Intrinsic value of LyondellBasell Industries - LYB

Previous Close

$110.83

  Intrinsic Value

$344.40

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  Rating & Target

str. buy

+211%

Previous close

$110.83

 
Intrinsic value

$344.40

 
Up/down potential

+211%

 
Rating

str. buy

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

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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of LyondellBasell Industries (LYB) stock.

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, %
  -10.85
  15.60
  14.54
  13.59
  12.73
  11.95
  11.26
  10.63
  10.07
  9.56
  9.11
  8.70
  8.33
  7.99
  7.69
  7.42
  7.18
  6.96
  6.77
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.85
  5.76
  5.68
  5.62
  5.55
  5.50
Revenue, $m
  29,183
  33,736
  38,641
  43,890
  49,477
  55,391
  61,628
  68,181
  75,047
  82,223
  89,711
  97,513
  105,632
  114,076
  122,853
  131,975
  141,454
  151,305
  161,545
  172,193
  183,268
  194,793
  206,792
  219,290
  232,315
  245,895
  260,061
  274,845
  290,281
  306,406
  323,256
Variable operating expenses, $m
 
  23,640
  27,070
  30,741
  34,646
  38,782
  43,142
  47,724
  52,525
  57,543
  62,778
  68,180
  73,857
  79,761
  85,898
  92,276
  98,903
  105,791
  112,951
  120,395
  128,139
  136,197
  144,587
  153,326
  162,432
  171,927
  181,832
  192,169
  202,962
  214,236
  226,017
Fixed operating expenses, $m
 
  3,851
  3,947
  4,046
  4,147
  4,251
  4,357
  4,466
  4,578
  4,692
  4,809
  4,930
  5,053
  5,179
  5,309
  5,441
  5,577
  5,717
  5,860
  6,006
  6,156
  6,310
  6,468
  6,630
  6,795
  6,965
  7,139
  7,318
  7,501
  7,688
  7,881
Total operating expenses, $m
  24,123
  27,491
  31,017
  34,787
  38,793
  43,033
  47,499
  52,190
  57,103
  62,235
  67,587
  73,110
  78,910
  84,940
  91,207
  97,717
  104,480
  111,508
  118,811
  126,401
  134,295
  142,507
  151,055
  159,956
  169,227
  178,892
  188,971
  199,487
  210,463
  221,924
  233,898
Operating income, $m
  5,060
  6,244
  7,623
  9,104
  10,683
  12,359
  14,128
  15,991
  17,944
  19,989
  22,124
  24,403
  26,722
  29,136
  31,647
  34,258
  36,973
  39,797
  42,735
  45,791
  48,972
  52,285
  55,737
  59,335
  63,087
  67,002
  71,089
  75,358
  79,818
  84,481
  89,358
EBITDA, $m
  6,124
  7,471
  9,021
  10,684
  12,458
  14,339
  16,326
  18,416
  20,609
  22,903
  25,299
  27,797
  30,398
  33,106
  35,922
  38,851
  41,896
  45,063
  48,356
  51,783
  55,350
  59,064
  62,933
  66,966
  71,172
  75,559
  80,139
  84,923
  89,920
  95,144
  100,607
Interest expense (income), $m
  346
  344
  451
  567
  691
  823
  962
  1,110
  1,264
  1,426
  1,596
  1,772
  1,956
  2,148
  2,347
  2,554
  2,770
  2,993
  3,226
  3,468
  3,719
  3,980
  4,252
  4,535
  4,830
  5,138
  5,458
  5,793
  6,142
  6,506
  6,886
Earnings before tax, $m
  5,233
  5,900
  7,172
  8,537
  9,992
  11,536
  13,166
  14,881
  16,680
  18,563
  20,528
  22,631
  24,766
  26,988
  29,300
  31,704
  34,204
  36,804
  39,509
  42,323
  45,253
  48,305
  51,485
  54,799
  58,257
  61,864
  65,631
  69,565
  73,677
  77,975
  82,471
Tax expense, $m
  1,386
  1,593
  1,937
  2,305
  2,698
  3,115
  3,555
  4,018
  4,504
  5,012
  5,543
  6,110
  6,687
  7,287
  7,911
  8,560
  9,235
  9,937
  10,667
  11,427
  12,218
  13,042
  13,901
  14,796
  15,729
  16,703
  17,720
  18,783
  19,893
  21,053
  22,267
Net income, $m
  3,836
  4,307
  5,236
  6,232
  7,294
  8,421
  9,611
  10,863
  12,177
  13,551
  14,986
  16,521
  18,079
  19,701
  21,389
  23,144
  24,969
  26,867
  28,841
  30,896
  33,035
  35,263
  37,584
  40,004
  42,527
  45,161
  47,911
  50,783
  53,784
  56,922
  60,204

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,022
  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
  23,442
  24,769
  28,371
  32,225
  36,326
  40,669
  45,248
  50,059
  55,100
  60,370
  65,867
  71,595
  77,556
  83,756
  90,201
  96,898
  103,858
  111,090
  118,609
  126,426
  134,558
  143,020
  151,830
  161,006
  170,569
  180,540
  190,940
  201,795
  213,129
  224,967
  237,339
Adjusted assets (=assets-cash), $m
  21,420
  24,769
  28,371
  32,225
  36,326
  40,669
  45,248
  50,059
  55,100
  60,370
  65,867
  71,595
  77,556
  83,756
  90,201
  96,898
  103,858
  111,090
  118,609
  126,426
  134,558
  143,020
  151,830
  161,006
  170,569
  180,540
  190,940
  201,795
  213,129
  224,967
  237,339
Revenue / Adjusted assets
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
  1.362
Average production assets, $m
  10,159
  11,740
  13,447
  15,274
  17,218
  19,276
  21,447
  23,727
  26,116
  28,614
  31,220
  33,934
  36,760
  39,698
  42,753
  45,927
  49,226
  52,654
  56,218
  59,923
  63,777
  67,788
  71,964
  76,313
  80,846
  85,571
  90,501
  95,646
  101,018
  106,629
  112,493
Working capital, $m
  5,059
  4,183
  4,791
  5,442
  6,135
  6,869
  7,642
  8,454
  9,306
  10,196
  11,124
  12,092
  13,098
  14,145
  15,234
  16,365
  17,540
  18,762
  20,032
  21,352
  22,725
  24,154
  25,642
  27,192
  28,807
  30,491
  32,248
  34,081
  35,995
  37,994
  40,084
Total debt, $m
  8,981
  11,006
  13,830
  16,851
  20,067
  23,472
  27,062
  30,834
  34,786
  38,917
  43,227
  47,718
  52,391
  57,252
  62,304
  67,555
  73,011
  78,682
  84,576
  90,705
  97,080
  103,715
  110,621
  117,816
  125,313
  133,130
  141,284
  149,794
  158,680
  167,961
  177,661
Total liabilities, $m
  17,394
  19,419
  22,243
  25,264
  28,480
  31,885
  35,475
  39,247
  43,199
  47,330
  51,640
  56,131
  60,804
  65,665
  70,717
  75,968
  81,424
  87,095
  92,989
  99,118
  105,493
  112,128
  119,034
  126,229
  133,726
  141,543
  149,697
  158,207
  167,093
  176,374
  186,074
Total equity, $m
  6,048
  5,350
  6,128
  6,961
  7,846
  8,785
  9,774
  10,813
  11,902
  13,040
  14,227
  15,465
  16,752
  18,091
  19,483
  20,930
  22,433
  23,996
  25,619
  27,308
  29,064
  30,892
  32,795
  34,777
  36,843
  38,997
  41,243
  43,588
  46,036
  48,593
  51,265
Total liabilities and equity, $m
  23,442
  24,769
  28,371
  32,225
  36,326
  40,670
  45,249
  50,060
  55,101
  60,370
  65,867
  71,596
  77,556
  83,756
  90,200
  96,898
  103,857
  111,091
  118,608
  126,426
  134,557
  143,020
  151,829
  161,006
  170,569
  180,540
  190,940
  201,795
  213,129
  224,967
  237,339
Debt-to-equity ratio
  1.485
  2.060
  2.260
  2.420
  2.560
  2.670
  2.770
  2.850
  2.920
  2.980
  3.040
  3.090
  3.130
  3.160
  3.200
  3.230
  3.250
  3.280
  3.300
  3.320
  3.340
  3.360
  3.370
  3.390
  3.400
  3.410
  3.430
  3.440
  3.450
  3.460
  3.470
Adjusted equity ratio
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216
  0.216

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,836
  4,307
  5,236
  6,232
  7,294
  8,421
  9,611
  10,863
  12,177
  13,551
  14,986
  16,521
  18,079
  19,701
  21,389
  23,144
  24,969
  26,867
  28,841
  30,896
  33,035
  35,263
  37,584
  40,004
  42,527
  45,161
  47,911
  50,783
  53,784
  56,922
  60,204
Depreciation, amort., depletion, $m
  1,064
  1,227
  1,397
  1,580
  1,775
  1,980
  2,197
  2,425
  2,664
  2,914
  3,175
  3,393
  3,676
  3,970
  4,275
  4,593
  4,923
  5,265
  5,622
  5,992
  6,378
  6,779
  7,196
  7,631
  8,085
  8,557
  9,050
  9,565
  10,102
  10,663
  11,249
Funds from operations, $m
  5,980
  5,534
  6,633
  7,812
  9,069
  10,402
  11,809
  13,289
  14,841
  16,465
  18,160
  19,914
  21,755
  23,671
  25,664
  27,736
  29,891
  32,132
  34,463
  36,888
  39,413
  42,041
  44,780
  47,635
  50,612
  53,718
  56,961
  60,347
  63,886
  67,585
  71,453
Change in working capital, $m
  374
  565
  608
  651
  693
  733
  773
  813
  851
  890
  928
  967
  1,007
  1,047
  1,088
  1,131
  1,175
  1,222
  1,270
  1,320
  1,373
  1,429
  1,488
  1,550
  1,615
  1,684
  1,757
  1,833
  1,914
  1,999
  2,089
Cash from operations, $m
  5,606
  4,970
  6,025
  7,161
  8,376
  9,668
  11,035
  12,476
  13,990
  15,575
  17,232
  18,947
  20,748
  22,624
  24,576
  26,605
  28,716
  30,911
  33,193
  35,568
  38,039
  40,612
  43,292
  46,085
  48,997
  52,034
  55,204
  58,514
  61,972
  65,586
  69,364
Maintenance CAPEX, $m
  0
  -1,016
  -1,174
  -1,345
  -1,527
  -1,722
  -1,928
  -2,145
  -2,373
  -2,612
  -2,861
  -3,122
  -3,393
  -3,676
  -3,970
  -4,275
  -4,593
  -4,923
  -5,265
  -5,622
  -5,992
  -6,378
  -6,779
  -7,196
  -7,631
  -8,085
  -8,557
  -9,050
  -9,565
  -10,102
  -10,663
New CAPEX, $m
  -2,243
  -1,581
  -1,707
  -1,827
  -1,944
  -2,058
  -2,170
  -2,280
  -2,389
  -2,497
  -2,606
  -2,715
  -2,826
  -2,938
  -3,055
  -3,174
  -3,299
  -3,428
  -3,564
  -3,705
  -3,854
  -4,011
  -4,176
  -4,349
  -4,533
  -4,726
  -4,930
  -5,145
  -5,372
  -5,611
  -5,864
Cash from investing activities, $m
  -2,297
  -2,597
  -2,881
  -3,172
  -3,471
  -3,780
  -4,098
  -4,425
  -4,762
  -5,109
  -5,467
  -5,837
  -6,219
  -6,614
  -7,025
  -7,449
  -7,892
  -8,351
  -8,829
  -9,327
  -9,846
  -10,389
  -10,955
  -11,545
  -12,164
  -12,811
  -13,487
  -14,195
  -14,937
  -15,713
  -16,527
Free cash flow, $m
  3,309
  2,373
  3,144
  3,990
  4,905
  5,888
  6,937
  8,051
  9,228
  10,466
  11,765
  13,110
  14,529
  16,009
  17,551
  19,156
  20,824
  22,560
  24,364
  26,241
  28,193
  30,224
  32,338
  34,539
  36,833
  39,224
  41,717
  44,319
  47,035
  49,872
  52,837
Issuance/(repayment) of debt, $m
  989
  2,621
  2,824
  3,022
  3,215
  3,405
  3,590
  3,772
  3,952
  4,131
  4,310
  4,491
  4,674
  4,861
  5,052
  5,251
  5,456
  5,671
  5,894
  6,129
  6,375
  6,634
  6,907
  7,194
  7,497
  7,817
  8,154
  8,510
  8,886
  9,282
  9,699
Issuance/(repurchase) of shares, $m
  -2,938
  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  
  -1,954
  2,621
  2,824
  3,022
  3,215
  3,405
  3,590
  3,772
  3,952
  4,131
  4,310
  4,491
  4,674
  4,861
  5,052
  5,251
  5,456
  5,671
  5,894
  6,129
  6,375
  6,634
  6,907
  7,194
  7,497
  7,817
  8,154
  8,510
  8,886
  9,282
  9,699
Total cash flow (excl. dividends), $m
  1,346
  4,994
  5,968
  7,011
  8,120
  9,293
  10,527
  11,823
  13,180
  14,597
  16,075
  17,600
  19,203
  20,870
  22,604
  24,406
  26,281
  28,230
  30,259
  32,370
  34,568
  36,858
  39,245
  41,734
  44,330
  47,041
  49,872
  52,829
  55,921
  59,154
  62,537
Retained Cash Flow (-), $m
  502
  -728
  -778
  -833
  -886
  -938
  -989
  -1,039
  -1,089
  -1,138
  -1,187
  -1,237
  -1,288
  -1,339
  -1,392
  -1,447
  -1,503
  -1,562
  -1,624
  -1,689
  -1,756
  -1,828
  -1,903
  -1,982
  -2,066
  -2,154
  -2,247
  -2,345
  -2,448
  -2,557
  -2,672
Prev. year cash balance distribution, $m
 
  1,426
  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
 
  5,692
  5,190
  6,179
  7,235
  8,355
  9,538
  10,784
  12,091
  13,459
  14,887
  16,363
  17,915
  19,531
  21,212
  22,960
  24,777
  26,668
  28,635
  30,681
  32,812
  35,030
  37,342
  39,752
  42,265
  44,887
  47,625
  50,485
  53,473
  56,597
  59,864
Discount rate, %
 
  4.60
  4.83
  5.07
  5.33
  5.59
  5.87
  6.16
  6.47
  6.80
  7.14
  7.49
  7.87
  8.26
  8.67
  9.11
  9.56
  10.04
  10.54
  11.07
  11.62
  12.21
  12.82
  13.46
  14.13
  14.84
  15.58
  16.36
  17.17
  18.03
  18.93
PV of cash for distribution, $m
 
  5,441
  4,722
  5,327
  5,879
  6,365
  6,773
  7,095
  7,321
  7,447
  7,472
  7,391
  7,220
  6,960
  6,619
  6,211
  5,747
  5,243
  4,713
  4,174
  3,638
  3,120
  2,631
  2,179
  1,772
  1,413
  1,104
  845
  632
  462
  330
Current shareholders' claim on cash, %
  100
  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 11.7
Price to Sales 1.5
Price to Book 7.4
Price to Tangible Book
Price to Cash Flow 8
Price to Free Cash Flow 13.3
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 $29183 million for the last fiscal year's total revenue generated by LyondellBasell Industries. The default revenue input number comes from 2016 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 15.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.6%, 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 70.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $3757 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 4.1% 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%.

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 34.8%.

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 12.4%. 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 - $6048 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 397.48 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 $44.1 billion.

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COMPANY NEWS

▶ [$$] LyondellBasell to Buy A. Schulman for $2.25 Billion   [Feb-15-18 08:26PM  The Wall Street Journal]
▶ Why A. Schulman's Stock Is Rising Today   [11:49AM  Motley Fool]
▶ LyondellBasell to acquire Ohio plastics company in $2.25B deal   [09:05AM  American City Business Journals]
▶ [$$] LyondellBasell to Buy A. Schulman for $2.25 Billion   [09:00AM  The Wall Street Journal]
▶ Top Ranked Value Stocks to Buy for February 8th   [Feb-08-18 09:30AM  Zacks]
▶ Jeff Auxier Comments on LyondellBasell   [Feb-06-18 02:49PM  GuruFocus.com]
▶ Jeff Auxier's 4th Quarter Shareholder Letter   [02:27PM  GuruFocus.com]
▶ LyondellBasell tops Street 4Q forecasts   [07:09AM  Associated Press]
▶ LyondellBasell Reports 2017 Earnings   [06:45AM  PR Newswire]
▶ What Could Drive LyondellBasells Revenue in 4Q17?   [Jan-26-18 05:15PM  Market Realist]
▶ Can LyondellBasells Stock Continue Its Surge?   [03:44PM  Market Realist]
▶ What Could Drive DowDuPonts Adjusted Earnings in 4Q17?   [Jan-25-18 03:20PM  Market Realist]
▶ 5 ROE Picks Fired Up by a Striking Start to Q4 Earnings   [Jan-23-18 11:10AM  InvestorPlace]
▶ PPGs Performance Coatings Revenue and Margin Improve in 4Q17   [Jan-22-18 12:50PM  Market Realist]
▶ Praxairs 4Q17 Revenue Expectations: The Driving Factors   [Jan-18-18 11:35AM  Market Realist]
▶ Can PPG Industries Beat Analysts Earnings Estimates?   [Jan-12-18 09:10AM  Market Realist]
▶ Scoop Up These 4 Chemical Stocks for Stellar Returns   [Jan-11-18 02:10PM  InvestorPlace]
▶ RPM Internationals Latest Dividend: All the Key Dates   [Jan-10-18 11:50AM  Market Realist]
▶ 3 Value Stocks for Conservative Investors   [Dec-21-17 06:59PM  Motley Fool]
▶ What Are Analysts Signaling with LyondellBasell?   [Dec-08-17 02:30PM  Market Realist]
▶ What LyondellBasells Dividend Yield Suggests   [01:00PM  Market Realist]
▶ LyondellBasell Board Authorizes Quarterly Dividend   [Nov-15-17 06:45AM  PR Newswire]
▶ This Rumor Pushed Braskem 19.6% Higher in October   [Nov-06-17 01:03PM  Motley Fool]
Financial statements of LYB
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