Intrinsic value of BlackRock - BLK

Previous Close

$512.55

  Intrinsic Value

$2,363

stock screener

  Rating & Target

str. buy

+361%

Previous close

$512.55

 
Intrinsic value

$2,363

 
Up/down potential

+361%

 
Rating

str. buy

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 82.5

 

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
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
  6.50
  6.35
  6.22
  6.09
  5.98
  5.89
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.42
Revenue, $m
  11,155
  12,717
  14,383
  16,150
  18,017
  19,982
  22,043
  24,200
  26,451
  28,799
  31,243
  33,785
  36,429
  39,176
  42,031
  44,998
  48,082
  51,288
  54,622
  58,091
  61,702
  65,462
  69,380
  73,464
  77,723
  82,167
  86,806
  91,651
  96,714
  102,005
  107,537
Variable operating expenses, $m
 
  7,332
  8,121
  8,957
  9,841
  10,771
  11,747
  12,768
  13,834
  14,945
  16,102
  15,994
  17,245
  18,546
  19,898
  21,302
  22,762
  24,280
  25,858
  27,500
  29,210
  30,990
  32,845
  34,778
  36,794
  38,898
  41,094
  43,388
  45,784
  48,289
  50,908
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
  7,332
  8,121
  8,957
  9,841
  10,771
  11,747
  12,768
  13,834
  14,945
  16,102
  15,994
  17,245
  18,546
  19,898
  21,302
  22,762
  24,280
  25,858
  27,500
  29,210
  30,990
  32,845
  34,778
  36,794
  38,898
  41,094
  43,388
  45,784
  48,289
  50,908
Operating income, $m
  4,570
  5,385
  6,262
  7,193
  8,176
  9,211
  10,296
  11,432
  12,617
  13,853
  15,141
  17,791
  19,183
  20,630
  22,134
  23,696
  25,320
  27,008
  28,764
  30,591
  32,492
  34,472
  36,535
  38,686
  40,929
  43,269
  45,712
  48,263
  50,929
  53,715
  56,629
EBITDA, $m
  4,799
  7,378
  8,345
  9,370
  10,454
  11,594
  12,789
  14,041
  15,347
  16,709
  18,127
  19,602
  21,136
  22,730
  24,386
  26,108
  27,897
  29,757
  31,692
  33,704
  35,799
  37,981
  40,254
  42,623
  45,095
  47,673
  50,365
  53,176
  56,113
  59,183
  62,393
Interest expense (income), $m
  198
  197
  1,289
  2,433
  3,647
  4,930
  6,280
  7,695
  9,177
  10,723
  12,336
  14,015
  15,761
  17,577
  19,464
  21,426
  23,464
  25,582
  27,784
  30,075
  32,457
  34,938
  37,521
  40,212
  43,017
  45,943
  48,996
  52,183
  55,511
  58,988
  62,623
Earnings before tax, $m
  4,460
  5,188
  4,973
  4,760
  4,529
  4,281
  4,016
  3,736
  3,441
  3,130
  2,805
  3,776
  3,422
  3,053
  2,669
  2,270
  1,856
  1,426
  980
  516
  35
  -466
  -986
  -1,526
  -2,089
  -2,674
  -3,284
  -3,919
  -4,582
  -5,273
  -5,994
Tax expense, $m
  1,290
  1,401
  1,343
  1,285
  1,223
  1,156
  1,084
  1,009
  929
  845
  757
  1,020
  924
  824
  721
  613
  501
  385
  264
  139
  9
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  3,172
  3,787
  3,630
  3,475
  3,306
  3,125
  2,932
  2,727
  2,512
  2,285
  2,047
  2,757
  2,498
  2,229
  1,948
  1,657
  1,355
  1,041
  715
  377
  25
  -466
  -986
  -1,526
  -2,089
  -2,674
  -3,284
  -3,919
  -4,582
  -5,273
  -5,994

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
  244,552
  276,588
  310,581
  346,487
  384,271
  423,907
  465,377
  508,679
  553,820
  600,822
  649,717
  700,553
  753,388
  808,292
  865,349
  924,652
  986,305
  1,050,424
  1,117,135
  1,186,573
  1,258,885
  1,334,227
  1,412,763
  1,494,670
  1,580,134
  1,669,350
  1,762,525
  1,859,875
  1,961,629
  2,068,026
Adjusted assets (=assets-cash), $m
  214,002
  244,552
  276,588
  310,581
  346,487
  384,271
  423,907
  465,377
  508,679
  553,820
  600,822
  649,717
  700,553
  753,388
  808,292
  865,349
  924,652
  986,305
  1,050,424
  1,117,135
  1,186,573
  1,258,885
  1,334,227
  1,412,763
  1,494,670
  1,580,134
  1,669,350
  1,762,525
  1,859,875
  1,961,629
  2,068,026
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
  20,448
  23,127
  25,970
  28,972
  32,131
  35,445
  38,913
  42,534
  46,308
  50,238
  54,327
  58,577
  62,995
  67,586
  72,357
  77,316
  82,471
  87,832
  93,410
  99,217
  105,263
  111,563
  118,130
  124,978
  132,124
  139,584
  147,375
  155,515
  164,024
  172,920
Working capital, $m
  0
  -7,045
  -7,968
  -8,947
  -9,982
  -11,070
  -12,212
  -13,407
  -14,654
  -15,954
  -17,308
  -18,717
  -20,182
  -21,704
  -23,285
  -24,929
  -26,637
  -28,413
  -30,261
  -32,182
  -34,183
  -36,266
  -38,436
  -40,699
  -43,058
  -45,521
  -48,091
  -50,775
  -53,579
  -56,511
  -59,576
Total debt, $m
  4,915
  32,221
  60,829
  91,185
  123,249
  156,990
  192,385
  229,418
  268,086
  308,397
  350,370
  394,034
  439,430
  486,611
  535,641
  586,593
  639,550
  694,606
  751,865
  811,437
  873,446
  938,021
  1,005,300
  1,075,433
  1,148,577
  1,224,896
  1,304,566
  1,387,771
  1,474,705
  1,565,571
  1,660,584
Total liabilities, $m
  191,079
  218,385
  246,993
  277,349
  309,413
  343,154
  378,549
  415,582
  454,250
  494,561
  536,534
  580,198
  625,594
  672,775
  721,805
  772,757
  825,714
  880,770
  938,029
  997,601
  1,059,610
  1,124,185
  1,191,464
  1,261,597
  1,334,741
  1,411,060
  1,490,730
  1,573,935
  1,660,869
  1,751,735
  1,846,748
Total equity, $m
  29,098
  26,167
  29,595
  33,232
  37,074
  41,117
  45,358
  49,795
  54,429
  59,259
  64,288
  69,520
  74,959
  80,613
  86,487
  92,592
  98,938
  105,535
  112,395
  119,533
  126,963
  134,701
  142,762
  151,166
  159,930
  169,074
  178,620
  188,590
  199,007
  209,894
  221,279
Total liabilities and equity, $m
  220,177
  244,552
  276,588
  310,581
  346,487
  384,271
  423,907
  465,377
  508,679
  553,820
  600,822
  649,718
  700,553
  753,388
  808,292
  865,349
  924,652
  986,305
  1,050,424
  1,117,134
  1,186,573
  1,258,886
  1,334,226
  1,412,763
  1,494,671
  1,580,134
  1,669,350
  1,762,525
  1,859,876
  1,961,629
  2,068,027
Debt-to-equity ratio
  0.169
  1.230
  2.060
  2.740
  3.320
  3.820
  4.240
  4.610
  4.930
  5.200
  5.450
  5.670
  5.860
  6.040
  6.190
  6.340
  6.460
  6.580
  6.690
  6.790
  6.880
  6.960
  7.040
  7.110
  7.180
  7.240
  7.300
  7.360
  7.410
  7.460
  7.500
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
  3,787
  3,630
  3,475
  3,306
  3,125
  2,932
  2,727
  2,512
  2,285
  2,047
  2,757
  2,498
  2,229
  1,948
  1,657
  1,355
  1,041
  715
  377
  25
  -466
  -986
  -1,526
  -2,089
  -2,674
  -3,284
  -3,919
  -4,582
  -5,273
  -5,994
Depreciation, amort., depletion, $m
  229
  1,993
  2,083
  2,177
  2,278
  2,383
  2,493
  2,609
  2,730
  2,855
  2,986
  1,811
  1,953
  2,100
  2,253
  2,412
  2,577
  2,749
  2,928
  3,114
  3,307
  3,509
  3,719
  3,938
  4,166
  4,404
  4,653
  4,913
  5,184
  5,467
  5,764
Funds from operations, $m
  1,401
  5,781
  5,713
  5,652
  5,583
  5,508
  5,425
  5,336
  5,241
  5,140
  5,034
  4,568
  4,451
  4,328
  4,201
  4,069
  3,932
  3,790
  3,643
  3,490
  3,332
  3,043
  2,733
  2,411
  2,077
  1,730
  1,369
  993
  602
  195
  -230
Change in working capital, $m
  -753
  -865
  -923
  -979
  -1,034
  -1,088
  -1,142
  -1,195
  -1,247
  -1,300
  -1,354
  -1,409
  -1,464
  -1,522
  -1,582
  -1,644
  -1,708
  -1,776
  -1,847
  -1,922
  -2,000
  -2,083
  -2,170
  -2,262
  -2,360
  -2,462
  -2,570
  -2,684
  -2,804
  -2,931
  -3,065
Cash from operations, $m
  2,154
  6,646
  6,636
  6,631
  6,618
  6,596
  6,567
  6,531
  6,489
  6,441
  6,388
  5,976
  5,915
  5,851
  5,783
  5,713
  5,641
  5,566
  5,490
  5,412
  5,333
  5,126
  4,904
  4,674
  4,437
  4,192
  3,939
  3,677
  3,407
  3,126
  2,835
Maintenance CAPEX, $m
  0
  -598
  -682
  -771
  -866
  -966
  -1,071
  -1,182
  -1,297
  -1,418
  -1,544
  -1,675
  -1,811
  -1,953
  -2,100
  -2,253
  -2,412
  -2,577
  -2,749
  -2,928
  -3,114
  -3,307
  -3,509
  -3,719
  -3,938
  -4,166
  -4,404
  -4,653
  -4,913
  -5,184
  -5,467
New CAPEX, $m
  -119
  -2,511
  -2,679
  -2,842
  -3,002
  -3,159
  -3,314
  -3,468
  -3,621
  -3,775
  -3,930
  -4,088
  -4,251
  -4,418
  -4,591
  -4,771
  -4,959
  -5,155
  -5,361
  -5,578
  -5,806
  -6,046
  -6,300
  -6,567
  -6,849
  -7,146
  -7,460
  -7,791
  -8,140
  -8,508
  -8,896
Cash from investing activities, $m
  -188
  -3,109
  -3,361
  -3,613
  -3,868
  -4,125
  -4,385
  -4,650
  -4,918
  -5,193
  -5,474
  -5,763
  -6,062
  -6,371
  -6,691
  -7,024
  -7,371
  -7,732
  -8,110
  -8,506
  -8,920
  -9,353
  -9,809
  -10,286
  -10,787
  -11,312
  -11,864
  -12,444
  -13,053
  -13,692
  -14,363
Free cash flow, $m
  1,966
  3,537
  3,276
  3,018
  2,750
  2,471
  2,182
  1,882
  1,571
  1,248
  914
  213
  -146
  -520
  -908
  -1,311
  -1,730
  -2,166
  -2,620
  -3,094
  -3,587
  -4,227
  -4,905
  -5,612
  -6,350
  -7,120
  -7,925
  -8,766
  -9,646
  -10,566
  -11,529
Issuance/(repayment) of debt, $m
  0
  27,306
  28,608
  30,355
  32,064
  33,741
  35,394
  37,033
  38,669
  40,311
  41,972
  43,664
  45,396
  47,181
  49,030
  50,952
  52,957
  55,056
  57,258
  59,573
  62,009
  64,575
  67,280
  70,133
  73,143
  76,319
  79,670
  83,205
  86,934
  90,866
  95,013
Issuance/(repurchase) of shares, $m
  -1,373
  0
  0
  163
  536
  918
  1,309
  1,710
  2,122
  2,545
  2,982
  2,475
  2,941
  3,425
  3,926
  4,448
  4,990
  5,556
  6,146
  6,761
  7,405
  8,203
  9,047
  9,930
  10,853
  11,819
  12,830
  13,889
  14,998
  16,160
  17,378
Cash from financing (excl. dividends), $m  
  -140
  27,306
  28,608
  30,518
  32,600
  34,659
  36,703
  38,743
  40,791
  42,856
  44,954
  46,139
  48,337
  50,606
  52,956
  55,400
  57,947
  60,612
  63,404
  66,334
  69,414
  72,778
  76,327
  80,063
  83,996
  88,138
  92,500
  97,094
  101,932
  107,026
  112,391
Total cash flow (excl. dividends), $m
  1,553
  30,843
  31,884
  33,536
  35,350
  37,130
  38,885
  40,625
  42,361
  44,105
  45,868
  46,352
  48,191
  50,086
  52,048
  54,089
  56,218
  58,446
  60,784
  63,241
  65,826
  68,550
  71,422
  74,451
  77,646
  81,018
  84,575
  88,328
  92,286
  96,461
  100,862
Retained Cash Flow (-), $m
  -595
  -3,244
  -3,428
  -3,637
  -3,842
  -4,043
  -4,241
  -4,437
  -4,633
  -4,830
  -5,029
  -5,232
  -5,439
  -5,653
  -5,875
  -6,105
  -6,345
  -6,597
  -6,861
  -7,138
  -7,430
  -8,203
  -9,047
  -9,930
  -10,853
  -11,819
  -12,830
  -13,889
  -14,998
  -16,160
  -17,378
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
 
  33,774
  28,456
  29,899
  31,508
  33,087
  34,644
  36,188
  37,728
  39,275
  40,839
  41,120
  42,752
  44,433
  46,174
  47,983
  49,872
  51,849
  53,923
  56,102
  58,396
  60,347
  62,375
  64,521
  66,794
  69,199
  71,745
  74,439
  77,288
  80,300
  83,484
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
 
  32,382
  26,051
  26,020
  25,944
  25,647
  25,143
  24,448
  23,581
  22,561
  21,410
  19,527
  18,244
  16,894
  15,501
  14,087
  12,674
  11,281
  9,930
  8,638
  7,420
  6,242
  5,175
  4,229
  3,402
  2,692
  2,093
  1,598
  1,196
  877
  629
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  99.8
  99.2
  98.4
  97.3
  96.0
  94.6
  93.1
  91.4
  90.2
  88.9
  87.5
  86.0
  84.5
  82.9
  81.3
  79.6
  78.0
  76.3
  74.6
  72.9
  71.2
  69.4
  67.6
  65.9
  64.1
  62.4
  60.6
  58.9

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 26.1
Price to Sales 7.4
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 38.4
Price to Free Cash Flow 40.7
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 14% 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 160.988 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 $82.5 billion.

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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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