Intrinsic value of LyondellBasell Industries - LYB

Previous Close

$106.22

  Intrinsic Value

$320.75

stock screener

  Rating & Target

str. buy

+202%

Previous close

$106.22

 
Intrinsic value

$320.75

 
Up/down potential

+202%

 
Rating

str. buy

We calculate the intrinsic value of LYB 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 41.9

 

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, %
  18.20
  16.88
  15.69
  14.62
  13.66
  12.79
  12.02
  11.31
  10.68
  10.11
  9.60
  9.14
  8.73
  8.36
  8.02
  7.72
  7.45
  7.20
  6.98
  6.78
  6.60
  6.44
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
Revenue, $m
  40,760
  47,640
  55,116
  63,176
  71,806
  80,993
  90,724
  100,988
  111,776
  123,081
  134,900
  147,233
  160,084
  173,459
  187,370
  201,831
  216,859
  232,476
  248,706
  265,576
  283,116
  301,361
  320,347
  340,112
  360,698
  382,151
  404,518
  427,849
  452,197
  477,619
Variable operating expenses, $m
  33,688
  39,355
  45,513
  52,152
  59,260
  66,828
  74,843
  83,298
  92,184
  101,496
  111,117
  121,276
  131,861
  142,878
  154,337
  166,248
  178,627
  191,490
  204,859
  218,755
  233,203
  248,231
  263,870
  280,150
  297,107
  314,778
  333,202
  352,419
  372,475
  393,414
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
  33,688
  39,355
  45,513
  52,152
  59,260
  66,828
  74,843
  83,298
  92,184
  101,496
  111,117
  121,276
  131,861
  142,878
  154,337
  166,248
  178,627
  191,490
  204,859
  218,755
  233,203
  248,231
  263,870
  280,150
  297,107
  314,778
  333,202
  352,419
  372,475
  393,414
Operating income, $m
  7,072
  8,285
  9,603
  11,024
  12,546
  14,165
  15,881
  17,690
  19,592
  21,585
  23,783
  25,957
  28,223
  30,581
  33,033
  35,583
  38,232
  40,986
  43,847
  46,821
  49,913
  53,130
  56,477
  59,962
  63,591
  67,373
  71,317
  75,430
  79,722
  84,204
EBITDA, $m
  8,568
  10,014
  11,585
  13,280
  15,094
  17,025
  19,070
  21,228
  23,495
  25,872
  28,356
  30,948
  33,650
  36,461
  39,385
  42,425
  45,584
  48,866
  52,278
  55,824
  59,511
  63,346
  67,337
  71,492
  75,819
  80,328
  85,030
  89,934
  95,052
  100,395
Interest expense (income), $m
  346
  483
  659
  852
  1,062
  1,288
  1,530
  1,788
  2,060
  2,348
  2,651
  2,968
  3,299
  3,645
  4,005
  4,381
  4,771
  5,176
  5,598
  6,035
  6,491
  6,964
  7,456
  7,967
  8,500
  9,054
  9,631
  10,233
  10,860
  11,514
  12,197
Earnings before tax, $m
  6,590
  7,626
  8,751
  9,962
  11,258
  12,635
  14,093
  15,630
  17,244
  18,935
  20,815
  22,658
  24,578
  26,575
  28,653
  30,812
  33,056
  35,388
  37,811
  40,330
  42,950
  45,674
  48,510
  51,462
  54,537
  57,742
  61,084
  64,570
  68,208
  72,007
Tax expense, $m
  1,779
  2,059
  2,363
  2,690
  3,040
  3,412
  3,805
  4,220
  4,656
  5,112
  5,620
  6,118
  6,636
  7,175
  7,736
  8,319
  8,925
  9,555
  10,209
  10,889
  11,596
  12,332
  13,098
  13,895
  14,725
  15,590
  16,493
  17,434
  18,416
  19,442
Net income, $m
  4,810
  5,567
  6,388
  7,272
  8,218
  9,224
  10,288
  11,410
  12,588
  13,822
  15,195
  16,540
  17,942
  19,400
  20,917
  22,493
  24,131
  25,833
  27,602
  29,441
  31,353
  33,342
  35,412
  37,567
  39,812
  42,152
  44,591
  47,136
  49,792
  52,565

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
  30,973
  36,201
  41,882
  48,006
  54,564
  61,545
  68,939
  76,739
  84,936
  93,527
  102,508
  111,879
  121,644
  131,808
  142,378
  153,367
  164,786
  176,653
  188,986
  201,805
  215,134
  228,998
  243,425
  258,444
  274,087
  290,389
  307,385
  325,113
  343,615
  362,932
Adjusted assets (=assets-cash), $m
  30,973
  36,201
  41,882
  48,006
  54,564
  61,545
  68,939
  76,739
  84,936
  93,527
  102,508
  111,879
  121,644
  131,808
  142,378
  153,367
  164,786
  176,653
  188,986
  201,805
  215,134
  228,998
  243,425
  258,444
  274,087
  290,389
  307,385
  325,113
  343,615
  362,932
Revenue / Adjusted assets
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
  1.316
Average production assets, $m
  13,818
  16,150
  18,684
  21,417
  24,342
  27,457
  30,756
  34,235
  37,892
  41,724
  45,731
  49,912
  54,268
  58,803
  63,518
  68,421
  73,515
  78,809
  84,311
  90,030
  95,976
  102,161
  108,598
  115,298
  122,277
  129,549
  137,132
  145,041
  153,295
  161,913
Working capital, $m
  1,549
  1,810
  2,094
  2,401
  2,729
  3,078
  3,448
  3,838
  4,247
  4,677
  5,126
  5,595
  6,083
  6,591
  7,120
  7,670
  8,241
  8,834
  9,451
  10,092
  10,758
  11,452
  12,173
  12,924
  13,707
  14,522
  15,372
  16,258
  17,183
  18,150
Total debt, $m
  11,773
  15,218
  18,962
  22,998
  27,319
  31,920
  36,793
  41,933
  47,335
  52,996
  58,915
  65,090
  71,525
  78,223
  85,189
  92,431
  99,956
  107,777
  115,904
  124,352
  133,135
  142,272
  151,779
  161,676
  171,985
  182,728
  193,929
  205,612
  217,804
  230,534
Total liabilities, $m
  20,411
  23,856
  27,600
  31,636
  35,957
  40,558
  45,431
  50,571
  55,973
  61,634
  67,553
  73,728
  80,163
  86,861
  93,827
  101,069
  108,594
  116,415
  124,542
  132,990
  141,773
  150,910
  160,417
  170,314
  180,623
  191,366
  202,567
  214,250
  226,442
  239,172
Total equity, $m
  10,562
  12,345
  14,282
  16,370
  18,606
  20,987
  23,508
  26,168
  28,963
  31,893
  34,955
  38,151
  41,481
  44,946
  48,551
  52,298
  56,192
  60,239
  64,444
  68,816
  73,361
  78,088
  83,008
  88,129
  93,464
  99,023
  104,818
  110,864
  117,173
  123,760
Total liabilities and equity, $m
  30,973
  36,201
  41,882
  48,006
  54,563
  61,545
  68,939
  76,739
  84,936
  93,527
  102,508
  111,879
  121,644
  131,807
  142,378
  153,367
  164,786
  176,654
  188,986
  201,806
  215,134
  228,998
  243,425
  258,443
  274,087
  290,389
  307,385
  325,114
  343,615
  362,932
Debt-to-equity ratio
  1.110
  1.230
  1.330
  1.400
  1.470
  1.520
  1.570
  1.600
  1.630
  1.660
  1.690
  1.710
  1.720
  1.740
  1.750
  1.770
  1.780
  1.790
  1.800
  1.810
  1.810
  1.820
  1.830
  1.830
  1.840
  1.850
  1.850
  1.850
  1.860
  1.860
Adjusted equity ratio
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341
  0.341

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,810
  5,567
  6,388
  7,272
  8,218
  9,224
  10,288
  11,410
  12,588
  13,822
  15,195
  16,540
  17,942
  19,400
  20,917
  22,493
  24,131
  25,833
  27,602
  29,441
  31,353
  33,342
  35,412
  37,567
  39,812
  42,152
  44,591
  47,136
  49,792
  52,565
Depreciation, amort., depletion, $m
  1,496
  1,729
  1,982
  2,255
  2,548
  2,859
  3,189
  3,537
  3,903
  4,286
  4,573
  4,991
  5,427
  5,880
  6,352
  6,842
  7,352
  7,881
  8,431
  9,003
  9,598
  10,216
  10,860
  11,530
  12,228
  12,955
  13,713
  14,504
  15,329
  16,191
Funds from operations, $m
  6,306
  7,296
  8,370
  9,528
  10,766
  12,083
  13,478
  14,947
  16,491
  18,109
  19,768
  21,532
  23,369
  25,280
  27,268
  29,335
  31,482
  33,714
  36,033
  38,444
  40,951
  43,558
  46,272
  49,097
  52,040
  55,107
  58,304
  61,640
  65,121
  68,757
Change in working capital, $m
  238
  261
  284
  306
  328
  349
  370
  390
  410
  430
  449
  469
  488
  508
  529
  550
  571
  593
  617
  641
  667
  693
  721
  751
  782
  815
  850
  887
  925
  966
Cash from operations, $m
  6,067
  7,034
  8,086
  9,222
  10,438
  11,734
  13,108
  14,557
  16,081
  17,679
  19,319
  21,063
  22,880
  24,772
  26,740
  28,785
  30,911
  33,121
  35,417
  37,803
  40,284
  42,865
  45,551
  48,346
  51,258
  54,291
  57,454
  60,754
  64,196
  67,790
Maintenance CAPEX, $m
  -1,168
  -1,382
  -1,615
  -1,868
  -2,142
  -2,434
  -2,746
  -3,076
  -3,424
  -3,789
  -4,172
  -4,573
  -4,991
  -5,427
  -5,880
  -6,352
  -6,842
  -7,352
  -7,881
  -8,431
  -9,003
  -9,598
  -10,216
  -10,860
  -11,530
  -12,228
  -12,955
  -13,713
  -14,504
  -15,329
New CAPEX, $m
  -2,143
  -2,332
  -2,534
  -2,732
  -2,926
  -3,114
  -3,299
  -3,480
  -3,657
  -3,832
  -4,007
  -4,181
  -4,356
  -4,534
  -4,716
  -4,902
  -5,095
  -5,294
  -5,502
  -5,719
  -5,946
  -6,185
  -6,436
  -6,700
  -6,979
  -7,273
  -7,582
  -7,909
  -8,254
  -8,618
Cash from investing activities, $m
  -3,311
  -3,714
  -4,149
  -4,600
  -5,068
  -5,548
  -6,045
  -6,556
  -7,081
  -7,621
  -8,179
  -8,754
  -9,347
  -9,961
  -10,596
  -11,254
  -11,937
  -12,646
  -13,383
  -14,150
  -14,949
  -15,783
  -16,652
  -17,560
  -18,509
  -19,501
  -20,537
  -21,622
  -22,758
  -23,947
Free cash flow, $m
  2,757
  3,320
  3,937
  4,621
  5,371
  6,186
  7,063
  8,002
  9,001
  10,057
  11,140
  12,309
  13,533
  14,811
  16,144
  17,531
  18,975
  20,475
  22,034
  23,653
  25,335
  27,082
  28,898
  30,786
  32,749
  34,791
  36,917
  39,131
  41,438
  43,843
Issuance/(repayment) of debt, $m
  3,154
  3,445
  3,744
  4,036
  4,322
  4,601
  4,873
  5,140
  5,402
  5,661
  5,918
  6,176
  6,435
  6,698
  6,966
  7,241
  7,526
  7,820
  8,127
  8,448
  8,784
  9,136
  9,507
  9,898
  10,309
  10,743
  11,200
  11,683
  12,193
  12,730
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  
  3,154
  3,445
  3,744
  4,036
  4,322
  4,601
  4,873
  5,140
  5,402
  5,661
  5,918
  6,176
  6,435
  6,698
  6,966
  7,241
  7,526
  7,820
  8,127
  8,448
  8,784
  9,136
  9,507
  9,898
  10,309
  10,743
  11,200
  11,683
  12,193
  12,730
Total cash flow (excl. dividends), $m
  5,911
  6,765
  7,681
  8,657
  9,693
  10,786
  11,936
  13,142
  14,403
  15,718
  17,058
  18,485
  19,968
  21,509
  23,110
  24,773
  26,500
  28,295
  30,161
  32,101
  34,119
  36,219
  38,405
  40,684
  43,058
  45,534
  48,118
  50,814
  53,631
  56,573
Retained Cash Flow (-), $m
  -1,613
  -1,783
  -1,937
  -2,088
  -2,236
  -2,381
  -2,522
  -2,660
  -2,795
  -2,929
  -3,063
  -3,196
  -3,330
  -3,466
  -3,605
  -3,747
  -3,894
  -4,047
  -4,205
  -4,371
  -4,545
  -4,728
  -4,919
  -5,122
  -5,334
  -5,559
  -5,796
  -6,045
  -6,309
  -6,587
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
  69
  82
  95
  110
  126
  144
  162
  181
  202
  224
  246
  270
  294
  320
  347
  375
  404
  434
  465
  497
  531
  566
  603
  641
  680
  721
  764
  809
  856
  904
Cash available for distribution, $m
  4,299
  4,983
  5,744
  6,568
  7,456
  8,406
  9,415
  10,482
  11,607
  12,789
  13,996
  15,289
  16,638
  18,043
  19,505
  21,026
  22,606
  24,249
  25,956
  27,730
  29,574
  31,491
  33,486
  35,562
  37,724
  39,975
  42,322
  44,769
  47,322
  49,986
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
  4,121
  4,561
  4,998
  5,408
  5,780
  6,100
  6,360
  6,552
  6,668
  6,705
  6,646
  6,524
  6,326
  6,057
  5,726
  5,343
  4,919
  4,466
  3,996
  3,524
  3,059
  2,613
  2,195
  1,811
  1,467
  1,166
  908
  693
  517
  376
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

LyondellBasell Industries N.V. is a chemical company. The Company operates in five segments: Olefins and Polyolefins-Americas (O&P-Americas), Olefins and Polyolefins-Europe, Asia, International (O&P-EAI), Intermediates and Derivatives (I&D), Refining and Technology. The O&P-Americas segment produces and markets olefins and co-products, polyethylene and polypropylene. The O&P-EAI segment produces and markets olefins and co-products, polyethylene and polypropylene. The I&D segment produces and markets propylene oxide (PO) and its derivatives, oxyfuels and related products, and intermediate chemicals, such as styrene monomer (SM), acetyls and ethylene oxides. The primary product of the Refining segment is refined products made from sulfur crude oil and other crude oils of various types and sources available on the United States Gulf Coast. The Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

FINANCIAL RATIOS  of  LyondellBasell Industries (LYB)

Valuation Ratios
P/E Ratio 11.2
Price to Sales 1.5
Price to Book 7.1
Price to Tangible Book
Price to Cash Flow 7.7
Price to Free Cash Flow 12.8
Growth Rates
Sales Growth Rate -10.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 55.8%
Cap. Spend. - 3 Yr. Gr. Rate 7.5%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 138.6%
Total Debt to Equity 148.5%
Interest Coverage 16
Management Effectiveness
Return On Assets 17.7%
Ret/ On Assets - 3 Yr. Avg. 18.3%
Return On Total Capital 25.9%
Ret/ On T. Cap. - 3 Yr. Avg. 26.9%
Return On Equity 60.9%
Return On Equity - 3 Yr. Avg. 53.8%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 20.6%
Gross Margin - 3 Yr. Avg. 19%
EBITDA Margin 22.8%
EBITDA Margin - 3 Yr. Avg. 20.5%
Operating Margin 17.3%
Oper. Margin - 3 Yr. Avg. 16.2%
Pre-Tax Margin 17.9%
Pre-Tax Margin - 3 Yr. Avg. 16.5%
Net Profit Margin 13.1%
Net Profit Margin - 3 Yr. Avg. 12%
Effective Tax Rate 26.5%
Eff/ Tax Rate - 3 Yr. Avg. 27.1%
Payout Ratio 36.4%

LYB stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LYB stock intrinsic value calculation we used $34484 million for the last fiscal year's total revenue generated by LyondellBasell Industries. The default revenue input number comes from 2017 income statement of LyondellBasell Industries. 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 LYB stock valuation model: a) initial revenue growth rate of 18.2% 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 LYB is calculated based on our internal credit rating of LyondellBasell Industries, 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 LyondellBasell Industries.
    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 LYB stock the variable cost ratio is equal to 82.7%.

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 LYB 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 5.6% for LyondellBasell Industries.

Corporate tax rate of 27% is the nominal tax rate for LyondellBasell Industries. 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 LYB stock is equal to 0.2%.

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 LYB are equal to 33.9%.

Life of production assets of 10 years is the average useful life of capital assets used in LyondellBasell Industries 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 LYB is equal to 3.8%. 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 - $8949 million for LyondellBasell Industries - 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 394 million for LyondellBasell Industries 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 LyondellBasell Industries at the current share price and the inputted number of shares is $41.9 billion.

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COMPANY NEWS

▶ Chemical Production on the Upswing: 5 Growth Stocks to Buy   [Jul-06-18 11:10AM  InvestorPlace]
▶ [$$] LyondellBasell, Braskem Confirm Merger Talks   [Jun-17-18 07:42PM  The Wall Street Journal]
▶ [$$] LyondellBasell, Braskem Confirm Merger Talks   [Jun-15-18 07:07PM  The Wall Street Journal]
▶ LyondellBasell confirms talks about Braskem deal   [01:31PM  American City Business Journals]
▶ Ex-chemical industry lawyer to lead Superfund task force   [Jun-01-18 06:44PM  Associated Press]
▶ Inside LyondellBasells growth plan   [May-17-18 10:17AM  CNBC Videos]
▶ LyondellBasell: 1Q Earnings Snapshot   [06:51AM  Associated Press]
▶ LyondellBasell reveals median employee pay   [08:07AM  American City Business Journals]
▶ 3 Top Stocks for Retirees   [08:31AM  Motley Fool]
▶ A. Schulman Reports Fiscal 2018 Second Quarter Results   [Mar-28-18 04:20PM  GlobeNewswire]
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