9%
Cap. Spend. - 3 Yr. Gr. Rate 15.3%
Financial Strength
Quick Ratio 6
Current Ratio 0.1
LT Debt to Equity -433%
Total Debt to Equity -437.7%
Interest Coverage 1
Management Effectiveness
Return On Assets -7.8%
Ret/ On Assets - 3 Yr. Avg. 0.2%
Return On Total Capital -1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.1%
Return On Equity 3.7%
Return On Equity - 3 Yr. Avg. -4%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 60.7%
Gross Margin - 3 Yr. Avg. 63.8%
EBITDA Margin 9.6%
EBITDA Margin - 3 Yr. Avg. 13.6%
Operating Margin 5.9%
Oper. Margin - 3 Yr. Avg. 9.7%
Pre-Tax Margin 0.4%
Pre-Tax Margin - 3 Yr. Avg. 4.1%
Net Profit Margin -0.9%
Net Profit Margin - 3 Yr. Avg. 1.4%
Effective Tax Rate 288.9%
Eff/ Tax Rate - 3 Yr. Avg. 133.8%
Payout Ratio 0%

REV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the REV stock intrinsic value calculation we used $2334 million for the last fiscal year's total revenue generated by Revlon Cl A. The default revenue input number comes from 2016 income statement of Revlon Cl A. 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 REV stock valuation model: a) initial revenue growth rate of 35.2% 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 15.1%, whose default value for REV is calculated based on our internal credit rating of Revlon Cl A, 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 Revlon Cl A.
    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 REV stock the variable cost ratio is equal to 88.8%.

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 REV 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 4.1% for Revlon Cl A.

Corporate tax rate of 27% is the nominal tax rate for Revlon Cl A. 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 REV 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 REV are equal to 31.9%.

Life of production assets of 10.8 years is the average useful life of capital assets used in Revlon Cl A 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 REV is equal to 11%. 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 - $-615 million for Revlon Cl A - 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 50.952 million for Revlon Cl A 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 Revlon Cl A at the current share price and the inputted number of shares is $0.9 billion.

RELATED COMPANIES Price Int.Val. Rating
AVP Avon Products 2.62 0.28  str.sell
COTY Coty Cl A 19.23 100.68  str.buy
PG Procter&Gamble 92.47 51.93  sell
EL Estee Lauder C 105.92 69.75  sell
IPAR Inter Parfums 37.75 68.65  str.buy
ELF e.l.f. Beauty 23.01 6.50  str.sell

COMPANY NEWS

▶ Revlon to add jobs, make $16M investment in Granville County expansion   [Aug-11-17 02:15PM  American City Business Journals]
▶ Revlon reports 2Q loss   [Aug-04-17 11:05PM  Associated Press]
▶ Revlon Reports Second Quarter 2017 Results   [07:30AM  Business Wire]
▶ [$$] Promotional Game   [Aug-03-17 06:36AM  The Wall Street Journal]
▶ Revlon, Inc. Value Analysis (NYSE:REV) : June 20, 2017   [Jun-20-17 04:10PM  Capital Cube]
▶ Why Epizyme, Tribune Media, and Revlon Jumped Today   [Jun-15-17 04:28PM  Motley Fool]
▶ Why Revlons Stock Dove 28% in May   [Jun-09-17 06:02PM  Motley Fool]
▶ Billionaire financier Ron Perelman ups stake in Revlon amid soft sales   [Jun-01-17 10:25AM  American City Business Journals]
▶ ETFs with exposure to Revlon, Inc. : May 22, 2017   [May-22-17 02:05PM  Capital Cube]
▶ ETFs with exposure to Revlon, Inc. : May 11, 2017   [May-11-17 05:26PM  Capital Cube]
▶ Here's Why Revlon, Inc. Is Getting Crushed Today   [May-05-17 05:59PM  Motley Fool]
▶ What Happened in the Stock Market Today   [04:54PM  Motley Fool]
▶ Revlon reports 1Q loss   [07:37AM  Associated Press]
▶ Revlon Reports First Quarter 2017 Results   [07:30AM  Business Wire]
▶ Former P&G executive hired as COO of rival Revlon   [Apr-18-17 01:56PM  American City Business Journals]
▶ Avon Focuses On Overlooked Demographic   [Mar-22-17 04:28PM  Investopedia]
▶ Avon Focuses On Overlooked Demographic   [04:28PM  at Investopedia]
▶ [$$] Revlon Stock Deserves More Than Lip Service   [Mar-16-17 07:09AM  Barrons.com]
▶ [$$] Two Of A Kind   [Mar-13-17 08:05AM  The Wall Street Journal]
▶ [$$] Two Of A Kind   [08:05AM  at The Wall Street Journal]
▶ [$$] Revlon Swings to Loss Amid Turnaround Effort   [Mar-03-17 11:11PM  The Wall Street Journal]
▶ [$$] Revlon Swings to Loss Amid Turnaround Effort   [11:11PM  at The Wall Street Journal]
▶ Stocks to Watch: Big Lots, Snap, Revlon   [09:28AM  at The Wall Street Journal]
▶ [$$] Revlon Swings to Loss Amid Turnaround Effort   [08:43AM  at The Wall Street Journal]
▶ Revlon Embarks on New Digital Transformation   [Feb-27-17 03:16PM  at Investopedia]
▶ Not a Pretty Picture: Avon, Nu Skin Struggle with Revenue   [Feb-22-17 12:01PM  at Investopedia]
▶ Why Revlon Inc Stock Gained 15% in January   [Feb-05-17 11:00PM  at Motley Fool]
▶ Revlon unveils new corporate structure   [Jan-17-17 09:27AM  at MarketWatch]
▶ [$$] Revlon's Beautiful Outlook   [Jan-14-17 12:01AM  at Barrons.com]
▶ [$$] Can Revlon Regain Some of Its Lost Luster?   [Jan-12-17 01:08AM  at The Wall Street Journal]
▶ [$$] Can Revlon Regain Some of Its Lost Luster?   [Jan-10-17 10:56PM  at The Wall Street Journal]
▶ [$$] Warburg and Former Revlon Chief Launch Beauty Company   [Dec-20-16 05:26PM  at The Wall Street Journal]
▶ Is Revlon Inc (REV) A Good Stock to Buy?   [Dec-12-16 10:52PM  at Insider Monkey]
▶ [$$] Revlon Swings to a Loss   [09:07AM  at The Wall Street Journal]
▶ Revlon Reports Third Quarter 2016 Results   [07:30AM  Business Wire]
Stock chart of REV Financial statements of REV
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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