Intrinsic value of Chemical Financial - CHFC

Previous Close

$57.94

  Intrinsic Value

$64.18

stock screener

  Rating & Target

hold

+11%

Previous close

$57.94

 
Intrinsic value

$64.18

 
Up/down potential

+11%

 
Rating

hold

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

We calculate the intrinsic value of CHFC 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 4.1

 

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, %
  38.80
  35.42
  32.38
  29.64
  27.18
  24.96
  22.96
  21.17
  19.55
  18.09
  16.79
  15.61
  14.55
  13.59
  12.73
  11.96
  11.26
  10.64
  10.07
  9.57
  9.11
  8.70
  8.33
  8.00
  7.70
  7.43
  7.18
  6.97
  6.77
  6.59
Revenue, $m
  941
  1,274
  1,687
  2,187
  2,781
  3,476
  4,274
  5,178
  6,191
  7,311
  8,538
  9,870
  11,306
  12,843
  14,478
  16,210
  18,035
  19,954
  21,964
  24,065
  26,257
  28,541
  30,918
  33,390
  35,959
  38,630
  41,405
  44,289
  47,287
  50,404
Variable operating expenses, $m
  415
  562
  744
  964
  1,227
  1,533
  1,885
  2,284
  2,730
  3,224
  3,765
  4,353
  4,986
  5,664
  6,385
  7,148
  7,954
  8,800
  9,686
  10,612
  11,579
  12,586
  13,635
  14,725
  15,858
  17,036
  18,260
  19,532
  20,854
  22,228
Fixed operating expenses, $m
  129
  132
  135
  137
  140
  144
  147
  150
  153
  157
  160
  164
  167
  171
  175
  178
  182
  186
  191
  195
  199
  203
  208
  212
  217
  222
  227
  232
  237
  242
Total operating expenses, $m
  544
  694
  879
  1,101
  1,367
  1,677
  2,032
  2,434
  2,883
  3,381
  3,925
  4,517
  5,153
  5,835
  6,560
  7,326
  8,136
  8,986
  9,877
  10,807
  11,778
  12,789
  13,843
  14,937
  16,075
  17,258
  18,487
  19,764
  21,091
  22,470
Operating income, $m
  397
  581
  809
  1,085
  1,414
  1,799
  2,242
  2,745
  3,307
  3,930
  4,613
  5,354
  6,153
  7,008
  7,919
  8,883
  9,899
  10,968
  12,087
  13,257
  14,479
  15,751
  17,075
  18,452
  19,884
  21,372
  22,919
  24,526
  26,197
  27,934
EBITDA, $m
  2,939
  4,022
  5,364
  6,991
  8,926
  11,185
  13,784
  16,729
  20,026
  23,674
  27,670
  32,010
  36,686
  41,692
  47,018
  52,658
  58,605
  64,854
  71,402
  78,246
  85,387
  92,828
  100,571
  108,625
  116,996
  125,696
  134,737
  144,133
  153,900
  164,056
Interest expense (income), $m
  0
  906
  1,083
  1,407
  1,808
  2,294
  2,872
  3,546
  4,322
  5,201
  6,185
  7,274
  8,467
  9,762
  11,158
  12,651
  14,241
  15,924
  17,698
  19,563
  21,517
  23,559
  25,690
  27,910
  30,220
  32,623
  35,121
  37,716
  40,414
  43,217
  46,131
Earnings before tax, $m
  -509
  -502
  -598
  -723
  -880
  -1,072
  -1,304
  -1,577
  -1,894
  -2,255
  -2,662
  -3,113
  -3,609
  -4,149
  -4,733
  -5,358
  -6,024
  -6,731
  -7,476
  -8,259
  -9,080
  -9,939
  -10,835
  -11,768
  -12,739
  -13,748
  -14,798
  -15,888
  -17,021
  -18,197
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
  -509
  -502
  -598
  -723
  -880
  -1,072
  -1,304
  -1,577
  -1,894
  -2,255
  -2,662
  -3,113
  -3,609
  -4,149
  -4,733
  -5,358
  -6,024
  -6,731
  -7,476
  -8,259
  -9,080
  -9,939
  -10,835
  -11,768
  -12,739
  -13,748
  -14,798
  -15,888
  -17,021
  -18,197

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
  18,821
  25,488
  33,740
  43,741
  55,628
  69,512
  85,474
  103,565
  123,812
  146,216
  170,759
  197,409
  226,124
  256,858
  289,562
  324,191
  360,705
  399,073
  439,272
  481,292
  525,135
  570,813
  618,353
  667,795
  719,189
  772,599
  828,102
  885,783
  945,741
  1,008,084
Adjusted assets (=assets-cash), $m
  18,821
  25,488
  33,740
  43,741
  55,628
  69,512
  85,474
  103,565
  123,812
  146,216
  170,759
  197,409
  226,124
  256,858
  289,562
  324,191
  360,705
  399,073
  439,272
  481,292
  525,135
  570,813
  618,353
  667,795
  719,189
  772,599
  828,102
  885,783
  945,741
  1,008,084
Revenue / Adjusted assets
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
  0.050
Average production assets, $m
  25,414
  34,416
  45,559
  59,063
  75,114
  93,862
  115,415
  139,844
  167,184
  197,435
  230,576
  266,561
  305,335
  346,835
  390,995
  437,755
  487,060
  538,868
  593,149
  649,889
  709,090
  770,769
  834,962
  901,723
  971,121
  1,043,241
  1,118,186
  1,196,073
  1,277,034
  1,361,216
Working capital, $m
  -21,426
  -29,015
  -38,410
  -49,795
  -63,327
  -79,132
  -97,303
  -117,899
  -140,948
  -166,452
  -194,392
  -224,730
  -257,420
  -292,407
  -329,637
  -369,059
  -410,627
  -454,304
  -500,067
  -547,903
  -597,813
  -649,813
  -703,933
  -760,218
  -818,725
  -879,527
  -942,711
  -1,008,375
  -1,076,631
  -1,147,603
Total debt, $m
  20,053
  26,052
  33,480
  42,480
  53,179
  65,674
  80,040
  96,322
  114,544
  134,708
  156,796
  180,781
  206,625
  234,285
  263,719
  294,885
  327,748
  362,279
  398,458
  436,277
  475,735
  516,845
  559,631
  604,129
  650,383
  698,453
  748,405
  800,318
  854,280
  910,389
Total liabilities, $m
  16,939
  22,939
  30,366
  39,367
  50,065
  62,561
  76,926
  93,209
  111,431
  131,594
  153,683
  177,668
  203,512
  231,172
  260,606
  291,772
  324,635
  359,166
  395,345
  433,163
  472,621
  513,732
  556,518
  601,015
  647,270
  695,339
  745,292
  797,205
  851,167
  907,276
Total equity, $m
  1,882
  2,549
  3,374
  4,374
  5,563
  6,951
  8,547
  10,357
  12,381
  14,622
  17,076
  19,741
  22,612
  25,686
  28,956
  32,419
  36,071
  39,907
  43,927
  48,129
  52,513
  57,081
  61,835
  66,779
  71,919
  77,260
  82,810
  88,578
  94,574
  100,808
Total liabilities and equity, $m
  18,821
  25,488
  33,740
  43,741
  55,628
  69,512
  85,473
  103,566
  123,812
  146,216
  170,759
  197,409
  226,124
  256,858
  289,562
  324,191
  360,706
  399,073
  439,272
  481,292
  525,134
  570,813
  618,353
  667,794
  719,189
  772,599
  828,102
  885,783
  945,741
  1,008,084
Debt-to-equity ratio
  10.650
  10.220
  9.920
  9.710
  9.560
  9.450
  9.360
  9.300
  9.250
  9.210
  9.180
  9.160
  9.140
  9.120
  9.110
  9.100
  9.090
  9.080
  9.070
  9.060
  9.060
  9.050
  9.050
  9.050
  9.040
  9.040
  9.040
  9.040
  9.030
  9.030
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -509
  -502
  -598
  -723
  -880
  -1,072
  -1,304
  -1,577
  -1,894
  -2,255
  -2,662
  -3,113
  -3,609
  -4,149
  -4,733
  -5,358
  -6,024
  -6,731
  -7,476
  -8,259
  -9,080
  -9,939
  -10,835
  -11,768
  -12,739
  -13,748
  -14,798
  -15,888
  -17,021
  -18,197
Depreciation, amort., depletion, $m
  2,541
  3,442
  4,556
  5,906
  7,511
  9,386
  11,542
  13,984
  16,718
  19,744
  23,058
  26,656
  30,534
  34,683
  39,100
  43,775
  48,706
  53,887
  59,315
  64,989
  70,909
  77,077
  83,496
  90,172
  97,112
  104,324
  111,819
  119,607
  127,703
  136,122
Funds from operations, $m
  2,033
  2,940
  3,958
  5,184
  6,632
  8,314
  10,237
  12,407
  14,824
  17,488
  20,396
  23,543
  26,924
  30,534
  34,367
  38,417
  42,682
  47,156
  51,839
  56,730
  61,829
  67,138
  72,662
  78,405
  84,373
  90,576
  97,021
  103,719
  110,683
  117,924
Change in working capital, $m
  -5,989
  -7,589
  -9,395
  -11,385
  -13,532
  -15,805
  -18,171
  -20,596
  -23,049
  -25,504
  -27,940
  -30,338
  -32,690
  -34,987
  -37,230
  -39,422
  -41,568
  -43,678
  -45,763
  -47,836
  -49,910
  -52,000
  -54,120
  -56,284
  -58,507
  -60,803
  -63,184
  -65,664
  -68,256
  -70,972
Cash from operations, $m
  8,022
  10,529
  13,352
  16,568
  20,164
  24,119
  28,408
  33,003
  37,873
  42,993
  48,336
  53,881
  59,614
  65,521
  71,597
  77,839
  84,249
  90,834
  97,602
  104,565
  111,739
  119,138
  126,782
  134,689
  142,881
  151,378
  160,205
  169,383
  178,939
  188,896
Maintenance CAPEX, $m
  -1,832
  -2,541
  -3,442
  -4,556
  -5,906
  -7,511
  -9,386
  -11,542
  -13,984
  -16,718
  -19,744
  -23,058
  -26,656
  -30,534
  -34,683
  -39,100
  -43,775
  -48,706
  -53,887
  -59,315
  -64,989
  -70,909
  -77,077
  -83,496
  -90,172
  -97,112
  -104,324
  -111,819
  -119,607
  -127,703
New CAPEX, $m
  -7,096
  -9,002
  -11,143
  -13,504
  -16,051
  -18,747
  -21,553
  -24,429
  -27,339
  -30,252
  -33,140
  -35,985
  -38,774
  -41,500
  -44,160
  -46,760
  -49,305
  -51,808
  -54,281
  -56,740
  -59,200
  -61,679
  -64,194
  -66,761
  -69,398
  -72,120
  -74,945
  -77,887
  -80,961
  -84,182
Cash from investing activities, $m
  -8,928
  -11,543
  -14,585
  -18,060
  -21,957
  -26,258
  -30,939
  -35,971
  -41,323
  -46,970
  -52,884
  -59,043
  -65,430
  -72,034
  -78,843
  -85,860
  -93,080
  -100,514
  -108,168
  -116,055
  -124,189
  -132,588
  -141,271
  -150,257
  -159,570
  -169,232
  -179,269
  -189,706
  -200,568
  -211,885
Free cash flow, $m
  -906
  -1,015
  -1,233
  -1,492
  -1,793
  -2,140
  -2,531
  -2,968
  -3,450
  -3,977
  -4,548
  -5,162
  -5,817
  -6,512
  -7,247
  -8,020
  -8,831
  -9,680
  -10,566
  -11,489
  -12,451
  -13,450
  -14,489
  -15,568
  -16,689
  -17,854
  -19,064
  -20,322
  -21,630
  -22,990
Issuance/(repayment) of debt, $m
  3,271
  6,000
  7,427
  9,001
  10,698
  12,496
  14,366
  16,283
  18,222
  20,163
  22,089
  23,985
  25,844
  27,660
  29,434
  31,166
  32,863
  34,531
  36,179
  37,818
  39,458
  41,110
  42,786
  44,497
  46,255
  48,069
  49,952
  51,913
  53,962
  56,109
Issuance/(repurchase) of shares, $m
  2,417
  1,169
  1,424
  1,723
  2,068
  2,461
  2,900
  3,387
  3,919
  4,496
  5,116
  5,778
  6,481
  7,223
  8,003
  8,821
  9,676
  10,567
  11,496
  12,461
  13,465
  14,507
  15,589
  16,712
  17,878
  19,089
  20,348
  21,656
  23,016
  24,432
Cash from financing (excl. dividends), $m  
  5,688
  7,169
  8,851
  10,724
  12,766
  14,957
  17,266
  19,670
  22,141
  24,659
  27,205
  29,763
  32,325
  34,883
  37,437
  39,987
  42,539
  45,098
  47,675
  50,279
  52,923
  55,617
  58,375
  61,209
  64,133
  67,158
  70,300
  73,569
  76,978
  80,541
Total cash flow (excl. dividends), $m
  4,782
  6,154
  7,618
  9,232
  10,973
  12,817
  14,735
  16,701
  18,690
  20,681
  22,656
  24,601
  26,508
  28,371
  30,190
  31,967
  33,707
  35,418
  37,109
  38,790
  40,472
  42,167
  43,886
  45,641
  47,444
  49,305
  51,236
  53,247
  55,349
  57,551
Retained Cash Flow (-), $m
  -2,417
  -1,169
  -1,424
  -1,723
  -2,068
  -2,461
  -2,900
  -3,387
  -3,919
  -4,496
  -5,116
  -5,778
  -6,481
  -7,223
  -8,003
  -8,821
  -9,676
  -10,567
  -11,496
  -12,461
  -13,465
  -14,507
  -15,589
  -16,712
  -17,878
  -19,089
  -20,348
  -21,656
  -23,016
  -24,432
Prev. year cash balance distribution, $m
  25
  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
  18
  24
  33
  44
  57
  72
  90
  111
  135
  161
  190
  222
  257
  294
  334
  376
  421
  469
  519
  571
  626
  683
  742
  804
  868
  935
  1,004
  1,077
  1,152
  1,229
Cash available for distribution, $m
  2,390
  4,985
  6,195
  7,509
  8,905
  10,356
  11,835
  13,314
  14,772
  16,186
  17,540
  18,823
  20,027
  21,148
  22,187
  23,146
  24,032
  24,851
  25,613
  26,329
  27,008
  27,660
  28,297
  28,929
  29,565
  30,215
  30,888
  31,591
  32,333
  33,120
Discount rate, %
  14.00
  14.70
  15.44
  16.21
  17.02
  17.87
  18.76
  19.70
  20.68
  21.72
  22.80
  23.94
  25.14
  26.40
  27.72
  29.10
  30.56
  32.09
  33.69
  35.38
  37.15
  39.00
  40.95
  43.00
  45.15
  47.41
  49.78
  52.27
  54.88
  57.63
PV of cash for distribution, $m
  2,097
  3,789
  4,027
  4,118
  4,059
  3,862
  3,552
  3,159
  2,720
  2,268
  1,831
  1,432
  1,085
  796
  565
  388
  258
  166
  103
  62
  36
  20
  11
  5
  3
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  30.8
  19.8
  13.1
  8.9
  6.2
  4.4
  3.1
  2.3
  1.7
  1.2
  0.9
  0.7
  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
  0.0
  0.0

Chemical Financial Corporation is a financial holding company. The Company operates in the commercial banking segment. The Company, through its subsidiary bank, Chemical Bank, offers banking and fiduciary products and services. These products and services include business and personal checking accounts, savings and individual retirement accounts, time deposit instruments, electronically accessed banking products, residential and commercial real estate financing, commercial lending, consumer financing, access to insurance and investment products, corporate and personal wealth management services, and other banking services. As of December 31, 2016, the Corporation and Chemical Bank served these markets through 249 banking offices. In addition to the banking offices, Chemical Bank operated eight loan production offices and over 272 automated teller machines, both on- and off-bank premises, as of December 31, 2016. Its loan portfolio includes commercial and real estate construction.

FINANCIAL RATIOS  of  Chemical Financial (CHFC)

Valuation Ratios
P/E Ratio 37.9
Price to Sales 0
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 14.6
Price to Free Cash Flow 15.6
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 14.9%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 19.4%
Total Debt to Equity 19.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 0.8%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 4.8%
Ret/ On T. Cap. - 3 Yr. Avg. 5.9%
Return On Equity 6%
Return On Equity - 3 Yr. Avg. 8%
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 28%
Eff/ Tax Rate - 3 Yr. Avg. 29.6%
Payout Ratio 45.4%

CHFC stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CHFC stock intrinsic value calculation we used $678 million for the last fiscal year's total revenue generated by Chemical Financial. The default revenue input number comes from 2017 income statement of Chemical Financial. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our CHFC stock valuation model: a) initial revenue growth rate of 38.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 14%, whose default value for CHFC is calculated based on our internal credit rating of Chemical Financial, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Chemical Financial.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of CHFC stock the variable cost ratio is equal to 44.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $126 million in the base year in the intrinsic value calculation for CHFC 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 Chemical Financial.

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

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the CHFC stock is equal to 2.6%.

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 CHFC are equal to 2700.6%.

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

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for CHFC is equal to -2276.8%. 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 Chemical Financial - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 71 million for Chemical Financial is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Chemical Financial at the current share price and the inputted number of shares is $4.1 billion.

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COMPANY NEWS

▶ Chemical Financial: 2Q Earnings Snapshot   [Jul-24-18 05:02PM  Associated Press]
▶ Chemical Financial: 1Q Earnings Snapshot   [Apr-24-18 05:01PM  Associated Press]
▶ Weekly CEO Buys Highlight   [Feb-05-18 10:50AM  GuruFocus.com]
▶ Weekly CEO Buys Highlight   [Jan-29-18 09:57AM  GuruFocus.com]
▶ Company News For Jan 24, 2018   [Jan-24-18 10:04AM  Zacks]
▶ Chemical Financial Trying To Close In On Key Technical Measure   [Nov-29-17 03:00AM  Investor's Business Daily]
▶ Chemical Financial Getting Closer To Key Technical Benchmark   [Nov-03-17 03:00AM  Investor's Business Daily]
▶ Chemical Financial Sees RS Rating Climb To 73   [03:00AM  Investor's Business Daily]
▶ Chemical Financial Corporation to Host Earnings Call   [Oct-25-17 07:10AM  ACCESSWIRE]
▶ Chemical Financial beats 3Q profit forecasts   [Oct-24-17 05:05PM  Associated Press]
▶ At $44.06, Is Chemical Financial Corporation (CHFC) A Buy?   [Sep-08-17 01:26PM  Simply Wall St.]
▶ Chemical Financial tops Street 2Q forecasts   [Jul-25-17 10:42PM  Associated Press]
▶ Chemical Financial tops 1Q profit forecasts   [Apr-25-17 05:01PM  Associated Press]
▶ UPDATE -- Chemical Bank Celebrates 100th Anniversary   [Mar-10-17 03:14PM  GlobeNewswire]
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