Intrinsic value of Expeditors International of Washington, - EXPD

Previous Close

$79.04

  Intrinsic Value

$91.80

stock screener

  Rating & Target

hold

+16%

Previous close

$79.04

 
Intrinsic value

$91.80

 
Up/down potential

+16%

 
Rating

hold

We calculate the intrinsic value of EXPD 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 0001), $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 13.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  17.60
  16.34
  15.21
  14.19
  13.27
  12.44
  11.70
  11.03
  10.42
  9.88
  9.39
  8.95
  8.56
  8.20
  7.88
  7.59
  7.33
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.90
  5.81
  5.73
  5.66
  5.59
Revenue, $m
  9,570
  11,134
  12,827
  14,647
  16,590
  18,654
  20,835
  23,133
  25,544
  28,068
  30,705
  33,454
  36,317
  39,296
  42,394
  45,613
  48,959
  52,436
  56,049
  59,806
  63,712
  67,776
  72,006
  76,410
  80,999
  85,782
  90,769
  95,973
  101,404
  107,076
Variable operating expenses, $m
  8,595
  9,991
  11,503
  13,127
  14,862
  16,705
  18,652
  20,704
  22,856
  25,110
  27,414
  29,868
  32,424
  35,084
  37,850
  40,724
  43,711
  46,815
  50,041
  53,395
  56,883
  60,511
  64,288
  68,220
  72,316
  76,586
  81,039
  85,685
  90,534
  95,598
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
  8,595
  9,991
  11,503
  13,127
  14,862
  16,705
  18,652
  20,704
  22,856
  25,110
  27,414
  29,868
  32,424
  35,084
  37,850
  40,724
  43,711
  46,815
  50,041
  53,395
  56,883
  60,511
  64,288
  68,220
  72,316
  76,586
  81,039
  85,685
  90,534
  95,598
Operating income, $m
  975
  1,143
  1,325
  1,520
  1,728
  1,949
  2,183
  2,429
  2,688
  2,958
  3,291
  3,586
  3,893
  4,212
  4,544
  4,889
  5,248
  5,621
  6,008
  6,411
  6,830
  7,265
  7,719
  8,191
  8,683
  9,195
  9,730
  10,288
  10,870
  11,478
EBITDA, $m
  1,089
  1,267
  1,460
  1,667
  1,888
  2,123
  2,371
  2,632
  2,907
  3,194
  3,494
  3,807
  4,133
  4,472
  4,824
  5,190
  5,571
  5,967
  6,378
  6,805
  7,250
  7,712
  8,194
  8,695
  9,217
  9,761
  10,329
  10,921
  11,539
  12,184
Interest expense (income), $m
  0
  0
  13
  27
  41
  57
  75
  93
  112
  132
  154
  176
  199
  223
  249
  275
  302
  331
  360
  391
  423
  456
  490
  526
  563
  602
  643
  685
  729
  775
  823
Earnings before tax, $m
  975
  1,130
  1,298
  1,478
  1,670
  1,875
  2,090
  2,317
  2,555
  2,805
  3,115
  3,387
  3,670
  3,964
  4,269
  4,587
  4,917
  5,261
  5,617
  5,988
  6,374
  6,775
  7,192
  7,627
  8,080
  8,552
  9,045
  9,559
  10,095
  10,655
Tax expense, $m
  263
  305
  350
  399
  451
  506
  564
  626
  690
  757
  841
  914
  991
  1,070
  1,153
  1,239
  1,328
  1,420
  1,517
  1,617
  1,721
  1,829
  1,942
  2,059
  2,182
  2,309
  2,442
  2,581
  2,726
  2,877
Net income, $m
  712
  825
  948
  1,079
  1,219
  1,368
  1,526
  1,692
  1,865
  2,047
  2,274
  2,472
  2,679
  2,893
  3,117
  3,349
  3,590
  3,840
  4,101
  4,371
  4,653
  4,946
  5,250
  5,568
  5,899
  6,243
  6,603
  6,978
  7,369
  7,778

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
  3,898
  4,535
  5,225
  5,966
  6,758
  7,598
  8,487
  9,423
  10,405
  11,433
  12,507
  13,627
  14,793
  16,007
  17,268
  18,580
  19,943
  21,359
  22,831
  24,361
  25,952
  27,607
  29,330
  31,124
  32,993
  34,942
  36,973
  39,093
  41,305
  43,615
Adjusted assets (=assets-cash), $m
  3,898
  4,535
  5,225
  5,966
  6,758
  7,598
  8,487
  9,423
  10,405
  11,433
  12,507
  13,627
  14,793
  16,007
  17,268
  18,580
  19,943
  21,359
  22,831
  24,361
  25,952
  27,607
  29,330
  31,124
  32,993
  34,942
  36,973
  39,093
  41,305
  43,615
Revenue / Adjusted assets
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
  2.455
Average production assets, $m
  612
  713
  821
  937
  1,062
  1,194
  1,333
  1,481
  1,635
  1,796
  1,965
  2,141
  2,324
  2,515
  2,713
  2,919
  3,133
  3,356
  3,587
  3,828
  4,078
  4,338
  4,608
  4,890
  5,184
  5,490
  5,809
  6,142
  6,490
  6,853
Working capital, $m
  574
  668
  770
  879
  995
  1,119
  1,250
  1,388
  1,533
  1,684
  1,842
  2,007
  2,179
  2,358
  2,544
  2,737
  2,938
  3,146
  3,363
  3,588
  3,823
  4,067
  4,320
  4,585
  4,860
  5,147
  5,446
  5,758
  6,084
  6,425
Total debt, $m
  235
  491
  767
  1,065
  1,382
  1,719
  2,076
  2,451
  2,845
  3,257
  3,688
  4,137
  4,604
  5,091
  5,597
  6,123
  6,669
  7,237
  7,827
  8,441
  9,079
  9,743
  10,434
  11,153
  11,903
  12,684
  13,499
  14,348
  15,236
  16,162
Total liabilities, $m
  1,563
  1,819
  2,095
  2,392
  2,710
  3,047
  3,403
  3,779
  4,172
  4,585
  5,015
  5,464
  5,932
  6,419
  6,925
  7,451
  7,997
  8,565
  9,155
  9,769
  10,407
  11,071
  11,761
  12,481
  13,230
  14,012
  14,826
  15,676
  16,563
  17,490
Total equity, $m
  2,335
  2,717
  3,130
  3,574
  4,048
  4,551
  5,084
  5,644
  6,233
  6,848
  7,492
  8,163
  8,861
  9,588
  10,344
  11,129
  11,946
  12,794
  13,676
  14,592
  15,545
  16,537
  17,569
  18,644
  19,763
  20,930
  22,147
  23,417
  24,742
  26,126
Total liabilities and equity, $m
  3,898
  4,536
  5,225
  5,966
  6,758
  7,598
  8,487
  9,423
  10,405
  11,433
  12,507
  13,627
  14,793
  16,007
  17,269
  18,580
  19,943
  21,359
  22,831
  24,361
  25,952
  27,608
  29,330
  31,125
  32,993
  34,942
  36,973
  39,093
  41,305
  43,616
Debt-to-equity ratio
  0.100
  0.180
  0.250
  0.300
  0.340
  0.380
  0.410
  0.430
  0.460
  0.480
  0.490
  0.510
  0.520
  0.530
  0.540
  0.550
  0.560
  0.570
  0.570
  0.580
  0.580
  0.590
  0.590
  0.600
  0.600
  0.610
  0.610
  0.610
  0.620
  0.620
Adjusted equity ratio
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599
  0.599

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  712
  825
  948
  1,079
  1,219
  1,368
  1,526
  1,692
  1,865
  2,047
  2,274
  2,472
  2,679
  2,893
  3,117
  3,349
  3,590
  3,840
  4,101
  4,371
  4,653
  4,946
  5,250
  5,568
  5,899
  6,243
  6,603
  6,978
  7,369
  7,778
Depreciation, amort., depletion, $m
  114
  124
  135
  147
  160
  173
  188
  203
  219
  236
  203
  221
  240
  259
  280
  301
  323
  346
  370
  395
  420
  447
  475
  504
  534
  566
  599
  633
  669
  706
Funds from operations, $m
  826
  949
  1,083
  1,226
  1,379
  1,542
  1,714
  1,895
  2,084
  2,283
  2,477
  2,693
  2,918
  3,153
  3,396
  3,650
  3,913
  4,186
  4,470
  4,766
  5,073
  5,393
  5,726
  6,072
  6,433
  6,809
  7,202
  7,611
  8,038
  8,485
Change in working capital, $m
  86
  94
  102
  109
  117
  124
  131
  138
  145
  151
  158
  165
  172
  179
  186
  193
  201
  209
  217
  225
  234
  244
  254
  264
  275
  287
  299
  312
  326
  340
Cash from operations, $m
  740
  855
  981
  1,117
  1,263
  1,418
  1,583
  1,757
  1,940
  2,132
  2,319
  2,528
  2,747
  2,974
  3,211
  3,456
  3,712
  3,978
  4,254
  4,541
  4,839
  5,149
  5,472
  5,808
  6,158
  6,522
  6,902
  7,299
  7,713
  8,144
Maintenance CAPEX, $m
  -53
  -63
  -73
  -85
  -97
  -109
  -123
  -137
  -153
  -169
  -185
  -203
  -221
  -240
  -259
  -280
  -301
  -323
  -346
  -370
  -395
  -420
  -447
  -475
  -504
  -534
  -566
  -599
  -633
  -669
New CAPEX, $m
  -94
  -100
  -108
  -116
  -124
  -132
  -140
  -147
  -154
  -162
  -169
  -176
  -183
  -191
  -198
  -206
  -214
  -223
  -231
  -240
  -250
  -260
  -271
  -282
  -294
  -306
  -319
  -333
  -348
  -363
Cash from investing activities, $m
  -147
  -163
  -181
  -201
  -221
  -241
  -263
  -284
  -307
  -331
  -354
  -379
  -404
  -431
  -457
  -486
  -515
  -546
  -577
  -610
  -645
  -680
  -718
  -757
  -798
  -840
  -885
  -932
  -981
  -1,032
Free cash flow, $m
  592
  692
  799
  916
  1,042
  1,176
  1,320
  1,472
  1,633
  1,802
  1,965
  2,150
  2,343
  2,544
  2,753
  2,971
  3,197
  3,432
  3,676
  3,930
  4,194
  4,469
  4,754
  5,051
  5,360
  5,682
  6,017
  6,367
  6,732
  7,112
Issuance/(repayment) of debt, $m
  235
  255
  277
  297
  317
  337
  356
  375
  394
  412
  431
  449
  468
  487
  506
  526
  546
  568
  590
  614
  638
  664
  691
  719
  749
  781
  815
  850
  887
  926
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  235
  255
  277
  297
  317
  337
  356
  375
  394
  412
  431
  449
  468
  487
  506
  526
  546
  568
  590
  614
  638
  664
  691
  719
  749
  781
  815
  850
  887
  926
Total cash flow (excl. dividends), $m
  828
  947
  1,076
  1,213
  1,359
  1,514
  1,676
  1,847
  2,027
  2,214
  2,395
  2,599
  2,810
  3,030
  3,259
  3,497
  3,743
  4,000
  4,267
  4,544
  4,832
  5,132
  5,445
  5,770
  6,109
  6,463
  6,832
  7,217
  7,619
  8,039
Retained Cash Flow (-), $m
  -348
  -382
  -413
  -444
  -474
  -504
  -532
  -561
  -588
  -616
  -643
  -671
  -699
  -727
  -756
  -786
  -816
  -848
  -882
  -917
  -953
  -992
  -1,032
  -1,075
  -1,120
  -1,167
  -1,217
  -1,270
  -1,325
  -1,384
Prev. year cash balance distribution, $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 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
  480
  566
  663
  769
  885
  1,010
  1,144
  1,287
  1,438
  1,598
  1,752
  1,928
  2,112
  2,303
  2,503
  2,711
  2,927
  3,152
  3,385
  3,627
  3,879
  4,141
  4,413
  4,696
  4,990
  5,296
  5,615
  5,947
  6,294
  6,655
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
  460
  518
  577
  633
  686
  733
  773
  804
  826
  838
  832
  823
  803
  773
  735
  689
  637
  580
  521
  461
  401
  344
  289
  239
  194
  155
  121
  92
  69
  50
Current shareholders' claim on cash, %
  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
  100.0

Expeditors International of Washington, Inc. is a logistics company. The Company is a third-party logistics provider, and purchases cargo space from carriers, including airlines and ocean shipping lines on a volume basis and resells that space to its customers. The Company provides a range of customer solutions, such as order management, time-definite transportation, warehousing and distribution, temperature-controlled transit, cargo insurance and customized logistics solutions. In addition, the Company's Project Cargo unit handles special project shipments that move through a single method or combination of air, ocean, and/or ground transportation. The Company's services include airfreight services, ocean freight and ocean services, and customs brokerage and other services. The Company operates along five geographic areas: the Americas; North Asia; South Asia; Europe, and the Middle East, Africa and India.

FINANCIAL RATIOS  of  Expeditors International of Washington, (EXPD)

Valuation Ratios
P/E Ratio 33
Price to Sales 2.3
Price to Book 7.7
Price to Tangible Book
Price to Cash Flow 26.9
Price to Free Cash Flow 30.2
Growth Rates
Sales Growth Rate -7.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 34.1%
Cap. Spend. - 3 Yr. Gr. Rate 2.2%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 16.1%
Ret/ On Assets - 3 Yr. Avg. 15.2%
Return On Total Capital 24.4%
Ret/ On T. Cap. - 3 Yr. Avg. 23%
Return On Equity 24.4%
Return On Equity - 3 Yr. Avg. 23%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 35.5%
Gross Margin - 3 Yr. Avg. 32.9%
EBITDA Margin 12%
EBITDA Margin - 3 Yr. Avg. 11.3%
Operating Margin 11%
Oper. Margin - 3 Yr. Avg. 10.3%
Pre-Tax Margin 11.3%
Pre-Tax Margin - 3 Yr. Avg. 10.6%
Net Profit Margin 7.1%
Net Profit Margin - 3 Yr. Avg. 6.6%
Effective Tax Rate 37%
Eff/ Tax Rate - 3 Yr. Avg. 37.5%
Payout Ratio 33.6%

EXPD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EXPD stock intrinsic value calculation we used $8138 million for the last fiscal year's total revenue generated by Expeditors International of Washington, . The default revenue input number comes from 0001 income statement of Expeditors International of Washington, . 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 EXPD stock valuation model: a) initial revenue growth rate of 17.6% 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 EXPD is calculated based on our internal credit rating of Expeditors International of Washington, , 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 Expeditors International of Washington, .
    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 EXPD stock the variable cost ratio is equal to 89.9%.

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 EXPD 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 Expeditors International of Washington, .

Corporate tax rate of 27% is the nominal tax rate for Expeditors International of Washington, . 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 EXPD 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 EXPD are equal to 6.4%.

Life of production assets of 9.7 years is the average useful life of capital assets used in Expeditors International of Washington, 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 EXPD is equal to 6%. 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 - $1986.838 million for Expeditors International of Washington, - 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 171.688 million for Expeditors International of Washington, 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 Expeditors International of Washington, at the current share price and the inputted number of shares is $13.6 billion.

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