Intrinsic value of Canon ADR - CAJ

Previous Close

$39.02

  Intrinsic Value

$185.50

stock screener

  Rating & Target

str. buy

+375%

Previous close

$39.02

 
Intrinsic value

$185.50

 
Up/down potential

+375%

 
Rating

str. buy

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

We calculate the intrinsic value of CAJ 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -10.49
  27.70
  25.43
  23.39
  21.55
  19.89
  18.40
  17.06
  15.86
  14.77
  13.79
  12.92
  12.12
  11.41
  10.77
  10.19
  9.67
  9.21
  8.79
  8.41
  8.07
  7.76
  7.48
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
Revenue, $m
  29,612
  37,815
  47,431
  58,523
  71,134
  85,285
  100,981
  118,212
  136,958
  157,189
  178,872
  201,973
  226,459
  252,301
  279,474
  307,961
  337,752
  368,847
  401,253
  434,986
  470,074
  506,551
  544,461
  583,855
  624,794
  667,347
  711,589
  757,605
  805,486
  855,329
  907,241
Variable operating expenses, $m
 
  25,602
  31,905
  39,176
  47,442
  56,717
  67,005
  78,300
  90,587
  103,848
  118,060
  132,387
  148,437
  165,376
  183,187
  201,859
  221,387
  241,768
  263,009
  285,121
  308,120
  332,029
  356,878
  382,700
  409,534
  437,426
  466,426
  496,588
  527,972
  560,643
  594,670
Fixed operating expenses, $m
 
  7,757
  7,951
  8,150
  8,354
  8,562
  8,777
  8,996
  9,221
  9,451
  9,688
  9,930
  10,178
  10,433
  10,693
  10,961
  11,235
  11,516
  11,803
  12,099
  12,401
  12,711
  13,029
  13,355
  13,688
  14,031
  14,381
  14,741
  15,109
  15,487
  15,874
Total operating expenses, $m
  27,619
  33,359
  39,856
  47,326
  55,796
  65,279
  75,782
  87,296
  99,808
  113,299
  127,748
  142,317
  158,615
  175,809
  193,880
  212,820
  232,622
  253,284
  274,812
  297,220
  320,521
  344,740
  369,907
  396,055
  423,222
  451,457
  480,807
  511,329
  543,081
  576,130
  610,544
Operating income, $m
  1,992
  4,456
  7,575
  11,198
  15,339
  20,006
  25,199
  30,916
  37,150
  43,889
  51,124
  59,656
  67,844
  76,493
  85,594
  95,141
  105,131
  115,563
  126,440
  137,767
  149,553
  161,811
  174,554
  187,800
  201,571
  215,890
  230,782
  246,276
  262,404
  279,199
  296,697
EBITDA, $m
  4,169
  7,187
  10,793
  14,978
  19,758
  25,142
  31,131
  37,721
  44,904
  52,669
  61,002
  69,889
  79,318
  89,276
  99,754
  110,744
  122,244
  134,251
  146,770
  159,806
  173,370
  187,476
  202,140
  217,382
  233,228
  249,702
  266,836
  284,662
  303,215
  322,536
  342,664
Interest expense (income), $m
  6
  186
  384
  617
  885
  1,191
  1,533
  1,913
  2,330
  2,783
  3,273
  3,798
  4,357
  4,949
  5,575
  6,232
  6,921
  7,642
  8,395
  9,179
  9,995
  10,844
  11,727
  12,644
  13,598
  14,588
  15,618
  16,689
  17,802
  18,961
  20,167
Earnings before tax, $m
  2,130
  4,270
  7,191
  10,581
  14,454
  18,815
  23,666
  29,004
  34,820
  41,106
  47,851
  55,858
  63,487
  71,543
  80,019
  88,909
  98,209
  107,921
  118,045
  128,588
  139,558
  150,966
  162,827
  175,156
  187,974
  201,301
  215,164
  229,588
  244,602
  260,238
  276,530
Tax expense, $m
  720
  1,153
  1,941
  2,857
  3,902
  5,080
  6,390
  7,831
  9,401
  11,099
  12,920
  15,082
  17,142
  19,317
  21,605
  24,005
  26,517
  29,139
  31,872
  34,719
  37,681
  40,761
  43,963
  47,292
  50,753
  54,351
  58,094
  61,989
  66,043
  70,264
  74,663
Net income, $m
  1,311
  3,117
  5,249
  7,724
  10,551
  13,735
  17,276
  21,173
  25,419
  30,007
  34,931
  40,776
  46,346
  52,227
  58,414
  64,903
  71,693
  78,782
  86,173
  93,869
  101,877
  110,205
  118,864
  127,864
  137,221
  146,950
  157,070
  167,599
  178,559
  189,974
  201,867

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  5,514
  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
  44,733
  50,085
  62,822
  77,514
  94,217
  112,961
  133,750
  156,573
  181,401
  208,197
  236,916
  267,514
  299,946
  334,174
  370,164
  407,895
  447,354
  488,539
  531,460
  576,141
  622,615
  670,929
  721,140
  773,317
  827,541
  883,903
  942,502
  1,003,451
  1,066,869
  1,132,887
  1,201,644
Adjusted assets (=assets-cash), $m
  39,219
  50,085
  62,822
  77,514
  94,217
  112,961
  133,750
  156,573
  181,401
  208,197
  236,916
  267,514
  299,946
  334,174
  370,164
  407,895
  447,354
  488,539
  531,460
  576,141
  622,615
  670,929
  721,140
  773,317
  827,541
  883,903
  942,502
  1,003,451
  1,066,869
  1,132,887
  1,201,644
Revenue / Adjusted assets
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
Average production assets, $m
  13,503
  17,243
  21,628
  26,687
  32,437
  38,890
  46,047
  53,905
  62,453
  71,678
  81,566
  92,100
  103,265
  115,049
  127,440
  140,430
  154,015
  168,194
  182,971
  198,354
  214,354
  230,987
  248,274
  266,238
  284,906
  304,310
  324,485
  345,468
  367,302
  390,030
  413,702
Working capital, $m
  9,718
  5,407
  6,783
  8,369
  10,172
  12,196
  14,440
  16,904
  19,585
  22,478
  25,579
  28,882
  32,384
  36,079
  39,965
  44,038
  48,299
  52,745
  57,379
  62,203
  67,221
  72,437
  77,858
  83,491
  89,346
  95,431
  101,757
  108,338
  115,184
  122,312
  129,735
Total debt, $m
  5,338
  10,979
  17,627
  25,297
  34,016
  43,799
  54,651
  66,565
  79,525
  93,513
  108,504
  124,476
  141,406
  159,273
  178,060
  197,755
  218,353
  239,851
  262,256
  285,580
  309,839
  335,059
  361,269
  388,506
  416,811
  446,231
  476,820
  508,635
  541,740
  576,201
  612,092
Total liabilities, $m
  20,505
  26,145
  32,793
  40,463
  49,182
  58,965
  69,817
  81,731
  94,691
  108,679
  123,670
  139,642
  156,572
  174,439
  193,226
  212,921
  233,519
  255,017
  277,422
  300,746
  325,005
  350,225
  376,435
  403,672
  431,977
  461,397
  491,986
  523,801
  556,906
  591,367
  627,258
Total equity, $m
  24,229
  23,941
  30,029
  37,052
  45,036
  53,995
  63,932
  74,842
  86,710
  99,518
  113,246
  127,872
  143,374
  159,735
  176,938
  194,974
  213,835
  233,522
  254,038
  275,395
  297,610
  320,704
  344,705
  369,646
  395,565
  422,506
  450,516
  479,649
  509,963
  541,520
  574,386
Total liabilities and equity, $m
  44,734
  50,086
  62,822
  77,515
  94,218
  112,960
  133,749
  156,573
  181,401
  208,197
  236,916
  267,514
  299,946
  334,174
  370,164
  407,895
  447,354
  488,539
  531,460
  576,141
  622,615
  670,929
  721,140
  773,318
  827,542
  883,903
  942,502
  1,003,450
  1,066,869
  1,132,887
  1,201,644
Debt-to-equity ratio
  0.220
  0.460
  0.590
  0.680
  0.760
  0.810
  0.850
  0.890
  0.920
  0.940
  0.960
  0.970
  0.990
  1.000
  1.010
  1.010
  1.020
  1.030
  1.030
  1.040
  1.040
  1.040
  1.050
  1.050
  1.050
  1.060
  1.060
  1.060
  1.060
  1.060
  1.070
Adjusted equity ratio
  0.477
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478
  0.478

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,311
  3,117
  5,249
  7,724
  10,551
  13,735
  17,276
  21,173
  25,419
  30,007
  34,931
  40,776
  46,346
  52,227
  58,414
  64,903
  71,693
  78,782
  86,173
  93,869
  101,877
  110,205
  118,864
  127,864
  137,221
  146,950
  157,070
  167,599
  178,559
  189,974
  201,867
Depreciation, amort., depletion, $m
  2,177
  2,731
  3,218
  3,780
  4,419
  5,136
  5,932
  6,805
  7,754
  8,779
  9,878
  10,233
  11,474
  12,783
  14,160
  15,603
  17,113
  18,688
  20,330
  22,039
  23,817
  25,665
  27,586
  29,582
  31,656
  33,812
  36,054
  38,385
  40,811
  43,337
  45,967
Funds from operations, $m
  5,015
  5,848
  8,468
  11,504
  14,970
  18,871
  23,208
  27,977
  33,173
  38,787
  44,809
  51,010
  57,820
  65,010
  72,574
  80,507
  88,806
  97,470
  106,503
  115,909
  125,695
  135,871
  146,450
  157,446
  168,877
  180,762
  193,123
  205,984
  219,371
  233,310
  247,834
Change in working capital, $m
  660
  1,173
  1,375
  1,586
  1,803
  2,024
  2,245
  2,464
  2,681
  2,893
  3,101
  3,303
  3,502
  3,695
  3,886
  4,074
  4,260
  4,447
  4,634
  4,824
  5,018
  5,216
  5,421
  5,633
  5,854
  6,085
  6,327
  6,580
  6,847
  7,128
  7,423
Cash from operations, $m
  4,355
  4,675
  7,092
  9,918
  13,167
  16,848
  20,963
  25,513
  30,492
  35,894
  41,708
  47,706
  54,318
  61,315
  68,688
  76,433
  84,545
  93,024
  101,869
  111,085
  120,677
  130,654
  141,028
  151,813
  163,023
  174,677
  186,797
  199,404
  212,524
  226,183
  240,410
Maintenance CAPEX, $m
  0
  -1,500
  -1,916
  -2,403
  -2,965
  -3,604
  -4,321
  -5,116
  -5,989
  -6,939
  -7,964
  -9,063
  -10,233
  -11,474
  -12,783
  -14,160
  -15,603
  -17,113
  -18,688
  -20,330
  -22,039
  -23,817
  -25,665
  -27,586
  -29,582
  -31,656
  -33,812
  -36,054
  -38,385
  -40,811
  -43,337
New CAPEX, $m
  -1,802
  -3,740
  -4,385
  -5,058
  -5,751
  -6,453
  -7,157
  -7,857
  -8,548
  -9,225
  -9,888
  -10,534
  -11,166
  -11,784
  -12,391
  -12,990
  -13,585
  -14,179
  -14,777
  -15,383
  -16,000
  -16,633
  -17,287
  -17,964
  -18,668
  -19,404
  -20,175
  -20,983
  -21,834
  -22,729
  -23,672
Cash from investing activities, $m
  -7,288
  -5,240
  -6,301
  -7,461
  -8,716
  -10,057
  -11,478
  -12,973
  -14,537
  -16,164
  -17,852
  -19,597
  -21,399
  -23,258
  -25,174
  -27,150
  -29,188
  -31,292
  -33,465
  -35,713
  -38,039
  -40,450
  -42,952
  -45,550
  -48,250
  -51,060
  -53,987
  -57,037
  -60,219
  -63,540
  -67,009
Free cash flow, $m
  -2,933
  -566
  792
  2,457
  4,451
  6,791
  9,485
  12,539
  15,955
  19,729
  23,857
  28,109
  32,919
  38,057
  43,514
  49,283
  55,357
  61,732
  68,404
  75,372
  82,638
  90,204
  98,077
  106,263
  114,772
  123,617
  132,810
  142,367
  152,305
  162,643
  173,402
Issuance/(repayment) of debt, $m
  4,606
  5,657
  6,649
  7,669
  8,719
  9,784
  10,852
  11,913
  12,960
  13,987
  14,992
  15,972
  16,930
  17,867
  18,787
  19,696
  20,597
  21,499
  22,405
  23,323
  24,259
  25,220
  26,210
  27,237
  28,305
  29,421
  30,589
  31,815
  33,104
  34,461
  35,891
Issuance/(repurchase) of shares, $m
  0
  2,093
  839
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  4,522
  7,750
  7,488
  7,669
  8,719
  9,784
  10,852
  11,913
  12,960
  13,987
  14,992
  15,972
  16,930
  17,867
  18,787
  19,696
  20,597
  21,499
  22,405
  23,323
  24,259
  25,220
  26,210
  27,237
  28,305
  29,421
  30,589
  31,815
  33,104
  34,461
  35,891
Total cash flow (excl. dividends), $m
  1,396
  7,184
  8,279
  10,126
  13,170
  16,575
  20,337
  24,453
  28,916
  33,717
  38,848
  44,081
  49,849
  55,923
  62,301
  68,979
  75,955
  83,230
  90,809
  98,695
  106,897
  115,424
  124,287
  133,500
  143,077
  153,038
  163,399
  174,182
  185,409
  197,104
  209,293
Retained Cash Flow (-), $m
  1,595
  -5,210
  -6,088
  -7,023
  -7,984
  -8,959
  -9,937
  -10,909
  -11,868
  -12,808
  -13,728
  -14,626
  -15,503
  -16,361
  -17,204
  -18,035
  -18,861
  -19,686
  -20,517
  -21,357
  -22,215
  -23,094
  -24,001
  -24,941
  -25,919
  -26,941
  -28,011
  -29,133
  -30,314
  -31,557
  -32,866
Prev. year cash balance distribution, $m
 
  5,498
  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
 
  7,472
  2,191
  3,103
  5,186
  7,615
  10,400
  13,544
  17,048
  20,908
  25,120
  29,456
  34,346
  39,563
  45,098
  50,943
  57,093
  63,544
  70,292
  77,338
  84,682
  92,330
  100,286
  108,559
  117,158
  126,097
  135,388
  145,049
  155,095
  165,548
  176,427
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
 
  7,164
  2,006
  2,701
  4,270
  5,903
  7,547
  9,150
  10,655
  12,011
  13,170
  13,988
  14,657
  15,043
  15,140
  14,956
  14,509
  13,826
  12,945
  11,908
  10,761
  9,550
  8,321
  7,115
  5,967
  4,905
  3,950
  3,113
  2,400
  1,807
  1,328
Current shareholders' claim on cash, %
  100
  95.0
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5
  93.5

Canon Inc. (Canon) is a manufacturer of office multifunction devices (MFDs), plain paper copying machines, laser printers, inkjet printers, cameras and lithography equipment. Canon sells its products principally under the Canon brand name and through sales subsidiaries. Each of these subsidiaries is responsible for marketing and distribution to retail dealers in an assigned territory. Canon operates its business in three segments: the Office Business Unit, the Imaging System Business Unit, and the Industry and Others Business Unit. Canon's research and development activities range from basic research to product-oriented research directed at maintaining Canon's technological operations in the marketplace. Canon has manufacturing subsidiaries in a range of countries, including the United States, Germany, France, the Netherlands, Taiwan, China, Malaysia, Thailand, Vietnam and the Philippines.

FINANCIAL RATIOS  of  Canon ADR (CAJ)

Valuation Ratios
P/E Ratio 32.5
Price to Sales 1.4
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 16.7
Growth Rates
Sales Growth Rate -10.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.2%
Cap. Spend. - 3 Yr. Gr. Rate -2.4%
Financial Strength
Quick Ratio 345
Current Ratio 0
LT Debt to Equity 22%
Total Debt to Equity 22%
Interest Coverage 356
Management Effectiveness
Return On Assets 3.2%
Ret/ On Assets - 3 Yr. Avg. 4.7%
Return On Total Capital 4.7%
Ret/ On T. Cap. - 3 Yr. Avg. 6.9%
Return On Equity 5.2%
Return On Equity - 3 Yr. Avg. 7.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 49.2%
Gross Margin - 3 Yr. Avg. 50%
EBITDA Margin 14.6%
EBITDA Margin - 3 Yr. Avg. 16.1%
Operating Margin 6.7%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 7.2%
Pre-Tax Margin - 3 Yr. Avg. 8.9%
Net Profit Margin 4.4%
Net Profit Margin - 3 Yr. Avg. 5.7%
Effective Tax Rate 33.8%
Eff/ Tax Rate - 3 Yr. Avg. 32.7%
Payout Ratio 108.8%

CAJ stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CAJ stock intrinsic value calculation we used $29612 million for the last fiscal year's total revenue generated by Canon ADR. The default revenue input number comes from 2016 income statement of Canon ADR. 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 CAJ stock valuation model: a) initial revenue growth rate of 27.7% 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 CAJ is calculated based on our internal credit rating of Canon ADR, 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 Canon ADR.
    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 CAJ stock the variable cost ratio is equal to 68.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $7568 million in the base year in the intrinsic value calculation for CAJ 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 3.5% for Canon ADR.

Corporate tax rate of 27% is the nominal tax rate for Canon ADR. 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 CAJ 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 CAJ are equal to 45.6%.

Life of production assets of 9 years is the average useful life of capital assets used in Canon ADR 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 CAJ is equal to 14.3%. 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 - $24229 million for Canon ADR - 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 1329.41 million for Canon ADR 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 Canon ADR at the current share price and the inputted number of shares is $51.9 billion.

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COMPANY NEWS

▶ Why GoPro Stock Fell Last Week   [Jan-17-18 08:48AM  Market Realist]
▶ ETFs with exposure to Canon, Inc. : December 18, 2017   [Dec-18-17 03:03PM  Capital Cube]
▶ ETFs with exposure to Canon, Inc. : December 7, 2017   [Dec-07-17 01:10PM  Capital Cube]
▶ Should You Get Rid of Pitney Bowes (PBI) Now?   [Nov-21-17 08:50AM  Zacks]
▶ Why Canon (CAJ) Is A Stellar Growth Stock   [Nov-20-17 07:04PM  Zacks]
▶ Winners of Canon PhotoMarathon Hong Kong 2017 announced   [Nov-11-17 05:39AM  Marketwired]
▶ ETFs with exposure to Canon, Inc. : November 9, 2017   [Nov-09-17 12:16PM  Capital Cube]
▶ Canon Launches New 4K UHD Portable Zoom Broadcast Lenses   [Nov-01-17 10:17AM  PR Newswire]
▶ Canon posts 3Q profit   [05:01AM  Associated Press]
▶ What vendors at Balloon Fiesta are saying this year (slideshow)   [Oct-09-17 05:55PM  American City Business Journals]
▶ Toshiba agreement on sale to Bain-led consortium protested   [Sep-13-17 03:41AM  Associated Press]
▶ Why Is No One Talking About Canon Inc.'s Stock?   [Sep-07-17 07:05PM  Motley Fool]
Financial statements of CAJ
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