Intrinsic value of Meredith Corporation - MDP

Previous Close

$57.28

  Intrinsic Value

$1,709

stock screener

  Rating & Target

str. buy

+999%

Previous close

$57.28

 
Intrinsic value

$1,709

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of MDP 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 0001), $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 2.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  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
  3,595
  5,555
  8,307
  12,053
  17,005
  23,378
  31,380
  41,204
  53,019
  66,967
  83,158
  101,669
  122,545
  145,805
  171,440
  199,426
  229,723
  262,280
  297,046
  333,967
  372,997
  414,094
  457,227
  502,377
  549,536
  598,710
  649,922
  703,204
  758,605
  816,188
Variable operating expenses, $m
  2,711
  3,973
  5,746
  8,160
  11,350
  15,455
  20,610
  26,939
  34,550
  43,536
  53,571
  65,496
  78,945
  93,929
  110,444
  128,473
  147,990
  168,963
  191,360
  215,145
  240,289
  266,764
  294,550
  323,636
  354,016
  385,695
  418,686
  453,011
  488,701
  525,796
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
  2,711
  3,973
  5,746
  8,160
  11,350
  15,455
  20,610
  26,939
  34,550
  43,536
  53,571
  65,496
  78,945
  93,929
  110,444
  128,473
  147,990
  168,963
  191,360
  215,145
  240,289
  266,764
  294,550
  323,636
  354,016
  385,695
  418,686
  453,011
  488,701
  525,796
Operating income, $m
  884
  1,581
  2,561
  3,893
  5,655
  7,923
  10,770
  14,265
  18,469
  23,431
  29,587
  36,173
  43,600
  51,876
  60,997
  70,954
  81,733
  93,317
  105,686
  118,822
  132,709
  147,331
  162,677
  178,741
  195,519
  213,015
  231,236
  250,193
  269,904
  290,391
EBITDA, $m
  1,410
  2,178
  3,258
  4,727
  6,669
  9,168
  12,306
  16,158
  20,792
  26,261
  32,611
  39,870
  48,057
  57,178
  67,231
  78,206
  90,087
  102,854
  116,487
  130,967
  146,272
  162,389
  179,303
  197,009
  215,502
  234,786
  254,869
  275,764
  297,490
  320,071
Interest expense (income), $m
  22
  169
  352
  617
  989
  1,496
  2,166
  3,029
  4,112
  5,441
  7,040
  8,928
  11,119
  13,624
  16,449
  19,596
  23,065
  26,852
  30,952
  35,358
  40,063
  45,059
  50,341
  55,902
  61,739
  67,849
  74,230
  80,885
  87,815
  95,025
  102,522
Earnings before tax, $m
  715
  1,229
  1,944
  2,904
  4,159
  5,756
  7,741
  10,153
  13,028
  16,391
  20,659
  25,054
  29,977
  35,427
  41,401
  47,889
  54,881
  62,364
  70,328
  78,760
  87,650
  96,990
  106,775
  117,002
  127,671
  138,785
  150,351
  162,378
  174,879
  187,869
Tax expense, $m
  193
  332
  525
  784
  1,123
  1,554
  2,090
  2,741
  3,517
  4,426
  5,578
  6,765
  8,094
  9,565
  11,178
  12,930
  14,818
  16,838
  18,989
  21,265
  23,665
  26,187
  28,829
  31,590
  34,471
  37,472
  40,595
  43,842
  47,217
  50,725
Net income, $m
  522
  897
  1,419
  2,120
  3,036
  4,202
  5,651
  7,412
  9,510
  11,966
  15,081
  18,290
  21,883
  25,862
  30,223
  34,959
  40,063
  45,526
  51,339
  57,495
  63,984
  70,803
  77,946
  85,411
  93,200
  101,313
  109,756
  118,536
  127,662
  137,144

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
  10,764
  16,630
  24,871
  36,086
  50,913
  69,993
  93,951
  123,364
  158,740
  200,501
  248,977
  304,398
  366,902
  436,541
  513,295
  597,085
  687,792
  785,269
  889,358
  999,902
  1,116,758
  1,239,803
  1,368,944
  1,504,122
  1,645,316
  1,792,546
  1,945,873
  2,105,401
  2,271,273
  2,443,675
Adjusted assets (=assets-cash), $m
  10,764
  16,630
  24,871
  36,086
  50,913
  69,993
  93,951
  123,364
  158,740
  200,501
  248,977
  304,398
  366,902
  436,541
  513,295
  597,085
  687,792
  785,269
  889,358
  999,902
  1,116,758
  1,239,803
  1,368,944
  1,504,122
  1,645,316
  1,792,546
  1,945,873
  2,105,401
  2,271,273
  2,443,675
Revenue / Adjusted assets
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
  0.334
Average production assets, $m
  2,876
  4,444
  6,646
  9,642
  13,604
  18,702
  25,104
  32,963
  42,415
  53,574
  66,527
  81,335
  98,036
  116,644
  137,152
  159,541
  183,778
  209,824
  237,636
  267,174
  298,398
  331,275
  365,782
  401,901
  439,628
  478,968
  519,937
  562,563
  606,884
  652,950
Working capital, $m
  590
  911
  1,362
  1,977
  2,789
  3,834
  5,146
  6,757
  8,695
  10,983
  13,638
  16,674
  20,097
  23,912
  28,116
  32,706
  37,674
  43,014
  48,715
  54,771
  61,172
  67,911
  74,985
  82,390
  90,124
  98,189
  106,587
  115,325
  124,411
  133,855
Total debt, $m
  6,515
  11,426
  18,323
  27,710
  40,120
  56,090
  76,143
  100,762
  130,371
  165,325
  205,900
  252,287
  304,603
  362,891
  427,134
  497,266
  573,188
  654,776
  741,899
  834,424
  932,232
  1,035,221
  1,143,312
  1,256,456
  1,374,635
  1,497,867
  1,626,202
  1,759,726
  1,898,561
  2,042,862
Total liabilities, $m
  9,010
  13,920
  20,817
  30,204
  42,614
  58,584
  78,637
  103,256
  132,865
  167,819
  208,394
  254,781
  307,097
  365,385
  429,628
  499,760
  575,682
  657,270
  744,393
  836,918
  934,727
  1,037,715
  1,145,806
  1,258,950
  1,377,130
  1,500,361
  1,628,696
  1,762,220
  1,901,055
  2,045,356
Total equity, $m
  1,755
  2,711
  4,054
  5,882
  8,299
  11,409
  15,314
  20,108
  25,875
  32,682
  40,583
  49,617
  59,805
  71,156
  83,667
  97,325
  112,110
  127,999
  144,965
  162,984
  182,032
  202,088
  223,138
  245,172
  268,187
  292,185
  317,177
  343,180
  370,217
  398,319
Total liabilities and equity, $m
  10,765
  16,631
  24,871
  36,086
  50,913
  69,993
  93,951
  123,364
  158,740
  200,501
  248,977
  304,398
  366,902
  436,541
  513,295
  597,085
  687,792
  785,269
  889,358
  999,902
  1,116,759
  1,239,803
  1,368,944
  1,504,122
  1,645,317
  1,792,546
  1,945,873
  2,105,400
  2,271,272
  2,443,675
Debt-to-equity ratio
  3.710
  4.210
  4.520
  4.710
  4.830
  4.920
  4.970
  5.010
  5.040
  5.060
  5.070
  5.080
  5.090
  5.100
  5.110
  5.110
  5.110
  5.120
  5.120
  5.120
  5.120
  5.120
  5.120
  5.120
  5.130
  5.130
  5.130
  5.130
  5.130
  5.130
Adjusted equity ratio
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  522
  897
  1,419
  2,120
  3,036
  4,202
  5,651
  7,412
  9,510
  11,966
  15,081
  18,290
  21,883
  25,862
  30,223
  34,959
  40,063
  45,526
  51,339
  57,495
  63,984
  70,803
  77,946
  85,411
  93,200
  101,313
  109,756
  118,536
  127,662
  137,144
Depreciation, amort., depletion, $m
  526
  597
  697
  833
  1,013
  1,245
  1,536
  1,893
  2,323
  2,830
  3,024
  3,697
  4,456
  5,302
  6,234
  7,252
  8,354
  9,537
  10,802
  12,144
  13,564
  15,058
  16,626
  18,268
  19,983
  21,771
  23,634
  25,571
  27,586
  29,680
Funds from operations, $m
  1,048
  1,494
  2,116
  2,953
  4,049
  5,447
  7,187
  9,305
  11,833
  14,796
  18,105
  21,987
  26,339
  31,164
  36,457
  42,211
  48,416
  55,063
  62,141
  69,639
  77,548
  85,861
  94,572
  103,680
  113,183
  123,084
  133,390
  144,107
  155,247
  166,824
Change in working capital, $m
  221
  321
  451
  614
  812
  1,045
  1,312
  1,611
  1,938
  2,288
  2,655
  3,036
  3,424
  3,815
  4,204
  4,590
  4,969
  5,339
  5,702
  6,055
  6,401
  6,740
  7,074
  7,405
  7,734
  8,065
  8,399
  8,738
  9,086
  9,444
Cash from operations, $m
  826
  1,173
  1,664
  2,339
  3,237
  4,402
  5,874
  7,694
  9,895
  12,508
  15,450
  18,951
  22,916
  27,349
  32,252
  37,621
  43,448
  49,724
  56,439
  63,584
  71,147
  79,121
  87,498
  96,275
  105,449
  115,020
  124,991
  135,369
  146,161
  157,380
Maintenance CAPEX, $m
  -82
  -131
  -202
  -302
  -438
  -618
  -850
  -1,141
  -1,498
  -1,928
  -2,435
  -3,024
  -3,697
  -4,456
  -5,302
  -6,234
  -7,252
  -8,354
  -9,537
  -10,802
  -12,144
  -13,564
  -15,058
  -16,626
  -18,268
  -19,983
  -21,771
  -23,634
  -25,571
  -27,586
New CAPEX, $m
  -1,079
  -1,568
  -2,202
  -2,997
  -3,962
  -5,098
  -6,402
  -7,859
  -9,452
  -11,159
  -12,953
  -14,809
  -16,701
  -18,608
  -20,509
  -22,389
  -24,237
  -26,046
  -27,813
  -29,537
  -31,224
  -32,878
  -34,506
  -36,120
  -37,727
  -39,340
  -40,969
  -42,626
  -44,321
  -46,066
Cash from investing activities, $m
  -1,161
  -1,699
  -2,404
  -3,299
  -4,400
  -5,716
  -7,252
  -9,000
  -10,950
  -13,087
  -15,388
  -17,833
  -20,398
  -23,064
  -25,811
  -28,623
  -31,489
  -34,400
  -37,350
  -40,339
  -43,368
  -46,442
  -49,564
  -52,746
  -55,995
  -59,323
  -62,740
  -66,260
  -69,892
  -73,652
Free cash flow, $m
  -334
  -525
  -739
  -960
  -1,163
  -1,315
  -1,377
  -1,306
  -1,055
  -578
  62
  1,118
  2,517
  4,286
  6,442
  8,998
  11,959
  15,325
  19,089
  23,245
  27,779
  32,680
  37,934
  43,529
  49,453
  55,697
  62,251
  69,109
  76,269
  83,729
Issuance/(repayment) of debt, $m
  3,380
  4,910
  6,897
  9,387
  12,410
  15,970
  20,053
  24,618
  29,609
  34,954
  40,574
  46,388
  52,316
  58,288
  64,243
  70,132
  75,922
  81,588
  87,123
  92,526
  97,808
  102,989
  108,091
  113,144
  118,180
  123,232
  128,335
  133,524
  138,835
  144,301
Issuance/(repurchase) of shares, $m
  135
  59
  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  
  3,515
  4,969
  6,897
  9,387
  12,410
  15,970
  20,053
  24,618
  29,609
  34,954
  40,574
  46,388
  52,316
  58,288
  64,243
  70,132
  75,922
  81,588
  87,123
  92,526
  97,808
  102,989
  108,091
  113,144
  118,180
  123,232
  128,335
  133,524
  138,835
  144,301
Total cash flow (excl. dividends), $m
  3,181
  4,444
  6,158
  8,427
  11,247
  14,656
  18,676
  23,312
  28,554
  34,376
  40,636
  47,506
  54,833
  62,573
  70,685
  79,130
  87,881
  96,913
  106,212
  115,770
  125,587
  135,668
  146,025
  156,673
  167,633
  178,928
  190,585
  202,634
  215,104
  228,030
Retained Cash Flow (-), $m
  -657
  -956
  -1,343
  -1,828
  -2,417
  -3,110
  -3,905
  -4,794
  -5,766
  -6,807
  -7,902
  -9,034
  -10,188
  -11,351
  -12,511
  -13,658
  -14,785
  -15,889
  -16,967
  -18,019
  -19,047
  -20,056
  -21,050
  -22,034
  -23,015
  -23,999
  -24,992
  -26,003
  -27,037
  -28,102
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
  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
  2,524
  3,488
  4,815
  6,599
  8,830
  11,545
  14,771
  18,518
  22,788
  27,569
  32,735
  38,472
  44,645
  51,222
  58,174
  65,473
  73,095
  81,024
  89,245
  97,751
  106,540
  115,612
  124,975
  134,639
  144,618
  154,930
  165,593
  176,631
  188,067
  199,928
Discount rate, %
  10.40
  10.92
  11.47
  12.04
  12.64
  13.27
  13.94
  14.63
  15.37
  16.13
  16.94
  17.79
  18.68
  19.61
  20.59
  21.62
  22.70
  23.84
  25.03
  26.28
  27.59
  28.97
  30.42
  31.94
  33.54
  35.22
  36.98
  38.83
  40.77
  42.81
PV of cash for distribution, $m
  2,286
  2,835
  3,476
  4,188
  4,869
  5,466
  5,926
  6,210
  6,295
  6,178
  5,853
  5,395
  4,820
  4,175
  3,507
  2,857
  2,256
  1,727
  1,281
  919
  638
  429
  278
  174
  105
  61
  34
  18
  9
  5
Current shareholders' claim on cash, %
  95.0
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7
  93.7

Meredith Corporation is a diversified media company. The Company is focused primarily on the home and family marketplace. The Company operates through two segments: Local Media and National Media. As of June 30, 2016, the Company's Local Media segment includes 16 owned television stations, one managed television station and related digital and mobile media operations. Its National Media segment includes magazine publishing, custom content and customer relationship marketing, digital and mobile media, brand licensing, database-related activities, and other related operations. Its National Media segment focuses on the food, home, parenthood, and health markets and is a publisher of magazines serving women. As of June 30, 2016, the Company's owned television stations consist of seven CBS affiliates, five FOX affiliates, two MyNetworkTV affiliates, one NBC affiliate, one ABC affiliate and one independent station. The National Media segment also focuses on run-of-press display advertising.

FINANCIAL RATIOS  of  Meredith Corporation (MDP)

Valuation Ratios
P/E Ratio 13.5
Price to Sales 1.5
Price to Book 2.6
Price to Tangible Book
Price to Cash Flow 11.7
Price to Free Cash Flow 13.9
Growth Rates
Sales Growth Rate 3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 40%
Cap. Spend. - 3 Yr. Gr. Rate 7%
Financial Strength
Quick Ratio 0
Current Ratio 0.4
LT Debt to Equity 63.8%
Total Debt to Equity 70.1%
Interest Coverage 14
Management Effectiveness
Return On Assets 7.6%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 11.5%
Ret/ On T. Cap. - 3 Yr. Avg. 7.2%
Return On Equity 20.1%
Return On Equity - 3 Yr. Avg. 12.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 64.9%
Gross Margin - 3 Yr. Avg. 63.4%
EBITDA Margin 21.4%
EBITDA Margin - 3 Yr. Avg. 17.2%
Operating Margin 18%
Oper. Margin - 3 Yr. Avg. 13.7%
Pre-Tax Margin 16.9%
Pre-Tax Margin - 3 Yr. Avg. 12.5%
Net Profit Margin 11%
Net Profit Margin - 3 Yr. Avg. 7.2%
Effective Tax Rate 34.8%
Eff/ Tax Rate - 3 Yr. Avg. 47.5%
Payout Ratio 48.7%

MDP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MDP stock intrinsic value calculation we used $2247 million for the last fiscal year's total revenue generated by Meredith Corporation. The default revenue input number comes from 0001 income statement of Meredith Corporation. 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 MDP 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 10.4%, whose default value for MDP is calculated based on our internal credit rating of Meredith Corporation, 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 Meredith Corporation.
    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 MDP stock the variable cost ratio is equal to 82%.

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 MDP stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Meredith Corporation.

Corporate tax rate of 27% is the nominal tax rate for Meredith Corporation. 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 MDP 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 MDP are equal to 80%.

Life of production assets of 22 years is the average useful life of capital assets used in Meredith Corporation 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 MDP is equal to 16.4%. 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 - $1097.5 million for Meredith Corporation - 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 45.122 million for Meredith Corporation 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 Meredith Corporation at the current share price and the inputted number of shares is $2.6 billion.

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