Intrinsic value of BlackRock - BLK

Previous Close

$477.50

  Intrinsic Value

$1,174

stock screener

  Rating & Target

str. buy

+146%

  Value-price divergence*

+22%

Previous close

$477.50

 
Intrinsic value

$1,174

 
Up/down potential

+146%

 
Rating

str. buy

 
Value-price divergence*

+22%

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

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

We calculate the intrinsic value of BLK stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 77.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -2.16
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.11
  5.09
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
Revenue, $m
  11,155
  11,791
  12,455
  13,148
  13,873
  14,630
  15,422
  16,250
  17,117
  18,025
  18,975
  19,970
  21,012
  22,104
  23,249
  24,449
  25,706
  27,025
  28,408
  29,858
  31,379
  32,975
  34,649
  36,405
  38,248
  40,181
  42,211
  44,340
  46,575
  48,921
  51,383
Variable operating expenses, $m
 
  6,894
  7,208
  7,536
  7,879
  8,238
  8,613
  9,005
  9,415
  9,845
  10,294
  9,454
  9,947
  10,464
  11,006
  11,574
  12,169
  12,794
  13,448
  14,135
  14,855
  15,610
  16,403
  17,234
  18,107
  19,022
  19,983
  20,991
  22,049
  23,159
  24,325
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
  6,585
  6,894
  7,208
  7,536
  7,879
  8,238
  8,613
  9,005
  9,415
  9,845
  10,294
  9,454
  9,947
  10,464
  11,006
  11,574
  12,169
  12,794
  13,448
  14,135
  14,855
  15,610
  16,403
  17,234
  18,107
  19,022
  19,983
  20,991
  22,049
  23,159
  24,325
Operating income, $m
  4,570
  4,897
  5,247
  5,612
  5,993
  6,392
  6,809
  7,246
  7,702
  8,180
  8,680
  10,516
  11,065
  11,640
  12,243
  12,875
  13,537
  14,231
  14,959
  15,723
  16,524
  17,364
  18,246
  19,171
  20,141
  21,159
  22,228
  23,350
  24,527
  25,762
  27,058
EBITDA, $m
  4,799
  6,841
  7,226
  7,628
  8,049
  8,488
  8,948
  9,428
  9,931
  10,458
  11,009
  11,586
  12,191
  12,825
  13,489
  14,185
  14,915
  15,680
  16,482
  17,323
  18,206
  19,132
  20,103
  21,122
  22,191
  23,313
  24,491
  25,726
  27,023
  28,384
  29,813
Interest expense (income), $m
  198
  197
  653
  1,109
  1,585
  2,083
  2,603
  3,147
  3,716
  4,312
  4,935
  5,588
  6,271
  6,987
  7,737
  8,524
  9,348
  10,212
  11,117
  12,067
  13,063
  14,108
  15,204
  16,354
  17,561
  18,827
  20,155
  21,549
  23,012
  24,547
  26,159
Earnings before tax, $m
  4,460
  4,701
  4,594
  4,503
  4,408
  4,309
  4,206
  4,099
  3,986
  3,868
  3,745
  4,928
  4,794
  4,653
  4,505
  4,351
  4,189
  4,020
  3,842
  3,656
  3,461
  3,256
  3,041
  2,816
  2,580
  2,333
  2,073
  1,801
  1,515
  1,215
  900
Tax expense, $m
  1,290
  1,269
  1,240
  1,216
  1,190
  1,164
  1,136
  1,107
  1,076
  1,044
  1,011
  1,331
  1,294
  1,256
  1,216
  1,175
  1,131
  1,085
  1,037
  987
  934
  879
  821
  760
  697
  630
  560
  486
  409
  328
  243
Net income, $m
  3,172
  3,431
  3,354
  3,287
  3,218
  3,146
  3,071
  2,992
  2,910
  2,824
  2,734
  3,598
  3,499
  3,397
  3,289
  3,176
  3,058
  2,934
  2,805
  2,669
  2,526
  2,377
  2,220
  2,056
  1,884
  1,703
  1,513
  1,314
  1,106
  887
  657

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,175
  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
  220,177
  226,747
  239,513
  252,846
  266,779
  281,343
  296,573
  312,505
  329,177
  346,627
  364,899
  384,034
  404,080
  425,083
  447,093
  470,164
  494,349
  519,708
  546,300
  574,189
  603,442
  634,127
  666,319
  700,095
  735,534
  772,721
  811,745
  852,700
  895,682
  940,794
  988,144
Adjusted assets (=assets-cash), $m
  214,002
  226,747
  239,513
  252,846
  266,779
  281,343
  296,573
  312,505
  329,177
  346,627
  364,899
  384,034
  404,080
  425,083
  447,093
  470,164
  494,349
  519,708
  546,300
  574,189
  603,442
  634,127
  666,319
  700,095
  735,534
  772,721
  811,745
  852,700
  895,682
  940,794
  988,144
Revenue / Adjusted assets
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
  0.052
Average production assets, $m
  17,938
  18,960
  20,027
  21,142
  22,307
  23,525
  24,798
  26,130
  27,524
  28,984
  30,511
  32,111
  33,788
  35,544
  37,384
  39,313
  41,336
  43,456
  45,679
  48,011
  50,457
  53,023
  55,715
  58,539
  61,502
  64,612
  67,875
  71,299
  74,893
  78,665
  82,625
Working capital, $m
  0
  -6,532
  -6,900
  -7,284
  -7,685
  -8,105
  -8,544
  -9,003
  -9,483
  -9,986
  -10,512
  -11,063
  -11,641
  -12,246
  -12,880
  -13,544
  -14,241
  -14,972
  -15,738
  -16,541
  -17,384
  -18,268
  -19,195
  -20,168
  -21,189
  -22,261
  -23,385
  -24,565
  -25,803
  -27,102
  -28,466
Total debt, $m
  4,915
  16,321
  27,721
  39,628
  52,070
  65,075
  78,676
  92,903
  107,791
  123,374
  139,691
  156,779
  174,679
  193,435
  213,090
  233,692
  255,290
  277,935
  301,682
  326,587
  352,709
  380,112
  408,859
  439,021
  470,668
  503,876
  538,725
  575,297
  613,680
  653,965
  696,249
Total liabilities, $m
  191,079
  202,485
  213,885
  225,792
  238,234
  251,239
  264,840
  279,067
  293,955
  309,538
  325,855
  342,943
  360,843
  379,599
  399,254
  419,856
  441,454
  464,099
  487,846
  512,751
  538,873
  566,276
  595,023
  625,185
  656,832
  690,040
  724,889
  761,461
  799,844
  840,129
  882,413
Total equity, $m
  29,098
  24,262
  25,628
  27,055
  28,545
  30,104
  31,733
  33,438
  35,222
  37,089
  39,044
  41,092
  43,237
  45,484
  47,839
  50,308
  52,895
  55,609
  58,454
  61,438
  64,568
  67,852
  71,296
  74,910
  78,702
  82,681
  86,857
  91,239
  95,838
  100,665
  105,731
Total liabilities and equity, $m
  220,177
  226,747
  239,513
  252,847
  266,779
  281,343
  296,573
  312,505
  329,177
  346,627
  364,899
  384,035
  404,080
  425,083
  447,093
  470,164
  494,349
  519,708
  546,300
  574,189
  603,441
  634,128
  666,319
  700,095
  735,534
  772,721
  811,746
  852,700
  895,682
  940,794
  988,144
Debt-to-equity ratio
  0.169
  0.670
  1.080
  1.460
  1.820
  2.160
  2.480
  2.780
  3.060
  3.330
  3.580
  3.820
  4.040
  4.250
  4.450
  4.650
  4.830
  5.000
  5.160
  5.320
  5.460
  5.600
  5.730
  5.860
  5.980
  6.090
  6.200
  6.310
  6.400
  6.500
  6.590
Adjusted equity ratio
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107
  0.107

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,172
  3,431
  3,354
  3,287
  3,218
  3,146
  3,071
  2,992
  2,910
  2,824
  2,734
  3,598
  3,499
  3,397
  3,289
  3,176
  3,058
  2,934
  2,805
  2,669
  2,526
  2,377
  2,220
  2,056
  1,884
  1,703
  1,513
  1,314
  1,106
  887
  657
Depreciation, amort., depletion, $m
  229
  1,944
  1,979
  2,017
  2,055
  2,096
  2,138
  2,183
  2,229
  2,278
  2,329
  1,070
  1,126
  1,185
  1,246
  1,310
  1,378
  1,449
  1,523
  1,600
  1,682
  1,767
  1,857
  1,951
  2,050
  2,154
  2,262
  2,377
  2,496
  2,622
  2,754
Funds from operations, $m
  1,401
  5,375
  5,333
  5,304
  5,273
  5,242
  5,209
  5,175
  5,139
  5,102
  5,063
  4,668
  4,626
  4,581
  4,535
  4,487
  4,436
  4,383
  4,327
  4,269
  4,208
  4,144
  4,077
  4,007
  3,934
  3,857
  3,776
  3,691
  3,602
  3,509
  3,411
Change in working capital, $m
  -753
  -352
  -368
  -384
  -401
  -420
  -439
  -459
  -480
  -503
  -526
  -551
  -577
  -605
  -634
  -665
  -697
  -731
  -766
  -803
  -843
  -884
  -927
  -973
  -1,021
  -1,071
  -1,124
  -1,180
  -1,238
  -1,300
  -1,364
Cash from operations, $m
  2,154
  5,727
  5,701
  5,688
  5,675
  5,661
  5,648
  5,634
  5,619
  5,604
  5,589
  5,219
  5,203
  5,186
  5,169
  5,151
  5,133
  5,113
  5,093
  5,073
  5,051
  5,028
  5,005
  4,980
  4,955
  4,928
  4,900
  4,871
  4,840
  4,808
  4,775
Maintenance CAPEX, $m
  0
  -598
  -632
  -668
  -705
  -744
  -784
  -827
  -871
  -917
  -966
  -1,017
  -1,070
  -1,126
  -1,185
  -1,246
  -1,310
  -1,378
  -1,449
  -1,523
  -1,600
  -1,682
  -1,767
  -1,857
  -1,951
  -2,050
  -2,154
  -2,262
  -2,377
  -2,496
  -2,622
New CAPEX, $m
  -119
  -1,022
  -1,067
  -1,115
  -1,165
  -1,218
  -1,273
  -1,332
  -1,394
  -1,459
  -1,528
  -1,600
  -1,676
  -1,756
  -1,840
  -1,929
  -2,022
  -2,120
  -2,224
  -2,332
  -2,446
  -2,566
  -2,692
  -2,824
  -2,963
  -3,109
  -3,263
  -3,424
  -3,594
  -3,772
  -3,959
Cash from investing activities, $m
  -188
  -1,620
  -1,699
  -1,783
  -1,870
  -1,962
  -2,057
  -2,159
  -2,265
  -2,376
  -2,494
  -2,617
  -2,746
  -2,882
  -3,025
  -3,175
  -3,332
  -3,498
  -3,673
  -3,855
  -4,046
  -4,248
  -4,459
  -4,681
  -4,914
  -5,159
  -5,417
  -5,686
  -5,971
  -6,268
  -6,581
Free cash flow, $m
  1,966
  4,107
  4,001
  3,905
  3,805
  3,700
  3,590
  3,475
  3,354
  3,228
  3,095
  2,602
  2,457
  2,304
  2,144
  1,976
  1,800
  1,615
  1,421
  1,218
  1,005
  781
  546
  299
  40
  -232
  -517
  -816
  -1,130
  -1,460
  -1,806
Issuance/(repayment) of debt, $m
  0
  11,406
  11,400
  11,907
  12,442
  13,006
  13,600
  14,227
  14,888
  15,584
  16,316
  17,088
  17,900
  18,756
  19,655
  20,602
  21,598
  22,645
  23,747
  24,905
  26,122
  27,402
  28,748
  30,161
  31,647
  33,208
  34,849
  36,572
  38,383
  40,285
  42,283
Issuance/(repurchase) of shares, $m
  -1,373
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  41
  315
  604
  907
  1,224
  1,558
  1,908
  2,276
  2,662
  3,068
  3,493
  3,940
  4,410
Cash from financing (excl. dividends), $m  
  -140
  11,406
  11,400
  11,907
  12,442
  13,006
  13,600
  14,227
  14,888
  15,584
  16,316
  17,088
  17,900
  18,756
  19,655
  20,602
  21,598
  22,645
  23,788
  25,220
  26,726
  28,309
  29,972
  31,719
  33,555
  35,484
  37,511
  39,640
  41,876
  44,225
  46,693
Total cash flow (excl. dividends), $m
  1,553
  15,513
  15,401
  15,812
  16,247
  16,706
  17,191
  17,702
  18,242
  18,811
  19,412
  19,690
  20,357
  21,060
  21,799
  22,578
  23,398
  24,260
  25,209
  26,438
  27,731
  29,089
  30,517
  32,018
  33,596
  35,253
  36,994
  38,824
  40,746
  42,765
  44,887
Retained Cash Flow (-), $m
  -595
  -1,339
  -1,366
  -1,427
  -1,491
  -1,558
  -1,630
  -1,705
  -1,784
  -1,867
  -1,955
  -2,048
  -2,145
  -2,247
  -2,355
  -2,469
  -2,588
  -2,713
  -2,845
  -2,984
  -3,130
  -3,283
  -3,445
  -3,614
  -3,792
  -3,979
  -4,176
  -4,382
  -4,599
  -4,827
  -5,066
Prev. year cash balance distribution, $m
 
  6,175
  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
 
  20,349
  14,035
  14,386
  14,756
  15,148
  15,561
  15,997
  16,458
  16,944
  17,457
  17,643
  18,212
  18,812
  19,444
  20,110
  20,810
  21,547
  22,363
  23,454
  24,601
  25,806
  27,073
  28,404
  29,804
  31,274
  32,819
  34,442
  36,147
  37,938
  39,820
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
 
  19,510
  12,849
  12,519
  12,150
  11,741
  11,293
  10,808
  10,287
  9,734
  9,152
  8,378
  7,772
  7,153
  6,528
  5,904
  5,288
  4,688
  4,118
  3,611
  3,126
  2,669
  2,246
  1,862
  1,518
  1,217
  957
  739
  559
  414
  300
Current shareholders' claim on cash, %
  100
  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
  99.8
  99.4
  98.9
  98.2
  97.4
  96.5
  95.4
  94.3
  93.0
  91.7
  90.3
  88.8

BlackRock, Inc. (BlackRock) is an investment management company. BlackRock provides a range of investment and risk management services to institutional and retail clients worldwide. Its diverse platform of active (alpha) and index (beta) investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Its products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds (ETFs), separate accounts, collective investment funds and other pooled investment vehicles. It offers its Aladdin investment system, as well as risk management, outsourcing, advisory and technology services, to institutional investors and wealth management intermediaries under the BlackRock Solutions name.

FINANCIAL RATIOS  of  BlackRock (BLK)

Valuation Ratios
P/E Ratio 24.3
Price to Sales 6.9
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow 35.8
Price to Free Cash Flow 37.9
Growth Rates
Sales Growth Rate -2.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -46.2%
Cap. Spend. - 3 Yr. Gr. Rate 4.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 16.9%
Total Debt to Equity 16.9%
Interest Coverage 24
Management Effectiveness
Return On Assets 1.5%
Ret/ On Assets - 3 Yr. Avg. 1.5%
Return On Total Capital 9.4%
Ret/ On T. Cap. - 3 Yr. Avg. 9.5%
Return On Equity 11%
Return On Equity - 3 Yr. Avg. 11.7%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 89%
Gross Margin - 3 Yr. Avg. 89.2%
EBITDA Margin 43.8%
EBITDA Margin - 3 Yr. Avg. 44.5%
Operating Margin 41%
Oper. Margin - 3 Yr. Avg. 40.8%
Pre-Tax Margin 40%
Pre-Tax Margin - 3 Yr. Avg. 40%
Net Profit Margin 28.4%
Net Profit Margin - 3 Yr. Avg. 29.2%
Effective Tax Rate 28.9%
Eff/ Tax Rate - 3 Yr. Avg. 27.3%
Payout Ratio 48.7%

BLK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BLK stock intrinsic value calculation we used $11155 million for the last fiscal year's total revenue generated by BlackRock. The default revenue input number comes from 2016 income statement of BlackRock. 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 BLK stock valuation model: a) initial revenue growth rate of 5.7% 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 BLK is calculated based on our internal credit rating of BlackRock, 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 BlackRock.
    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 BLK stock the variable cost ratio is equal to 59.1%.

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 BLK stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4% for BlackRock.

Corporate tax rate of 27% is the nominal tax rate for BlackRock. 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 BLK 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 BLK are equal to 160.8%.

Life of production assets of 135.6 years is the average useful life of capital assets used in BlackRock 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 BLK is equal to -55.4%. 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 - $29098 million for BlackRock - 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 161.155 million for BlackRock 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 BlackRock at the current share price and the inputted number of shares is $77.0 billion.

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COMPANY NEWS

▶ [$$] Authers' Note: Mnuchin's Warning   [Oct-18-17 08:02PM  Financial Times]
▶ Preparing for U.S. Tax Reform Market Risks   [10:44AM  Bloomberg Video]
▶ State Street slashes fund fees to stand out from Fidelity, others   [03:25PM  American City Business Journals]
▶ BlackRocks iShares Added More to This in 3Q17   [09:08AM  Market Realist]
▶ Where BlackRock Is Adding Assets   [07:41AM  Market Realist]
▶ Inside BlackRocks 3Q17 Performance in Retail, Institutional   [Oct-12-17 05:04PM  Market Realist]
▶ 3 Reasons to Buy BlackRock   [03:08PM  Barrons.com]
▶ Company News For Oct 12, 2017   [09:59AM  Zacks]
▶ BlackRock's earnings beat by the numbers   [01:12PM  CNBC Videos]
▶ How Legal Is Bitcoin Anyway?   [12:23PM  InvestorPlace]
▶ Stock Indexes Flat; Why The Bull May Have Further To Go   [12:05PM  Investor's Business Daily]
▶ BlackRock assets surge to $6 trn   [10:46AM  Reuters Videos]
▶ [$$] BlackRock Oversees Almost $6 Trillion in Assets   [10:35AM  The Wall Street Journal]
▶ BlackRock Gets a Passive Response   [10:24AM  Barrons.com]
▶ Financials lag as markets open mixed   [09:39AM  CNBC Videos]
▶ Why BlackRock Is Trading at a Premium in 2017   [07:36AM  Market Realist]
▶ BlackRock beats Street 3Q forecasts   [06:26AM  Associated Press]
▶ Closing Bell: LIVE MARKETS BLOG   [Oct-10-17 04:03PM  TheStreet.com]
▶ Trian to Contest P&G Vote: LIVE MARKETS BLOG   [12:45PM  TheStreet.com]
Financial statements of BLK
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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