Intrinsic value of Willis Lease Finance - WLFC

Previous Close

$23.81

  Intrinsic Value

$8.40

stock screener

  Rating & Target

str. sell

-65%

  Value-price divergence*

-10%

Previous close

$23.81

 
Intrinsic value

$8.40

 
Up/down potential

-65%

 
Rating

str. sell

 
Value-price divergence*

-10%

Our model is not good at valuating stocks of financial companies, such as WLFC.

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

We calculate the intrinsic value of WLFC 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 0.2

 

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, %
  5.03
  56.90
  51.71
  47.04
  42.84
  39.05
  35.65
  32.58
  29.82
  27.34
  25.11
  23.10
  21.29
  19.66
  18.19
  16.87
  15.69
  14.62
  13.66
  12.79
  12.01
  11.31
  10.68
  10.11
  9.60
  9.14
  8.73
  8.35
  8.02
  7.72
  7.44
Revenue, $m
  209
  328
  497
  732
  1,045
  1,453
  1,971
  2,613
  3,392
  4,320
  5,404
  6,652
  8,068
  9,654
  11,411
  13,336
  15,428
  17,683
  20,098
  22,668
  25,391
  28,263
  31,281
  34,444
  37,750
  41,200
  44,795
  48,537
  52,429
  56,475
  60,679
Variable operating expenses, $m
 
  306
  464
  682
  975
  1,356
  1,839
  2,438
  3,165
  4,030
  5,042
  6,207
  7,528
  9,008
  10,646
  12,443
  14,394
  16,498
  18,751
  21,150
  23,690
  26,369
  29,185
  32,136
  35,221
  38,440
  41,794
  45,285
  48,916
  52,691
  56,613
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
  185
  306
  464
  682
  975
  1,356
  1,839
  2,438
  3,165
  4,030
  5,042
  6,207
  7,528
  9,008
  10,646
  12,443
  14,394
  16,498
  18,751
  21,150
  23,690
  26,369
  29,185
  32,136
  35,221
  38,440
  41,794
  45,285
  48,916
  52,691
  56,613
Operating income, $m
  24
  22
  33
  49
  70
  97
  132
  175
  227
  289
  362
  446
  541
  647
  765
  894
  1,034
  1,185
  1,347
  1,519
  1,701
  1,894
  2,096
  2,308
  2,529
  2,760
  3,001
  3,252
  3,513
  3,784
  4,065
EBITDA, $m
  90
  125
  190
  279
  399
  555
  753
  998
  1,296
  1,650
  2,064
  2,541
  3,082
  3,687
  4,358
  5,094
  5,893
  6,754
  7,676
  8,658
  9,698
  10,795
  11,947
  13,155
  14,418
  15,736
  17,109
  18,539
  20,025
  21,570
  23,176
Interest expense (income), $m
  37
  38
  65
  103
  156
  227
  319
  436
  581
  757
  966
  1,211
  1,493
  1,813
  2,171
  2,568
  3,003
  3,476
  3,985
  4,530
  5,111
  5,726
  6,375
  7,057
  7,771
  8,518
  9,297
  10,109
  10,955
  11,834
  12,747
Earnings before tax, $m
  24
  -16
  -31
  -54
  -86
  -129
  -187
  -261
  -354
  -467
  -604
  -766
  -953
  -1,166
  -1,407
  -1,675
  -1,969
  -2,291
  -2,638
  -3,012
  -3,410
  -3,833
  -4,279
  -4,749
  -5,242
  -5,757
  -6,296
  -6,857
  -7,442
  -8,050
  -8,682
Tax expense, $m
  10
  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
Net income, $m
  14
  -16
  -31
  -54
  -86
  -129
  -187
  -261
  -354
  -467
  -604
  -766
  -953
  -1,166
  -1,407
  -1,675
  -1,969
  -2,291
  -2,638
  -3,012
  -3,410
  -3,833
  -4,279
  -4,749
  -5,242
  -5,757
  -6,296
  -6,857
  -7,442
  -8,050
  -8,682

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  10
  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
  1,338
  2,102
  3,189
  4,689
  6,698
  9,313
  12,633
  16,749
  21,744
  27,690
  34,642
  42,643
  51,720
  61,887
  73,146
  85,488
  98,897
  113,353
  128,832
  145,309
  162,762
  181,171
  200,518
  220,792
  241,988
  264,105
  287,150
  311,137
  336,084
  362,017
  388,967
Adjusted assets (=assets-cash), $m
  1,328
  2,102
  3,189
  4,689
  6,698
  9,313
  12,633
  16,749
  21,744
  27,690
  34,642
  42,643
  51,720
  61,887
  73,146
  85,488
  98,897
  113,353
  128,832
  145,309
  162,762
  181,171
  200,518
  220,792
  241,988
  264,105
  287,150
  311,137
  336,084
  362,017
  388,967
Revenue / Adjusted assets
  0.157
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
  0.156
Average production assets, $m
  1,159
  1,818
  2,758
  4,055
  5,792
  8,053
  10,924
  14,483
  18,803
  23,943
  29,955
  36,873
  44,723
  53,514
  63,250
  73,922
  85,517
  98,017
  111,402
  125,650
  140,742
  156,660
  173,389
  190,920
  209,249
  228,374
  248,301
  269,043
  290,614
  313,039
  336,343
Working capital, $m
  0
  -16
  -24
  -35
  -50
  -70
  -95
  -125
  -163
  -207
  -259
  -319
  -387
  -463
  -548
  -640
  -741
  -849
  -965
  -1,088
  -1,219
  -1,357
  -1,501
  -1,653
  -1,812
  -1,978
  -2,150
  -2,330
  -2,517
  -2,711
  -2,913
Total debt, $m
  900
  1,542
  2,454
  3,712
  5,397
  7,592
  10,377
  13,831
  18,022
  23,010
  28,842
  35,555
  43,171
  51,701
  61,147
  71,502
  82,753
  94,881
  107,868
  121,693
  136,336
  151,780
  168,012
  185,022
  202,806
  221,362
  240,697
  260,822
  281,752
  303,510
  326,121
Total liabilities, $m
  1,122
  1,764
  2,676
  3,934
  5,619
  7,814
  10,599
  14,053
  18,244
  23,232
  29,064
  35,777
  43,393
  51,923
  61,369
  71,724
  82,975
  95,103
  108,090
  121,915
  136,558
  152,002
  168,234
  185,244
  203,028
  221,584
  240,919
  261,044
  281,974
  303,732
  326,343
Total equity, $m
  216
  338
  513
  755
  1,078
  1,499
  2,034
  2,697
  3,501
  4,458
  5,577
  6,865
  8,327
  9,964
  11,776
  13,764
  15,922
  18,250
  20,742
  23,395
  26,205
  29,168
  32,283
  35,547
  38,960
  42,521
  46,231
  50,093
  54,109
  58,285
  62,624
Total liabilities and equity, $m
  1,338
  2,102
  3,189
  4,689
  6,697
  9,313
  12,633
  16,750
  21,745
  27,690
  34,641
  42,642
  51,720
  61,887
  73,145
  85,488
  98,897
  113,353
  128,832
  145,310
  162,763
  181,170
  200,517
  220,791
  241,988
  264,105
  287,150
  311,137
  336,083
  362,017
  388,967
Debt-to-equity ratio
  4.167
  4.560
  4.780
  4.920
  5.010
  5.060
  5.100
  5.130
  5.150
  5.160
  5.170
  5.180
  5.180
  5.190
  5.190
  5.200
  5.200
  5.200
  5.200
  5.200
  5.200
  5.200
  5.200
  5.200
  5.210
  5.210
  5.210
  5.210
  5.210
  5.210
  5.210
Adjusted equity ratio
  0.155
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161
  0.161

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  14
  -16
  -31
  -54
  -86
  -129
  -187
  -261
  -354
  -467
  -604
  -766
  -953
  -1,166
  -1,407
  -1,675
  -1,969
  -2,291
  -2,638
  -3,012
  -3,410
  -3,833
  -4,279
  -4,749
  -5,242
  -5,757
  -6,296
  -6,857
  -7,442
  -8,050
  -8,682
Depreciation, amort., depletion, $m
  66
  103
  157
  230
  329
  458
  621
  823
  1,068
  1,360
  1,702
  2,095
  2,541
  3,041
  3,594
  4,200
  4,859
  5,569
  6,330
  7,139
  7,997
  8,901
  9,852
  10,848
  11,889
  12,976
  14,108
  15,287
  16,512
  17,786
  19,110
Funds from operations, $m
  101
  87
  125
  176
  243
  328
  434
  562
  715
  893
  1,098
  1,329
  1,588
  1,874
  2,187
  2,525
  2,890
  3,278
  3,691
  4,128
  4,587
  5,069
  5,573
  6,099
  6,647
  7,218
  7,812
  8,429
  9,070
  9,736
  10,428
Change in working capital, $m
  0
  -6
  -8
  -11
  -15
  -20
  -25
  -31
  -37
  -45
  -52
  -60
  -68
  -76
  -84
  -92
  -100
  -108
  -116
  -123
  -131
  -138
  -145
  -152
  -159
  -166
  -173
  -180
  -187
  -194
  -202
Cash from operations, $m
  101
  93
  133
  188
  258
  348
  459
  593
  752
  937
  1,150
  1,389
  1,656
  1,950
  2,271
  2,618
  2,990
  3,387
  3,807
  4,251
  4,717
  5,206
  5,718
  6,251
  6,806
  7,384
  7,985
  8,609
  9,257
  9,931
  10,630
Maintenance CAPEX, $m
  0
  -66
  -103
  -157
  -230
  -329
  -458
  -621
  -823
  -1,068
  -1,360
  -1,702
  -2,095
  -2,541
  -3,041
  -3,594
  -4,200
  -4,859
  -5,569
  -6,330
  -7,139
  -7,997
  -8,901
  -9,852
  -10,848
  -11,889
  -12,976
  -14,108
  -15,287
  -16,512
  -17,786
New CAPEX, $m
  -180
  -659
  -940
  -1,297
  -1,737
  -2,262
  -2,871
  -3,559
  -4,319
  -5,141
  -6,012
  -6,919
  -7,849
  -8,792
  -9,735
  -10,672
  -11,595
  -12,500
  -13,385
  -14,248
  -15,092
  -15,918
  -16,729
  -17,531
  -18,328
  -19,125
  -19,928
  -20,741
  -21,572
  -22,424
  -23,304
Cash from investing activities, $m
  -123
  -725
  -1,043
  -1,454
  -1,967
  -2,591
  -3,329
  -4,180
  -5,142
  -6,209
  -7,372
  -8,621
  -9,944
  -11,333
  -12,776
  -14,266
  -15,795
  -17,359
  -18,954
  -20,578
  -22,231
  -23,915
  -25,630
  -27,383
  -29,176
  -31,014
  -32,904
  -34,849
  -36,859
  -38,936
  -41,090
Free cash flow, $m
  -22
  -632
  -910
  -1,266
  -1,709
  -2,243
  -2,870
  -3,587
  -4,390
  -5,272
  -6,222
  -7,231
  -8,288
  -9,382
  -10,505
  -11,648
  -12,805
  -13,973
  -15,147
  -16,327
  -17,513
  -18,708
  -19,913
  -21,132
  -22,370
  -23,630
  -24,919
  -26,241
  -27,601
  -29,006
  -30,460
Issuance/(repayment) of debt, $m
  35
  642
  912
  1,259
  1,685
  2,194
  2,785
  3,453
  4,191
  4,988
  5,833
  6,713
  7,616
  8,530
  9,446
  10,355
  11,250
  12,129
  12,987
  13,825
  14,643
  15,444
  16,232
  17,010
  17,783
  18,556
  19,335
  20,125
  20,930
  21,758
  22,611
Issuance/(repurchase) of shares, $m
  -9
  138
  206
  296
  409
  550
  721
  923
  1,158
  1,425
  1,724
  2,054
  2,414
  2,803
  3,220
  3,662
  4,128
  4,618
  5,131
  5,665
  6,220
  6,796
  7,394
  8,013
  8,654
  9,318
  10,006
  10,719
  11,458
  12,225
  13,021
Cash from financing (excl. dividends), $m  
  23
  780
  1,118
  1,555
  2,094
  2,744
  3,506
  4,376
  5,349
  6,413
  7,557
  8,767
  10,030
  11,333
  12,666
  14,017
  15,378
  16,747
  18,118
  19,490
  20,863
  22,240
  23,626
  25,023
  26,437
  27,874
  29,341
  30,844
  32,388
  33,983
  35,632
Total cash flow (excl. dividends), $m
  0
  148
  209
  288
  385
  502
  637
  790
  959
  1,141
  1,334
  1,535
  1,742
  1,951
  2,161
  2,369
  2,573
  2,774
  2,971
  3,162
  3,349
  3,533
  3,713
  3,891
  4,068
  4,245
  4,423
  4,603
  4,788
  4,977
  5,172
Retained Cash Flow (-), $m
  -7
  -138
  -206
  -296
  -409
  -550
  -721
  -923
  -1,158
  -1,425
  -1,724
  -2,054
  -2,414
  -2,803
  -3,220
  -3,662
  -4,128
  -4,618
  -5,131
  -5,665
  -6,220
  -6,796
  -7,394
  -8,013
  -8,654
  -9,318
  -10,006
  -10,719
  -11,458
  -12,225
  -13,021
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
 
  10
  2
  -8
  -24
  -48
  -84
  -134
  -199
  -284
  -389
  -518
  -672
  -852
  -1,059
  -1,293
  -1,555
  -1,844
  -2,160
  -2,502
  -2,870
  -3,263
  -3,681
  -4,122
  -4,587
  -5,074
  -5,584
  -6,116
  -6,671
  -7,248
  -7,849
Discount rate, %
 
  11.90
  12.50
  13.12
  13.78
  14.46
  15.19
  15.95
  16.74
  17.58
  18.46
  19.38
  20.35
  21.37
  22.44
  23.56
  24.74
  25.98
  27.28
  28.64
  30.07
  31.57
  33.15
  34.81
  36.55
  38.38
  40.30
  42.31
  44.43
  46.65
  48.98
PV of cash for distribution, $m
 
  9
  2
  -5
  -14
  -25
  -36
  -47
  -58
  -66
  -72
  -74
  -73
  -69
  -62
  -54
  -45
  -36
  -28
  -21
  -15
  -10
  -7
  -4
  -3
  -2
  -1
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  52.6
  28.2
  15.6
  8.8
  5.1
  3.1
  1.9
  1.2
  0.7
  0.5
  0.3
  0.2
  0.1
  0.1
  0.1
  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

Willis Lease Finance Corporation, together with its subsidiaries, leases commercial aircraft engines and other aircraft-related equipment to air carriers, manufacturers, and overhaul/repair facilities worldwide. It operates through two segments, Equipment Leasing and Spare Parts Sales. The company also purchases and resells new and used commercial aircraft engines, as well as sells aircraft engine parts and materials. Its engine portfolio consists of noise-compliant Stage III commercial jet engines. As of December 31, 2015, the company had a total lease portfolio of 201 engines and related equipment, 10 aircraft, and 5 spare parts packages with 85 lessees in 46 countries, as well as managed a total lease portfolio of 40 engines and related equipment for other parties. Willis Lease Finance Corporation was founded in 1985 and is headquartered in Novato, California.

FINANCIAL RATIOS  of  Willis Lease Finance (WLFC)

Valuation Ratios
P/E Ratio 10.9
Price to Sales 0.7
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 1.5
Price to Free Cash Flow -1.9
Growth Rates
Sales Growth Rate 5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.3%
Cap. Spend. - 3 Yr. Gr. Rate 5.6%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 416.7%
Total Debt to Equity 416.7%
Interest Coverage 2
Management Effectiveness
Return On Assets 2.7%
Ret/ On Assets - 3 Yr. Avg. 2.2%
Return On Total Capital 1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 0.8%
Return On Equity 6.6%
Return On Equity - 3 Yr. Avg. 4.2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 93.8%
Gross Margin - 3 Yr. Avg. 93.6%
EBITDA Margin 60.8%
EBITDA Margin - 3 Yr. Avg. 61%
Operating Margin 11.5%
Oper. Margin - 3 Yr. Avg. 8.1%
Pre-Tax Margin 11.5%
Pre-Tax Margin - 3 Yr. Avg. 8.3%
Net Profit Margin 6.7%
Net Profit Margin - 3 Yr. Avg. 4.6%
Effective Tax Rate 41.7%
Eff/ Tax Rate - 3 Yr. Avg. 45.7%
Payout Ratio 0%

WLFC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WLFC stock intrinsic value calculation we used $209 million for the last fiscal year's total revenue generated by Willis Lease Finance. The default revenue input number comes from 2016 income statement of Willis Lease Finance. 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 WLFC stock valuation model: a) initial revenue growth rate of 56.9% 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 11.9%, whose default value for WLFC is calculated based on our internal credit rating of Willis Lease Finance, 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 Willis Lease Finance.
    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 WLFC stock the variable cost ratio is equal to 93.3%.

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 WLFC 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 4.2% for Willis Lease Finance.

Corporate tax rate of 27% is the nominal tax rate for Willis Lease Finance. 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 WLFC 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 WLFC are equal to 554.3%.

Life of production assets of 17.6 years is the average useful life of capital assets used in Willis Lease Finance 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 WLFC is equal to -4.8%. 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 - $216 million for Willis Lease Finance - 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 6.431 million for Willis Lease Finance 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 Willis Lease Finance at the current share price and the inputted number of shares is $0.2 billion.

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COMPANY NEWS

▶ Willis Lease posts 2Q profit   [Aug-08-17 02:04PM  Associated Press]
▶ Willis Lease posts 1Q profit   [May-08-17 09:10AM  Associated Press]
▶ Willis Lease posts 4Q profit   [Mar-10-17 04:50PM  Associated Press]
▶ How GigPeak Inc (GIG) Compares To Its Peers   [Dec-16-16 11:15PM  Insider Monkey]
▶ CFO Moves: Phoenix Cos., Willis Lease Finance   [Jan-22-16 05:41PM  at The Wall Street Journal]
▶ Brad Forsyth to Resign as Willis Lease CFO   [06:00AM  GlobeNewswire]
▶ Willis Lease Finance to Promote Brian Hole to President   [Jan-18-16 11:00AM  GlobeNewswire]
▶ 10-Q for Willis Lease Finance Corp.   [Aug-08  08:10PM  at Company Spotlight]
▶ 10-Q for Willis Lease Finance Corp.   [May-10  08:11PM  at Company Spotlight]
▶ 10-K for Willis Lease Finance Corp.   [May-04  08:12PM  at Company Spotlight]
Financial statements of WLFC
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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