Intrinsic value of Unilever ADR - UN

Previous Close

$56.32

  Intrinsic Value

$33.73

stock screener

  Rating & Target

sell

-40%

Previous close

$56.32

 
Intrinsic value

$33.73

 
Up/down potential

-40%

 
Rating

sell

We calculate the intrinsic value of UN 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 165.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -1.05
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  55,634
  56,747
  58,052
  59,544
  61,219
  63,075
  65,111
  67,329
  69,729
  72,315
  75,090
  78,059
  81,227
  84,600
  88,185
  91,989
  96,021
  100,288
  104,800
  109,569
  114,603
  119,915
  125,517
  131,422
  137,644
  144,197
  151,096
  158,358
  166,000
  174,039
  182,495
Variable operating expenses, $m
 
  48,708
  49,786
  51,017
  52,400
  53,932
  55,614
  57,444
  59,426
  61,561
  63,852
  64,443
  67,058
  69,843
  72,803
  75,943
  79,271
  82,794
  86,520
  90,456
  94,612
  98,998
  103,623
  108,498
  113,634
  119,044
  124,740
  130,735
  137,044
  143,681
  150,662
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
  47,401
  48,708
  49,786
  51,017
  52,400
  53,932
  55,614
  57,444
  59,426
  61,561
  63,852
  64,443
  67,058
  69,843
  72,803
  75,943
  79,271
  82,794
  86,520
  90,456
  94,612
  98,998
  103,623
  108,498
  113,634
  119,044
  124,740
  130,735
  137,044
  143,681
  150,662
Operating income, $m
  8,233
  8,038
  8,266
  8,526
  8,819
  9,142
  9,498
  9,884
  10,303
  10,754
  11,238
  13,616
  14,169
  14,757
  15,383
  16,046
  16,749
  17,494
  18,281
  19,113
  19,991
  20,917
  21,895
  22,925
  24,010
  25,153
  26,356
  27,623
  28,956
  30,358
  31,833
EBITDA, $m
  9,778
  10,769
  11,016
  11,299
  11,617
  11,969
  12,356
  12,777
  13,232
  13,723
  14,250
  14,813
  15,414
  16,054
  16,735
  17,456
  18,221
  19,031
  19,887
  20,792
  21,748
  22,756
  23,819
  24,939
  26,120
  27,364
  28,673
  30,051
  31,501
  33,027
  34,631
Interest expense (income), $m
  498
  470
  498
  529
  565
  606
  651
  700
  753
  811
  874
  941
  1,013
  1,089
  1,171
  1,258
  1,350
  1,447
  1,550
  1,659
  1,775
  1,896
  2,025
  2,160
  2,303
  2,453
  2,612
  2,778
  2,954
  3,139
  3,333
Earnings before tax, $m
  7,883
  7,568
  7,769
  7,997
  8,253
  8,537
  8,847
  9,185
  9,550
  9,943
  10,364
  12,675
  13,156
  13,668
  14,212
  14,789
  15,400
  16,047
  16,731
  17,453
  18,216
  19,021
  19,870
  20,765
  21,707
  22,700
  23,745
  24,845
  26,002
  27,220
  28,500
Tax expense, $m
  2,029
  2,043
  2,098
  2,159
  2,228
  2,305
  2,389
  2,480
  2,578
  2,685
  2,798
  3,422
  3,552
  3,690
  3,837
  3,993
  4,158
  4,333
  4,517
  4,712
  4,918
  5,136
  5,365
  5,606
  5,861
  6,129
  6,411
  6,708
  7,021
  7,349
  7,695
Net income, $m
  5,471
  5,525
  5,671
  5,838
  6,025
  6,232
  6,458
  6,705
  6,971
  7,258
  7,566
  9,253
  9,604
  9,978
  10,374
  10,796
  11,242
  11,714
  12,213
  12,741
  13,298
  13,885
  14,505
  15,158
  15,846
  16,571
  17,334
  18,137
  18,982
  19,870
  20,805

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,886
  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
  59,556
  56,803
  58,110
  59,603
  61,280
  63,138
  65,176
  67,396
  69,799
  72,387
  75,165
  78,137
  81,309
  84,685
  88,274
  92,081
  96,117
  100,388
  104,905
  109,678
  114,718
  120,035
  125,643
  131,554
  137,782
  144,341
  151,247
  158,517
  166,166
  174,213
  182,678
Adjusted assets (=assets-cash), $m
  55,670
  56,803
  58,110
  59,603
  61,280
  63,138
  65,176
  67,396
  69,799
  72,387
  75,165
  78,137
  81,309
  84,685
  88,274
  92,081
  96,117
  100,388
  104,905
  109,678
  114,718
  120,035
  125,643
  131,554
  137,782
  144,341
  151,247
  158,517
  166,166
  174,213
  182,678
Revenue / Adjusted assets
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
  0.999
Average production assets, $m
  21,893
  22,358
  22,872
  23,460
  24,120
  24,851
  25,654
  26,527
  27,473
  28,492
  29,586
  30,755
  32,004
  33,333
  34,745
  36,244
  37,832
  39,513
  41,291
  43,170
  45,154
  47,247
  49,454
  51,780
  54,232
  56,814
  59,532
  62,393
  65,404
  68,571
  71,903
Working capital, $m
  -7,042
  -5,448
  -5,573
  -5,716
  -5,877
  -6,055
  -6,251
  -6,464
  -6,694
  -6,942
  -7,209
  -7,494
  -7,798
  -8,122
  -8,466
  -8,831
  -9,218
  -9,628
  -10,061
  -10,519
  -11,002
  -11,512
  -12,050
  -12,617
  -13,214
  -13,843
  -14,505
  -15,202
  -15,936
  -16,708
  -17,520
Total debt, $m
  17,319
  14,217
  15,119
  16,149
  17,306
  18,588
  19,995
  21,526
  23,184
  24,970
  26,887
  28,938
  31,126
  33,456
  35,932
  38,559
  41,344
  44,291
  47,408
  50,701
  54,178
  57,847
  61,717
  65,795
  70,092
  74,618
  79,384
  84,399
  89,677
  95,230
  101,071
Total liabilities, $m
  42,296
  39,194
  40,096
  41,126
  42,283
  43,565
  44,972
  46,503
  48,161
  49,947
  51,864
  53,915
  56,103
  58,433
  60,909
  63,536
  66,321
  69,268
  72,385
  75,678
  79,155
  82,824
  86,694
  90,772
  95,069
  99,595
  104,361
  109,376
  114,654
  120,207
  126,048
Total equity, $m
  17,260
  17,609
  18,014
  18,477
  18,997
  19,573
  20,205
  20,893
  21,638
  22,440
  23,301
  24,223
  25,206
  26,252
  27,365
  28,545
  29,796
  31,120
  32,521
  34,000
  35,562
  37,211
  38,949
  40,782
  42,712
  44,746
  46,887
  49,140
  51,511
  54,006
  56,630
Total liabilities and equity, $m
  59,556
  56,803
  58,110
  59,603
  61,280
  63,138
  65,177
  67,396
  69,799
  72,387
  75,165
  78,138
  81,309
  84,685
  88,274
  92,081
  96,117
  100,388
  104,906
  109,678
  114,717
  120,035
  125,643
  131,554
  137,781
  144,341
  151,248
  158,516
  166,165
  174,213
  182,678
Debt-to-equity ratio
  1.003
  0.810
  0.840
  0.870
  0.910
  0.950
  0.990
  1.030
  1.070
  1.110
  1.150
  1.190
  1.230
  1.270
  1.310
  1.350
  1.390
  1.420
  1.460
  1.490
  1.520
  1.550
  1.580
  1.610
  1.640
  1.670
  1.690
  1.720
  1.740
  1.760
  1.780
Adjusted equity ratio
  0.240
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  5,471
  5,525
  5,671
  5,838
  6,025
  6,232
  6,458
  6,705
  6,971
  7,258
  7,566
  9,253
  9,604
  9,978
  10,374
  10,796
  11,242
  11,714
  12,213
  12,741
  13,298
  13,885
  14,505
  15,158
  15,846
  16,571
  17,334
  18,137
  18,982
  19,870
  20,805
Depreciation, amort., depletion, $m
  1,545
  2,730
  2,750
  2,773
  2,799
  2,827
  2,858
  2,892
  2,929
  2,969
  3,011
  1,197
  1,245
  1,297
  1,352
  1,410
  1,472
  1,537
  1,607
  1,680
  1,757
  1,838
  1,924
  2,015
  2,110
  2,211
  2,316
  2,428
  2,545
  2,668
  2,798
Funds from operations, $m
  5,116
  8,255
  8,421
  8,611
  8,824
  9,059
  9,317
  9,597
  9,900
  10,227
  10,577
  10,450
  10,849
  11,275
  11,726
  12,206
  12,714
  13,252
  13,820
  14,421
  15,055
  15,724
  16,429
  17,173
  17,956
  18,781
  19,650
  20,564
  21,526
  22,539
  23,603
Change in working capital, $m
  -2,322
  -107
  -125
  -143
  -161
  -178
  -195
  -213
  -230
  -248
  -266
  -285
  -304
  -324
  -344
  -365
  -387
  -410
  -433
  -458
  -483
  -510
  -538
  -567
  -597
  -629
  -662
  -697
  -734
  -772
  -812
Cash from operations, $m
  7,438
  8,362
  8,546
  8,754
  8,984
  9,237
  9,512
  9,810
  10,131
  10,475
  10,844
  10,735
  11,153
  11,598
  12,071
  12,571
  13,101
  13,661
  14,253
  14,878
  15,538
  16,234
  16,967
  17,740
  18,554
  19,410
  20,312
  21,262
  22,260
  23,310
  24,415
Maintenance CAPEX, $m
  0
  -852
  -870
  -890
  -913
  -939
  -967
  -998
  -1,032
  -1,069
  -1,109
  -1,151
  -1,197
  -1,245
  -1,297
  -1,352
  -1,410
  -1,472
  -1,537
  -1,607
  -1,680
  -1,757
  -1,838
  -1,924
  -2,015
  -2,110
  -2,211
  -2,316
  -2,428
  -2,545
  -2,668
New CAPEX, $m
  -2,149
  -466
  -514
  -588
  -660
  -731
  -802
  -874
  -946
  -1,019
  -1,093
  -1,170
  -1,248
  -1,329
  -1,412
  -1,499
  -1,588
  -1,681
  -1,778
  -1,879
  -1,984
  -2,093
  -2,207
  -2,327
  -2,451
  -2,582
  -2,718
  -2,861
  -3,011
  -3,168
  -3,332
Cash from investing activities, $m
  -3,365
  -1,318
  -1,384
  -1,478
  -1,573
  -1,670
  -1,769
  -1,872
  -1,978
  -2,088
  -2,202
  -2,321
  -2,445
  -2,574
  -2,709
  -2,851
  -2,998
  -3,153
  -3,315
  -3,486
  -3,664
  -3,850
  -4,045
  -4,251
  -4,466
  -4,692
  -4,929
  -5,177
  -5,439
  -5,713
  -6,000
Free cash flow, $m
  4,073
  7,044
  7,162
  7,276
  7,412
  7,567
  7,743
  7,938
  8,153
  8,387
  8,642
  8,414
  8,708
  9,024
  9,361
  9,720
  10,102
  10,508
  10,938
  11,393
  11,875
  12,384
  12,921
  13,489
  14,087
  14,718
  15,383
  16,084
  16,821
  17,598
  18,415
Issuance/(repayment) of debt, $m
  1,869
  784
  901
  1,030
  1,157
  1,282
  1,407
  1,532
  1,658
  1,786
  1,917
  2,051
  2,188
  2,330
  2,476
  2,627
  2,784
  2,947
  3,117
  3,293
  3,477
  3,669
  3,869
  4,079
  4,297
  4,526
  4,765
  5,016
  5,278
  5,553
  5,841
Issuance/(repurchase) of shares, $m
  -271
  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  
  566
  784
  901
  1,030
  1,157
  1,282
  1,407
  1,532
  1,658
  1,786
  1,917
  2,051
  2,188
  2,330
  2,476
  2,627
  2,784
  2,947
  3,117
  3,293
  3,477
  3,669
  3,869
  4,079
  4,297
  4,526
  4,765
  5,016
  5,278
  5,553
  5,841
Total cash flow (excl. dividends), $m
  4,938
  7,829
  8,064
  8,307
  8,568
  8,849
  9,149
  9,470
  9,811
  10,173
  10,558
  10,464
  10,897
  11,354
  11,837
  12,348
  12,887
  13,455
  14,055
  14,686
  15,352
  16,053
  16,791
  17,567
  18,385
  19,244
  20,149
  21,100
  22,099
  23,151
  24,256
Retained Cash Flow (-), $m
  -965
  -349
  -405
  -463
  -520
  -576
  -632
  -688
  -745
  -802
  -861
  -921
  -983
  -1,047
  -1,112
  -1,180
  -1,251
  -1,324
  -1,400
  -1,480
  -1,562
  -1,648
  -1,738
  -1,832
  -1,931
  -2,033
  -2,141
  -2,253
  -2,371
  -2,495
  -2,624
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
 
  7,480
  7,659
  7,844
  8,049
  8,273
  8,517
  8,781
  9,066
  9,371
  9,697
  9,543
  9,913
  10,307
  10,725
  11,167
  11,636
  12,131
  12,654
  13,207
  13,790
  14,404
  15,052
  15,735
  16,454
  17,211
  18,008
  18,846
  19,728
  20,656
  21,632
Discount rate, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
 
  7,164
  6,997
  6,805
  6,598
  6,376
  6,137
  5,880
  5,607
  5,316
  5,011
  4,457
  4,150
  3,835
  3,514
  3,190
  2,868
  2,552
  2,245
  1,951
  1,674
  1,417
  1,183
  972
  785
  624
  487
  372
  279
  205
  147
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

Unilever N.V. is a fast-moving consumer goods (FMCG) company. The Company's segments include Personal Care, which primarily includes sales of skin care and hair care products, deodorants and oral care products; Foods, which primarily includes sales of soups, bouillons, sauces, snacks, mayonnaise, salad dressings, margarines and spreads; Home Care, which primarily includes sales of home care products, such as powders, liquids and capsules, soap bars and a range of cleaning products, and Refreshment, which primarily includes sales of ice cream and tea-based beverages. The Company's geographical segments include Asia/AMET/RUB, The Americas and Europe. Its brands include Axe, Dirt is Good (Omo), Dove, Family Goodness (Rama), Heartbrand (Wall's), Hellmann's, Knorr, Lipton, Lux, Magnum, Rexona, Sunsilk and Surf. The Company operates in more than 100 countries, selling its products in more than 190 countries. The Company operates approximately 310 factories in over 70 countries.

FINANCIAL RATIOS  of  Unilever ADR (UN)

Valuation Ratios
P/E Ratio 29.2
Price to Sales 2.9
Price to Book 9.3
Price to Tangible Book
Price to Cash Flow 21.5
Price to Free Cash Flow 30.2
Growth Rates
Sales Growth Rate -1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -7.5%
Cap. Spend. - 3 Yr. Gr. Rate -1.2%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 68.1%
Total Debt to Equity 100.3%
Interest Coverage 17
Management Effectiveness
Return On Assets 10.2%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 16.5%
Ret/ On T. Cap. - 3 Yr. Avg. 18%
Return On Equity 32.6%
Return On Equity - 3 Yr. Avg. 34.4%
Asset Turnover 1
Profitability Ratios
Gross Margin 48.8%
Gross Margin - 3 Yr. Avg. 46.2%
EBITDA Margin 17.8%
EBITDA Margin - 3 Yr. Avg. 18.3%
Operating Margin 14.8%
Oper. Margin - 3 Yr. Avg. 15.1%
Pre-Tax Margin 14.2%
Pre-Tax Margin - 3 Yr. Avg. 14.5%
Net Profit Margin 9.8%
Net Profit Margin - 3 Yr. Avg. 9.9%
Effective Tax Rate 25.7%
Eff/ Tax Rate - 3 Yr. Avg. 26.9%
Payout Ratio 69.6%

UN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the UN stock intrinsic value calculation we used $55634 million for the last fiscal year's total revenue generated by Unilever ADR. The default revenue input number comes from 2016 income statement of Unilever 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 UN stock valuation model: a) initial revenue growth rate of 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 4.4%, whose default value for UN is calculated based on our internal credit rating of Unilever 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 Unilever 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 UN stock the variable cost ratio is equal to 85.9%.

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 UN 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 Unilever ADR.

Corporate tax rate of 27% is the nominal tax rate for Unilever 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 UN 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 UN are equal to 39.4%.

Life of production assets of 25.7 years is the average useful life of capital assets used in Unilever 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 UN is equal to -9.6%. 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 - $17260 million for Unilever 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 2937.85 million for Unilever 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 Unilever ADR at the current share price and the inputted number of shares is $165.5 billion.

RELATED COMPANIES Price Int.Val. Rating
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PG Procter&Gamble 88.25 66.18  sell
PEP PepsiCo 111.61 59.61  sell
UL Unilever ADR 54.79 33.38  sell
KHC Kraft Heinz 76.71 47.28  sell

COMPANY NEWS

▶ [$$] Unilever, Nestlé Test Investor Patience With Slower Sales   [Oct-20-17 12:39AM  The Wall Street Journal]
▶ Here's The Latest Red Flag For Branded Consumer Goods   [04:07PM  Investor's Business Daily]
▶ Trying to Make Sense of Unilever   [10:08AM  TheStreet.com]
▶ [$$] Unilever takes steps to streamline operations   [Oct-11-17 12:18PM  Financial Times]
▶ Why Doesn't Berkshire Just Buy More Apple?   [06:00AM  TheStreet.com]
▶ [$$] Unilever Apologizes for Dove Ad   [Oct-10-17 12:22AM  The Wall Street Journal]
▶ Dove under fire for racist ad   [Oct-09-17 01:25PM  Yahoo Finance Video]
▶ [$$] Unilever Apologizes for Dove Ad   [12:15PM  The Wall Street Journal]
▶ Extended Unilever Could Still Trade Higher   [Oct-05-17 03:24PM  TheStreet.com]
▶ Should You Be Concerned About Unilever PLCs (LSE:ULVR) Risks?   [Sep-29-17 11:40AM  Simply Wall St.]
▶ [$$] Unilever to Buy Korean Skin-Care Firm for $2.7 Billion   [01:25AM  The Wall Street Journal]
▶ GE Confirms ABB Deal, Unilever Buys Skin Care Brand, Genuine Parts Buys Rival   [Sep-25-17 04:13PM  Investor's Business Daily]
▶ Is This 2015 IPO Barking Up The Right Breakout Tree?   [10:39AM  Investor's Business Daily]
▶ Unilever Gets K-Pop Fever   [06:20AM  Bloomberg]
▶ [$$] Unilever to Buy Korean Skin-Care Firm for $2.7 Billion   [03:57AM  The Wall Street Journal]
▶ Steven Romick's Top 5 Global Stock Picks   [Sep-22-17 03:50PM  GuruFocus.com]
▶ Stocks With Rising Relative Strength: Nestle   [03:00AM  Investor's Business Daily]
▶ [$$] Nestlé, Unilever Bite-Sized Deals Betray Healthier Appetite   [Sep-07-17 09:35AM  The Wall Street Journal]
▶ How Procter & Gamble Co. Makes Most of Its Money   [Aug-31-17 06:08PM  Motley Fool]
▶ 3 International Stocks for Retirees   [Aug-26-17 03:20PM  Motley Fool]
▶ For Unilever, Estee Lauder's Not Just a Pretty Face   [Aug-25-17 12:01PM  Bloomberg]
▶ [$$] Domino Effect: Packaged Goods Woes Spreading to Ad, Media Firms   [Aug-23-17 09:35AM  The Wall Street Journal]
▶ Major businesses are signing up for blockchain   [Aug-22-17 10:22AM  Yahoo Finance Video]
▶ Yahoo Finance Live: Market Movers - Aug 22nd, 2017   [07:20AM  Yahoo Finance Video]
▶ Unilever's Anti-Kraft Work   [Aug-21-17 06:53AM  Bloomberg]
▶ 3 Reasons The Procter & Gamble Company Stock Could Fall   [Aug-17-17 09:33PM  Motley Fool]
▶ Unilever to buy back Dutch preference shares   [Aug-09-17 10:17AM  Reuters]
▶ ETFs with exposure to Unilever NV : August 4, 2017   [Aug-04-17 07:59PM  Capital Cube]
▶ Bull of the Day: Unilever (UL)   [05:08AM  Zacks]
▶ Procter & Gamble Co. Earnings: What to Watch   [Jul-26-17 08:14AM  Motley Fool]
▶ Unilever lifts full-year margin target   [10:12AM  Reuters Videos]
▶ Unilever's Growing Pains   [07:49AM  Bloomberg]
▶ Unilever CEO Polman Seeks Value Enhancing M&A   [05:18AM  Bloomberg Video]
▶ [$$] Unilever Reassures Investors With Strong Earnings   [03:45AM  The Wall Street Journal]
▶ Unilever net profit soars in first half of 2017   [03:23AM  Associated Press]
Financial statements of UN
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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