Intrinsic value of Tenaris ADR - TS

Previous Close

$27.25

  Intrinsic Value

$4.26

stock screener

  Rating & Target

str. sell

-84%

  Value-price divergence*

-26%

Previous close

$27.25

 
Intrinsic value

$4.26

 
Up/down potential

-84%

 
Rating

str. sell

 
Value-price divergence*

-26%

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

We calculate the intrinsic value of TS 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 16.0

 

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, %
  -37.80
  17.80
  16.52
  15.37
  14.33
  13.40
  12.56
  11.80
  11.12
  10.51
  9.96
  9.46
  9.02
  8.62
  8.25
  7.93
  7.64
  7.37
  7.13
  6.92
  6.73
  6.56
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
  5.60
Revenue, $m
  4,294
  5,058
  5,894
  6,800
  7,774
  8,816
  9,923
  11,094
  12,328
  13,624
  14,980
  16,398
  17,877
  19,417
  21,019
  22,686
  24,418
  26,218
  28,089
  30,033
  32,054
  34,155
  36,341
  38,616
  40,985
  43,453
  46,025
  48,707
  51,505
  54,425
  57,474
Variable operating expenses, $m
 
  4,656
  5,404
  6,214
  7,086
  8,018
  9,009
  10,057
  11,161
  12,321
  13,535
  14,674
  15,998
  17,376
  18,810
  20,301
  21,851
  23,462
  25,136
  26,876
  28,684
  30,565
  32,521
  34,557
  36,677
  38,886
  41,187
  43,587
  46,091
  48,704
  51,433
Fixed operating expenses, $m
 
  402
  412
  422
  433
  444
  455
  466
  478
  490
  502
  514
  527
  540
  554
  568
  582
  596
  611
  627
  642
  658
  675
  692
  709
  727
  745
  764
  783
  802
  822
Total operating expenses, $m
  4,353
  5,058
  5,816
  6,636
  7,519
  8,462
  9,464
  10,523
  11,639
  12,811
  14,037
  15,188
  16,525
  17,916
  19,364
  20,869
  22,433
  24,058
  25,747
  27,503
  29,326
  31,223
  33,196
  35,249
  37,386
  39,613
  41,932
  44,351
  46,874
  49,506
  52,255
Operating income, $m
  -59
  1
  78
  163
  255
  354
  459
  571
  689
  813
  944
  1,209
  1,352
  1,501
  1,655
  1,817
  1,985
  2,159
  2,341
  2,530
  2,727
  2,932
  3,145
  3,367
  3,599
  3,841
  4,093
  4,356
  4,631
  4,919
  5,219
EBITDA, $m
  603
  781
  967
  1,168
  1,386
  1,619
  1,867
  2,129
  2,406
  2,697
  3,003
  3,322
  3,655
  4,002
  4,363
  4,739
  5,130
  5,537
  5,959
  6,399
  6,856
  7,331
  7,826
  8,342
  8,878
  9,438
  10,021
  10,630
  11,266
  11,929
  12,622
Interest expense (income), $m
  19
  1
  13
  26
  40
  55
  71
  88
  106
  125
  146
  167
  189
  211
  235
  260
  286
  313
  341
  370
  400
  431
  464
  498
  533
  570
  608
  648
  689
  733
  778
Earnings before tax, $m
  34
  -1
  66
  138
  215
  299
  388
  483
  583
  688
  798
  1,043
  1,163
  1,289
  1,420
  1,557
  1,699
  1,846
  2,000
  2,160
  2,327
  2,500
  2,681
  2,870
  3,066
  3,271
  3,485
  3,708
  3,942
  4,186
  4,441
Tax expense, $m
  17
  0
  18
  37
  58
  81
  105
  130
  157
  186
  215
  282
  314
  348
  383
  420
  459
  499
  540
  583
  628
  675
  724
  775
  828
  883
  941
  1,001
  1,064
  1,130
  1,199
Net income, $m
  55
  -1
  48
  100
  157
  218
  283
  352
  425
  502
  583
  761
  849
  941
  1,037
  1,136
  1,240
  1,348
  1,460
  1,577
  1,699
  1,825
  1,957
  2,095
  2,238
  2,388
  2,544
  2,707
  2,877
  3,056
  3,242

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,033
  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
  14,003
  14,090
  16,418
  18,941
  21,655
  24,557
  27,641
  30,903
  34,340
  37,949
  41,728
  45,677
  49,796
  54,086
  58,550
  63,192
  68,017
  73,031
  78,241
  83,656
  89,286
  95,139
  101,229
  107,566
  114,165
  121,039
  128,203
  135,673
  143,467
  151,601
  160,095
Adjusted assets (=assets-cash), $m
  11,970
  14,090
  16,418
  18,941
  21,655
  24,557
  27,641
  30,903
  34,340
  37,949
  41,728
  45,677
  49,796
  54,086
  58,550
  63,192
  68,017
  73,031
  78,241
  83,656
  89,286
  95,139
  101,229
  107,566
  114,165
  121,039
  128,203
  135,673
  143,467
  151,601
  160,095
Revenue / Adjusted assets
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
  0.359
Average production assets, $m
  6,527
  7,689
  8,959
  10,336
  11,817
  13,400
  15,083
  16,863
  18,739
  20,708
  22,770
  24,925
  27,173
  29,513
  31,949
  34,482
  37,115
  39,851
  42,695
  45,650
  48,721
  51,916
  55,239
  58,697
  62,298
  66,048
  69,958
  74,034
  78,287
  82,726
  87,361
Working capital, $m
  3,104
  2,216
  2,582
  2,978
  3,405
  3,861
  4,346
  4,859
  5,400
  5,967
  6,561
  7,182
  7,830
  8,505
  9,206
  9,936
  10,695
  11,483
  12,303
  13,154
  14,039
  14,960
  15,917
  16,914
  17,952
  19,032
  20,159
  21,334
  22,559
  23,838
  25,174
Total debt, $m
  840
  364
  734
  1,136
  1,567
  2,029
  2,519
  3,038
  3,584
  4,158
  4,759
  5,387
  6,042
  6,724
  7,433
  8,171
  8,939
  9,736
  10,564
  11,425
  12,320
  13,251
  14,219
  15,227
  16,276
  17,369
  18,508
  19,696
  20,935
  22,229
  23,579
Total liabilities, $m
  2,716
  2,240
  2,610
  3,012
  3,443
  3,905
  4,395
  4,914
  5,460
  6,034
  6,635
  7,263
  7,918
  8,600
  9,309
  10,047
  10,815
  11,612
  12,440
  13,301
  14,196
  15,127
  16,095
  17,103
  18,152
  19,245
  20,384
  21,572
  22,811
  24,105
  25,455
Total equity, $m
  11,287
  11,850
  13,807
  15,929
  18,212
  20,652
  23,246
  25,989
  28,880
  31,915
  35,094
  38,414
  41,878
  45,486
  49,240
  53,144
  57,202
  61,419
  65,801
  70,355
  75,089
  80,012
  85,134
  90,463
  96,013
  101,794
  107,819
  114,101
  120,656
  127,497
  134,640
Total liabilities and equity, $m
  14,003
  14,090
  16,417
  18,941
  21,655
  24,557
  27,641
  30,903
  34,340
  37,949
  41,729
  45,677
  49,796
  54,086
  58,549
  63,191
  68,017
  73,031
  78,241
  83,656
  89,285
  95,139
  101,229
  107,566
  114,165
  121,039
  128,203
  135,673
  143,467
  151,602
  160,095
Debt-to-equity ratio
  0.074
  0.030
  0.050
  0.070
  0.090
  0.100
  0.110
  0.120
  0.120
  0.130
  0.140
  0.140
  0.140
  0.150
  0.150
  0.150
  0.160
  0.160
  0.160
  0.160
  0.160
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.170
  0.180
Adjusted equity ratio
  0.773
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841
  0.841

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  55
  -1
  48
  100
  157
  218
  283
  352
  425
  502
  583
  761
  849
  941
  1,037
  1,136
  1,240
  1,348
  1,460
  1,577
  1,699
  1,825
  1,957
  2,095
  2,238
  2,388
  2,544
  2,707
  2,877
  3,056
  3,242
Depreciation, amort., depletion, $m
  662
  781
  889
  1,005
  1,131
  1,265
  1,408
  1,558
  1,717
  1,884
  2,059
  2,112
  2,303
  2,501
  2,708
  2,922
  3,145
  3,377
  3,618
  3,869
  4,129
  4,400
  4,681
  4,974
  5,279
  5,597
  5,929
  6,274
  6,634
  7,011
  7,403
Funds from operations, $m
  1,065
  780
  936
  1,106
  1,288
  1,483
  1,691
  1,911
  2,143
  2,386
  2,642
  2,873
  3,152
  3,442
  3,744
  4,059
  4,385
  4,725
  5,078
  5,446
  5,828
  6,225
  6,639
  7,069
  7,518
  7,985
  8,473
  8,981
  9,512
  10,066
  10,645
Change in working capital, $m
  201
  335
  366
  397
  427
  456
  485
  513
  540
  568
  594
  621
  648
  675
  702
  730
  759
  788
  819
  852
  885
  920
  958
  997
  1,038
  1,081
  1,127
  1,175
  1,225
  1,279
  1,336
Cash from operations, $m
  864
  446
  570
  709
  861
  1,027
  1,206
  1,398
  1,602
  1,819
  2,047
  2,253
  2,504
  2,768
  3,042
  3,329
  3,627
  3,937
  4,259
  4,594
  4,942
  5,305
  5,681
  6,073
  6,480
  6,904
  7,346
  7,807
  8,287
  8,787
  9,310
Maintenance CAPEX, $m
  0
  -553
  -652
  -759
  -876
  -1,001
  -1,136
  -1,278
  -1,429
  -1,588
  -1,755
  -1,930
  -2,112
  -2,303
  -2,501
  -2,708
  -2,922
  -3,145
  -3,377
  -3,618
  -3,869
  -4,129
  -4,400
  -4,681
  -4,974
  -5,279
  -5,597
  -5,929
  -6,274
  -6,634
  -7,011
New CAPEX, $m
  -787
  -1,162
  -1,270
  -1,377
  -1,481
  -1,583
  -1,683
  -1,780
  -1,876
  -1,969
  -2,062
  -2,155
  -2,247
  -2,341
  -2,436
  -2,533
  -2,633
  -2,736
  -2,843
  -2,955
  -3,072
  -3,194
  -3,323
  -3,458
  -3,601
  -3,751
  -3,909
  -4,076
  -4,253
  -4,439
  -4,635
Cash from investing activities, $m
  -98
  -1,715
  -1,922
  -2,136
  -2,357
  -2,584
  -2,819
  -3,058
  -3,305
  -3,557
  -3,817
  -4,085
  -4,359
  -4,644
  -4,937
  -5,241
  -5,555
  -5,881
  -6,220
  -6,573
  -6,941
  -7,323
  -7,723
  -8,139
  -8,575
  -9,030
  -9,506
  -10,005
  -10,527
  -11,073
  -11,646
Free cash flow, $m
  766
  -1,269
  -1,351
  -1,427
  -1,496
  -1,558
  -1,612
  -1,661
  -1,702
  -1,739
  -1,770
  -1,832
  -1,855
  -1,876
  -1,895
  -1,912
  -1,928
  -1,945
  -1,961
  -1,979
  -1,998
  -2,019
  -2,042
  -2,067
  -2,095
  -2,126
  -2,161
  -2,199
  -2,240
  -2,286
  -2,336
Issuance/(repayment) of debt, $m
  -115
  332
  370
  401
  432
  461
  490
  519
  546
  574
  601
  628
  655
  682
  710
  738
  767
  797
  828
  861
  895
  931
  968
  1,008
  1,049
  1,093
  1,139
  1,188
  1,239
  1,293
  1,351
Issuance/(repurchase) of shares, $m
  0
  1,788
  1,910
  2,021
  2,126
  2,222
  2,310
  2,391
  2,465
  2,533
  2,596
  2,560
  2,615
  2,667
  2,718
  2,768
  2,818
  2,869
  2,922
  2,977
  3,036
  3,098
  3,164
  3,235
  3,311
  3,393
  3,481
  3,576
  3,677
  3,785
  3,902
Cash from financing (excl. dividends), $m  
  -145
  2,120
  2,280
  2,422
  2,558
  2,683
  2,800
  2,910
  3,011
  3,107
  3,197
  3,188
  3,270
  3,349
  3,428
  3,506
  3,585
  3,666
  3,750
  3,838
  3,931
  4,029
  4,132
  4,243
  4,360
  4,486
  4,620
  4,764
  4,916
  5,078
  5,253
Total cash flow (excl. dividends), $m
  620
  851
  928
  996
  1,061
  1,125
  1,188
  1,249
  1,309
  1,368
  1,427
  1,356
  1,414
  1,473
  1,533
  1,594
  1,657
  1,721
  1,789
  1,859
  1,933
  2,010
  2,091
  2,176
  2,265
  2,360
  2,460
  2,565
  2,676
  2,793
  2,916
Retained Cash Flow (-), $m
  426
  -1,788
  -1,958
  -2,122
  -2,283
  -2,440
  -2,594
  -2,744
  -2,891
  -3,035
  -3,178
  -3,321
  -3,464
  -3,608
  -3,754
  -3,904
  -4,058
  -4,217
  -4,382
  -4,554
  -4,734
  -4,923
  -5,121
  -5,330
  -5,549
  -5,781
  -6,025
  -6,283
  -6,554
  -6,841
  -7,144
Prev. year cash balance distribution, $m
 
  1,225
  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
 
  288
  -1,029
  -1,126
  -1,222
  -1,315
  -1,405
  -1,494
  -1,581
  -1,667
  -1,752
  -1,965
  -2,050
  -2,135
  -2,222
  -2,310
  -2,401
  -2,495
  -2,593
  -2,695
  -2,802
  -2,913
  -3,031
  -3,154
  -3,284
  -3,421
  -3,565
  -3,718
  -3,879
  -4,048
  -4,227
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
 
  276
  -942
  -980
  -1,006
  -1,019
  -1,020
  -1,009
  -988
  -958
  -918
  -933
  -875
  -812
  -746
  -678
  -610
  -543
  -478
  -415
  -356
  -301
  -251
  -207
  -167
  -133
  -104
  -80
  -60
  -44
  -32
Current shareholders' claim on cash, %
  100
  88.9
  79.8
  72.3
  66.1
  60.8
  56.4
  52.6
  49.3
  46.4
  43.9
  41.7
  39.8
  38.1
  36.6
  35.2
  33.9
  32.7
  31.7
  30.7
  29.8
  28.9
  28.2
  27.4
  26.7
  26.1
  25.5
  24.9
  24.3
  23.8
  23.3

Tenaris S.A. is a holding company, which is a steel producer with production facilities in Mexico, Argentina, Colombia, United States and Guatemala. The Company supplies round steel bars and flat steel products for its pipes business. It operates through Tubes business segment. The Tubes segment includes the production and sale of both seamless and welded steel tubular products, and related services primarily for the oil and gas industry, principally oil country tubular goods (OCTG) used in drilling operations, and for other industrial applications with production processes that include in the transformation of steel into tubular products. It operates in geographical areas, such as North America, South America, Europe, Middle East and Africa, and Asia Pacific. Its products and services include OCTG, Premium Connections, Rig Direct, Offshore Line Pipe, Onshore Line Pipe, Hydrocarbon Processing, Power Generation, Sucker Rods, Coiled Tubing, Industrial and Mechanical, and Automotive.

FINANCIAL RATIOS  of  Tenaris ADR (TS)

Valuation Ratios
P/E Ratio 584.9
Price to Sales 7.5
Price to Book 2.9
Price to Tangible Book
Price to Cash Flow 37.2
Price to Free Cash Flow 417.8
Growth Rates
Sales Growth Rate -37.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -30.5%
Cap. Spend. - 3 Yr. Gr. Rate 0.3%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 0.3%
Total Debt to Equity 7.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 0.4%
Ret/ On Assets - 3 Yr. Avg. 2.4%
Return On Total Capital 0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 0.5%
Return On Equity - 3 Yr. Avg. 3%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 26.3%
Gross Margin - 3 Yr. Avg. 32.3%
EBITDA Margin 16.7%
EBITDA Margin - 3 Yr. Avg. 17.5%
Operating Margin -1.4%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 0.8%
Pre-Tax Margin - 3 Yr. Avg. 6.7%
Net Profit Margin 1.3%
Net Profit Margin - 3 Yr. Avg. 3.9%
Effective Tax Rate 50%
Eff/ Tax Rate - 3 Yr. Avg. 83.3%
Payout Ratio 923.6%

TS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TS stock intrinsic value calculation we used $4294 million for the last fiscal year's total revenue generated by Tenaris ADR. The default revenue input number comes from 2016 income statement of Tenaris 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 TS stock valuation model: a) initial revenue growth rate of 17.8% 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 TS is calculated based on our internal credit rating of Tenaris 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 Tenaris 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 TS stock the variable cost ratio is equal to 92.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $392 million in the base year in the intrinsic value calculation for TS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Tenaris ADR.

Corporate tax rate of 27% is the nominal tax rate for Tenaris 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 TS 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 TS are equal to 152%.

Life of production assets of 11.8 years is the average useful life of capital assets used in Tenaris 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 TS is equal to 43.8%. 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 - $11287 million for Tenaris 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 586.844 million for Tenaris 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 Tenaris ADR at the current share price and the inputted number of shares is $16.0 billion.

RELATED COMPANIES Price Int.Val. Rating
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COMPANY NEWS

▶ Investor Network: Tenaris S.A. to Host Earnings Call   [Aug-03-17 05:40AM  ACCESSWIRE]
▶ Tenaris Announces 2017 Second Quarter Results   [Aug-02-17 04:31PM  Marketwired]
▶ Is Tenaris (TS) Stock a Solid Choice Right Now?   [May-22-17 08:50AM  Zacks]
▶ ETFs with exposure to Tenaris SA : May 4, 2017   [May-04-17 04:24PM  Capital Cube]
▶ Tenaris Files 2016 Form 20-F   [May-01-17 05:13PM  Marketwired]
▶ Tenaris Announces 2017 First Quarter Results   [Apr-26-17 09:11PM  Marketwired]
▶ New Strong Sell Stocks for April 17th   [Apr-17-17 10:29AM  Zacks]
▶ Tenaris Announces 2016 Fourth Quarter and Annual Results   [Feb-22-17 04:24PM  Marketwired]
▶ Is Tenaris SA (ADR) (TS) A Good Stock To Buy?   [Dec-16-16 11:37AM  at Insider Monkey]
▶ [$$] Nucor Agrees to Acquire Republic Conduit for $335 Million   [04:54PM  at The Wall Street Journal]
▶ Hedge Funds Are Buying Delphi Automotive PLC (DLPH)   [Nov-29-16 03:47AM  at Insider Monkey]
▶ Low-risk Stock Patterns With High Reward Potential   [Nov-07-16 01:00PM  at Investopedia]
▶ 8 Key Oil and Gas Stocks Analysts Want You to Buy Now   [Oct-22-16 10:55AM  at 24/7 Wall St.]
▶ [$$] Why Schlumberger Tops Halliburton   [Aug-30-16 03:07PM  at Barrons.com]
▶ 3 Ways You Can Invest in Argentina From the U.S. (ARGT, FM)   [Aug-22-16 07:00PM  at Investopedia]
▶ Tenaris Announces 2016 Second Quarter Results   [Aug-03-16 04:50PM  Marketwired]
▶ Tenaris Participates in Usiminas Capital Increase   [May-23-16 05:05PM  Marketwired]
▶ TENARIS SA Financials   [01:04PM  EDGAR Online Financials]
▶ Tenaris Files 2015 Form 20-F   [May-02-16 05:17PM  Marketwired]
▶ Tenaris Announces 2016 First Quarter Results   [Apr-27-16 10:51PM  Marketwired]
▶ Tenaris Announces 2015 Fourth Quarter and Annual Results   [Feb-24-16 04:30PM  Marketwired]
▶ Find Out Why We Love ATI, TS, CSTM and CRS   [Feb-17-16 08:30AM  Accesswire]
Financial statements of TS
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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