Intrinsic value of American International Group - AIG

Previous Close

$52.33

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$52.33

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

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

We calculate the intrinsic value of AIG 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 48.7

 

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, %
  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
  50,510
  51,672
  53,000
  54,491
  56,143
  57,956
  59,929
  62,066
  64,368
  66,838
  69,481
  72,301
  75,303
  78,494
  81,880
  85,468
  89,267
  93,283
  97,527
  102,009
  106,737
  111,723
  116,979
  122,517
  128,350
  134,491
  140,955
  147,757
  154,913
  162,439
Variable operating expenses, $m
  49,298
  50,432
  51,728
  53,183
  54,796
  56,565
  58,491
  60,576
  62,823
  65,234
  67,813
  70,565
  73,496
  76,610
  79,915
  83,417
  87,124
  91,044
  95,187
  99,560
  104,175
  109,042
  114,172
  119,577
  125,270
  131,263
  137,572
  144,211
  151,195
  158,541
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
  49,298
  50,432
  51,728
  53,183
  54,796
  56,565
  58,491
  60,576
  62,823
  65,234
  67,813
  70,565
  73,496
  76,610
  79,915
  83,417
  87,124
  91,044
  95,187
  99,560
  104,175
  109,042
  114,172
  119,577
  125,270
  131,263
  137,572
  144,211
  151,195
  158,541
Operating income, $m
  1,212
  1,240
  1,272
  1,308
  1,347
  1,391
  1,438
  1,490
  1,545
  1,604
  1,668
  1,735
  1,807
  1,884
  1,965
  2,051
  2,142
  2,239
  2,341
  2,448
  2,562
  2,681
  2,808
  2,940
  3,080
  3,228
  3,383
  3,546
  3,718
  3,899
EBITDA, $m
  52,036
  53,233
  54,601
  56,137
  57,839
  59,706
  61,739
  63,940
  66,312
  68,856
  71,579
  74,484
  77,577
  80,865
  84,353
  88,049
  91,962
  96,100
  100,473
  105,089
  109,960
  115,097
  120,512
  126,217
  132,226
  138,553
  145,212
  152,219
  159,591
  167,345
Interest expense (income), $m
  1,331
  17,404
  16,807
  16,961
  17,138
  17,337
  17,557
  17,798
  18,061
  18,345
  18,652
  18,981
  19,333
  19,708
  20,108
  20,533
  20,984
  21,461
  21,967
  22,502
  23,067
  23,664
  24,293
  24,957
  25,657
  26,395
  27,171
  27,989
  28,850
  29,755
  30,708
Earnings before tax, $m
  -16,192
  -15,567
  -15,689
  -15,830
  -15,989
  -16,166
  -16,360
  -16,571
  -16,801
  -17,048
  -17,313
  -17,597
  -17,901
  -18,224
  -18,568
  -18,932
  -19,319
  -19,728
  -20,161
  -20,619
  -21,102
  -21,612
  -22,150
  -22,717
  -23,314
  -23,943
  -24,606
  -25,303
  -26,037
  -26,809
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
  -16,192
  -15,567
  -15,689
  -15,830
  -15,989
  -16,166
  -16,360
  -16,571
  -16,801
  -17,048
  -17,313
  -17,597
  -17,901
  -18,224
  -18,568
  -18,932
  -19,319
  -19,728
  -20,161
  -20,619
  -21,102
  -21,612
  -22,150
  -22,717
  -23,314
  -23,943
  -24,606
  -25,303
  -26,037
  -26,809

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
  138,385
  141,568
  145,206
  149,290
  153,816
  158,782
  164,190
  170,044
  176,350
  183,118
  190,358
  198,084
  206,310
  215,052
  224,329
  234,160
  244,566
  255,571
  267,198
  279,475
  292,430
  306,091
  320,492
  335,664
  351,644
  368,469
  386,178
  404,813
  424,418
  445,040
Adjusted assets (=assets-cash), $m
  138,385
  141,568
  145,206
  149,290
  153,816
  158,782
  164,190
  170,044
  176,350
  183,118
  190,358
  198,084
  206,310
  215,052
  224,329
  234,160
  244,566
  255,571
  267,198
  279,475
  292,430
  306,091
  320,492
  335,664
  351,644
  368,469
  386,178
  404,813
  424,418
  445,040
Revenue / Adjusted assets
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
  0.365
Average production assets, $m
  508,236
  519,925
  533,287
  548,289
  564,911
  583,149
  603,009
  624,507
  647,668
  672,524
  699,115
  727,489
  757,700
  789,807
  823,877
  859,982
  898,200
  938,616
  981,320
  1,026,410
  1,073,986
  1,124,160
  1,177,047
  1,232,770
  1,291,458
  1,353,250
  1,418,289
  1,486,730
  1,558,732
  1,634,466
Working capital, $m
  -441,259
  -451,408
  -463,009
  -476,033
  -490,465
  -506,300
  -523,543
  -542,208
  -562,316
  -583,897
  -606,984
  -631,618
  -657,848
  -685,724
  -715,304
  -746,651
  -779,832
  -814,922
  -851,999
  -891,146
  -932,453
  -976,015
  -1,021,932
  -1,070,312
  -1,121,266
  -1,174,915
  -1,231,383
  -1,290,804
  -1,353,318
  -1,419,071
Total debt, $m
  311,236
  314,101
  317,375
  321,051
  325,125
  329,594
  334,461
  339,729
  345,405
  351,496
  358,012
  364,966
  372,369
  380,237
  388,586
  397,434
  406,799
  416,703
  427,168
  438,218
  449,877
  462,172
  475,132
  488,788
  503,170
  518,312
  534,250
  551,022
  568,667
  587,226
Total liabilities, $m
  124,546
  127,411
  130,685
  134,361
  138,435
  142,904
  147,771
  153,039
  158,715
  164,806
  171,322
  178,276
  185,679
  193,547
  201,896
  210,744
  220,109
  230,013
  240,478
  251,528
  263,187
  275,482
  288,442
  302,098
  316,480
  331,622
  347,560
  364,332
  381,977
  400,536
Total equity, $m
  13,838
  14,157
  14,521
  14,929
  15,382
  15,878
  16,419
  17,004
  17,635
  18,312
  19,036
  19,808
  20,631
  21,505
  22,433
  23,416
  24,457
  25,557
  26,720
  27,948
  29,243
  30,609
  32,049
  33,566
  35,164
  36,847
  38,618
  40,481
  42,442
  44,504
Total liabilities and equity, $m
  138,384
  141,568
  145,206
  149,290
  153,817
  158,782
  164,190
  170,043
  176,350
  183,118
  190,358
  198,084
  206,310
  215,052
  224,329
  234,160
  244,566
  255,570
  267,198
  279,476
  292,430
  306,091
  320,491
  335,664
  351,644
  368,469
  386,178
  404,813
  424,419
  445,040
Debt-to-equity ratio
  22.490
  22.190
  21.860
  21.510
  21.140
  20.760
  20.370
  19.980
  19.590
  19.200
  18.810
  18.420
  18.050
  17.680
  17.320
  16.970
  16.630
  16.300
  15.990
  15.680
  15.380
  15.100
  14.830
  14.560
  14.310
  14.070
  13.830
  13.610
  13.400
  13.190
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -16,192
  -15,567
  -15,689
  -15,830
  -15,989
  -16,166
  -16,360
  -16,571
  -16,801
  -17,048
  -17,313
  -17,597
  -17,901
  -18,224
  -18,568
  -18,932
  -19,319
  -19,728
  -20,161
  -20,619
  -21,102
  -21,612
  -22,150
  -22,717
  -23,314
  -23,943
  -24,606
  -25,303
  -26,037
  -26,809
Depreciation, amort., depletion, $m
  50,824
  51,993
  53,329
  54,829
  56,491
  58,315
  60,301
  62,451
  64,767
  67,252
  69,912
  72,749
  75,770
  78,981
  82,388
  85,998
  89,820
  93,862
  98,132
  102,641
  107,399
  112,416
  117,705
  123,277
  129,146
  135,325
  141,829
  148,673
  155,873
  163,447
Funds from operations, $m
  34,632
  36,426
  37,639
  38,998
  40,502
  42,149
  43,941
  45,879
  47,966
  50,205
  52,598
  55,151
  57,869
  60,757
  63,820
  67,066
  70,501
  74,133
  77,971
  82,022
  86,297
  90,804
  95,555
  100,560
  105,832
  111,382
  117,223
  123,370
  129,836
  136,637
Change in working capital, $m
  -8,652
  -10,149
  -11,601
  -13,024
  -14,432
  -15,835
  -17,243
  -18,665
  -20,108
  -21,580
  -23,087
  -24,635
  -26,229
  -27,876
  -29,580
  -31,347
  -33,182
  -35,090
  -37,077
  -39,147
  -41,307
  -43,562
  -45,917
  -48,379
  -50,954
  -53,648
  -56,468
  -59,421
  -62,514
  -65,754
Cash from operations, $m
  43,284
  46,575
  49,240
  52,023
  54,934
  57,984
  61,184
  64,544
  68,075
  71,785
  75,685
  79,786
  84,098
  88,633
  93,400
  98,413
  103,683
  109,223
  115,047
  121,169
  127,604
  134,366
  141,472
  148,940
  156,786
  165,030
  173,691
  182,791
  192,349
  202,391
Maintenance CAPEX, $m
  -49,828
  -50,824
  -51,993
  -53,329
  -54,829
  -56,491
  -58,315
  -60,301
  -62,451
  -64,767
  -67,252
  -69,912
  -72,749
  -75,770
  -78,981
  -82,388
  -85,998
  -89,820
  -93,862
  -98,132
  -102,641
  -107,399
  -112,416
  -117,705
  -123,277
  -129,146
  -135,325
  -141,829
  -148,673
  -155,873
New CAPEX, $m
  -9,953
  -11,689
  -13,362
  -15,001
  -16,622
  -18,238
  -19,860
  -21,498
  -23,160
  -24,856
  -26,591
  -28,374
  -30,211
  -32,107
  -34,070
  -36,105
  -38,218
  -40,416
  -42,704
  -45,089
  -47,577
  -50,174
  -52,887
  -55,723
  -58,688
  -61,792
  -65,039
  -68,440
  -72,002
  -75,734
Cash from investing activities, $m
  -59,781
  -62,513
  -65,355
  -68,330
  -71,451
  -74,729
  -78,175
  -81,799
  -85,611
  -89,623
  -93,843
  -98,286
  -102,960
  -107,877
  -113,051
  -118,493
  -124,216
  -130,236
  -136,566
  -143,221
  -150,218
  -157,573
  -165,303
  -173,428
  -181,965
  -190,938
  -200,364
  -210,269
  -220,675
  -231,607
Free cash flow, $m
  -16,497
  -15,938
  -16,114
  -16,307
  -16,518
  -16,745
  -16,991
  -17,255
  -17,537
  -17,838
  -18,158
  -18,499
  -18,861
  -19,245
  -19,651
  -20,080
  -20,534
  -21,013
  -21,519
  -22,052
  -22,614
  -23,207
  -23,831
  -24,488
  -25,179
  -25,907
  -26,673
  -27,479
  -28,326
  -29,217
Issuance/(repayment) of debt, $m
  -11,056
  2,865
  3,274
  3,676
  4,073
  4,469
  4,867
  5,268
  5,676
  6,091
  6,516
  6,953
  7,403
  7,868
  8,349
  8,848
  9,366
  9,904
  10,465
  11,049
  11,659
  12,295
  12,960
  13,655
  14,382
  15,142
  15,938
  16,772
  17,645
  18,559
Issuance/(repurchase) of shares, $m
  30,030
  15,885
  16,053
  16,239
  16,442
  16,662
  16,901
  17,157
  17,431
  17,725
  18,037
  18,370
  18,723
  19,098
  19,495
  19,915
  20,360
  20,829
  21,324
  21,847
  22,398
  22,978
  23,590
  24,234
  24,912
  25,626
  26,377
  27,167
  27,998
  28,872
Cash from financing (excl. dividends), $m  
  18,974
  18,750
  19,327
  19,915
  20,515
  21,131
  21,768
  22,425
  23,107
  23,816
  24,553
  25,323
  26,126
  26,966
  27,844
  28,763
  29,726
  30,733
  31,789
  32,896
  34,057
  35,273
  36,550
  37,889
  39,294
  40,768
  42,315
  43,939
  45,643
  47,431
Total cash flow (excl. dividends), $m
  2,477
  2,811
  3,214
  3,608
  3,998
  4,386
  4,776
  5,170
  5,570
  5,978
  6,395
  6,824
  7,266
  7,722
  8,194
  8,683
  9,192
  9,720
  10,270
  10,844
  11,442
  12,067
  12,719
  13,401
  14,115
  14,861
  15,642
  16,460
  17,317
  18,214
Retained Cash Flow (-), $m
  -30,030
  -15,885
  -16,053
  -16,239
  -16,442
  -16,662
  -16,901
  -17,157
  -17,431
  -17,725
  -18,037
  -18,370
  -18,723
  -19,098
  -19,495
  -19,915
  -20,360
  -20,829
  -21,324
  -21,847
  -22,398
  -22,978
  -23,590
  -24,234
  -24,912
  -25,626
  -26,377
  -27,167
  -27,998
  -28,872
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
  -27,553
  -13,074
  -12,840
  -12,631
  -12,444
  -12,276
  -12,124
  -11,986
  -11,861
  -11,747
  -11,642
  -11,546
  -11,458
  -11,376
  -11,301
  -11,232
  -11,168
  -11,109
  -11,054
  -11,003
  -10,955
  -10,911
  -10,870
  -10,833
  -10,797
  -10,765
  -10,735
  -10,707
  -10,681
  -10,657
Discount rate, %
  15.70
  16.49
  17.31
  18.17
  19.08
  20.04
  21.04
  22.09
  23.20
  24.36
  25.57
  26.85
  28.19
  29.60
  31.08
  32.64
  34.27
  35.98
  37.78
  39.67
  41.66
  43.74
  45.93
  48.22
  50.63
  53.17
  55.82
  58.62
  61.55
  64.62
PV of cash for distribution, $m
  -23,814
  -9,635
  -7,953
  -6,477
  -5,196
  -4,104
  -3,185
  -2,428
  -1,814
  -1,328
  -951
  -665
  -454
  -302
  -195
  -122
  -75
  -44
  -25
  -14
  -7
  -4
  -2
  -1
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  23.3
  10.9
  5.1
  2.5
  1.2
  0.6
  0.3
  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
  0.0
  0.0
  0.0
  0.0
  0.0

American International Group, Inc. is a global insurance company. The Company provides a range of property casualty insurance, life insurance, retirement products and other financial services to commercial and individual customers. Its segments include Commercial Insurance, Consumer Insurance, Other Operations and Legacy Portfolio. The Commercial Insurance segment is a provider of insurance products and services for commercial customers. It includes property casualty networks. The Consumer Insurance segment is a franchise that brings together a portfolio of retirement, life insurance and personal insurance products offered through multiple distribution networks. The Other Operations segment consists of businesses and items not attributed to its Commercial and Consumer modules or its Legacy Portfolio. The Legacy Portfolio segment includes Legacy Property and Casualty Run-Off Insurance Lines, as well as Legacy Life Insurance Run-Off Lines and Legacy Investments.

FINANCIAL RATIOS  of  American International Group (AIG)

Valuation Ratios
P/E Ratio -61.3
Price to Sales 1
Price to Book 0.7
Price to Tangible Book
Price to Cash Flow 21.9
Price to Free Cash Flow 21.9
Growth Rates
Sales Growth Rate -10.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 40.5%
Total Debt to Equity 40.5%
Interest Coverage 1
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. 1.1%
Return On Total Capital -0.8%
Ret/ On T. Cap. - 3 Yr. Avg. 2.1%
Return On Equity -1%
Return On Equity - 3 Yr. Avg. 2.8%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 10.1%
EBITDA Margin - 3 Yr. Avg. 18.1%
Operating Margin 1.2%
Oper. Margin - 3 Yr. Avg. 8.2%
Pre-Tax Margin -0.1%
Pre-Tax Margin - 3 Yr. Avg. 7.2%
Net Profit Margin -1.6%
Net Profit Margin - 3 Yr. Avg. 4.6%
Effective Tax Rate -250%
Eff/ Tax Rate - 3 Yr. Avg. -63.3%
Payout Ratio -161.6%

AIG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AIG stock intrinsic value calculation we used $49520 million for the last fiscal year's total revenue generated by American International Group. The default revenue input number comes from 2017 income statement of American International Group. 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 AIG 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 15.7%, whose default value for AIG is calculated based on our internal credit rating of American International Group, 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 International Group.
    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 AIG stock the variable cost ratio is equal to 97.6%.

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 AIG 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 International Group.

Corporate tax rate of 27% is the nominal tax rate for American International Group. 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 AIG 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 AIG are equal to 1006.2%.

Life of production assets of 10 years is the average useful life of capital assets used in American International Group 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 AIG is equal to -873.6%. 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 - $0 million for American International Group - 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 931 million for American International Group 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 International Group at the current share price and the inputted number of shares is $48.7 billion.

RELATED COMPANIES Price Int.Val. Rating
NMIH NMI Holdings C 21.80 12.57  sell

COMPANY NEWS

▶ Insurance ETFs Looking Good Post Q2 Earnings   [Aug-08-18 11:20AM  Zacks]
▶ [$$] Insurers Are Speeding Up Claims. Their Worry: More Mistakes   [Aug-06-18 07:41PM  The Wall Street Journal]
▶ Company News For Aug 6, 2018   [10:26AM  Zacks]
▶ [$$] AIGs Income Slid in Second Quarter   [Aug-02-18 08:41PM  The Wall Street Journal]
▶ AIG Reports Second Quarter 2018 Results   [04:16PM  Business Wire]
▶ [$$] Carlyle Buying Minority Stake in DSA Re From AIG   [11:38AM  The Wall Street Journal]
▶ [$$] Carlyle/AIG: alternative lifestyle   [02:22AM  Financial Times]
▶ [$$] The big flaw: auditing in crisis   [12:01AM  Financial Times]
▶ [$$] Insurers Pull Billions From Hedge Funds   [Jul-25-18 12:08PM  The Wall Street Journal]
▶ [$$] Insurers Pull Billions From Hedge Funds   [Jul-24-18 08:05PM  The Wall Street Journal]
▶ [$$] Hedge Fund Titan Paulson Takes on Tiny Toronto Gold Miner   [Jul-20-18 05:07PM  The Wall Street Journal]
▶ AIG Announces Closing of Validus Acquisition   [Jul-18-18 09:13AM  Business Wire]
▶ How Goldman Sachs Makes its Money   [Jul-17-18 10:23AM  Investopedia]
▶ 10 Cheap Companies That Share Profits With Investors   [Jul-11-18 06:00AM  Morningstar]
▶ AIG to Report Second Quarter 2018 Results on August 2, 2018   [Jun-25-18 04:30PM  Business Wire]
▶ [$$] AIG: The long struggle to repair its reputation   [Jun-17-18 03:00AM  Financial Times]
▶ Dont Give In to Trade War Complacency   [Jun-12-18 01:40PM  InvestorPlace]
▶ Charlotte developer breaking ground soon at Toringdon   [07:01AM  American City Business Journals]
▶ [$$] AIG eyes expansion of life and retirement unit   [Jun-07-18 12:01AM  Financial Times]
▶ Ultimate Stock-Pickers: Top 10 Buys and Sells   [Jun-05-18 06:00AM  Morningstar]
▶ AIG Announces Life and Retirement Investor Meeting   [Jun-04-18 08:30AM  Business Wire]
▶ EU mergers and takeovers (May 29)   [10:16AM  Reuters]
▶ EU mergers and takeovers (May 28)   [May-28-18 11:05AM  Reuters]
▶ EU mergers and takeovers (May 25)   [May-25-18 11:29AM  Reuters]
▶ Icahn divests AIG, Paypal stakes   [May-16-18 12:12PM  MarketWatch]
▶ Q1 Earnings Fail to Drive Insurance ETFs   [May-11-18 11:40AM  Zacks]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.