Intrinsic value of Rockwell Collins - COL

Previous Close

$137.35

  Intrinsic Value

$831.45

stock screener

  Rating & Target

str. buy

+505%

Previous close

$137.35

 
Intrinsic value

$831.45

 
Up/down potential

+505%

 
Rating

str. buy

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

We calculate the intrinsic value of COL 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
2017(a)
   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, %
  29.72
  51.80
  47.12
  42.91
  39.12
  35.71
  32.63
  29.87
  27.38
  25.15
  23.13
  21.32
  19.69
  18.22
  16.90
  15.71
  14.64
  13.67
  12.80
  12.02
  11.32
  10.69
  10.12
  9.61
  9.15
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
Revenue, $m
  6,822
  10,356
  15,235
  21,773
  30,290
  41,105
  54,519
  70,805
  90,194
  112,874
  138,983
  168,612
  201,805
  238,570
  278,878
  322,680
  369,906
  420,480
  474,322
  531,357
  591,517
  654,749
  721,015
  790,295
  862,590
  937,921
  1,016,329
  1,097,877
  1,182,649
  1,270,747
  1,362,296
Variable operating expenses, $m
 
  7,955
  11,272
  15,716
  21,505
  28,857
  37,976
  49,046
  62,226
  77,643
  95,391
  114,615
  137,179
  162,170
  189,570
  219,344
  251,447
  285,825
  322,424
  361,194
  402,088
  445,071
  490,116
  537,210
  586,353
  637,559
  690,858
  746,291
  803,915
  863,801
  926,032
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
  5,749
  7,955
  11,272
  15,716
  21,505
  28,857
  37,976
  49,046
  62,226
  77,643
  95,391
  114,615
  137,179
  162,170
  189,570
  219,344
  251,447
  285,825
  322,424
  361,194
  402,088
  445,071
  490,116
  537,210
  586,353
  637,559
  690,858
  746,291
  803,915
  863,801
  926,032
Operating income, $m
  1,073
  2,401
  3,963
  6,057
  8,784
  12,248
  16,543
  21,759
  27,968
  35,231
  43,592
  53,997
  64,627
  76,400
  89,309
  103,336
  118,460
  134,656
  151,898
  170,163
  189,429
  209,678
  230,899
  253,086
  276,238
  300,362
  325,471
  351,587
  378,734
  406,947
  436,265
EBITDA, $m
  1,467
  3,508
  5,161
  7,375
  10,260
  13,924
  18,468
  23,985
  30,553
  38,235
  47,080
  57,116
  68,360
  80,814
  94,468
  109,306
  125,304
  142,435
  160,674
  179,994
  200,373
  221,793
  244,240
  267,708
  292,198
  317,716
  344,276
  371,900
  400,616
  430,459
  461,471
Interest expense (income), $m
  0
  234
  443
  731
  1,116
  1,619
  2,257
  3,048
  4,008
  5,152
  6,490
  8,030
  9,778
  11,735
  13,904
  16,282
  18,865
  21,651
  24,634
  27,810
  31,174
  34,723
  38,452
  42,361
  46,447
  50,712
  55,155
  59,780
  64,590
  69,590
  74,787
Earnings before tax, $m
  931
  2,167
  3,520
  5,326
  7,668
  10,629
  14,287
  18,711
  23,960
  30,079
  37,103
  45,967
  54,849
  64,665
  75,405
  87,054
  99,594
  113,005
  127,264
  142,353
  158,255
  174,956
  192,447
  210,725
  229,790
  249,650
  270,316
  291,807
  314,144
  337,357
  361,478
Tax expense, $m
  226
  585
  950
  1,438
  2,070
  2,870
  3,857
  5,052
  6,469
  8,121
  10,018
  12,411
  14,809
  17,459
  20,359
  23,505
  26,890
  30,511
  34,361
  38,435
  42,729
  47,238
  51,961
  56,896
  62,043
  67,406
  72,985
  78,788
  84,819
  91,086
  97,599
Net income, $m
  705
  1,582
  2,570
  3,888
  5,598
  7,759
  10,429
  13,659
  17,491
  21,958
  27,085
  33,556
  40,040
  47,205
  55,045
  63,549
  72,704
  82,493
  92,903
  103,918
  115,526
  127,718
  140,486
  153,829
  167,747
  182,245
  197,331
  213,019
  229,325
  246,270
  263,879

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  703
  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
  17,997
  26,284
  38,669
  55,261
  76,877
  104,326
  138,373
  179,707
  228,919
  286,482
  352,749
  427,949
  512,196
  605,507
  707,813
  818,984
  938,848
  1,067,209
  1,203,864
  1,348,622
  1,501,313
  1,661,800
  1,829,987
  2,005,826
  2,189,316
  2,380,510
  2,579,516
  2,786,490
  3,001,647
  3,225,247
  3,457,605
Adjusted assets (=assets-cash), $m
  17,294
  26,284
  38,669
  55,261
  76,877
  104,326
  138,373
  179,707
  228,919
  286,482
  352,749
  427,949
  512,196
  605,507
  707,813
  818,984
  938,848
  1,067,209
  1,203,864
  1,348,622
  1,501,313
  1,661,800
  1,829,987
  2,005,826
  2,189,316
  2,380,510
  2,579,516
  2,786,490
  3,001,647
  3,225,247
  3,457,605
Revenue / Adjusted assets
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
  0.394
Average production assets, $m
  2,615
  3,966
  5,835
  8,339
  11,601
  15,743
  20,881
  27,118
  34,544
  43,231
  53,231
  64,578
  77,291
  91,372
  106,810
  123,586
  141,674
  161,044
  181,666
  203,510
  226,551
  250,769
  276,149
  302,683
  330,372
  359,224
  389,254
  420,487
  452,954
  486,696
  521,760
Working capital, $m
  1,691
  2,226
  3,276
  4,681
  6,512
  8,837
  11,722
  15,223
  19,392
  24,268
  29,881
  36,252
  43,388
  51,292
  59,959
  69,376
  79,530
  90,403
  101,979
  114,242
  127,176
  140,771
  155,018
  169,914
  185,457
  201,653
  218,511
  236,044
  254,269
  273,211
  292,894
Total debt, $m
  7,155
  12,653
  20,877
  31,894
  46,247
  64,474
  87,081
  114,527
  147,203
  185,425
  229,426
  279,359
  335,299
  397,257
  465,189
  539,006
  618,596
  703,828
  794,567
  890,686
  992,073
  1,098,636
  1,210,313
  1,327,069
  1,448,907
  1,575,860
  1,707,999
  1,845,431
  1,988,294
  2,136,765
  2,291,051
Total liabilities, $m
  11,954
  17,452
  25,676
  36,693
  51,046
  69,273
  91,880
  119,326
  152,002
  190,224
  234,225
  284,158
  340,098
  402,056
  469,988
  543,805
  623,395
  708,627
  799,366
  895,485
  996,872
  1,103,435
  1,215,112
  1,331,868
  1,453,706
  1,580,659
  1,712,798
  1,850,230
  1,993,093
  2,141,564
  2,295,850
Total equity, $m
  6,043
  8,831
  12,993
  18,568
  25,831
  35,054
  46,493
  60,382
  76,917
  96,258
  118,524
  143,791
  172,098
  203,450
  237,825
  275,179
  315,453
  358,582
  404,498
  453,137
  504,441
  558,365
  614,876
  673,958
  735,610
  799,852
  866,717
  936,261
  1,008,553
  1,083,683
  1,161,755
Total liabilities and equity, $m
  17,997
  26,283
  38,669
  55,261
  76,877
  104,327
  138,373
  179,708
  228,919
  286,482
  352,749
  427,949
  512,196
  605,506
  707,813
  818,984
  938,848
  1,067,209
  1,203,864
  1,348,622
  1,501,313
  1,661,800
  1,829,988
  2,005,826
  2,189,316
  2,380,511
  2,579,515
  2,786,491
  3,001,646
  3,225,247
  3,457,605
Debt-to-equity ratio
  1.184
  1.430
  1.610
  1.720
  1.790
  1.840
  1.870
  1.900
  1.910
  1.930
  1.940
  1.940
  1.950
  1.950
  1.960
  1.960
  1.960
  1.960
  1.960
  1.970
  1.970
  1.970
  1.970
  1.970
  1.970
  1.970
  1.970
  1.970
  1.970
  1.970
  1.970
Adjusted equity ratio
  0.328
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336
  0.336

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  705
  1,582
  2,570
  3,888
  5,598
  7,759
  10,429
  13,659
  17,491
  21,958
  27,085
  33,556
  40,040
  47,205
  55,045
  63,549
  72,704
  82,493
  92,903
  103,918
  115,526
  127,718
  140,486
  153,829
  167,747
  182,245
  197,331
  213,019
  229,325
  246,270
  263,879
Depreciation, amort., depletion, $m
  394
  1,107
  1,198
  1,319
  1,476
  1,676
  1,925
  2,226
  2,585
  3,004
  3,487
  3,120
  3,734
  4,414
  5,160
  5,970
  6,844
  7,780
  8,776
  9,831
  10,944
  12,114
  13,341
  14,622
  15,960
  17,354
  18,805
  20,313
  21,882
  23,512
  25,206
Funds from operations, $m
  1,351
  2,689
  3,768
  5,207
  7,074
  9,435
  12,354
  15,885
  20,075
  24,962
  30,572
  36,675
  43,774
  51,619
  60,205
  69,520
  79,548
  90,273
  101,679
  113,749
  126,470
  139,832
  153,827
  168,452
  183,707
  199,598
  216,135
  233,332
  251,207
  269,782
  289,085
Change in working capital, $m
  87
  760
  1,049
  1,406
  1,831
  2,325
  2,884
  3,501
  4,169
  4,876
  5,613
  6,370
  7,137
  7,904
  8,666
  9,417
  10,154
  10,873
  11,576
  12,262
  12,934
  13,595
  14,247
  14,895
  15,543
  16,196
  16,858
  17,533
  18,226
  18,941
  19,683
Cash from operations, $m
  1,264
  1,929
  2,718
  3,801
  5,243
  7,110
  9,470
  12,383
  15,906
  20,086
  24,959
  30,305
  36,637
  43,715
  51,539
  60,102
  69,394
  79,400
  90,103
  101,487
  113,536
  126,237
  139,580
  153,556
  168,164
  183,402
  199,278
  215,799
  232,981
  250,841
  269,402
Maintenance CAPEX, $m
  0
  -126
  -192
  -282
  -403
  -560
  -761
  -1,009
  -1,310
  -1,669
  -2,088
  -2,572
  -3,120
  -3,734
  -4,414
  -5,160
  -5,970
  -6,844
  -7,780
  -8,776
  -9,831
  -10,944
  -12,114
  -13,341
  -14,622
  -15,960
  -17,354
  -18,805
  -20,313
  -21,882
  -23,512
New CAPEX, $m
  -240
  -1,352
  -1,869
  -2,504
  -3,262
  -4,142
  -5,138
  -6,237
  -7,426
  -8,686
  -10,000
  -11,348
  -12,713
  -14,081
  -15,438
  -16,776
  -18,088
  -19,370
  -20,622
  -21,844
  -23,041
  -24,218
  -25,380
  -26,534
  -27,689
  -28,852
  -30,030
  -31,233
  -32,468
  -33,742
  -35,063
Cash from investing activities, $m
  -3,674
  -1,478
  -2,061
  -2,786
  -3,665
  -4,702
  -5,899
  -7,246
  -8,736
  -10,355
  -12,088
  -13,920
  -15,833
  -17,815
  -19,852
  -21,936
  -24,058
  -26,214
  -28,402
  -30,620
  -32,872
  -35,162
  -37,494
  -39,875
  -42,311
  -44,812
  -47,384
  -50,038
  -52,781
  -55,624
  -58,575
Free cash flow, $m
  -2,410
  451
  658
  1,015
  1,578
  2,408
  3,572
  5,137
  7,170
  9,731
  12,870
  16,386
  20,804
  25,900
  31,687
  38,167
  45,336
  53,186
  61,701
  70,866
  80,663
  91,075
  102,085
  113,681
  125,852
  138,591
  151,894
  165,762
  180,200
  195,217
  210,827
Issuance/(repayment) of debt, $m
  2,940
  5,977
  8,224
  11,017
  14,353
  18,226
  22,607
  27,446
  32,676
  38,222
  44,001
  49,933
  55,940
  61,958
  67,931
  73,818
  79,590
  85,231
  90,739
  96,119
  101,387
  106,563
  111,677
  116,757
  121,837
  126,953
  132,139
  137,431
  142,864
  148,471
  154,286
Issuance/(repurchase) of shares, $m
  18
  1,430
  1,591
  1,687
  1,666
  1,464
  1,010
  229
  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  
  2,953
  7,407
  9,815
  12,704
  16,019
  19,690
  23,617
  27,675
  32,676
  38,222
  44,001
  49,933
  55,940
  61,958
  67,931
  73,818
  79,590
  85,231
  90,739
  96,119
  101,387
  106,563
  111,677
  116,757
  121,837
  126,953
  132,139
  137,431
  142,864
  148,471
  154,286
Total cash flow (excl. dividends), $m
  557
  7,859
  10,473
  13,719
  17,597
  22,098
  27,189
  32,812
  39,847
  47,953
  56,872
  66,319
  76,745
  87,858
  99,618
  111,984
  124,926
  138,417
  152,440
  166,986
  182,050
  197,638
  213,762
  230,438
  247,690
  265,544
  284,033
  303,193
  323,064
  343,688
  365,112
Retained Cash Flow (-), $m
  -3,965
  -3,012
  -4,161
  -5,575
  -7,263
  -9,223
  -11,440
  -13,888
  -16,535
  -19,341
  -22,266
  -25,267
  -28,307
  -31,352
  -34,375
  -37,354
  -40,274
  -43,129
  -45,916
  -48,639
  -51,304
  -53,924
  -56,511
  -59,082
  -61,653
  -64,241
  -66,866
  -69,544
  -72,293
  -75,130
  -78,072
Prev. year cash balance distribution, $m
 
  224
  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
 
  5,071
  6,312
  8,145
  10,334
  12,875
  15,749
  18,924
  23,312
  28,611
  34,606
  41,051
  48,437
  56,506
  65,243
  74,631
  84,652
  95,288
  106,524
  118,347
  130,746
  143,715
  157,251
  171,356
  186,037
  201,302
  217,167
  233,650
  250,771
  268,558
  287,040
Discount rate, %
 
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
 
  4,695
  5,371
  6,320
  7,251
  8,095
  8,789
  9,277
  9,930
  10,468
  10,742
  10,670
  10,396
  9,867
  9,126
  8,224
  7,221
  6,176
  5,144
  4,171
  3,290
  2,523
  1,880
  1,360
  954
  648
  426
  271
  166
  99
  56
Current shareholders' claim on cash, %
  100
  93.8
  89.5
  86.5
  84.4
  83.2
  82.5
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4
  82.4

Rockwell Collins, Inc. designs, produces and supports communications and aviation systems for commercial and military customers. The Company provides information management services through voice and data communication networks and solutions across the world. The Company operates through three segments: Commercial Systems, Government Systems and Information Management Services. The Commercial Systems segment supplies aviation electronics systems, products and services to customers located throughout the world. The Government Systems segment provides a range of electronic products, systems and services to customers including the United States Department of Defense, various ministries of defense, other government agencies and defense contractors around the world. The Information Management Services segment provides communications services, systems integration and security solutions across the aviation, airport, rail and nuclear security markets.

FINANCIAL RATIOS  of  Rockwell Collins (COL)

Valuation Ratios
P/E Ratio 31.7
Price to Sales 3.3
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 17.7
Price to Free Cash Flow 21.8
Growth Rates
Sales Growth Rate 29.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 24.4%
Cap. Spend. - 3 Yr. Gr. Rate 7.9%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 110.5%
Total Debt to Equity 118.4%
Interest Coverage 0
Management Effectiveness
Return On Assets 5.5%
Ret/ On Assets - 3 Yr. Avg. 8.2%
Return On Total Capital 8.1%
Ret/ On T. Cap. - 3 Yr. Avg. 14.3%
Return On Equity 17.4%
Return On Equity - 3 Yr. Avg. 30.2%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 28.6%
Gross Margin - 3 Yr. Avg. 30.1%
EBITDA Margin 19.4%
EBITDA Margin - 3 Yr. Avg. 21.7%
Operating Margin 15.7%
Oper. Margin - 3 Yr. Avg. 17.9%
Pre-Tax Margin 13.6%
Pre-Tax Margin - 3 Yr. Avg. 16.6%
Net Profit Margin 10.3%
Net Profit Margin - 3 Yr. Avg. 12.4%
Effective Tax Rate 24.3%
Eff/ Tax Rate - 3 Yr. Avg. 24.8%
Payout Ratio 27.5%

COL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COL stock intrinsic value calculation we used $6822 million for the last fiscal year's total revenue generated by Rockwell Collins. The default revenue input number comes from 2017 income statement of Rockwell Collins. 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 COL stock valuation model: a) initial revenue growth rate of 51.8% 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 8%, whose default value for COL is calculated based on our internal credit rating of Rockwell Collins, 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 Rockwell Collins.
    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 COL stock the variable cost ratio is equal to 81.4%.

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 COL 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 Rockwell Collins.

Corporate tax rate of 27% is the nominal tax rate for Rockwell Collins. 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 COL 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 COL are equal to 38.3%.

Life of production assets of 20.7 years is the average useful life of capital assets used in Rockwell Collins 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 COL is equal to 21.5%. 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 - $6043 million for Rockwell Collins - 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 163.914 million for Rockwell Collins 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 Rockwell Collins at the current share price and the inputted number of shares is $22.5 billion.

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Financial statements of COL
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