Intrinsic value of Huntington Bancshares - HBAN

Previous Close

$15.93

  Intrinsic Value

$11.72

stock screener

  Rating & Target

sell

-26%

Previous close

$15.93

 
Intrinsic value

$11.72

 
Up/down potential

-26%

 
Rating

sell

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

We calculate the intrinsic value of HBAN 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 17.3

 

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, %
  23.40
  21.56
  19.90
  18.41
  17.07
  15.87
  14.78
  13.80
  12.92
  12.13
  11.42
  10.77
  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
Revenue, $m
  5,069
  6,162
  7,389
  8,749
  10,243
  11,868
  13,622
  15,502
  17,505
  19,628
  21,868
  24,225
  26,695
  29,278
  31,974
  34,784
  37,710
  40,752
  43,915
  47,203
  50,619
  54,169
  57,859
  61,695
  65,685
  69,837
  74,159
  78,661
  83,351
  88,241
Variable operating expenses, $m
  1,987
  2,416
  2,896
  3,430
  4,015
  4,652
  5,340
  6,077
  6,862
  7,694
  8,572
  9,496
  10,464
  11,477
  12,534
  13,635
  14,782
  15,975
  17,215
  18,503
  19,842
  21,234
  22,681
  24,184
  25,749
  27,376
  29,070
  30,835
  32,674
  34,591
Fixed operating expenses, $m
  1,152
  1,177
  1,203
  1,229
  1,257
  1,284
  1,312
  1,341
  1,371
  1,401
  1,432
  1,463
  1,495
  1,528
  1,562
  1,596
  1,632
  1,667
  1,704
  1,742
  1,780
  1,819
  1,859
  1,900
  1,942
  1,984
  2,028
  2,073
  2,118
  2,165
Total operating expenses, $m
  3,139
  3,593
  4,099
  4,659
  5,272
  5,936
  6,652
  7,418
  8,233
  9,095
  10,004
  10,959
  11,959
  13,005
  14,096
  15,231
  16,414
  17,642
  18,919
  20,245
  21,622
  23,053
  24,540
  26,084
  27,691
  29,360
  31,098
  32,908
  34,792
  36,756
Operating income, $m
  1,930
  2,569
  3,289
  4,090
  4,971
  5,932
  6,970
  8,084
  9,272
  10,533
  11,864
  13,265
  14,735
  16,273
  17,878
  19,552
  21,296
  23,110
  24,996
  26,958
  28,996
  31,115
  33,319
  35,611
  37,995
  40,477
  43,061
  45,753
  48,559
  51,486
EBITDA, $m
  14,511
  17,862
  21,626
  25,803
  30,391
  35,384
  40,775
  46,555
  52,714
  59,243
  66,135
  73,384
  80,983
  88,932
  97,229
  105,877
  114,880
  124,245
  133,981
  144,100
  154,616
  165,546
  176,907
  188,719
  201,006
  213,792
  227,102
  240,966
  255,412
  270,474
Interest expense (income), $m
  241
  5,135
  5,594
  6,597
  7,721
  8,969
  10,339
  11,829
  13,437
  15,161
  16,998
  18,944
  20,999
  23,160
  25,425
  27,793
  30,266
  32,843
  35,525
  38,315
  41,215
  44,230
  47,362
  50,618
  54,001
  57,519
  61,178
  64,985
  68,949
  73,077
  77,378
Earnings before tax, $m
  -3,204
  -3,025
  -3,307
  -3,631
  -3,998
  -4,407
  -4,859
  -5,353
  -5,889
  -6,465
  -7,080
  -7,734
  -8,425
  -9,152
  -9,915
  -10,713
  -11,547
  -12,415
  -13,319
  -14,258
  -15,234
  -16,247
  -17,299
  -18,391
  -19,524
  -20,702
  -21,925
  -23,196
  -24,517
  -25,892
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
  -3,204
  -3,025
  -3,307
  -3,631
  -3,998
  -4,407
  -4,859
  -5,353
  -5,889
  -6,465
  -7,080
  -7,734
  -8,425
  -9,152
  -9,915
  -10,713
  -11,547
  -12,415
  -13,319
  -14,258
  -15,234
  -16,247
  -17,299
  -18,391
  -19,524
  -20,702
  -21,925
  -23,196
  -24,517
  -25,892

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
  95,647
  116,268
  139,410
  165,080
  193,263
  223,925
  257,017
  292,488
  330,279
  370,337
  412,613
  457,068
  503,674
  552,415
  603,289
  656,308
  711,501
  768,909
  828,590
  890,614
  955,068
  1,022,050
  1,091,672
  1,164,058
  1,239,346
  1,317,684
  1,399,234
  1,484,167
  1,572,667
  1,664,930
Adjusted assets (=assets-cash), $m
  95,647
  116,268
  139,410
  165,080
  193,263
  223,925
  257,017
  292,488
  330,279
  370,337
  412,613
  457,068
  503,674
  552,415
  603,289
  656,308
  711,501
  768,909
  828,590
  890,614
  955,068
  1,022,050
  1,091,672
  1,164,058
  1,239,346
  1,317,684
  1,399,234
  1,484,167
  1,572,667
  1,664,930
Revenue / Adjusted assets
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
  0.053
Average production assets, $m
  125,804
  152,927
  183,366
  217,130
  254,200
  294,528
  338,055
  384,709
  434,416
  487,104
  542,710
  601,183
  662,483
  726,592
  793,506
  863,243
  935,838
  1,011,347
  1,089,845
  1,171,426
  1,256,202
  1,344,304
  1,435,877
  1,531,087
  1,630,113
  1,733,152
  1,840,414
  1,952,126
  2,068,530
  2,189,884
Working capital, $m
  -112,041
  -136,197
  -163,306
  -193,376
  -226,390
  -262,307
  -301,072
  -342,622
  -386,890
  -433,815
  -483,337
  -535,413
  -590,007
  -647,102
  -706,696
  -768,803
  -833,456
  -900,705
  -970,615
  -1,043,271
  -1,118,773
  -1,197,236
  -1,278,791
  -1,363,585
  -1,451,778
  -1,543,543
  -1,639,071
  -1,738,562
  -1,842,232
  -1,950,309
Total debt, $m
  103,601
  122,160
  142,988
  166,091
  191,456
  219,051
  248,835
  280,758
  314,770
  350,822
  388,871
  428,881
  470,826
  514,693
  560,479
  608,196
  657,870
  709,537
  763,250
  819,072
  877,080
  937,364
  1,000,024
  1,065,172
  1,132,931
  1,203,435
  1,276,829
  1,353,269
  1,432,919
  1,515,956
Total liabilities, $m
  86,082
  104,641
  125,469
  148,572
  173,937
  201,532
  231,316
  263,239
  297,251
  333,303
  371,352
  411,362
  453,307
  497,174
  542,960
  590,677
  640,351
  692,018
  745,731
  801,553
  859,561
  919,845
  982,505
  1,047,653
  1,115,412
  1,185,916
  1,259,310
  1,335,750
  1,415,400
  1,498,437
Total equity, $m
  9,565
  11,627
  13,941
  16,508
  19,326
  22,392
  25,702
  29,249
  33,028
  37,034
  41,261
  45,707
  50,367
  55,242
  60,329
  65,631
  71,150
  76,891
  82,859
  89,061
  95,507
  102,205
  109,167
  116,406
  123,935
  131,768
  139,923
  148,417
  157,267
  166,493
Total liabilities and equity, $m
  95,647
  116,268
  139,410
  165,080
  193,263
  223,924
  257,018
  292,488
  330,279
  370,337
  412,613
  457,069
  503,674
  552,416
  603,289
  656,308
  711,501
  768,909
  828,590
  890,614
  955,068
  1,022,050
  1,091,672
  1,164,059
  1,239,347
  1,317,684
  1,399,233
  1,484,167
  1,572,667
  1,664,930
Debt-to-equity ratio
  10.830
  10.510
  10.260
  10.060
  9.910
  9.780
  9.680
  9.600
  9.530
  9.470
  9.420
  9.380
  9.350
  9.320
  9.290
  9.270
  9.250
  9.230
  9.210
  9.200
  9.180
  9.170
  9.160
  9.150
  9.140
  9.130
  9.130
  9.120
  9.110
  9.110
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
  -3,204
  -3,025
  -3,307
  -3,631
  -3,998
  -4,407
  -4,859
  -5,353
  -5,889
  -6,465
  -7,080
  -7,734
  -8,425
  -9,152
  -9,915
  -10,713
  -11,547
  -12,415
  -13,319
  -14,258
  -15,234
  -16,247
  -17,299
  -18,391
  -19,524
  -20,702
  -21,925
  -23,196
  -24,517
  -25,892
Depreciation, amort., depletion, $m
  12,580
  15,293
  18,337
  21,713
  25,420
  29,453
  33,806
  38,471
  43,442
  48,710
  54,271
  60,118
  66,248
  72,659
  79,351
  86,324
  93,584
  101,135
  108,984
  117,143
  125,620
  134,430
  143,588
  153,109
  163,011
  173,315
  184,041
  195,213
  206,853
  218,988
Funds from operations, $m
  9,376
  12,268
  15,029
  18,082
  21,422
  25,046
  28,946
  33,118
  37,553
  42,246
  47,191
  52,385
  57,824
  63,507
  69,436
  75,611
  82,037
  88,720
  95,666
  102,885
  110,387
  118,184
  126,289
  134,718
  143,487
  152,613
  162,117
  172,017
  182,336
  193,097
Change in working capital, $m
  -21,246
  -24,156
  -27,109
  -30,070
  -33,014
  -35,917
  -38,765
  -41,550
  -44,269
  -46,924
  -49,523
  -52,075
  -54,594
  -57,095
  -59,594
  -62,107
  -64,653
  -67,248
  -69,910
  -72,656
  -75,502
  -78,463
  -81,555
  -84,794
  -88,193
  -91,766
  -95,527
  -99,491
  -103,670
  -108,078
Cash from operations, $m
  30,622
  36,424
  42,138
  48,152
  54,436
  60,963
  67,711
  74,668
  81,821
  89,170
  96,714
  104,460
  112,418
  120,602
  129,029
  137,718
  146,690
  155,968
  165,576
  175,541
  185,888
  196,647
  207,844
  219,512
  231,680
  244,379
  257,644
  271,508
  286,006
  301,174
Maintenance CAPEX, $m
  -10,195
  -12,580
  -15,293
  -18,337
  -21,713
  -25,420
  -29,453
  -33,806
  -38,471
  -43,442
  -48,710
  -54,271
  -60,118
  -66,248
  -72,659
  -79,351
  -86,324
  -93,584
  -101,135
  -108,984
  -117,143
  -125,620
  -134,430
  -143,588
  -153,109
  -163,011
  -173,315
  -184,041
  -195,213
  -206,853
New CAPEX, $m
  -23,855
  -27,123
  -30,439
  -33,764
  -37,069
  -40,329
  -43,527
  -46,654
  -49,707
  -52,688
  -55,606
  -58,472
  -61,301
  -64,109
  -66,914
  -69,736
  -72,595
  -75,509
  -78,498
  -81,581
  -84,776
  -88,101
  -91,574
  -95,210
  -99,026
  -103,038
  -107,262
  -111,712
  -116,404
  -121,354
Cash from investing activities, $m
  -34,050
  -39,703
  -45,732
  -52,101
  -58,782
  -65,749
  -72,980
  -80,460
  -88,178
  -96,130
  -104,316
  -112,743
  -121,419
  -130,357
  -139,573
  -149,087
  -158,919
  -169,093
  -179,633
  -190,565
  -201,919
  -213,721
  -226,004
  -238,798
  -252,135
  -266,049
  -280,577
  -295,753
  -311,617
  -328,207
Free cash flow, $m
  -3,428
  -3,280
  -3,593
  -3,949
  -4,346
  -4,786
  -5,268
  -5,792
  -6,356
  -6,960
  -7,603
  -8,283
  -9,001
  -9,755
  -10,544
  -11,369
  -12,229
  -13,125
  -14,057
  -15,025
  -16,031
  -17,075
  -18,160
  -19,286
  -20,455
  -21,670
  -22,933
  -24,246
  -25,612
  -27,033
Issuance/(repayment) of debt, $m
  8,513
  18,559
  20,828
  23,103
  25,365
  27,595
  29,783
  31,923
  34,012
  36,052
  38,049
  40,010
  41,945
  43,867
  45,786
  47,717
  49,673
  51,667
  53,713
  55,822
  58,008
  60,284
  62,660
  65,148
  67,759
  70,504
  73,394
  76,440
  79,650
  83,037
Issuance/(repurchase) of shares, $m
  13,297
  5,087
  5,622
  6,198
  6,816
  7,473
  8,168
  8,900
  9,668
  10,471
  11,308
  12,179
  13,085
  14,026
  15,002
  16,015
  17,066
  18,156
  19,287
  20,460
  21,679
  22,945
  24,261
  25,629
  27,053
  28,535
  30,080
  31,689
  33,367
  35,118
Cash from financing (excl. dividends), $m  
  21,810
  23,646
  26,450
  29,301
  32,181
  35,068
  37,951
  40,823
  43,680
  46,523
  49,357
  52,189
  55,030
  57,893
  60,788
  63,732
  66,739
  69,823
  73,000
  76,282
  79,687
  83,229
  86,921
  90,777
  94,812
  99,039
  103,474
  108,129
  113,017
  118,155
Total cash flow (excl. dividends), $m
  18,383
  20,366
  22,856
  25,353
  27,834
  30,282
  32,684
  35,032
  37,324
  39,563
  41,754
  43,906
  46,030
  48,138
  50,245
  52,364
  54,510
  56,698
  58,943
  61,258
  63,657
  66,154
  68,761
  71,491
  74,357
  77,370
  80,541
  83,883
  87,406
  91,122
Retained Cash Flow (-), $m
  -13,297
  -5,087
  -5,622
  -6,198
  -6,816
  -7,473
  -8,168
  -8,900
  -9,668
  -10,471
  -11,308
  -12,179
  -13,085
  -14,026
  -15,002
  -16,015
  -17,066
  -18,156
  -19,287
  -20,460
  -21,679
  -22,945
  -24,261
  -25,629
  -27,053
  -28,535
  -30,080
  -31,689
  -33,367
  -35,118
Prev. year cash balance distribution, $m
  528
  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
  90
  112
  136
  163
  192
  225
  261
  300
  341
  385
  432
  481
  533
  587
  644
  703
  765
  830
  897
  966
  1,038
  1,114
  1,192
  1,273
  1,357
  1,445
  1,536
  1,632
  1,731
  1,834
Cash available for distribution, $m
  5,613
  15,279
  17,234
  19,155
  21,018
  22,809
  24,515
  26,131
  27,656
  29,092
  30,446
  31,726
  32,944
  34,112
  35,242
  36,349
  37,444
  38,542
  39,656
  40,797
  41,978
  43,209
  44,500
  45,862
  47,304
  48,834
  50,461
  52,194
  54,039
  56,004
Discount rate, %
  14.90
  15.65
  16.43
  17.25
  18.11
  19.02
  19.97
  20.97
  22.01
  23.11
  24.27
  25.48
  26.76
  28.10
  29.50
  30.98
  32.52
  34.15
  35.86
  37.65
  39.53
  41.51
  43.59
  45.77
  48.05
  50.46
  52.98
  55.63
  58.41
  61.33
PV of cash for distribution, $m
  4,885
  11,425
  10,920
  10,135
  9,144
  8,025
  6,855
  5,700
  4,614
  3,636
  2,789
  2,081
  1,510
  1,065
  729
  485
  312
  195
  117
  68
  38
  21
  11
  5
  3
  1
  1
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  32.6
  22.0
  15.2
  10.8
  7.8
  5.7
  4.2
  3.2
  2.4
  1.8
  1.4
  1.1
  0.9
  0.7
  0.5
  0.4
  0.3
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0

Huntington Bancshares Incorporated (Huntington) is a bank holding company. Through its subsidiaries, including its bank subsidiary, The Huntington National Bank (the Bank), the Company provides commercial and consumer banking services, mortgage banking services, automobile financing, recreational vehicle and marine financing, equipment leasing, investment management, trust services, brokerage services, insurance programs, and other financial products and services. Its segments include Consumer and Business Banking, Commercial Banking, Commercial Real Estate and Vehicle Finance, Regional Banking and The Huntington Private Client Group, Home Lending and Treasury/Other. The Bank offers commercial and consumer loans. Its consumer loans include automobile, home equity, residential mortgage, and recreational vehicle (RV) and marine finance loans. It offers demand deposits-noninterest-bearing, demand deposits-interest-bearing, money market deposits, and savings and other domestic deposits.

FINANCIAL RATIOS  of  Huntington Bancshares (HBAN)

Valuation Ratios
P/E Ratio 24.3
Price to Sales 0
Price to Book 1.7
Price to Tangible Book
Price to Cash Flow 14.2
Price to Free Cash Flow 15.8
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 29%
Cap. Spend. - 3 Yr. Gr. Rate 3.3%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 116.4%
Total Debt to Equity 116.4%
Interest Coverage 5
Management Effectiveness
Return On Assets 1.1%
Ret/ On Assets - 3 Yr. Avg. 1.1%
Return On Total Capital 3.9%
Ret/ On T. Cap. - 3 Yr. Avg. 4.7%
Return On Equity 8.4%
Return On Equity - 3 Yr. Avg. 9.8%
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 22.6%
Eff/ Tax Rate - 3 Yr. Avg. 24.2%
Payout Ratio 42.1%

HBAN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HBAN stock intrinsic value calculation we used $4108 million for the last fiscal year's total revenue generated by Huntington Bancshares. The default revenue input number comes from 2017 income statement of Huntington Bancshares. 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 HBAN stock valuation model: a) initial revenue growth rate of 23.4% 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 14.9%, whose default value for HBAN is calculated based on our internal credit rating of Huntington Bancshares, 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 Huntington Bancshares.
    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 HBAN stock the variable cost ratio is equal to 39.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1127 million in the base year in the intrinsic value calculation for HBAN 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 Huntington Bancshares.

Corporate tax rate of 27% is the nominal tax rate for Huntington Bancshares. 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 HBAN stock is equal to 2.2%.

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 HBAN are equal to 2481.7%.

Life of production assets of 10 years is the average useful life of capital assets used in Huntington Bancshares 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 HBAN is equal to -2210.2%. 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 Huntington Bancshares - 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 1085 million for Huntington Bancshares 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 Huntington Bancshares at the current share price and the inputted number of shares is $17.3 billion.

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COMPANY NEWS

▶ Huntington to acquire Chicago securities firm   [Aug-10-18 11:03AM  American City Business Journals]
▶ Huntington Bancshares: 2Q Earnings Snapshot   [07:52AM  Associated Press]
▶ These are the promising bank stocks: Strategists   [Jul-02-18 04:24PM  CNBC Videos]
▶ 3 Top Bank Stocks to Buy Right Now   [08:00AM  Motley Fool]
▶ Edited Transcript of HBAN presentation 6-Mar-17 3:25pm GMT   [Apr-10-18 10:59AM  Thomson Reuters StreetEvents]
▶ Fish Sandwich Chronicles: Neal and Susie Shipley at Big Jim's   [Apr-01-18 09:05AM  American City Business Journals]
▶ Huntington Bank cites tax reform for spike in small business loans   [Feb-13-18 12:00PM  American City Business Journals]
▶ [$$] Bankrupt West Virginia Tech Park Finds Buyer   [Feb-02-18 11:11AM  The Wall Street Journal]
▶ Huntington Bancshares meets 4Q profit forecasts   [08:01AM  Associated Press]
▶ Huntington Bancshares Sees Composite Rating Move Up To 96   [Jan-17-18 03:00AM  Investor's Business Daily]
▶ Huntington Bancshares Trying To Close In On Key Technical Benchmark   [Jan-11-18 03:00AM  Investor's Business Daily]
▶ See how Huntington's supermarket-turned-office changed how its employees work (Video)   [Dec-18-17 03:39PM  American City Business Journals]
▶ Is Huntington (HBAN) a Feasible Value Stock?   [Dec-15-17 09:38AM  Zacks]
▶ Huntington Bancshares Earns Relative Strength Rating Upgrade   [Dec-05-17 03:00AM  Investor's Business Daily]
▶ Credit union named best bank in Ohio, Huntington named best in Indiana   [Nov-10-17 10:00AM  American City Business Journals]
▶ 401(K)s may see severe changes under tax overhaul   [10:54AM  Yahoo Finance Video]
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