Intrinsic value of Brighthouse Financial - BHF

Previous Close

$41.48

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$41.48

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of BHF 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 0.0

 

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
  10,947
  16,913
  25,294
  36,700
  51,779
  71,184
  95,550
  125,463
  161,440
  203,912
  253,213
  309,577
  373,144
  443,968
  522,027
  607,243
  699,493
  798,629
  904,489
  1,016,914
  1,135,757
  1,260,896
  1,392,234
  1,529,711
  1,673,308
  1,823,043
  1,978,978
  2,141,220
  2,309,914
  2,485,249
Variable operating expenses, $m
  27,764
  42,668
  63,603
  92,097
  129,764
  178,239
  239,107
  313,832
  403,706
  509,803
  632,543
  773,344
  932,139
  1,109,062
  1,304,060
  1,516,935
  1,747,382
  1,995,028
  2,259,473
  2,540,319
  2,837,199
  3,149,803
  3,477,894
  3,821,322
  4,180,036
  4,554,084
  4,943,621
  5,348,911
  5,770,320
  6,208,321
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
  27,764
  42,668
  63,603
  92,097
  129,764
  178,239
  239,107
  313,832
  403,706
  509,803
  632,543
  773,344
  932,139
  1,109,062
  1,304,060
  1,516,935
  1,747,382
  1,995,028
  2,259,473
  2,540,319
  2,837,199
  3,149,803
  3,477,894
  3,821,322
  4,180,036
  4,554,084
  4,943,621
  5,348,911
  5,770,320
  6,208,321
Operating income, $m
  -16,817
  -25,754
  -38,309
  -55,397
  -77,985
  -107,055
  -143,557
  -188,369
  -242,265
  -305,891
  -379,330
  -463,767
  -558,995
  -665,094
  -782,032
  -909,691
  -1,047,888
  -1,196,400
  -1,354,985
  -1,523,405
  -1,701,441
  -1,888,907
  -2,085,660
  -2,291,611
  -2,506,728
  -2,731,041
  -2,964,643
  -3,207,692
  -3,460,407
  -3,723,071
EBITDA, $m
  20,214
  31,231
  46,706
  67,768
  95,611
  131,444
  176,436
  231,671
  298,105
  376,531
  467,566
  571,644
  689,023
  819,801
  963,941
  1,121,294
  1,291,637
  1,474,694
  1,670,167
  1,877,764
  2,097,213
  2,328,285
  2,570,805
  2,824,662
  3,089,817
  3,366,307
  3,654,248
  3,953,832
  4,265,331
  4,589,094
Interest expense (income), $m
  186
  4,446
  5,345
  6,947
  9,198
  12,260
  16,309
  21,519
  28,062
  36,094
  45,754
  57,158
  70,396
  85,530
  102,598
  121,615
  142,575
  165,456
  190,226
  216,844
  245,269
  275,456
  307,366
  340,967
  376,232
  413,146
  451,703
  491,908
  533,778
  577,341
  622,637
Earnings before tax, $m
  -21,263
  -31,100
  -45,256
  -64,594
  -90,246
  -123,364
  -165,076
  -216,431
  -278,359
  -351,645
  -436,488
  -534,163
  -644,525
  -767,692
  -903,647
  -1,052,266
  -1,213,344
  -1,386,625
  -1,571,829
  -1,768,674
  -1,976,897
  -2,196,273
  -2,426,627
  -2,667,843
  -2,919,874
  -3,182,744
  -3,456,551
  -3,741,470
  -4,037,748
  -4,345,708
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
  -21,263
  -31,100
  -45,256
  -64,594
  -90,246
  -123,364
  -165,076
  -216,431
  -278,359
  -351,645
  -436,488
  -534,163
  -644,525
  -767,692
  -903,647
  -1,052,266
  -1,213,344
  -1,386,625
  -1,571,829
  -1,768,674
  -1,976,897
  -2,196,273
  -2,426,627
  -2,667,843
  -2,919,874
  -3,182,744
  -3,456,551
  -3,741,470
  -4,037,748
  -4,345,708

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
  60,482
  93,444
  139,746
  202,764
  286,071
  393,282
  527,900
  693,165
  891,936
  1,126,587
  1,398,966
  1,710,369
  2,061,570
  2,452,862
  2,884,130
  3,354,935
  3,864,604
  4,412,313
  4,997,174
  5,618,307
  6,274,903
  6,966,275
  7,691,898
  8,451,444
  9,244,794
  10,072,059
  10,933,582
  11,829,943
  12,761,954
  13,730,659
Adjusted assets (=assets-cash), $m
  60,482
  93,444
  139,746
  202,764
  286,071
  393,282
  527,900
  693,165
  891,936
  1,126,587
  1,398,966
  1,710,369
  2,061,570
  2,452,862
  2,884,130
  3,354,935
  3,864,604
  4,412,313
  4,997,174
  5,618,307
  6,274,903
  6,966,275
  7,691,898
  8,451,444
  9,244,794
  10,072,059
  10,933,582
  11,829,943
  12,761,954
  13,730,659
Revenue / Adjusted assets
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
  0.181
Average production assets, $m
  366,140
  565,686
  845,984
  1,227,480
  1,731,797
  2,380,822
  3,195,759
  4,196,234
  5,399,533
  6,820,049
  8,468,954
  10,354,108
  12,480,182
  14,848,953
  17,459,731
  20,309,859
  23,395,254
  26,710,935
  30,251,524
  34,011,693
  37,986,543
  42,171,917
  46,564,645
  51,162,725
  55,965,449
  60,973,483
  66,188,908
  71,615,231
  77,257,374
  83,121,649
Working capital, $m
  -335,378
  -518,160
  -774,908
  -1,124,352
  -1,586,298
  -2,180,794
  -2,927,264
  -3,843,683
  -4,945,886
  -6,247,056
  -7,757,426
  -9,484,197
  -11,431,646
  -13,601,403
  -15,992,834
  -18,603,506
  -21,429,678
  -24,466,788
  -27,709,911
  -31,154,166
  -34,795,065
  -38,628,800
  -42,652,469
  -46,864,236
  -51,263,455
  -55,850,734
  -60,627,979
  -65,598,404
  -70,766,516
  -76,138,099
Total debt, $m
  98,989
  128,655
  170,326
  227,043
  302,019
  398,509
  519,665
  668,404
  847,297
  1,058,483
  1,303,624
  1,583,888
  1,899,968
  2,252,131
  2,640,272
  3,063,997
  3,522,699
  4,015,637
  4,542,012
  5,101,032
  5,691,968
  6,314,202
  6,967,264
  7,650,854
  8,364,870
  9,109,408
  9,884,779
  10,691,503
  11,530,314
  12,402,148
Total liabilities, $m
  54,434
  84,100
  125,771
  182,488
  257,464
  353,954
  475,110
  623,849
  802,742
  1,013,928
  1,259,069
  1,539,333
  1,855,413
  2,207,576
  2,595,717
  3,019,442
  3,478,144
  3,971,082
  4,497,457
  5,056,477
  5,647,413
  6,269,647
  6,922,709
  7,606,299
  8,320,315
  9,064,853
  9,840,224
  10,646,948
  11,485,759
  12,357,593
Total equity, $m
  6,048
  9,344
  13,975
  20,276
  28,607
  39,328
  52,790
  69,317
  89,194
  112,659
  139,897
  171,037
  206,157
  245,286
  288,413
  335,494
  386,460
  441,231
  499,717
  561,831
  627,490
  696,627
  769,190
  845,144
  924,479
  1,007,206
  1,093,358
  1,182,994
  1,276,195
  1,373,066
Total liabilities and equity, $m
  60,482
  93,444
  139,746
  202,764
  286,071
  393,282
  527,900
  693,166
  891,936
  1,126,587
  1,398,966
  1,710,370
  2,061,570
  2,452,862
  2,884,130
  3,354,936
  3,864,604
  4,412,313
  4,997,174
  5,618,308
  6,274,903
  6,966,274
  7,691,899
  8,451,443
  9,244,794
  10,072,059
  10,933,582
  11,829,942
  12,761,954
  13,730,659
Debt-to-equity ratio
  16.370
  13.770
  12.190
  11.200
  10.560
  10.130
  9.840
  9.640
  9.500
  9.400
  9.320
  9.260
  9.220
  9.180
  9.150
  9.130
  9.120
  9.100
  9.090
  9.080
  9.070
  9.060
  9.060
  9.050
  9.050
  9.040
  9.040
  9.040
  9.030
  9.030
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
  -21,263
  -31,100
  -45,256
  -64,594
  -90,246
  -123,364
  -165,076
  -216,431
  -278,359
  -351,645
  -436,488
  -534,163
  -644,525
  -767,692
  -903,647
  -1,052,266
  -1,213,344
  -1,386,625
  -1,571,829
  -1,768,674
  -1,976,897
  -2,196,273
  -2,426,627
  -2,667,843
  -2,919,874
  -3,182,744
  -3,456,551
  -3,741,470
  -4,037,748
  -4,345,708
Depreciation, amort., depletion, $m
  37,031
  56,986
  85,015
  123,165
  173,597
  238,499
  319,993
  420,040
  540,370
  682,422
  846,895
  1,035,411
  1,248,018
  1,484,895
  1,745,973
  2,030,986
  2,339,525
  2,671,093
  3,025,152
  3,401,169
  3,798,654
  4,217,192
  4,656,465
  5,116,273
  5,596,545
  6,097,348
  6,618,891
  7,161,523
  7,725,737
  8,312,165
Funds from operations, $m
  15,768
  25,886
  39,759
  58,571
  83,351
  115,135
  154,916
  203,610
  262,011
  330,777
  410,407
  501,248
  603,493
  717,203
  842,326
  978,720
  1,126,181
  1,284,468
  1,453,323
  1,632,495
  1,821,757
  2,020,919
  2,229,838
  2,448,429
  2,676,671
  2,914,604
  3,162,340
  3,420,053
  3,687,989
  3,966,457
Change in working capital, $m
  -125,767
  -182,781
  -256,748
  -349,445
  -461,946
  -594,496
  -746,470
  -916,419
  -1,102,203
  -1,301,170
  -1,510,370
  -1,726,771
  -1,947,449
  -2,169,756
  -2,391,431
  -2,610,672
  -2,826,172
  -3,037,110
  -3,243,123
  -3,444,255
  -3,640,899
  -3,833,736
  -4,023,669
  -4,211,768
  -4,399,218
  -4,587,279
  -4,777,246
  -4,970,425
  -5,168,112
  -5,371,582
Cash from operations, $m
  141,535
  208,667
  296,507
  408,015
  545,297
  709,631
  901,386
  1,120,028
  1,364,214
  1,631,947
  1,920,778
  2,228,019
  2,550,942
  2,886,959
  3,233,756
  3,589,392
  3,952,354
  4,321,578
  4,696,446
  5,076,750
  5,462,656
  5,854,654
  6,253,506
  6,660,197
  7,075,889
  7,501,883
  7,939,585
  8,390,478
  8,856,102
  9,338,039
Maintenance CAPEX, $m
  -22,884
  -36,614
  -56,569
  -84,598
  -122,748
  -173,180
  -238,082
  -319,576
  -419,623
  -539,953
  -682,005
  -846,895
  -1,035,411
  -1,248,018
  -1,484,895
  -1,745,973
  -2,030,986
  -2,339,525
  -2,671,093
  -3,025,152
  -3,401,169
  -3,798,654
  -4,217,192
  -4,656,465
  -5,116,273
  -5,596,545
  -6,097,348
  -6,618,891
  -7,161,523
  -7,725,737
New CAPEX, $m
  -137,300
  -199,546
  -280,298
  -381,496
  -504,316
  -649,025
  -814,938
  -1,000,475
  -1,203,299
  -1,420,516
  -1,648,905
  -1,885,154
  -2,126,074
  -2,368,771
  -2,610,778
  -2,850,129
  -3,085,395
  -3,315,681
  -3,540,589
  -3,760,169
  -3,974,850
  -4,185,374
  -4,392,728
  -4,598,080
  -4,802,724
  -5,008,034
  -5,215,425
  -5,426,323
  -5,642,143
  -5,864,276
Cash from investing activities, $m
  -160,184
  -236,160
  -336,867
  -466,094
  -627,064
  -822,205
  -1,053,020
  -1,320,051
  -1,622,922
  -1,960,469
  -2,330,910
  -2,732,049
  -3,161,485
  -3,616,789
  -4,095,673
  -4,596,102
  -5,116,381
  -5,655,206
  -6,211,682
  -6,785,321
  -7,376,019
  -7,984,028
  -8,609,920
  -9,254,545
  -9,918,997
  -10,604,579
  -11,312,773
  -12,045,214
  -12,803,666
  -13,590,013
Free cash flow, $m
  -18,649
  -27,493
  -40,359
  -58,079
  -81,768
  -112,574
  -151,634
  -200,022
  -258,709
  -328,523
  -410,132
  -504,031
  -610,542
  -729,830
  -861,917
  -1,006,710
  -1,164,027
  -1,333,628
  -1,515,237
  -1,708,571
  -1,913,363
  -2,129,374
  -2,356,414
  -2,594,348
  -2,843,107
  -3,102,696
  -3,373,188
  -3,654,735
  -3,947,564
  -4,251,974
Issuance/(repayment) of debt, $m
  16,651
  29,666
  41,671
  56,717
  74,976
  96,490
  121,156
  148,739
  178,893
  211,186
  245,141
  280,264
  316,081
  352,162
  388,141
  423,725
  458,702
  492,938
  526,375
  559,020
  590,936
  622,234
  653,061
  683,591
  714,015
  744,538
  775,371
  806,725
  838,810
  871,835
Issuance/(repurchase) of shares, $m
  27,311
  34,396
  49,887
  70,896
  98,576
  134,086
  178,538
  232,957
  298,236
  375,110
  463,726
  565,303
  679,645
  806,821
  946,774
  1,099,347
  1,264,311
  1,441,396
  1,630,315
  1,830,787
  2,042,557
  2,265,410
  2,499,189
  2,743,798
  2,999,209
  3,265,470
  3,542,703
  3,831,106
  4,130,949
  4,442,579
Cash from financing (excl. dividends), $m  
  43,962
  64,062
  91,558
  127,613
  173,552
  230,576
  299,694
  381,696
  477,129
  586,296
  708,867
  845,567
  995,726
  1,158,983
  1,334,915
  1,523,072
  1,723,013
  1,934,334
  2,156,690
  2,389,807
  2,633,493
  2,887,644
  3,152,250
  3,427,389
  3,713,224
  4,010,008
  4,318,074
  4,637,831
  4,969,759
  5,314,414
Total cash flow (excl. dividends), $m
  25,313
  36,569
  51,199
  69,533
  91,785
  118,002
  148,060
  181,674
  218,420
  257,774
  298,735
  341,536
  385,184
  429,154
  472,999
  516,362
  558,986
  600,707
  641,454
  681,235
  720,130
  758,271
  795,837
  833,041
  870,117
  907,313
  944,886
  983,095
  1,022,195
  1,062,440
Retained Cash Flow (-), $m
  -27,311
  -34,396
  -49,887
  -70,896
  -98,576
  -134,086
  -178,538
  -232,957
  -298,236
  -375,110
  -463,726
  -565,303
  -679,645
  -806,821
  -946,774
  -1,099,347
  -1,264,311
  -1,441,396
  -1,630,315
  -1,830,787
  -2,042,557
  -2,265,410
  -2,499,189
  -2,743,798
  -2,999,209
  -3,265,470
  -3,542,703
  -3,831,106
  -4,130,949
  -4,442,579
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
  -1,998
  2,173
  1,312
  -1,363
  -6,792
  -16,084
  -30,478
  -51,283
  -79,816
  -117,336
  -164,991
  -223,767
  -294,461
  -377,668
  -473,776
  -582,985
  -705,325
  -840,689
  -988,862
  -1,149,552
  -1,322,427
  -1,507,140
  -1,703,352
  -1,910,757
  -2,129,092
  -2,358,157
  -2,597,817
  -2,848,011
  -3,108,754
  -3,380,139
Discount rate, %
  14.80
  15.54
  16.32
  17.13
  17.99
  18.89
  19.83
  20.83
  21.87
  22.96
  24.11
  25.31
  26.58
  27.91
  29.30
  30.77
  32.31
  33.92
  35.62
  37.40
  39.27
  41.23
  43.29
  45.46
  47.73
  50.12
  52.62
  55.26
  58.02
  60.92
PV of cash for distribution, $m
  -1,740
  1,628
  834
  -724
  -2,970
  -5,696
  -8,589
  -11,291
  -13,463
  -14,853
  -15,335
  -14,922
  -13,751
  -12,038
  -10,033
  -7,973
  -6,047
  -4,378
  -3,028
  -1,999
  -1,260
  -758
  -435
  -237
  -123
  -61
  -29
  -13
  -5
  -2
Current shareholders' claim on cash, %
  50.0
  7.5
  1.2
  0.2
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Brighthouse Financial, Inc. is a provider of life insurance and annuity products in the United States. The Company offers a range of products and services, which include variable, fixed, index-linked and income annuities, as well as variable, universal, term and whole life products. These products and services are marketed through various third party retail distribution channels in the United States. Fixed income annuities provide a guaranteed monthly income for a specified period of years and/or for the life of the annuitant. The Company operating segments include Annuities, Life and Run-off.

FINANCIAL RATIOS  of  Brighthouse Financial (BHF)

Valuation Ratios
P/E Ratio -1.7
Price to Sales 1.6
Price to Book 0.3
Price to Tangible Book
Price to Cash Flow 1.3
Price to Free Cash Flow 1.3
Growth Rates
Sales Growth Rate -65.9%
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 12.9%
Total Debt to Equity 12.9%
Interest Coverage -24
Management Effectiveness
Return On Assets -1.3%
Ret/ On Assets - 3 Yr. Avg. -0%
Return On Total Capital -16.5%
Ret/ On T. Cap. - 3 Yr. Avg. -1.5%
Return On Equity -18.5%
Return On Equity - 3 Yr. Avg. -1.8%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -148.1%
EBITDA Margin - 3 Yr. Avg. -36.7%
Operating Margin -150.4%
Oper. Margin - 3 Yr. Avg. -38.3%
Pre-Tax Margin -154.8%
Pre-Tax Margin - 3 Yr. Avg. -40.7%
Net Profit Margin -96.7%
Net Profit Margin - 3 Yr. Avg. -24%
Effective Tax Rate 37.5%
Eff/ Tax Rate - 3 Yr. Avg. 28.4%
Payout Ratio 0%

BHF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BHF stock intrinsic value calculation we used $6842 million for the last fiscal year's total revenue generated by Brighthouse Financial. The default revenue input number comes from 2017 income statement of Brighthouse Financial. 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 BHF 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 14.8%, whose default value for BHF is calculated based on our internal credit rating of Brighthouse Financial, 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 Brighthouse Financial.
    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 BHF stock the variable cost ratio is equal to 255.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BHF 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 Brighthouse Financial.

Corporate tax rate of 27% is the nominal tax rate for Brighthouse Financial. 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 BHF 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 BHF are equal to 3344.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Brighthouse Financial 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 BHF is equal to -3063.6%. 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 Brighthouse Financial - 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 0 million for Brighthouse Financial 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 Brighthouse Financial at the current share price and the inputted number of shares is $0.0 billion.

COMPANY NEWS

▶ Brighthouse Financial: 2Q Earnings Snapshot   [Aug-06-18 04:31PM  Associated Press]
▶ Brighthouse Financial: 1Q Earnings Snapshot   [May-07-18 05:11PM  Associated Press]
▶ Here's why stocks are tanking and what traders are watching today   [Mar-19-18 11:01AM  Yahoo Finance Video]
▶ Brighthouse Financial Brings Even More Choice to FlexChoice   [Feb-20-18 08:00AM  Business Wire]
▶ Brighthouse Financial misses 4Q profit forecasts   [Feb-12-18 04:47PM  Associated Press]
▶ David Einhorn: Twitter Is Undervalued Vs. Facebook   [Jan-18-18 01:40PM  Investopedia]
▶ Brighthouse Financial reports 3Q loss   [Nov-01-17 05:11PM  Associated Press]
▶ What to watch when Netflix delivers earnings   [Oct-16-17 09:15AM  Yahoo Finance]
▶ What Happened in the Stock Market Today   [Aug-07-17 04:53PM  Motley Fool]
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