Intrinsic value of Kraton - KRA

Previous Close

$47.19

  Intrinsic Value

$518.91

stock screener

  Rating & Target

str. buy

+999%

Previous close

$47.19

 
Intrinsic value

$518.91

 
Up/down potential

+999%

 
Rating

str. buy

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

We calculate the intrinsic value of KRA 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 2016), $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 1.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   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

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  68.50
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  1,744
  2,790
  4,311
  6,447
  9,355
  13,198
  18,145
  24,355
  31,980
  41,151
  51,976
  64,543
  78,910
  95,113
  113,166
  133,063
  154,784
  178,298
  203,567
  230,551
  259,207
  289,500
  321,398
  354,875
  389,918
  426,520
  464,687
  504,434
  545,789
  588,788
  633,481
Variable operating expenses, $m
 
  2,334
  3,564
  5,292
  7,644
  10,752
  14,753
  19,777
  25,944
  33,362
  42,118
  52,205
  63,826
  76,932
  91,534
  107,628
  125,197
  144,216
  164,655
  186,481
  209,660
  234,162
  259,962
  287,040
  315,384
  344,990
  375,861
  408,011
  441,461
  476,241
  512,390
Fixed operating expenses, $m
 
  139
  143
  146
  150
  154
  158
  162
  166
  170
  174
  178
  183
  187
  192
  197
  202
  207
  212
  217
  223
  228
  234
  240
  246
  252
  258
  265
  272
  278
  285
Total operating expenses, $m
  1,621
  2,473
  3,707
  5,438
  7,794
  10,906
  14,911
  19,939
  26,110
  33,532
  42,292
  52,383
  64,009
  77,119
  91,726
  107,825
  125,399
  144,423
  164,867
  186,698
  209,883
  234,390
  260,196
  287,280
  315,630
  345,242
  376,119
  408,276
  441,733
  476,519
  512,675
Operating income, $m
  123
  317
  604
  1,009
  1,561
  2,292
  3,234
  4,417
  5,870
  7,619
  9,684
  12,159
  14,901
  17,994
  21,440
  25,238
  29,385
  33,875
  38,700
  43,853
  49,325
  55,110
  61,201
  67,595
  74,287
  81,278
  88,567
  96,158
  104,057
  112,269
  120,805
EBITDA, $m
  249
  538
  903
  1,418
  2,120
  3,049
  4,245
  5,748
  7,595
  9,816
  12,439
  15,484
  18,965
  22,893
  27,269
  32,092
  37,358
  43,059
  49,186
  55,728
  62,677
  70,022
  77,756
  85,874
  94,372
  103,248
  112,503
  122,141
  132,170
  142,598
  153,436
Interest expense (income), $m
  116
  183
  339
  566
  884
  1,318
  1,891
  2,628
  3,554
  4,690
  6,057
  7,671
  9,544
  11,686
  14,101
  16,792
  19,758
  22,996
  26,501
  30,267
  34,289
  38,561
  43,077
  47,831
  52,821
  58,045
  63,501
  69,190
  75,115
  81,279
  87,689
Earnings before tax, $m
  13
  134
  265
  443
  677
  974
  1,343
  1,789
  2,316
  2,929
  3,627
  4,488
  5,357
  6,308
  7,339
  8,446
  9,627
  10,879
  12,199
  13,585
  15,036
  16,549
  18,125
  19,764
  21,466
  23,233
  25,066
  26,968
  28,942
  30,990
  33,117
Tax expense, $m
  -92
  36
  72
  120
  183
  263
  363
  483
  625
  791
  979
  1,212
  1,446
  1,703
  1,981
  2,280
  2,599
  2,937
  3,294
  3,668
  4,060
  4,468
  4,894
  5,336
  5,796
  6,273
  6,768
  7,281
  7,814
  8,367
  8,942
Net income, $m
  107
  98
  193
  323
  494
  711
  980
  1,306
  1,691
  2,138
  2,648
  3,276
  3,910
  4,605
  5,357
  6,166
  7,028
  7,942
  8,906
  9,917
  10,976
  12,081
  13,231
  14,428
  15,670
  16,960
  18,298
  19,687
  21,128
  22,623
  24,175

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  122
  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
  2,907
  4,458
  6,887
  10,299
  14,944
  21,083
  28,985
  38,906
  51,086
  65,736
  83,029
  103,104
  126,054
  151,938
  180,776
  212,560
  247,259
  284,821
  325,188
  368,292
  414,069
  462,461
  513,415
  566,893
  622,872
  681,342
  742,311
  805,805
  871,867
  940,556
  1,011,950
Adjusted assets (=assets-cash), $m
  2,785
  4,458
  6,887
  10,299
  14,944
  21,083
  28,985
  38,906
  51,086
  65,736
  83,029
  103,104
  126,054
  151,938
  180,776
  212,560
  247,259
  284,821
  325,188
  368,292
  414,069
  462,461
  513,415
  566,893
  622,872
  681,342
  742,311
  805,805
  871,867
  940,556
  1,011,950
Revenue / Adjusted assets
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
  0.626
Average production assets, $m
  953
  1,524
  2,354
  3,520
  5,108
  7,206
  9,907
  13,298
  17,461
  22,468
  28,379
  35,240
  43,085
  51,932
  61,789
  72,652
  84,512
  97,351
  111,148
  125,881
  141,527
  158,067
  175,483
  193,762
  212,895
  232,880
  253,719
  275,421
  298,001
  321,478
  345,880
Working capital, $m
  410
  527
  815
  1,219
  1,768
  2,494
  3,429
  4,603
  6,044
  7,777
  9,824
  12,199
  14,914
  17,976
  21,388
  25,149
  29,254
  33,698
  38,474
  43,574
  48,990
  54,716
  60,744
  67,071
  73,694
  80,612
  87,826
  95,338
  103,154
  111,281
  119,728
Total debt, $m
  1,740
  3,142
  5,241
  8,190
  12,202
  17,507
  24,334
  32,906
  43,430
  56,087
  71,028
  88,373
  108,202
  130,565
  155,481
  182,943
  212,923
  245,377
  280,253
  317,495
  357,047
  398,857
  442,881
  489,087
  537,452
  587,970
  640,648
  695,507
  752,584
  811,932
  873,616
Total liabilities, $m
  2,449
  3,851
  5,950
  8,899
  12,911
  18,216
  25,043
  33,615
  44,139
  56,796
  71,737
  89,082
  108,911
  131,274
  156,190
  183,652
  213,632
  246,086
  280,962
  318,204
  357,756
  399,566
  443,590
  489,796
  538,161
  588,679
  641,357
  696,216
  753,293
  812,641
  874,325
Total equity, $m
  458
  606
  937
  1,401
  2,032
  2,867
  3,942
  5,291
  6,948
  8,940
  11,292
  14,022
  17,143
  20,664
  24,586
  28,908
  33,627
  38,736
  44,226
  50,088
  56,313
  62,895
  69,824
  77,097
  84,711
  92,662
  100,954
  109,590
  118,574
  127,916
  137,625
Total liabilities and equity, $m
  2,907
  4,457
  6,887
  10,300
  14,943
  21,083
  28,985
  38,906
  51,087
  65,736
  83,029
  103,104
  126,054
  151,938
  180,776
  212,560
  247,259
  284,822
  325,188
  368,292
  414,069
  462,461
  513,414
  566,893
  622,872
  681,341
  742,311
  805,806
  871,867
  940,557
  1,011,950
Debt-to-equity ratio
  3.799
  5.180
  5.600
  5.850
  6.000
  6.110
  6.170
  6.220
  6.250
  6.270
  6.290
  6.300
  6.310
  6.320
  6.320
  6.330
  6.330
  6.330
  6.340
  6.340
  6.340
  6.340
  6.340
  6.340
  6.340
  6.350
  6.350
  6.350
  6.350
  6.350
  6.350
Adjusted equity ratio
  0.121
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136
  0.136

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  107
  98
  193
  323
  494
  711
  980
  1,306
  1,691
  2,138
  2,648
  3,276
  3,910
  4,605
  5,357
  6,166
  7,028
  7,942
  8,906
  9,917
  10,976
  12,081
  13,231
  14,428
  15,670
  16,960
  18,298
  19,687
  21,128
  22,623
  24,175
Depreciation, amort., depletion, $m
  126
  221
  299
  409
  559
  757
  1,012
  1,332
  1,724
  2,197
  2,754
  3,325
  4,065
  4,899
  5,829
  6,854
  7,973
  9,184
  10,486
  11,876
  13,352
  14,912
  16,555
  18,279
  20,084
  21,970
  23,936
  25,983
  28,113
  30,328
  32,630
Funds from operations, $m
  134
  318
  492
  732
  1,053
  1,468
  1,992
  2,637
  3,415
  4,335
  5,402
  6,601
  7,975
  9,504
  11,186
  13,020
  15,001
  17,126
  19,391
  21,793
  24,328
  26,993
  29,786
  32,707
  35,755
  38,930
  42,234
  45,670
  49,241
  52,951
  56,806
Change in working capital, $m
  -4
  198
  287
  404
  550
  726
  935
  1,174
  1,441
  1,733
  2,046
  2,375
  2,715
  3,062
  3,412
  3,761
  4,105
  4,444
  4,776
  5,100
  5,416
  5,725
  6,029
  6,327
  6,623
  6,918
  7,214
  7,512
  7,816
  8,127
  8,447
Cash from operations, $m
  138
  120
  205
  329
  503
  742
  1,057
  1,464
  1,974
  2,601
  3,356
  4,226
  5,260
  6,441
  7,774
  9,259
  10,896
  12,682
  14,615
  16,693
  18,911
  21,267
  23,758
  26,380
  29,132
  32,012
  35,021
  38,158
  41,425
  44,824
  48,359
Maintenance CAPEX, $m
  0
  -90
  -144
  -222
  -332
  -482
  -680
  -935
  -1,255
  -1,647
  -2,120
  -2,677
  -3,325
  -4,065
  -4,899
  -5,829
  -6,854
  -7,973
  -9,184
  -10,486
  -11,876
  -13,352
  -14,912
  -16,555
  -18,279
  -20,084
  -21,970
  -23,936
  -25,983
  -28,113
  -30,328
New CAPEX, $m
  -125
  -571
  -830
  -1,166
  -1,587
  -2,099
  -2,701
  -3,391
  -4,163
  -5,007
  -5,911
  -6,861
  -7,844
  -8,847
  -9,857
  -10,864
  -11,860
  -12,839
  -13,797
  -14,733
  -15,647
  -16,540
  -17,416
  -18,279
  -19,133
  -19,985
  -20,839
  -21,702
  -22,580
  -23,478
  -24,402
Cash from investing activities, $m
  -1,365
  -661
  -974
  -1,388
  -1,919
  -2,581
  -3,381
  -4,326
  -5,418
  -6,654
  -8,031
  -9,538
  -11,169
  -12,912
  -14,756
  -16,693
  -18,714
  -20,812
  -22,981
  -25,219
  -27,523
  -29,892
  -32,328
  -34,834
  -37,412
  -40,069
  -42,809
  -45,638
  -48,563
  -51,591
  -54,730
Free cash flow, $m
  -1,227
  -540
  -769
  -1,060
  -1,416
  -1,839
  -2,323
  -2,862
  -3,443
  -4,053
  -4,675
  -5,313
  -5,909
  -6,470
  -6,982
  -7,434
  -7,818
  -8,130
  -8,366
  -8,526
  -8,611
  -8,624
  -8,570
  -8,454
  -8,281
  -8,057
  -7,788
  -7,480
  -7,138
  -6,767
  -6,372
Issuance/(repayment) of debt, $m
  1,339
  1,444
  2,099
  2,948
  4,013
  5,305
  6,827
  8,572
  10,524
  12,657
  14,942
  17,344
  19,829
  22,363
  24,916
  27,462
  29,979
  32,454
  34,876
  37,242
  39,552
  41,810
  44,024
  46,205
  48,365
  50,518
  52,678
  54,859
  57,077
  59,348
  61,684
Issuance/(repurchase) of shares, $m
  3
  131
  137
  141
  138
  124
  94
  43
  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  
  1,280
  1,575
  2,236
  3,089
  4,151
  5,429
  6,921
  8,615
  10,524
  12,657
  14,942
  17,344
  19,829
  22,363
  24,916
  27,462
  29,979
  32,454
  34,876
  37,242
  39,552
  41,810
  44,024
  46,205
  48,365
  50,518
  52,678
  54,859
  57,077
  59,348
  61,684
Total cash flow (excl. dividends), $m
  52
  1,035
  1,467
  2,029
  2,734
  3,590
  4,598
  5,753
  7,080
  8,604
  10,267
  12,031
  13,920
  15,893
  17,935
  20,028
  22,161
  24,324
  26,511
  28,717
  30,941
  33,186
  35,454
  37,751
  40,084
  42,461
  44,889
  47,379
  49,940
  52,581
  55,313
Retained Cash Flow (-), $m
  -99
  -228
  -330
  -464
  -632
  -835
  -1,075
  -1,349
  -1,656
  -1,992
  -2,352
  -2,730
  -3,121
  -3,520
  -3,922
  -4,323
  -4,719
  -5,109
  -5,490
  -5,862
  -6,226
  -6,581
  -6,930
  -7,273
  -7,613
  -7,952
  -8,292
  -8,635
  -8,984
  -9,342
  -9,710
Prev. year cash balance distribution, $m
 
  80
  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
 
  887
  1,137
  1,565
  2,103
  2,755
  3,523
  4,404
  5,424
  6,612
  7,915
  9,301
  10,799
  12,373
  14,013
  15,705
  17,442
  19,216
  21,021
  22,854
  24,715
  26,605
  28,524
  30,478
  32,471
  34,509
  36,597
  38,744
  40,955
  43,239
  45,603
Discount rate, %
 
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.84
  17.69
  18.57
  19.50
  20.47
  21.50
  22.57
  23.70
  24.88
  26.13
  27.44
  28.81
  30.25
  31.76
  33.35
  35.02
  36.77
  38.60
  40.53
  42.56
  44.69
  46.92
PV of cash for distribution, $m
 
  796
  907
  1,097
  1,281
  1,440
  1,559
  1,628
  1,650
  1,629
  1,553
  1,428
  1,274
  1,099
  918
  742
  580
  440
  322
  228
  156
  103
  66
  41
  24
  14
  8
  4
  2
  1
  0
Current shareholders' claim on cash, %
  100
  90.3
  84.4
  80.6
  78.2
  76.7
  76.0
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7
  75.7

Kraton Corporation, formerly Kraton Performance Polymers, Inc., is a specialty chemicals company. The Company manufactures styrenic block copolymers (SBCs) and other engineered polymers. The Company also produces specialty products primarily derived from pine wood pulping co-products. The Company operates through two segments: Polymer Segment, which comprises SBCs and other engineered polymers business, and Chemical Segment, which comprises pine-based specialty products business. Its SBCs are used in a range of applications, including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, paving, roofing and footwear products. The Company also sells isoprene rubber (IR) and isoprene rubber latex (IRL), which are non-SBC products primarily used in applications, such as medical products, personal care, adhesives, tackifiers, paints and coatings. It offers crude tall oil (CTO) and crude sulfate turpentine (CST).

FINANCIAL RATIOS  of  Kraton (KRA)

Valuation Ratios
P/E Ratio 13.7
Price to Sales 0.8
Price to Book 3.2
Price to Tangible Book
Price to Cash Flow 10.6
Price to Free Cash Flow 112.4
Growth Rates
Sales Growth Rate 68.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -3.1%
Cap. Spend. - 3 Yr. Gr. Rate 7.8%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 370.7%
Total Debt to Equity 379.9%
Interest Coverage 1
Management Effectiveness
Return On Assets 52.4%
Ret/ On Assets - 3 Yr. Avg. 18.7%
Return On Total Capital 7.2%
Ret/ On T. Cap. - 3 Yr. Avg. 2%
Return On Equity 26.2%
Return On Equity - 3 Yr. Avg. 7.9%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 27.5%
Gross Margin - 3 Yr. Avg. 23.1%
EBITDA Margin 14.6%
EBITDA Margin - 3 Yr. Avg. 9.9%
Operating Margin 7.1%
Oper. Margin - 3 Yr. Avg. 3.8%
Pre-Tax Margin 0.7%
Pre-Tax Margin - 3 Yr. Avg. 0.2%
Net Profit Margin 6.1%
Net Profit Margin - 3 Yr. Avg. 1.7%
Effective Tax Rate -707.7%
Eff/ Tax Rate - 3 Yr. Avg. -247%
Payout Ratio 0%

KRA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KRA stock intrinsic value calculation we used $1744 million for the last fiscal year's total revenue generated by Kraton. The default revenue input number comes from 2016 income statement of Kraton. 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 KRA stock valuation model: a) initial revenue growth rate of 60% 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 11.4%, whose default value for KRA is calculated based on our internal credit rating of Kraton, 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 Kraton.
    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 KRA stock the variable cost ratio is equal to 85.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $136 million in the base year in the intrinsic value calculation for KRA 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 10.8% for Kraton.

Corporate tax rate of 27% is the nominal tax rate for Kraton. 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 KRA 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 KRA are equal to 54.6%.

Life of production assets of 10.6 years is the average useful life of capital assets used in Kraton 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 KRA is equal to 18.9%. 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 - $458 million for Kraton - 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 31.198 million for Kraton 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 Kraton at the current share price and the inputted number of shares is $1.5 billion.

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COMPANY NEWS

▶ 5 Strong Buy Stocks Bursting To New Highs   [Nov-07-17 04:26PM  Zacks]
▶ ETFs with exposure to Kraton Corp. : November 6, 2017   [Nov-06-17 11:55AM  Capital Cube]
▶ New Strong Buy Stocks for October 30th   [Oct-30-17 11:28AM  Zacks]
▶ Kraton Corp.: Strong price momentum but will it sustain?   [Oct-26-17 10:00AM  Capital Cube]
▶ Kraton Joins Elite Club Of Stocks With RS Ratings Over 90   [03:00AM  Investor's Business Daily]
▶ Kraton reports 3Q loss   [Oct-24-17 04:43PM  Associated Press]
▶ Stock Indexes Up; Trucks And Superregional Banks Rise   [Sep-29-17 12:07PM  Investor's Business Daily]
▶ Kraton Announces Hurricane Harvey Relief Efforts   [Aug-30-17 03:00PM  PR Newswire]
▶ Kraton Corp. Value Analysis (NYSE:KRA) : August 30, 2017   [Aug-29-17 10:25PM  Capital Cube]
▶ Top Ranked Value Stocks to Buy for August 21st   [Aug-21-17 11:28AM  Zacks]
▶ ETFs with exposure to Kraton Corp. : August 11, 2017   [Aug-11-17 05:48PM  Capital Cube]
▶ Kraton posts 2Q profit   [Jul-26-17 10:35PM  Associated Press]
▶ Kraton Corp. Value Analysis (NYSE:KRA) : June 30, 2017   [Jun-30-17 03:59PM  Capital Cube]
▶ Huntsman and Clariant announce merger to create $20B chemical co.   [May-22-17 08:02AM  American City Business Journals]
▶ Kraton Announces Opening of HSBC Plant in Taiwan   [May-09-17 10:00AM  PR Newswire]
▶ ETFs with exposure to Kraton Corp. : May 5, 2017   [May-05-17 04:16PM  Capital Cube]
▶ Kraton posts 1Q profit   [Apr-26-17 04:49PM  Associated Press]
▶ Baron Funds Comments on Kraton Corp   [Mar-16-17 03:57PM  GuruFocus.com]
▶ Kraton Announces Global HSBC and SBS Price Increase   [Feb-28-17 06:08PM  PR Newswire]
▶ Kraton reports 4Q loss   [Feb-27-17 06:04PM  Associated Press]
Financial statements of KRA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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