Intrinsic value of Leucadia National - LUK

Previous Close

$28.01

  Intrinsic Value

$27.77

stock screener

  Rating & Target

hold

-1%

Previous close

$28.01

 
Intrinsic value

$27.77

 
Up/down potential

-1%

 
Rating

hold

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

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

We calculate the intrinsic value of LUK 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
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, %
  -7.31
  16.70
  15.53
  14.48
  13.53
  12.68
  11.91
  11.22
  10.60
  10.04
  9.53
  9.08
  8.67
  8.30
  7.97
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
Revenue, $m
  10,033
  11,709
  13,527
  15,485
  17,580
  19,809
  22,168
  24,654
  27,267
  30,003
  32,864
  35,847
  38,956
  42,191
  45,555
  49,052
  52,687
  56,463
  60,388
  64,468
  68,710
  73,123
  77,716
  82,497
  87,477
  92,667
  98,079
  103,724
  109,616
  115,768
  122,195
Variable operating expenses, $m
 
  11,329
  13,061
  14,927
  16,924
  19,047
  21,295
  23,665
  26,154
  28,762
  31,487
  34,159
  37,121
  40,204
  43,410
  46,742
  50,205
  53,804
  57,544
  61,431
  65,474
  69,679
  74,055
  78,611
  83,357
  88,302
  93,459
  98,839
  104,453
  110,315
  116,439
Fixed operating expenses, $m
 
  35
  36
  37
  38
  38
  39
  40
  41
  42
  44
  45
  46
  47
  48
  49
  50
  52
  53
  54
  56
  57
  59
  60
  61
  63
  65
  66
  68
  70
  71
Total operating expenses, $m
  9,762
  11,364
  13,097
  14,964
  16,962
  19,085
  21,334
  23,705
  26,195
  28,804
  31,531
  34,204
  37,167
  40,251
  43,458
  46,791
  50,255
  53,856
  57,597
  61,485
  65,530
  69,736
  74,114
  78,671
  83,418
  88,365
  93,524
  98,905
  104,521
  110,385
  116,510
Operating income, $m
  271
  345
  430
  521
  619
  723
  833
  949
  1,071
  1,199
  1,333
  1,644
  1,789
  1,940
  2,098
  2,261
  2,431
  2,608
  2,791
  2,982
  3,181
  3,387
  3,602
  3,826
  4,059
  4,302
  4,555
  4,820
  5,095
  5,384
  5,684
EBITDA, $m
  438
  654
  761
  875
  997
  1,128
  1,265
  1,411
  1,564
  1,724
  1,891
  2,066
  2,247
  2,437
  2,634
  2,838
  3,051
  3,272
  3,502
  3,741
  3,989
  4,247
  4,516
  4,796
  5,088
  5,392
  5,709
  6,040
  6,385
  6,745
  7,122
Interest expense (income), $m
  957
  853
  848
  1,099
  1,369
  1,657
  1,964
  2,289
  2,632
  2,992
  3,369
  3,763
  4,174
  4,603
  5,048
  5,512
  5,994
  6,495
  7,015
  7,556
  8,118
  8,702
  9,310
  9,943
  10,602
  11,288
  12,003
  12,749
  13,527
  14,339
  15,186
Earnings before tax, $m
  316
  -508
  -419
  -578
  -750
  -934
  -1,131
  -1,340
  -1,561
  -1,793
  -2,036
  -2,119
  -2,385
  -2,662
  -2,951
  -3,251
  -3,563
  -3,887
  -4,223
  -4,573
  -4,937
  -5,315
  -5,708
  -6,117
  -6,543
  -6,986
  -7,448
  -7,929
  -8,431
  -8,955
  -9,502
Tax expense, $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
Net income, $m
  130
  -508
  -419
  -578
  -750
  -934
  -1,131
  -1,340
  -1,561
  -1,793
  -2,036
  -2,119
  -2,385
  -2,662
  -2,951
  -3,251
  -3,563
  -3,887
  -4,223
  -4,573
  -4,937
  -5,315
  -5,708
  -6,117
  -6,543
  -6,986
  -7,448
  -7,929
  -8,431
  -8,955
  -9,502

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  12,408
  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
  45,071
  38,138
  44,061
  50,440
  57,264
  64,523
  72,207
  80,307
  88,817
  97,731
  107,047
  116,767
  126,892
  137,430
  148,389
  159,780
  171,618
  183,919
  196,704
  209,994
  223,812
  238,187
  253,145
  268,719
  284,942
  301,848
  319,476
  337,865
  357,056
  377,096
  398,028
Adjusted assets (=assets-cash), $m
  32,663
  38,138
  44,061
  50,440
  57,264
  64,523
  72,207
  80,307
  88,817
  97,731
  107,047
  116,767
  126,892
  137,430
  148,389
  159,780
  171,618
  183,919
  196,704
  209,994
  223,812
  238,187
  253,145
  268,719
  284,942
  301,848
  319,476
  337,865
  357,056
  377,096
  398,028
Revenue / Adjusted assets
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
  0.307
Average production assets, $m
  2,078
  2,424
  2,800
  3,205
  3,639
  4,100
  4,589
  5,103
  5,644
  6,211
  6,803
  7,420
  8,064
  8,734
  9,430
  10,154
  10,906
  11,688
  12,500
  13,345
  14,223
  15,137
  16,087
  17,077
  18,108
  19,182
  20,302
  21,471
  22,691
  23,964
  25,294
Working capital, $m
  15,841
  4,625
  5,343
  6,117
  6,944
  7,824
  8,756
  9,738
  10,770
  11,851
  12,981
  14,160
  15,388
  16,665
  17,994
  19,376
  20,811
  22,303
  23,853
  25,465
  27,141
  28,884
  30,698
  32,586
  34,553
  36,604
  38,741
  40,971
  43,298
  45,728
  48,267
Total debt, $m
  18,669
  18,051
  23,381
  29,122
  35,264
  41,797
  48,713
  56,003
  63,661
  71,684
  80,069
  88,816
  97,929
  107,413
  117,276
  127,528
  138,182
  149,254
  160,760
  172,720
  185,157
  198,094
  211,557
  225,573
  240,173
  255,389
  271,254
  287,804
  305,077
  323,112
  341,952
Total liabilities, $m
  34,943
  34,325
  39,655
  45,396
  51,538
  58,071
  64,987
  72,277
  79,935
  87,958
  96,343
  105,090
  114,203
  123,687
  133,550
  143,802
  154,456
  165,528
  177,034
  188,994
  201,431
  214,368
  227,831
  241,847
  256,447
  271,663
  287,528
  304,078
  321,351
  339,386
  358,226
Total equity, $m
  10,128
  3,814
  4,406
  5,044
  5,726
  6,452
  7,221
  8,031
  8,882
  9,773
  10,705
  11,677
  12,689
  13,743
  14,839
  15,978
  17,162
  18,392
  19,670
  20,999
  22,381
  23,819
  25,315
  26,872
  28,494
  30,185
  31,948
  33,786
  35,706
  37,710
  39,803
Total liabilities and equity, $m
  45,071
  38,139
  44,061
  50,440
  57,264
  64,523
  72,208
  80,308
  88,817
  97,731
  107,048
  116,767
  126,892
  137,430
  148,389
  159,780
  171,618
  183,920
  196,704
  209,993
  223,812
  238,187
  253,146
  268,719
  284,941
  301,848
  319,476
  337,864
  357,057
  377,096
  398,029
Debt-to-equity ratio
  1.843
  4.730
  5.310
  5.770
  6.160
  6.480
  6.750
  6.970
  7.170
  7.330
  7.480
  7.610
  7.720
  7.820
  7.900
  7.980
  8.050
  8.120
  8.170
  8.230
  8.270
  8.320
  8.360
  8.390
  8.430
  8.460
  8.490
  8.520
  8.540
  8.570
  8.590
Adjusted equity ratio
  -0.054
  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
  130
  -508
  -419
  -578
  -750
  -934
  -1,131
  -1,340
  -1,561
  -1,793
  -2,036
  -2,119
  -2,385
  -2,662
  -2,951
  -3,251
  -3,563
  -3,887
  -4,223
  -4,573
  -4,937
  -5,315
  -5,708
  -6,117
  -6,543
  -6,986
  -7,448
  -7,929
  -8,431
  -8,955
  -9,502
Depreciation, amort., depletion, $m
  167
  309
  331
  354
  378
  405
  432
  462
  492
  524
  558
  422
  458
  496
  536
  577
  620
  664
  710
  758
  808
  860
  914
  970
  1,029
  1,090
  1,154
  1,220
  1,289
  1,362
  1,437
Funds from operations, $m
  592
  -198
  -88
  -224
  -371
  -530
  -699
  -879
  -1,068
  -1,268
  -1,478
  -1,698
  -1,927
  -2,166
  -2,415
  -2,674
  -2,943
  -3,223
  -3,513
  -3,815
  -4,129
  -4,455
  -4,794
  -5,147
  -5,514
  -5,896
  -6,294
  -6,709
  -7,142
  -7,593
  -8,065
Change in working capital, $m
  -12
  662
  718
  774
  828
  880
  932
  982
  1,032
  1,081
  1,130
  1,179
  1,228
  1,278
  1,329
  1,381
  1,436
  1,492
  1,550
  1,612
  1,676
  1,743
  1,814
  1,889
  1,967
  2,050
  2,138
  2,230
  2,327
  2,430
  2,538
Cash from operations, $m
  604
  -860
  -806
  -998
  -1,199
  -1,410
  -1,631
  -1,861
  -2,100
  -2,349
  -2,608
  -2,876
  -3,155
  -3,444
  -3,744
  -4,055
  -4,378
  -4,714
  -5,064
  -5,427
  -5,805
  -6,198
  -6,608
  -7,036
  -7,481
  -7,946
  -8,432
  -8,939
  -9,469
  -10,024
  -10,603
Maintenance CAPEX, $m
  0
  -118
  -138
  -159
  -182
  -207
  -233
  -261
  -290
  -321
  -353
  -387
  -422
  -458
  -496
  -536
  -577
  -620
  -664
  -710
  -758
  -808
  -860
  -914
  -970
  -1,029
  -1,090
  -1,154
  -1,220
  -1,289
  -1,362
New CAPEX, $m
  -319
  -346
  -376
  -405
  -434
  -461
  -488
  -515
  -541
  -566
  -592
  -618
  -643
  -670
  -696
  -724
  -752
  -782
  -812
  -845
  -878
  -913
  -951
  -990
  -1,031
  -1,074
  -1,120
  -1,169
  -1,220
  -1,273
  -1,330
Cash from investing activities, $m
  -640
  -464
  -514
  -564
  -616
  -668
  -721
  -776
  -831
  -887
  -945
  -1,005
  -1,065
  -1,128
  -1,192
  -1,260
  -1,329
  -1,402
  -1,476
  -1,555
  -1,636
  -1,721
  -1,811
  -1,904
  -2,001
  -2,103
  -2,210
  -2,323
  -2,440
  -2,562
  -2,692
Free cash flow, $m
  -36
  -1,324
  -1,320
  -1,562
  -1,815
  -2,078
  -2,352
  -2,636
  -2,931
  -3,237
  -3,553
  -3,880
  -4,220
  -4,572
  -4,936
  -5,315
  -5,708
  -6,116
  -6,540
  -6,981
  -7,441
  -7,920
  -8,419
  -8,939
  -9,483
  -10,050
  -10,642
  -11,261
  -11,909
  -12,586
  -13,295
Issuance/(repayment) of debt, $m
  216
  -92
  5,331
  5,741
  6,142
  6,533
  6,916
  7,290
  7,658
  8,023
  8,385
  8,747
  9,113
  9,484
  9,863
  10,252
  10,654
  11,071
  11,506
  11,961
  12,437
  12,937
  13,463
  14,017
  14,600
  15,216
  15,865
  16,550
  17,273
  18,035
  18,840
Issuance/(repurchase) of shares, $m
  -94
  6,076
  1,011
  1,216
  1,432
  1,660
  1,900
  2,150
  2,412
  2,684
  2,968
  3,091
  3,398
  3,716
  4,047
  4,390
  4,746
  5,117
  5,502
  5,902
  6,319
  6,753
  7,204
  7,675
  8,165
  8,677
  9,211
  9,768
  10,351
  10,959
  11,595
Cash from financing (excl. dividends), $m  
  322
  5,984
  6,342
  6,957
  7,574
  8,193
  8,816
  9,440
  10,070
  10,707
  11,353
  11,838
  12,511
  13,200
  13,910
  14,642
  15,400
  16,188
  17,008
  17,863
  18,756
  19,690
  20,667
  21,692
  22,765
  23,893
  25,076
  26,318
  27,624
  28,994
  30,435
Total cash flow (excl. dividends), $m
  260
  4,659
  5,021
  5,395
  5,759
  6,115
  6,463
  6,804
  7,139
  7,470
  7,800
  7,958
  8,291
  8,628
  8,973
  9,327
  9,693
  10,073
  10,468
  10,881
  11,315
  11,770
  12,248
  12,752
  13,283
  13,843
  14,434
  15,057
  15,714
  16,408
  17,140
Retained Cash Flow (-), $m
  273
  -6,076
  -1,011
  -1,216
  -1,432
  -1,660
  -1,900
  -2,150
  -2,412
  -2,684
  -2,968
  -3,091
  -3,398
  -3,716
  -4,047
  -4,390
  -4,746
  -5,117
  -5,502
  -5,902
  -6,319
  -6,753
  -7,204
  -7,675
  -8,165
  -8,677
  -9,211
  -9,768
  -10,351
  -10,959
  -11,595
Prev. year cash balance distribution, $m
 
  11,882
  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
 
  10,465
  4,010
  4,179
  4,327
  4,455
  4,563
  4,654
  4,727
  4,786
  4,832
  4,867
  4,893
  4,912
  4,926
  4,937
  4,947
  4,956
  4,966
  4,979
  4,996
  5,017
  5,044
  5,077
  5,118
  5,166
  5,223
  5,288
  5,364
  5,449
  5,545
Discount rate, %
 
  6.60
  6.93
  7.28
  7.64
  8.02
  8.42
  8.84
  9.29
  9.75
  10.24
  10.75
  11.29
  11.85
  12.45
  13.07
  13.72
  14.41
  15.13
  15.88
  16.68
  17.51
  18.39
  19.31
  20.27
  21.29
  22.35
  23.47
  24.64
  25.87
  27.17
PV of cash for distribution, $m
 
  9,817
  3,507
  3,385
  3,223
  3,029
  2,809
  2,571
  2,323
  2,072
  1,823
  1,583
  1,356
  1,145
  954
  782
  632
  503
  393
  303
  228
  169
  123
  88
  61
  41
  28
  18
  11
  7
  4
Current shareholders' claim on cash, %
  100
  50.0
  39.4
  30.9
  24.0
  18.6
  14.3
  11.0
  8.4
  6.5
  4.9
  3.8
  3.0
  2.3
  1.8
  1.4
  1.0
  0.8
  0.6
  0.5
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0

Leucadia National Corporation (Leucadia) is a diversified holding company focused on return on investment and long-term value. The Company's segments, based on requirements are Jefferies, National Beef, and Corporate and other. Jefferies is a global full-service, integrated securities and investment banking firm. National Beef processes and markets fresh boxed beef, case-ready beef, beef by-products and wet blue leather for domestic and international markets. Its financial services businesses include Jefferies Group LLC, Leucadia Asset Management, Berkadia Commercial Mortgage, LLC (commercial mortgage banking and servicing), FXCM Group, LLC, HomeFed Corporation (HomeFed) and Foursight Capital and Chrome Capital (vehicle finance). It also owns and has investments in an array of businesses, including National Beef, HRG Group, Inc. (HRG), Vitesse Energy, LLC and Juneau Energy, LLC, Conwed Plastics and Idaho Timber and Golden Queen Mining Company, LLC (a gold and silver mining project).

FINANCIAL RATIOS  of  Leucadia National (LUK)

Valuation Ratios
P/E Ratio 77.4
Price to Sales 1
Price to Book 1
Price to Tangible Book
Price to Cash Flow 16.7
Price to Free Cash Flow 35.3
Growth Rates
Sales Growth Rate -7.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 7.8%
Cap. Spend. - 3 Yr. Gr. Rate 14%
Financial Strength
Quick Ratio 24
Current Ratio 0
LT Debt to Equity 179.1%
Total Debt to Equity 184.3%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.6%
Ret/ On Assets - 3 Yr. Avg. 1.4%
Return On Total Capital 0.4%
Ret/ On T. Cap. - 3 Yr. Avg. 0.6%
Return On Equity 1.3%
Return On Equity - 3 Yr. Avg. 2%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 31.7%
Gross Margin - 3 Yr. Avg. 30.2%
EBITDA Margin 14.4%
EBITDA Margin - 3 Yr. Avg. 13.2%
Operating Margin 2.7%
Oper. Margin - 3 Yr. Avg. 2.8%
Pre-Tax Margin 3.1%
Pre-Tax Margin - 3 Yr. Avg. 2.5%
Net Profit Margin 1.3%
Net Profit Margin - 3 Yr. Avg. 1.9%
Effective Tax Rate 38.6%
Eff/ Tax Rate - 3 Yr. Avg. 50.5%
Payout Ratio 70%

LUK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LUK stock intrinsic value calculation we used $10033 million for the last fiscal year's total revenue generated by Leucadia National. The default revenue input number comes from 2016 income statement of Leucadia National. 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 LUK stock valuation model: a) initial revenue growth rate of 16.7% 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 6.6%, whose default value for LUK is calculated based on our internal credit rating of Leucadia National, 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 Leucadia National.
    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 LUK stock the variable cost ratio is equal to 97%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $34 million in the base year in the intrinsic value calculation for LUK 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 4.7% for Leucadia National.

Corporate tax rate of 27% is the nominal tax rate for Leucadia National. 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 LUK 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 LUK are equal to 20.7%.

Life of production assets of 17.6 years is the average useful life of capital assets used in Leucadia National 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 LUK is equal to 39.5%. 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 - $10128 million for Leucadia National - 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 358.248 million for Leucadia National 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 Leucadia National at the current share price and the inputted number of shares is $10.0 billion.

RELATED COMPANIES Price Int.Val. Rating
HRL Hormel Foods 34.76 25.57  sell
TSN Tyson Foods Cl 80.19 67.77  hold
HLI Houlihan Lokey 50.50 252.36  str.buy
GHL Greenhill 19.15 50.58  str.buy

COMPANY NEWS

▶ MOVES-HSBC's Ramesh switches to Jefferies   [Jan-15-18 11:43AM  Reuters]
▶ [$$] Leucadia Exploring Sale of Meat Processor National Beef   [Jan-08-18 04:45PM  The Wall Street Journal]
▶ Leucadia Exploring Sale of Meat Processor National Beef   [03:54PM  The Wall Street Journal]
▶ LPC: Banks provide US$650m of loans for SMG buyout   [Dec-13-17 03:40PM  Reuters]
▶ [$$] FXCM Part-Owner Enters Bankruptcy With Prearranged Plan   [Dec-12-17 03:43PM  The Wall Street Journal]
▶ MOVES-Jefferies hires Slosser to boost 144a roster   [Dec-01-17 11:38AM  Reuters]
▶ Merchant Banking Holds Back Leucadia's Profits   [Oct-27-17 08:45AM  Motley Fool]
▶ Leucadia posts 3Q profit   [Oct-26-17 06:48PM  Associated Press]
▶ [$$] GIP Buying Medallion Gathering & Processing for $1.83 Billion   [Oct-02-17 12:12PM  The Wall Street Journal]
▶ Wall Street Relatively Flat in Premarket Trading   [Sep-20-17 12:47PM  GuruFocus.com]
▶ [$$] Jefferies Profit More Than Doubles   [12:26AM  The Wall Street Journal]
▶ Jefferies Trading Revenue Slumps   [Sep-19-17 07:23PM  Bloomberg Video]
▶ Leucadia to Host Investor Meeting on October 5, 2017   [Sep-13-17 09:22AM  Business Wire]
▶ Jefferies to Hold Hurricane Harvey Relief Day Today   [Aug-30-17 07:45AM  Business Wire]
▶ Leucadia and Jefferies to Host Annual Investor Meeting   [Aug-11-17 10:54AM  Business Wire]
▶ [$$] Clearlake Capital Invests in JetSmarter   [Aug-10-17 06:38PM  The Wall Street Journal]
▶ JetSmarter raises its first round of institutional capital   [12:50PM  American City Business Journals]
▶ Leucadia posts 2Q profit   [Jul-27-17 11:05PM  Associated Press]
Financial statements of LUK
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