Intrinsic value of American Equity Investment Life Holding - AEL

Previous Close

$37.36

  Intrinsic Value

$1,313

stock screener

  Rating & Target

str. buy

+999%

Previous close

$37.36

 
Intrinsic value

$1,313

 
Up/down potential

+999%

 
Rating

str. buy

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

We calculate the intrinsic value of AEL 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 2017), $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 3.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  6,227
  9,621
  14,388
  20,877
  29,454
  40,492
  54,353
  71,368
  91,834
  115,993
  144,037
  176,100
  212,259
  252,547
  296,950
  345,424
  397,899
  454,292
  514,509
  578,461
  646,064
  717,247
  791,957
  870,160
  951,844
  1,037,019
  1,125,721
  1,218,010
  1,313,970
  1,413,708
Variable operating expenses, $m
  4,122
  6,369
  9,525
  13,820
  19,498
  26,806
  35,981
  47,246
  60,794
  76,788
  95,353
  116,578
  140,516
  167,186
  196,581
  228,671
  263,409
  300,741
  340,605
  382,941
  427,694
  474,818
  524,276
  576,046
  630,120
  686,506
  745,227
  806,323
  869,848
  935,875
Fixed operating expenses, $m
  38
  39
  39
  40
  41
  42
  43
  44
  45
  46
  47
  48
  49
  50
  51
  52
  54
  55
  56
  57
  58
  60
  61
  62
  64
  65
  67
  68
  70
  71
Total operating expenses, $m
  4,160
  6,408
  9,564
  13,860
  19,539
  26,848
  36,024
  47,290
  60,839
  76,834
  95,400
  116,626
  140,565
  167,236
  196,632
  228,723
  263,463
  300,796
  340,661
  382,998
  427,752
  474,878
  524,337
  576,108
  630,184
  686,571
  745,294
  806,391
  869,918
  935,946
Operating income, $m
  2,067
  3,213
  4,824
  7,016
  9,914
  13,644
  18,328
  24,078
  30,995
  39,160
  48,638
  59,474
  71,695
  85,311
  100,318
  116,701
  134,436
  153,496
  173,848
  195,463
  218,311
  242,370
  267,621
  294,052
  321,659
  350,447
  380,427
  411,619
  444,052
  477,762
EBITDA, $m
  11,514
  17,809
  26,652
  38,688
  54,599
  75,075
  100,786
  132,351
  170,316
  215,133
  267,157
  326,634
  393,713
  468,449
  550,820
  640,744
  738,090
  842,702
  954,409
  1,073,045
  1,198,454
  1,330,506
  1,469,099
  1,614,172
  1,765,701
  1,923,708
  2,088,259
  2,259,463
  2,437,477
  2,622,499
Interest expense (income), $m
  40
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
  2,716
Earnings before tax, $m
  -649
  497
  2,107
  4,300
  7,198
  10,928
  15,612
  21,362
  28,279
  36,444
  45,921
  56,757
  68,978
  82,594
  97,602
  113,985
  131,720
  150,780
  171,132
  192,746
  215,595
  239,654
  264,904
  291,336
  318,943
  347,731
  377,711
  408,903
  441,336
  475,046
Tax expense, $m
  0
  134
  569
  1,161
  1,943
  2,951
  4,215
  5,768
  7,635
  9,840
  12,399
  15,324
  18,624
  22,300
  26,352
  30,776
  35,564
  40,710
  46,206
  52,041
  58,211
  64,706
  71,524
  78,661
  86,115
  93,887
  101,982
  110,404
  119,161
  128,262
Net income, $m
  -649
  363
  1,538
  3,139
  5,254
  7,977
  11,397
  15,594
  20,643
  26,604
  33,523
  41,433
  50,354
  60,294
  71,249
  83,209
  96,156
  110,069
  124,926
  140,705
  157,384
  174,947
  193,380
  212,675
  232,828
  253,844
  275,729
  298,499
  322,175
  346,784

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
  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
Adjusted assets (=assets-cash), $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
Revenue / Adjusted assets
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Average production assets, $m
  94,473
  145,961
  218,284
  316,719
  446,845
  614,309
  824,582
  1,082,728
  1,393,208
  1,759,735
  2,185,192
  2,671,606
  3,220,184
  3,831,383
  4,505,026
  5,240,427
  6,036,533
  6,892,057
  7,805,614
  8,775,827
  9,801,433
  10,881,359
  12,014,787
  13,201,201
  14,440,418
  15,732,610
  17,078,314
  18,478,435
  19,934,242
  21,447,365
Working capital, $m
  -94,697
  -146,307
  -218,802
  -317,471
  -447,905
  -615,766
  -826,539
  -1,085,298
  -1,396,514
  -1,763,911
  -2,190,377
  -2,677,946
  -3,227,825
  -3,840,475
  -4,515,716
  -5,252,863
  -6,050,857
  -6,908,412
  -7,824,136
  -8,796,651
  -9,824,691
  -10,907,180
  -12,043,298
  -13,232,527
  -14,474,685
  -15,769,943
  -17,118,840
  -18,522,283
  -19,981,545
  -21,498,258
Total debt, $m
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
  50,301
Total liabilities, $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 equity, $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 liabilities and equity, $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
Debt-to-equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
Adjusted equity ratio
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000
  0.000

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -649
  363
  1,538
  3,139
  5,254
  7,977
  11,397
  15,594
  20,643
  26,604
  33,523
  41,433
  50,354
  60,294
  71,249
  83,209
  96,156
  110,069
  124,926
  140,705
  157,384
  174,947
  193,380
  212,675
  232,828
  253,844
  275,729
  298,499
  322,175
  346,784
Depreciation, amort., depletion, $m
  9,447
  14,596
  21,828
  31,672
  44,684
  61,431
  82,458
  108,273
  139,321
  175,974
  218,519
  267,161
  322,018
  383,138
  450,503
  524,043
  603,653
  689,206
  780,561
  877,583
  980,143
  1,088,136
  1,201,479
  1,320,120
  1,444,042
  1,573,261
  1,707,831
  1,847,843
  1,993,424
  2,144,736
Funds from operations, $m
  8,798
  14,959
  23,367
  34,811
  49,939
  69,408
  93,855
  123,867
  159,964
  202,577
  252,042
  308,594
  372,373
  443,432
  521,752
  607,252
  699,809
  799,275
  905,488
  1,018,287
  1,137,528
  1,263,083
  1,394,859
  1,532,795
  1,676,870
  1,827,105
  1,983,560
  2,146,343
  2,315,600
  2,491,520
Change in working capital, $m
  -35,511
  -51,610
  -72,495
  -98,669
  -130,434
  -167,861
  -210,772
  -258,759
  -311,217
  -367,397
  -426,466
  -487,569
  -549,879
  -612,650
  -675,241
  -737,146
  -797,994
  -857,555
  -915,724
  -972,515
  -1,028,040
  -1,082,489
  -1,136,118
  -1,189,229
  -1,242,158
  -1,295,258
  -1,348,897
  -1,403,443
  -1,459,262
  -1,516,713
Cash from operations, $m
  44,309
  66,569
  95,862
  133,479
  180,373
  237,270
  304,627
  382,626
  471,181
  569,974
  678,508
  796,162
  922,252
  1,056,082
  1,196,993
  1,344,398
  1,497,803
  1,656,829
  1,821,212
  1,990,803
  2,165,567
  2,345,572
  2,530,977
  2,722,024
  2,919,028
  3,122,363
  3,332,457
  3,549,786
  3,774,861
  4,008,233
Maintenance CAPEX, $m
  -5,904
  -9,447
  -14,596
  -21,828
  -31,672
  -44,684
  -61,431
  -82,458
  -108,273
  -139,321
  -175,974
  -218,519
  -267,161
  -322,018
  -383,138
  -450,503
  -524,043
  -603,653
  -689,206
  -780,561
  -877,583
  -980,143
  -1,088,136
  -1,201,479
  -1,320,120
  -1,444,042
  -1,573,261
  -1,707,831
  -1,847,843
  -1,993,424
New CAPEX, $m
  -35,431
  -51,488
  -72,323
  -98,435
  -130,126
  -167,464
  -210,273
  -258,146
  -310,480
  -366,527
  -425,457
  -486,415
  -548,578
  -611,199
  -673,643
  -735,401
  -796,105
  -855,525
  -913,556
  -970,213
  -1,025,606
  -1,079,926
  -1,133,428
  -1,186,414
  -1,239,217
  -1,292,192
  -1,345,704
  -1,400,120
  -1,455,807
  -1,513,123
Cash from investing activities, $m
  -41,335
  -60,935
  -86,919
  -120,263
  -161,798
  -212,148
  -271,704
  -340,604
  -418,753
  -505,848
  -601,431
  -704,934
  -815,739
  -933,217
  -1,056,781
  -1,185,904
  -1,320,148
  -1,459,178
  -1,602,762
  -1,750,774
  -1,903,189
  -2,060,069
  -2,221,564
  -2,387,893
  -2,559,337
  -2,736,234
  -2,918,965
  -3,107,951
  -3,303,650
  -3,506,547
Free cash flow, $m
  2,974
  5,634
  8,942
  13,216
  18,576
  25,121
  32,923
  42,022
  52,428
  64,126
  77,078
  91,229
  106,514
  122,864
  140,212
  158,494
  177,655
  197,652
  218,450
  240,028
  262,379
  285,502
  309,413
  334,132
  359,691
  386,129
  413,493
  441,834
  471,211
  501,686
Issuance/(repayment) of debt, $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
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $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 cash flow (excl. dividends), $m
  2,974
  5,634
  8,942
  13,216
  18,576
  25,121
  32,923
  42,022
  52,428
  64,126
  77,078
  91,229
  106,514
  122,864
  140,212
  158,494
  177,655
  197,652
  218,450
  240,028
  262,379
  285,502
  309,413
  334,132
  359,691
  386,129
  413,493
  441,834
  471,211
  501,686
Retained Cash Flow (-), $m
  -649
  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
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
  8
  12
  19
  29
  42
  59
  81
  109
  143
  184
  232
  288
  352
  425
  505
  594
  691
  796
  909
  1,029
  1,157
  1,292
  1,434
  1,584
  1,740
  1,904
  2,074
  2,251
  2,436
  2,628
Cash available for distribution, $m
  2,325
  5,634
  8,942
  13,216
  18,576
  25,121
  32,923
  42,022
  52,428
  64,126
  77,078
  91,229
  106,514
  122,864
  140,212
  158,494
  177,655
  197,652
  218,450
  240,028
  262,379
  285,502
  309,413
  334,132
  359,691
  386,129
  413,493
  441,834
  471,211
  501,686
Discount rate, %
  13.70
  14.39
  15.10
  15.86
  16.65
  17.49
  18.36
  19.28
  20.24
  21.25
  22.32
  23.43
  24.60
  25.83
  27.13
  28.48
  29.91
  31.40
  32.97
  34.62
  36.35
  38.17
  40.08
  42.08
  44.18
  46.39
  48.71
  51.15
  53.71
  56.39
PV of cash for distribution, $m
  2,045
  4,306
  5,864
  7,334
  8,600
  9,553
  10,118
  10,257
  9,979
  9,335
  8,407
  7,295
  6,103
  4,924
  3,831
  2,875
  2,079
  1,449
  973
  628
  390
  233
  133
  73
  38
  19
  9
  4
  2
  1
Current shareholders' claim on cash, %
  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

American Equity Investment Life Holding Company is engaged in the development and sale of fixed index and fixed rate annuity products. The Company issues fixed annuity and life insurance products through its life insurance subsidiaries, American Equity Investment Life Insurance Company, American Equity Investment Life Insurance Company of New York and Eagle Life Insurance Company. Its target market includes the group of individuals aged 45 to 75 seeking to accumulate tax-deferred savings or create guaranteed lifetime income. The Company distributes through a range of distribution channels, including independent agents, broker/dealers, banks and registered investment advisors. Its product types include fixed index annuities, annual reset fixed rate annuities, multi-year fixed rate annuities and single premium immediate annuities. Its life insurance products include traditional ordinary and term, universal life and other interest-sensitive life insurance products.

FINANCIAL RATIOS  of  American Equity Investment Life Holding (AEL)

Valuation Ratios
P/E Ratio 39.6
Price to Sales 1.5
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 2.3
Price to Free Cash Flow 2.3
Growth Rates
Sales Growth Rate 46.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate 0%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 32.1%
Total Debt to Equity 32.1%
Interest Coverage 4
Management Effectiveness
Return On Assets 0.2%
Ret/ On Assets - 3 Yr. Avg. 0.4%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 5.4%
Return On Equity 3.9%
Return On Equity - 3 Yr. Avg. 7.3%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 24.7%
EBITDA Margin - 3 Yr. Avg. 29.2%
Operating Margin 32.2%
Oper. Margin - 3 Yr. Avg. 13.1%
Pre-Tax Margin 5.9%
Pre-Tax Margin - 3 Yr. Avg. 12.3%
Net Profit Margin 3.7%
Net Profit Margin - 3 Yr. Avg. 8%
Effective Tax Rate 36.2%
Eff/ Tax Rate - 3 Yr. Avg. 35.5%
Payout Ratio 25.3%

AEL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AEL stock intrinsic value calculation we used $3892 million for the last fiscal year's total revenue generated by American Equity Investment Life Holding. The default revenue input number comes from 2017 income statement of American Equity Investment Life Holding. 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 AEL stock valuation model: a) initial revenue growth rate of 60% 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 13.7%, whose default value for AEL is calculated based on our internal credit rating of American Equity Investment Life Holding, 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 American Equity Investment Life Holding.
    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 AEL stock the variable cost ratio is equal to 66.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $37 million in the base year in the intrinsic value calculation for AEL 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 American Equity Investment Life Holding.

Corporate tax rate of 27% is the nominal tax rate for American Equity Investment Life Holding. 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 AEL stock is equal to 0.2%.

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 AEL are equal to 1517.1%.

Life of production assets of 10 years is the average useful life of capital assets used in American Equity Investment Life Holding 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 AEL is equal to -1520.7%. 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 - $0 million for American Equity Investment Life Holding - 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 89 million for American Equity Investment Life Holding 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 American Equity Investment Life Holding at the current share price and the inputted number of shares is $3.3 billion.

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COMPANY NEWS

▶ American Equity: 2Q Earnings Snapshot   [06:19PM  Associated Press]
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▶ American Equity tops Street 4Q forecasts   [Feb-07-18 07:45PM  Associated Press]
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▶ Life Insurers' Multitudes of Stimuli   [Dec-28-17 12:35PM  Zacks]
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▶ Athene Holding (ATH) Jumps: Stock Rises 7.5%   [Dec-11-17 08:46AM  Zacks]
▶ American Equity beats Street 3Q forecasts   [Nov-06-17 06:00PM  Associated Press]
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