Intrinsic value of Citizens Financial Group - CFG

Previous Close

$40.20

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$40.20

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

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

We calculate the intrinsic value of CFG 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 20.2

 

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, %
  10.20
  9.68
  9.21
  8.79
  8.41
  8.07
  7.76
  7.49
  7.24
  7.01
  6.81
  6.63
  6.47
  6.32
  6.19
  6.07
  5.96
  5.87
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.34
  5.30
  5.27
  5.24
Revenue, $m
  5,935
  6,510
  7,110
  7,735
  8,385
  9,062
  9,765
  10,497
  11,256
  12,046
  12,867
  13,720
  14,608
  15,531
  16,492
  17,493
  18,537
  19,624
  20,759
  21,942
  23,178
  24,469
  25,818
  27,228
  28,702
  30,244
  31,858
  33,547
  35,316
  37,168
Variable operating expenses, $m
  1,448
  1,588
  1,735
  1,887
  2,046
  2,211
  2,383
  2,561
  2,747
  2,939
  3,139
  3,348
  3,564
  3,790
  4,024
  4,268
  4,523
  4,788
  5,065
  5,354
  5,655
  5,970
  6,300
  6,644
  7,003
  7,380
  7,773
  8,186
  8,617
  9,069
Fixed operating expenses, $m
  2,255
  2,304
  2,355
  2,407
  2,460
  2,514
  2,569
  2,626
  2,683
  2,742
  2,803
  2,864
  2,927
  2,992
  3,058
  3,125
  3,194
  3,264
  3,336
  3,409
  3,484
  3,561
  3,639
  3,719
  3,801
  3,884
  3,970
  4,057
  4,146
  4,238
Total operating expenses, $m
  3,703
  3,892
  4,090
  4,294
  4,506
  4,725
  4,952
  5,187
  5,430
  5,681
  5,942
  6,212
  6,491
  6,782
  7,082
  7,393
  7,717
  8,052
  8,401
  8,763
  9,139
  9,531
  9,939
  10,363
  10,804
  11,264
  11,743
  12,243
  12,763
  13,307
Operating income, $m
  2,233
  2,617
  3,020
  3,441
  3,880
  4,337
  4,814
  5,310
  5,827
  6,364
  6,925
  7,508
  8,116
  8,750
  9,411
  10,100
  10,820
  11,572
  12,358
  13,179
  14,039
  14,938
  15,879
  16,865
  17,898
  18,980
  20,115
  21,305
  22,552
  23,861
EBITDA, $m
  18,865
  20,859
  22,943
  25,115
  27,377
  29,731
  32,179
  34,724
  37,369
  40,120
  42,980
  45,954
  49,049
  52,271
  55,625
  59,120
  62,764
  66,563
  70,528
  74,666
  78,989
  83,505
  88,226
  93,162
  98,327
  103,731
  109,387
  115,311
  121,515
  128,014
Interest expense (income), $m
  505
  7,413
  7,291
  7,885
  8,505
  9,151
  9,824
  10,524
  11,251
  12,007
  12,793
  13,610
  14,458
  15,341
  16,258
  17,213
  18,207
  19,242
  20,321
  21,446
  22,619
  23,843
  25,121
  26,455
  27,850
  29,308
  30,833
  32,427
  34,096
  35,843
  37,672
Earnings before tax, $m
  -5,180
  -4,674
  -4,865
  -5,064
  -5,272
  -5,487
  -5,710
  -5,941
  -6,181
  -6,429
  -6,685
  -6,950
  -7,225
  -7,509
  -7,802
  -8,107
  -8,422
  -8,749
  -9,088
  -9,439
  -9,804
  -10,183
  -10,576
  -10,985
  -11,410
  -11,852
  -12,312
  -12,792
  -13,290
  -13,810
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
  -5,180
  -4,674
  -4,865
  -5,064
  -5,272
  -5,487
  -5,710
  -5,941
  -6,181
  -6,429
  -6,685
  -6,950
  -7,225
  -7,509
  -7,802
  -8,107
  -8,422
  -8,749
  -9,088
  -9,439
  -9,804
  -10,183
  -10,576
  -10,985
  -11,410
  -11,852
  -12,312
  -12,792
  -13,290
  -13,810

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
  126,285
  138,509
  151,268
  164,566
  178,409
  192,807
  207,776
  223,332
  239,498
  256,298
  273,760
  291,915
  310,798
  330,446
  350,899
  372,201
  394,398
  417,538
  441,673
  466,860
  493,154
  520,618
  549,315
  579,312
  610,681
  643,494
  677,831
  713,772
  751,403
  790,814
Adjusted assets (=assets-cash), $m
  126,285
  138,509
  151,268
  164,566
  178,409
  192,807
  207,776
  223,332
  239,498
  256,298
  273,760
  291,915
  310,798
  330,446
  350,899
  372,201
  394,398
  417,538
  441,673
  466,860
  493,154
  520,618
  549,315
  579,312
  610,681
  643,494
  677,831
  713,772
  751,403
  790,814
Revenue / Adjusted assets
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
  0.047
Average production assets, $m
  166,321
  182,421
  199,225
  216,739
  234,970
  253,934
  273,648
  294,136
  315,427
  337,553
  360,551
  384,462
  409,332
  435,209
  462,146
  490,202
  519,435
  549,911
  581,699
  614,870
  649,501
  685,671
  723,466
  762,974
  804,287
  847,504
  892,726
  940,062
  989,624
  1,041,529
Working capital, $m
  -137,950
  -151,303
  -165,242
  -179,768
  -194,889
  -210,618
  -226,969
  -243,963
  -261,622
  -279,973
  -299,048
  -318,881
  -339,508
  -360,971
  -383,313
  -406,583
  -430,830
  -456,107
  -482,473
  -509,985
  -538,709
  -568,709
  -600,057
  -632,825
  -667,092
  -702,936
  -740,445
  -779,706
  -820,813
  -863,864
Total debt, $m
  135,016
  146,018
  157,501
  169,469
  181,928
  194,887
  208,358
  222,359
  236,908
  252,028
  267,744
  284,084
  301,078
  318,761
  337,169
  356,341
  376,318
  397,144
  418,866
  441,534
  465,199
  489,916
  515,743
  542,741
  570,972
  600,505
  631,408
  663,755
  697,623
  733,092
Total liabilities, $m
  113,656
  124,658
  136,141
  148,109
  160,568
  173,527
  186,998
  200,999
  215,548
  230,668
  246,384
  262,724
  279,718
  297,401
  315,809
  334,981
  354,958
  375,784
  397,506
  420,174
  443,839
  468,556
  494,383
  521,381
  549,612
  579,145
  610,048
  642,395
  676,263
  711,732
Total equity, $m
  12,628
  13,851
  15,127
  16,457
  17,841
  19,281
  20,778
  22,333
  23,950
  25,630
  27,376
  29,192
  31,080
  33,045
  35,090
  37,220
  39,440
  41,754
  44,167
  46,686
  49,315
  52,062
  54,931
  57,931
  61,068
  64,349
  67,783
  71,377
  75,140
  79,081
Total liabilities and equity, $m
  126,284
  138,509
  151,268
  164,566
  178,409
  192,808
  207,776
  223,332
  239,498
  256,298
  273,760
  291,916
  310,798
  330,446
  350,899
  372,201
  394,398
  417,538
  441,673
  466,860
  493,154
  520,618
  549,314
  579,312
  610,680
  643,494
  677,831
  713,772
  751,403
  790,813
Debt-to-equity ratio
  10.690
  10.540
  10.410
  10.300
  10.200
  10.110
  10.030
  9.960
  9.890
  9.830
  9.780
  9.730
  9.690
  9.650
  9.610
  9.570
  9.540
  9.510
  9.480
  9.460
  9.430
  9.410
  9.390
  9.370
  9.350
  9.330
  9.320
  9.300
  9.280
  9.270
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
  -5,180
  -4,674
  -4,865
  -5,064
  -5,272
  -5,487
  -5,710
  -5,941
  -6,181
  -6,429
  -6,685
  -6,950
  -7,225
  -7,509
  -7,802
  -8,107
  -8,422
  -8,749
  -9,088
  -9,439
  -9,804
  -10,183
  -10,576
  -10,985
  -11,410
  -11,852
  -12,312
  -12,792
  -13,290
  -13,810
Depreciation, amort., depletion, $m
  16,632
  18,242
  19,923
  21,674
  23,497
  25,393
  27,365
  29,414
  31,543
  33,755
  36,055
  38,446
  40,933
  43,521
  46,215
  49,020
  51,944
  54,991
  58,170
  61,487
  64,950
  68,567
  72,347
  76,297
  80,429
  84,750
  89,273
  94,006
  98,962
  104,153
Funds from operations, $m
  11,452
  13,569
  15,058
  16,610
  18,225
  19,906
  21,655
  23,472
  25,362
  27,327
  29,370
  31,496
  33,709
  36,012
  38,412
  40,913
  43,521
  46,242
  49,082
  52,048
  55,146
  58,384
  61,770
  65,312
  69,019
  72,898
  76,960
  81,215
  85,672
  90,343
Change in working capital, $m
  -12,769
  -13,354
  -13,938
  -14,526
  -15,122
  -15,729
  -16,351
  -16,994
  -17,659
  -18,352
  -19,075
  -19,832
  -20,627
  -21,463
  -22,343
  -23,270
  -24,247
  -25,278
  -26,365
  -27,513
  -28,723
  -30,001
  -31,348
  -32,768
  -34,266
  -35,845
  -37,509
  -39,261
  -41,107
  -43,051
Cash from operations, $m
  24,221
  26,922
  28,996
  31,136
  33,347
  35,635
  38,006
  40,466
  43,021
  45,678
  48,445
  51,328
  54,336
  57,475
  60,755
  64,183
  67,768
  71,520
  75,447
  79,560
  83,869
  88,385
  93,118
  98,081
  103,285
  108,743
  114,469
  120,476
  126,779
  133,394
Maintenance CAPEX, $m
  -15,093
  -16,632
  -18,242
  -19,923
  -21,674
  -23,497
  -25,393
  -27,365
  -29,414
  -31,543
  -33,755
  -36,055
  -38,446
  -40,933
  -43,521
  -46,215
  -49,020
  -51,944
  -54,991
  -58,170
  -61,487
  -64,950
  -68,567
  -72,347
  -76,297
  -80,429
  -84,750
  -89,273
  -94,006
  -98,962
New CAPEX, $m
  -15,393
  -16,100
  -16,805
  -17,514
  -18,231
  -18,963
  -19,714
  -20,488
  -21,291
  -22,126
  -22,998
  -23,911
  -24,869
  -25,877
  -26,938
  -28,055
  -29,234
  -30,476
  -31,788
  -33,171
  -34,631
  -36,171
  -37,795
  -39,508
  -41,313
  -43,217
  -45,223
  -47,336
  -49,561
  -51,905
Cash from investing activities, $m
  -30,486
  -32,732
  -35,047
  -37,437
  -39,905
  -42,460
  -45,107
  -47,853
  -50,705
  -53,669
  -56,753
  -59,966
  -63,315
  -66,810
  -70,459
  -74,270
  -78,254
  -82,420
  -86,779
  -91,341
  -96,118
  -101,121
  -106,362
  -111,855
  -117,610
  -123,646
  -129,973
  -136,609
  -143,567
  -150,867
Free cash flow, $m
  -6,265
  -5,810
  -6,051
  -6,300
  -6,558
  -6,825
  -7,102
  -7,387
  -7,684
  -7,990
  -8,308
  -8,638
  -8,980
  -9,335
  -9,704
  -10,087
  -10,486
  -10,900
  -11,331
  -11,781
  -12,248
  -12,736
  -13,244
  -13,773
  -14,326
  -14,903
  -15,504
  -16,132
  -16,788
  -17,474
Issuance/(repayment) of debt, $m
  -2,253
  11,002
  11,483
  11,968
  12,459
  12,959
  13,472
  14,001
  14,549
  15,120
  15,716
  16,340
  16,995
  17,683
  18,408
  19,172
  19,977
  20,826
  21,722
  22,668
  23,665
  24,717
  25,827
  26,998
  28,232
  29,532
  30,903
  32,347
  33,868
  35,469
Issuance/(repurchase) of shares, $m
  18,628
  5,896
  6,141
  6,394
  6,656
  6,927
  7,207
  7,497
  7,797
  8,109
  8,431
  8,766
  9,113
  9,473
  9,848
  10,237
  10,642
  11,063
  11,501
  11,958
  12,433
  12,929
  13,446
  13,985
  14,547
  15,134
  15,746
  16,386
  17,054
  17,751
Cash from financing (excl. dividends), $m  
  16,375
  16,898
  17,624
  18,362
  19,115
  19,886
  20,679
  21,498
  22,346
  23,229
  24,147
  25,106
  26,108
  27,156
  28,256
  29,409
  30,619
  31,889
  33,223
  34,626
  36,098
  37,646
  39,273
  40,983
  42,779
  44,666
  46,649
  48,733
  50,922
  53,220
Total cash flow (excl. dividends), $m
  10,110
  11,088
  11,573
  12,062
  12,556
  13,060
  13,577
  14,110
  14,663
  15,238
  15,839
  16,468
  17,128
  17,822
  18,552
  19,322
  20,133
  20,989
  21,892
  22,845
  23,850
  24,911
  26,029
  27,209
  28,453
  29,763
  31,145
  32,600
  34,133
  35,747
Retained Cash Flow (-), $m
  -18,628
  -5,896
  -6,141
  -6,394
  -6,656
  -6,927
  -7,207
  -7,497
  -7,797
  -8,109
  -8,431
  -8,766
  -9,113
  -9,473
  -9,848
  -10,237
  -10,642
  -11,063
  -11,501
  -11,958
  -12,433
  -12,929
  -13,446
  -13,985
  -14,547
  -15,134
  -15,746
  -16,386
  -17,054
  -17,751
Prev. year cash balance distribution, $m
  820
  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
  48
  53
  59
  64
  70
  75
  82
  88
  94
  101
  108
  116
  123
  131
  140
  148
  157
  167
  177
  187
  197
  209
  220
  232
  245
  258
  272
  287
  302
  318
Cash available for distribution, $m
  -7,698
  5,192
  5,432
  5,667
  5,900
  6,133
  6,370
  6,613
  6,866
  7,130
  7,408
  7,702
  8,015
  8,348
  8,704
  9,085
  9,491
  9,926
  10,391
  10,887
  11,417
  11,982
  12,583
  13,224
  13,906
  14,630
  15,399
  16,215
  17,080
  17,996
Discount rate, %
  15.40
  16.17
  16.98
  17.83
  18.72
  19.65
  20.64
  21.67
  22.75
  23.89
  25.08
  26.34
  27.66
  29.04
  30.49
  32.02
  33.62
  35.30
  37.06
  38.92
  40.86
  42.90
  45.05
  47.30
  49.67
  52.15
  54.76
  57.50
  60.37
  63.39
PV of cash for distribution, $m
  -6,671
  3,847
  3,394
  2,940
  2,502
  2,090
  1,713
  1,377
  1,085
  837
  632
  466
  335
  235
  161
  107
  69
  43
  26
  15
  9
  5
  2
  1
  1
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  34.1
  23.6
  16.6
  11.8
  8.5
  6.2
  4.6
  3.4
  2.5
  1.9
  1.4
  1.1
  0.8
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0

Citizens Financial Group, Inc. is a retail bank holding company. The Company operates through two segments: Consumer Banking and Commercial Banking. Its Consumer Banking serves retail customers and small businesses. Consumer Banking products and services include deposit products, mortgage and home equity lending, auto financing, student loans, personal unsecured lines and loans, credit cards, business loans, wealth management and investment services. The Company's Commercial Banking segment offers a range of financial products and solutions, including lending and leasing, deposit and treasury management services, foreign exchange and interest rate risk management solutions, as well as corporate finance, merger and acquisition, and debt and equity capital markets capabilities. The Company delivers a range of retail and commercial banking products and services to individuals, institutions and companies. As of December 31, 2016, the Company operated approximately 1,200 branches.

FINANCIAL RATIOS  of  Citizens Financial Group (CFG)

Valuation Ratios
P/E Ratio 19.7
Price to Sales 0
Price to Book 1
Price to Tangible Book
Price to Cash Flow 13.8
Price to Free Cash Flow 17.3
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 1.3%
Cap. Spend. - 3 Yr. Gr. Rate -3.8%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 86.8%
Total Debt to Equity 86.8%
Interest Coverage 4
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 0.8%
Return On Total Capital 3%
Ret/ On T. Cap. - 3 Yr. Avg. 2.8%
Return On Equity 5.3%
Return On Equity - 3 Yr. Avg. 4.7%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 31.9%
Eff/ Tax Rate - 3 Yr. Avg. 32.4%
Payout Ratio 24.4%

CFG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CFG stock intrinsic value calculation we used $5386 million for the last fiscal year's total revenue generated by Citizens Financial Group. The default revenue input number comes from 2017 income statement of Citizens Financial Group. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CFG stock valuation model: a) initial revenue growth rate of 10.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 15.4%, whose default value for CFG is calculated based on our internal credit rating of Citizens Financial Group, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Citizens Financial Group.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CFG stock the variable cost ratio is equal to 24.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2206 million in the base year in the intrinsic value calculation for CFG 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 Citizens Financial Group.

Corporate tax rate of 27% is the nominal tax rate for Citizens Financial Group. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CFG stock is equal to 0.9%.

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 CFG are equal to 2802.2%.

Life of production assets of 10 years is the average useful life of capital assets used in Citizens Financial Group operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CFG is equal to -2324.2%. 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 Citizens Financial Group - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 502 million for Citizens Financial Group is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Citizens Financial Group at the current share price and the inputted number of shares is $20.2 billion.

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COMPANY NEWS

▶ Citizens Financial Group: 2Q Earnings Snapshot   [06:45AM  Associated Press]
▶ Citizens Financial Group's Earnings Outlook   [Jul-19-18 03:05PM  Benzinga]
▶ Citizens Financial Group Announces Prime Rate Change   [Jun-13-18 06:01PM  Business Wire]
▶ EXCLUSIVE: Citizens CEO doesn't fear JPMorgan (Video)   [Jun-11-18 01:29PM  American City Business Journals]
▶ EXCLUSIVE: Citizens CEO on mortgage expansion, regulatory changes (Video)   [Jun-08-18 02:53PM  American City Business Journals]
▶ 5 Bank Stocks to Buy as ECB Looks to Wind Down Stimulus   [Jun-07-18 11:40AM  InvestorPlace]
▶ Citizens Financial buys mortgage firm in $511M deal   [01:49PM  American City Business Journals]
▶ Out-of-state lender buys in to Nashville with $511 million deal   [10:55AM  American City Business Journals]
▶ Baird: Buy The Dip In Citizens Financial   [May-30-18 02:49PM  Benzinga]
▶ Citizens, Santander no longer too big to fail under bill sent to Trump   [May-23-18 03:04PM  American City Business Journals]
▶ 8 Bank Stocks to Lead the Market in 2018: Goldman   [May-10-18 08:00AM  Investopedia]
▶ Forget bank branches - it's all about the app   [May-03-18 01:49PM  Yahoo Finance Video]
▶ Santander gets good news on regulatory, customer service marks   [May-01-18 02:56PM  American City Business Journals]
▶ J.D. Power study: TD leads local bank pack in customer satisfaction   [07:39AM  American City Business Journals]
▶ Citizens Bank customers experience issues accessing accounts   [Apr-27-18 02:54PM  American City Business Journals]
▶ Citizens giving $112,000 to seven nonprofits via financial literacy program   [Apr-24-18 11:07AM  American City Business Journals]
▶ Citizens continues branch upgrades, hiring in Pittsburgh   [Apr-23-18 07:58AM  American City Business Journals]
▶ Bank Notes: Mixed bag for regional banks in 1Q earnings   [07:30AM  American City Business Journals]
▶ Citizens Financial Group: 1Q Earnings Snapshot   [06:51AM  Associated Press]
▶ Bank Notes: After buying stake in Navient, hedge fund wants board seat   [Apr-09-18 07:40AM  American City Business Journals]
▶ Citizens Bank using Phillies ties to execute its strategic plan   [Apr-06-18 02:29PM  American City Business Journals]
▶ PNC offers new digital auto lending product   [Mar-27-18 02:53PM  American City Business Journals]
▶ Citizens Financial Group Announces Prime Rate Change   [Mar-21-18 05:35PM  Business Wire]
▶ Bank Notes: CEO pay gaps disclosed; TD expands auto financing business   [Mar-19-18 12:18PM  American City Business Journals]
▶ Citizens shares sink after bank is tied to Manafort indictment   [Feb-26-18 07:00PM  American City Business Journals]
▶ Bet on These 7 Low Price-to-Sales Stocks for Better Rewards   [Feb-21-18 12:25PM  InvestorPlace]
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