Intrinsic value of Altaba - AABA

Previous Close

$62.28

  Intrinsic Value

$9.24

stock screener

  Rating & Target

str. sell

-85%

Previous close

$62.28

 
Intrinsic value

$9.24

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of AABA 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 0001), $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 51.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  22.10
  20.39
  18.85
  17.47
  16.22
  15.10
  14.09
  13.18
  12.36
  11.62
  10.96
  10.37
  9.83
  9.35
  8.91
  8.52
  8.17
  7.85
  7.57
  7.31
  7.08
  6.87
  6.68
  6.52
  6.36
  6.23
  6.10
  5.99
  5.89
  5.81
Revenue, $m
  6,312
  7,598
  9,031
  10,608
  12,329
  14,190
  16,189
  18,323
  20,587
  22,981
  25,500
  28,143
  30,910
  33,799
  36,811
  39,947
  43,210
  46,603
  50,130
  53,794
  57,602
  61,560
  65,675
  69,954
  74,405
  79,039
  83,864
  88,892
  94,132
  99,596
Variable operating expenses, $m
  12,333
  14,835
  17,621
  20,689
  24,035
  27,655
  31,543
  35,692
  40,097
  44,751
  49,593
  54,734
  60,114
  65,733
  71,591
  77,691
  84,037
  90,635
  97,493
  104,620
  112,026
  119,723
  127,726
  136,048
  144,706
  153,718
  163,102
  172,879
  183,070
  193,698
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
  12,333
  14,835
  17,621
  20,689
  24,035
  27,655
  31,543
  35,692
  40,097
  44,751
  49,593
  54,734
  60,114
  65,733
  71,591
  77,691
  84,037
  90,635
  97,493
  104,620
  112,026
  119,723
  127,726
  136,048
  144,706
  153,718
  163,102
  172,879
  183,070
  193,698
Operating income, $m
  -6,021
  -7,237
  -8,590
  -10,081
  -11,706
  -13,465
  -15,354
  -17,369
  -19,509
  -21,771
  -24,093
  -26,591
  -29,204
  -31,934
  -34,780
  -37,743
  -40,826
  -44,032
  -47,364
  -50,826
  -54,424
  -58,164
  -62,051
  -66,094
  -70,300
  -74,678
  -79,237
  -83,987
  -88,938
  -94,101
EBITDA, $m
  -5,520
  -6,646
  -7,899
  -9,278
  -10,783
  -12,411
  -14,159
  -16,025
  -18,006
  -20,100
  -22,303
  -24,615
  -27,034
  -29,561
  -32,196
  -34,939
  -37,793
  -40,761
  -43,845
  -47,050
  -50,380
  -53,842
  -57,441
  -61,183
  -65,077
  -69,130
  -73,350
  -77,747
  -82,330
  -87,110
Interest expense (income), $m
  0
  70
  277
  507
  762
  1,044
  1,351
  1,683
  2,040
  2,421
  2,825
  3,253
  3,702
  4,174
  4,668
  5,184
  5,722
  6,281
  6,864
  7,470
  8,099
  8,753
  9,433
  10,140
  10,874
  11,638
  12,433
  13,260
  14,121
  15,019
  15,954
Earnings before tax, $m
  -6,091
  -7,514
  -9,097
  -10,843
  -12,750
  -14,816
  -17,037
  -19,410
  -21,931
  -24,596
  -27,346
  -30,293
  -33,379
  -36,602
  -39,964
  -43,465
  -47,108
  -50,896
  -54,833
  -58,925
  -63,177
  -67,597
  -72,191
  -76,968
  -81,938
  -87,111
  -92,497
  -98,108
  -103,957
  -110,056
Tax expense, $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
Net income, $m
  -6,091
  -7,514
  -9,097
  -10,843
  -12,750
  -14,816
  -17,037
  -19,410
  -21,931
  -24,596
  -27,346
  -30,293
  -33,379
  -36,602
  -39,964
  -43,465
  -47,108
  -50,896
  -54,833
  -58,925
  -63,177
  -67,597
  -72,191
  -76,968
  -81,938
  -87,111
  -92,497
  -98,108
  -103,957
  -110,056

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  52,161
  62,797
  74,635
  87,670
  101,890
  117,273
  133,794
  151,426
  170,144
  189,923
  210,743
  232,589
  255,452
  279,328
  304,221
  330,143
  357,111
  385,151
  414,294
  444,578
  476,050
  508,760
  542,765
  578,129
  614,921
  653,216
  693,094
  734,641
  777,947
  823,110
Adjusted assets (=assets-cash), $m
  52,161
  62,797
  74,635
  87,670
  101,890
  117,273
  133,794
  151,426
  170,144
  189,923
  210,743
  232,589
  255,452
  279,328
  304,221
  330,143
  357,111
  385,151
  414,294
  444,578
  476,050
  508,760
  542,765
  578,129
  614,921
  653,216
  693,094
  734,641
  777,947
  823,110
Revenue / Adjusted assets
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
  0.121
Average production assets, $m
  2,215
  2,667
  3,170
  3,723
  4,327
  4,981
  5,682
  6,431
  7,226
  8,066
  8,950
  9,878
  10,849
  11,863
  12,921
  14,021
  15,167
  16,358
  17,595
  18,882
  20,218
  21,608
  23,052
  24,554
  26,116
  27,743
  29,436
  31,201
  33,040
  34,958
Working capital, $m
  25
  30
  36
  42
  49
  57
  65
  73
  82
  92
  102
  113
  124
  135
  147
  160
  173
  186
  201
  215
  230
  246
  263
  280
  298
  316
  335
  356
  377
  398
Total debt, $m
  5,131
  9,385
  14,120
  19,334
  25,022
  31,175
  37,784
  44,837
  52,324
  60,235
  68,563
  77,302
  86,447
  95,997
  105,955
  116,323
  127,111
  138,326
  149,984
  162,098
  174,686
  187,770
  201,372
  215,518
  230,235
  245,553
  261,504
  278,122
  295,445
  313,510
Total liabilities, $m
  20,865
  25,119
  29,854
  35,068
  40,756
  46,909
  53,517
  60,570
  68,058
  75,969
  84,297
  93,036
  102,181
  111,731
  121,688
  132,057
  142,844
  154,060
  165,717
  177,831
  190,420
  203,504
  217,106
  231,252
  245,969
  261,286
  277,238
  293,856
  311,179
  329,244
Total equity, $m
  31,297
  37,678
  44,781
  52,602
  61,134
  70,364
  80,276
  90,856
  102,086
  113,954
  126,446
  139,553
  153,271
  167,597
  182,533
  198,086
  214,267
  231,090
  248,576
  266,747
  285,630
  305,256
  325,659
  346,877
  368,953
  391,930
  415,856
  440,784
  466,768
  493,866
Total liabilities and equity, $m
  52,162
  62,797
  74,635
  87,670
  101,890
  117,273
  133,793
  151,426
  170,144
  189,923
  210,743
  232,589
  255,452
  279,328
  304,221
  330,143
  357,111
  385,150
  414,293
  444,578
  476,050
  508,760
  542,765
  578,129
  614,922
  653,216
  693,094
  734,640
  777,947
  823,110
Debt-to-equity ratio
  0.160
  0.250
  0.320
  0.370
  0.410
  0.440
  0.470
  0.490
  0.510
  0.530
  0.540
  0.550
  0.560
  0.570
  0.580
  0.590
  0.590
  0.600
  0.600
  0.610
  0.610
  0.620
  0.620
  0.620
  0.620
  0.630
  0.630
  0.630
  0.630
  0.630
Adjusted equity ratio
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600
  0.600

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -6,091
  -7,514
  -9,097
  -10,843
  -12,750
  -14,816
  -17,037
  -19,410
  -21,931
  -24,596
  -27,346
  -30,293
  -33,379
  -36,602
  -39,964
  -43,465
  -47,108
  -50,896
  -54,833
  -58,925
  -63,177
  -67,597
  -72,191
  -76,968
  -81,938
  -87,111
  -92,497
  -98,108
  -103,957
  -110,056
Depreciation, amort., depletion, $m
  501
  591
  692
  802
  923
  1,054
  1,194
  1,344
  1,503
  1,671
  1,790
  1,976
  2,170
  2,373
  2,584
  2,804
  3,033
  3,272
  3,519
  3,776
  4,044
  4,322
  4,610
  4,911
  5,223
  5,549
  5,887
  6,240
  6,608
  6,992
Funds from operations, $m
  -5,590
  -6,923
  -8,405
  -10,041
  -11,827
  -13,762
  -15,843
  -18,066
  -20,428
  -22,925
  -25,556
  -28,317
  -31,209
  -34,229
  -37,380
  -40,661
  -44,075
  -47,625
  -51,314
  -55,149
  -59,134
  -63,275
  -67,580
  -72,058
  -76,715
  -81,563
  -86,610
  -91,868
  -97,349
  -103,064
Change in working capital, $m
  5
  5
  6
  6
  7
  7
  8
  9
  9
  10
  10
  11
  11
  12
  12
  13
  13
  14
  14
  15
  15
  16
  16
  17
  18
  19
  19
  20
  21
  22
Cash from operations, $m
  -5,595
  -6,928
  -8,411
  -10,047
  -11,834
  -13,770
  -15,851
  -18,074
  -20,437
  -22,935
  -25,566
  -28,328
  -31,220
  -34,241
  -37,392
  -40,673
  -44,088
  -47,638
  -51,328
  -55,164
  -59,149
  -63,291
  -67,597
  -72,075
  -76,733
  -81,581
  -86,629
  -91,888
  -97,370
  -103,086
Maintenance CAPEX, $m
  -362
  -443
  -533
  -634
  -745
  -865
  -996
  -1,136
  -1,286
  -1,445
  -1,613
  -1,790
  -1,976
  -2,170
  -2,373
  -2,584
  -2,804
  -3,033
  -3,272
  -3,519
  -3,776
  -4,044
  -4,322
  -4,610
  -4,911
  -5,223
  -5,549
  -5,887
  -6,240
  -6,608
New CAPEX, $m
  -404
  -452
  -503
  -554
  -604
  -653
  -702
  -749
  -795
  -840
  -884
  -928
  -971
  -1,014
  -1,057
  -1,101
  -1,145
  -1,191
  -1,238
  -1,286
  -1,337
  -1,389
  -1,444
  -1,502
  -1,563
  -1,626
  -1,694
  -1,765
  -1,839
  -1,918
Cash from investing activities, $m
  -766
  -895
  -1,036
  -1,188
  -1,349
  -1,518
  -1,698
  -1,885
  -2,081
  -2,285
  -2,497
  -2,718
  -2,947
  -3,184
  -3,430
  -3,685
  -3,949
  -4,224
  -4,510
  -4,805
  -5,113
  -5,433
  -5,766
  -6,112
  -6,474
  -6,849
  -7,243
  -7,652
  -8,079
  -8,526
Free cash flow, $m
  -6,361
  -7,823
  -9,447
  -11,235
  -13,183
  -15,288
  -17,549
  -19,960
  -22,518
  -25,220
  -28,063
  -31,046
  -34,166
  -37,425
  -40,822
  -44,358
  -48,037
  -51,862
  -55,838
  -59,969
  -64,262
  -68,724
  -73,363
  -78,187
  -83,206
  -88,431
  -93,872
  -99,540
  -105,449
  -111,612
Issuance/(repayment) of debt, $m
  3,831
  4,254
  4,735
  5,214
  5,688
  6,153
  6,608
  7,053
  7,487
  7,912
  8,328
  8,738
  9,145
  9,550
  9,957
  10,369
  10,787
  11,216
  11,657
  12,114
  12,589
  13,084
  13,602
  14,146
  14,717
  15,318
  15,951
  16,619
  17,323
  18,065
Issuance/(repurchase) of shares, $m
  11,872
  13,895
  16,200
  18,664
  21,282
  24,046
  26,950
  29,989
  33,161
  36,463
  39,838
  43,401
  47,096
  50,928
  54,900
  59,018
  63,289
  67,720
  72,319
  77,096
  82,060
  87,222
  92,594
  98,187
  104,014
  110,088
  116,424
  123,036
  129,941
  137,153
Cash from financing (excl. dividends), $m  
  15,703
  18,149
  20,935
  23,878
  26,970
  30,199
  33,558
  37,042
  40,648
  44,375
  48,166
  52,139
  56,241
  60,478
  64,857
  69,387
  74,076
  78,936
  83,976
  89,210
  94,649
  100,306
  106,196
  112,333
  118,731
  125,406
  132,375
  139,655
  147,264
  155,218
Total cash flow (excl. dividends), $m
  9,342
  10,327
  11,488
  12,644
  13,787
  14,910
  16,009
  17,083
  18,130
  19,155
  20,103
  21,093
  22,075
  23,053
  24,036
  25,029
  26,039
  27,073
  28,139
  29,241
  30,387
  31,582
  32,833
  34,146
  35,524
  36,975
  38,504
  40,115
  41,814
  43,607
Retained Cash Flow (-), $m
  -11,872
  -13,895
  -16,200
  -18,664
  -21,282
  -24,046
  -26,950
  -29,989
  -33,161
  -36,463
  -39,838
  -43,401
  -47,096
  -50,928
  -54,900
  -59,018
  -63,289
  -67,720
  -72,319
  -77,096
  -82,060
  -87,222
  -92,594
  -98,187
  -104,014
  -110,088
  -116,424
  -123,036
  -129,941
  -137,153
Prev. year cash balance distribution, $m
  5,533
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  3,003
  -3,569
  -4,712
  -6,020
  -7,495
  -9,135
  -10,940
  -12,907
  -15,031
  -17,308
  -19,735
  -22,307
  -25,021
  -27,874
  -30,864
  -33,989
  -37,250
  -40,646
  -44,181
  -47,855
  -51,673
  -55,640
  -59,761
  -64,041
  -68,489
  -73,113
  -77,920
  -82,922
  -88,127
  -93,547
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
  2,879
  -3,267
  -4,101
  -4,957
  -5,809
  -6,630
  -7,391
  -8,067
  -8,634
  -9,074
  -9,372
  -9,519
  -9,514
  -9,358
  -9,061
  -8,637
  -8,105
  -7,485
  -6,803
  -6,081
  -5,345
  -4,617
  -3,917
  -3,262
  -2,664
  -2,133
  -1,672
  -1,283
  -962
  -704
Current shareholders' claim on cash, %
  78.1
  61.5
  48.8
  39.0
  31.4
  25.3
  20.6
  16.8
  13.7
  11.3
  9.3
  7.7
  6.4
  5.3
  4.5
  3.7
  3.1
  2.6
  2.2
  1.9
  1.6
  1.3
  1.1
  0.9
  0.8
  0.7
  0.6
  0.5
  0.4
  0.4

Altaba Inc. (the Fund), formerly Yahoo! Inc., is a non-diversified, closed-end management investment company. The Fund seeks to track the combined investment return of the Alibaba Shares and the Yahoo Japan Shares it owns. Alibaba Shares represent an approximate 15% equity interest in Alibaba Group Holding Limited (Alibaba), and its Yahoo Japan Corporation ((Yahoo Japa) Shares represent an approximate 36% equity interest in Yahoo Japan. In addition to the Alibaba Shares and the Yahoo Japan Shares, the Fund also owns the minority investments, all of the equity interests in Excalibur IP, LLC (which owns the Excalibur IP Assets) and the marketable debt securities portfolio. The Fund’s external investment advisors are BlackRock Advisors, LLC and Morgan Stanley Smith Barney LLC.

FINANCIAL RATIOS  of  Altaba (AABA)

Valuation Ratios
P/E Ratio -278
Price to Sales 11.5
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 47.6
Price to Free Cash Flow 59
Growth Rates
Sales Growth Rate 4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -56.9%
Cap. Spend. - 3 Yr. Gr. Rate -6.7%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 4.2%
Total Debt to Equity 4.2%
Interest Coverage 0
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital -0.7%
Ret/ On T. Cap. - 3 Yr. Avg. 4.9%
Return On Equity -0.7%
Return On Equity - 3 Yr. Avg. 5.2%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 47.4%
Gross Margin - 3 Yr. Avg. 59.2%
EBITDA Margin -3.7%
EBITDA Margin - 3 Yr. Avg. 50.7%
Operating Margin -12.5%
Oper. Margin - 3 Yr. Avg. 39.5%
Pre-Tax Margin -13.5%
Pre-Tax Margin - 3 Yr. Avg. 39%
Net Profit Margin -4.1%
Net Profit Margin - 3 Yr. Avg. 23.7%
Effective Tax Rate 18%
Eff/ Tax Rate - 3 Yr. Avg. 19.4%
Payout Ratio 0%

AABA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AABA stock intrinsic value calculation we used $5169.135 million for the last fiscal year's total revenue generated by Altaba. The default revenue input number comes from 0001 income statement of Altaba. 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 AABA stock valuation model: a) initial revenue growth rate of 22.1% 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 AABA is calculated based on our internal credit rating of Altaba, 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 Altaba.
    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 AABA stock the variable cost ratio is equal to 195.6%.

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 AABA 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 5.4% for Altaba.

Corporate tax rate of 27% is the nominal tax rate for Altaba. 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 AABA 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 AABA are equal to 35.1%.

Life of production assets of 4.4 years is the average useful life of capital assets used in Altaba 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 AABA is equal to 0.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $31049.283 million for Altaba - 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 824.921 million for Altaba 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 Altaba at the current share price and the inputted number of shares is $51.4 billion.

COMPANY NEWS

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▶ Here's What's Behind Altaba's Unusual Tender Offer   [Jun-07-18 05:15PM  The Wall Street Journal]
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