Intrinsic value of MetLife - MET

Previous Close

$51.41

  Intrinsic Value

$257.66

stock screener

  Rating & Target

str. buy

+401%

Previous close

$51.41

 
Intrinsic value

$257.66

 
Up/down potential

+401%

 
Rating

str. buy

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

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

We calculate the intrinsic value of MET stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 54.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -9.19
  13.00
  12.20
  11.48
  10.83
  10.25
  9.72
  9.25
  8.83
  8.44
  8.10
  7.79
  7.51
  7.26
  7.03
  6.83
  6.65
  6.48
  6.33
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.57
  5.52
  5.47
  5.42
  5.38
Revenue, $m
  0
  71,874
  80,642
  89,900
  99,638
  109,850
  120,531
  131,682
  143,305
  155,405
  167,992
  181,078
  194,678
  208,810
  223,497
  238,762
  254,633
  271,139
  288,314
  306,191
  324,810
  344,209
  364,433
  385,526
  407,535
  430,513
  454,511
  479,586
  505,796
  533,204
  561,873
Variable operating expenses, $m
 
  62,841
  70,396
  78,371
  86,761
  95,558
  104,760
  114,367
  124,380
  134,804
  145,648
  155,999
  167,716
  179,891
  192,543
  205,694
  219,367
  233,588
  248,383
  263,785
  279,825
  296,538
  313,960
  332,132
  351,093
  370,889
  391,563
  413,165
  435,745
  459,357
  484,056
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
  62,599
  62,841
  70,396
  78,371
  86,761
  95,558
  104,760
  114,367
  124,380
  134,804
  145,648
  155,999
  167,716
  179,891
  192,543
  205,694
  219,367
  233,588
  248,383
  263,785
  279,825
  296,538
  313,960
  332,132
  351,093
  370,889
  391,563
  413,165
  435,745
  459,357
  484,056
Operating income, $m
  1,006
  9,032
  10,247
  11,529
  12,877
  14,292
  15,771
  17,315
  18,925
  20,601
  22,344
  25,079
  26,962
  28,919
  30,953
  33,068
  35,266
  37,552
  39,930
  42,406
  44,985
  47,672
  50,472
  53,394
  56,442
  59,624
  62,948
  66,421
  70,051
  73,846
  77,817
EBITDA, $m
  1,658
  10,075
  11,305
  12,602
  13,967
  15,399
  16,896
  18,459
  20,089
  21,785
  23,549
  25,384
  27,290
  29,271
  31,330
  33,470
  35,695
  38,009
  40,416
  42,922
  45,532
  48,252
  51,087
  54,044
  57,129
  60,350
  63,714
  67,229
  70,903
  74,745
  78,764
Interest expense (income), $m
  1,202
  1,155
  5,773
  12,220
  19,026
  26,185
  33,693
  41,547
  49,745
  58,290
  67,186
  76,440
  86,061
  96,060
  106,450
  117,248
  128,471
  140,139
  152,275
  164,902
  178,046
  191,734
  205,997
  220,866
  236,373
  252,555
  269,448
  287,092
  305,527
  324,798
  344,948
Earnings before tax, $m
  -195
  7,877
  4,474
  -691
  -6,149
  -11,894
  -17,922
  -24,231
  -30,820
  -37,689
  -44,842
  -51,362
  -59,099
  -67,140
  -75,497
  -84,180
  -93,206
  -102,588
  -112,345
  -122,496
  -133,061
  -144,063
  -155,525
  -167,472
  -179,931
  -192,931
  -206,501
  -220,672
  -235,477
  -250,951
  -267,131
Tax expense, $m
  -999
  2,127
  1,208
  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
  800
  5,750
  3,266
  -691
  -6,149
  -11,894
  -17,922
  -24,231
  -30,820
  -37,689
  -44,842
  -51,362
  -59,099
  -67,140
  -75,497
  -84,180
  -93,206
  -102,588
  -112,345
  -122,496
  -133,061
  -144,063
  -155,525
  -167,472
  -179,931
  -192,931
  -206,501
  -220,672
  -235,477
  -250,951
  -267,131

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
  0
Total assets, $m
  898,764
  1,012,305
  1,135,806
  1,266,197
  1,403,351
  1,547,178
  1,697,624
  1,854,680
  2,018,381
  2,188,808
  2,366,088
  2,550,392
  2,741,939
  2,940,988
  3,147,843
  3,362,845
  3,586,377
  3,818,861
  4,060,755
  4,312,552
  4,574,785
  4,848,019
  5,132,857
  5,429,938
  5,739,935
  6,063,560
  6,401,562
  6,754,729
  7,123,888
  7,509,909
  7,913,702
Adjusted assets (=assets-cash), $m
  898,764
  1,012,305
  1,135,806
  1,266,197
  1,403,351
  1,547,178
  1,697,624
  1,854,680
  2,018,381
  2,188,808
  2,366,088
  2,550,392
  2,741,939
  2,940,988
  3,147,843
  3,362,845
  3,586,377
  3,818,861
  4,060,755
  4,312,552
  4,574,785
  4,848,019
  5,132,857
  5,429,938
  5,739,935
  6,063,560
  6,401,562
  6,754,729
  7,123,888
  7,509,909
  7,913,702
Revenue / Adjusted assets
  0.000
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
  0.071
Average production assets, $m
  1,850
  2,084
  2,339
  2,607
  2,889
  3,186
  3,495
  3,819
  4,156
  4,507
  4,872
  5,251
  5,646
  6,055
  6,481
  6,924
  7,384
  7,863
  8,361
  8,880
  9,419
  9,982
  10,569
  11,180
  11,819
  12,485
  13,181
  13,908
  14,668
  15,463
  16,294
Working capital, $m
  0
  287
  323
  360
  399
  439
  482
  527
  573
  622
  672
  724
  779
  835
  894
  955
  1,019
  1,085
  1,153
  1,225
  1,299
  1,377
  1,458
  1,542
  1,630
  1,722
  1,818
  1,918
  2,023
  2,133
  2,247
Total debt, $m
  19,913
  99,532
  210,684
  328,035
  451,474
  580,918
  716,320
  857,670
  1,005,001
  1,158,385
  1,317,937
  1,483,811
  1,656,203
  1,835,348
  2,021,516
  2,215,018
  2,416,198
  2,625,433
  2,843,137
  3,069,755
  3,305,764
  3,551,675
  3,808,029
  4,075,402
  4,354,399
  4,645,662
  4,949,864
  5,267,714
  5,599,957
  5,947,376
  6,310,790
Total liabilities, $m
  831,455
  911,074
  1,022,226
  1,139,577
  1,263,016
  1,392,460
  1,527,862
  1,669,212
  1,816,543
  1,969,927
  2,129,479
  2,295,353
  2,467,745
  2,646,890
  2,833,058
  3,026,560
  3,227,740
  3,436,975
  3,654,679
  3,881,297
  4,117,306
  4,363,217
  4,619,571
  4,886,944
  5,165,941
  5,457,204
  5,761,406
  6,079,256
  6,411,499
  6,758,918
  7,122,332
Total equity, $m
  67,309
  101,230
  113,581
  126,620
  140,335
  154,718
  169,762
  185,468
  201,838
  218,881
  236,609
  255,039
  274,194
  294,099
  314,784
  336,284
  358,638
  381,886
  406,075
  431,255
  457,478
  484,802
  513,286
  542,994
  573,993
  606,356
  640,156
  675,473
  712,389
  750,991
  791,370
Total liabilities and equity, $m
  898,764
  1,012,304
  1,135,807
  1,266,197
  1,403,351
  1,547,178
  1,697,624
  1,854,680
  2,018,381
  2,188,808
  2,366,088
  2,550,392
  2,741,939
  2,940,989
  3,147,842
  3,362,844
  3,586,378
  3,818,861
  4,060,754
  4,312,552
  4,574,784
  4,848,019
  5,132,857
  5,429,938
  5,739,934
  6,063,560
  6,401,562
  6,754,729
  7,123,888
  7,509,909
  7,913,702
Debt-to-equity ratio
  0.296
  0.980
  1.850
  2.590
  3.220
  3.750
  4.220
  4.620
  4.980
  5.290
  5.570
  5.820
  6.040
  6.240
  6.420
  6.590
  6.740
  6.870
  7.000
  7.120
  7.230
  7.330
  7.420
  7.510
  7.590
  7.660
  7.730
  7.800
  7.860
  7.920
  7.970
Adjusted equity ratio
  0.075
  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
  800
  5,750
  3,266
  -691
  -6,149
  -11,894
  -17,922
  -24,231
  -30,820
  -37,689
  -44,842
  -51,362
  -59,099
  -67,140
  -75,497
  -84,180
  -93,206
  -102,588
  -112,345
  -122,496
  -133,061
  -144,063
  -155,525
  -167,472
  -179,931
  -192,931
  -206,501
  -220,672
  -235,477
  -250,951
  -267,131
Depreciation, amort., depletion, $m
  652
  1,043
  1,058
  1,074
  1,090
  1,107
  1,125
  1,144
  1,164
  1,184
  1,205
  305
  328
  352
  377
  403
  429
  457
  486
  516
  548
  580
  614
  650
  687
  726
  766
  809
  853
  899
  947
Funds from operations, $m
  31,497
  6,794
  4,324
  383
  -5,059
  -10,787
  -16,797
  -23,087
  -29,656
  -36,505
  -43,637
  -51,057
  -58,771
  -66,788
  -75,120
  -83,778
  -92,776
  -102,131
  -111,859
  -121,980
  -132,513
  -143,482
  -154,910
  -166,822
  -179,244
  -192,205
  -205,734
  -219,863
  -234,624
  -250,052
  -266,183
Change in working capital, $m
  16,670
  33
  35
  37
  39
  41
  43
  45
  46
  48
  50
  52
  54
  57
  59
  61
  63
  66
  69
  72
  74
  78
  81
  84
  88
  92
  96
  100
  105
  110
  115
Cash from operations, $m
  14,827
  6,760
  4,289
  346
  -5,098
  -10,827
  -16,840
  -23,132
  -29,703
  -36,553
  -43,687
  -51,109
  -58,825
  -66,845
  -75,179
  -83,839
  -92,840
  -102,197
  -111,928
  -122,051
  -132,588
  -143,560
  -154,991
  -166,906
  -179,332
  -192,297
  -205,830
  -219,963
  -234,729
  -250,162
  -266,298
Maintenance CAPEX, $m
  0
  -108
  -121
  -136
  -152
  -168
  -185
  -203
  -222
  -242
  -262
  -283
  -305
  -328
  -352
  -377
  -403
  -429
  -457
  -486
  -516
  -548
  -580
  -614
  -650
  -687
  -726
  -766
  -809
  -853
  -899
New CAPEX, $m
  -1,515
  -234
  -254
  -268
  -282
  -296
  -310
  -323
  -337
  -351
  -365
  -379
  -394
  -410
  -426
  -443
  -460
  -479
  -498
  -518
  -540
  -563
  -586
  -612
  -638
  -666
  -696
  -727
  -760
  -795
  -831
Cash from investing activities, $m
  -5,850
  -342
  -375
  -404
  -434
  -464
  -495
  -526
  -559
  -593
  -627
  -662
  -699
  -738
  -778
  -820
  -863
  -908
  -955
  -1,004
  -1,056
  -1,111
  -1,166
  -1,226
  -1,288
  -1,353
  -1,422
  -1,493
  -1,569
  -1,648
  -1,730
Free cash flow, $m
  8,977
  6,419
  3,913
  -59
  -5,532
  -11,292
  -17,335
  -23,658
  -30,262
  -37,146
  -44,314
  -51,772
  -59,525
  -67,583
  -75,957
  -84,658
  -93,702
  -103,105
  -112,883
  -123,056
  -133,644
  -144,670
  -156,158
  -168,133
  -180,621
  -193,650
  -207,252
  -221,457
  -236,298
  -251,809
  -268,029
Issuance/(repayment) of debt, $m
  -1,309
  79,619
  111,151
  117,351
  123,439
  129,444
  135,402
  141,351
  147,331
  153,384
  159,552
  165,874
  172,392
  179,144
  186,169
  193,502
  201,179
  209,236
  217,704
  226,618
  236,009
  245,911
  256,354
  267,372
  278,997
  291,263
  304,202
  317,850
  332,243
  347,419
  363,414
Issuance/(repurchase) of shares, $m
  -372
  28,171
  9,084
  13,730
  19,864
  26,276
  32,967
  39,937
  47,190
  54,732
  62,570
  69,792
  78,254
  87,045
  96,182
  105,681
  115,559
  125,836
  136,534
  147,676
  159,284
  171,386
  184,009
  197,180
  210,931
  225,293
  240,301
  255,988
  272,393
  289,553
  307,510
Cash from financing (excl. dividends), $m  
  -1,711
  107,790
  120,235
  131,081
  143,303
  155,720
  168,369
  181,288
  194,521
  208,116
  222,122
  235,666
  250,646
  266,189
  282,351
  299,183
  316,738
  335,072
  354,238
  374,294
  395,293
  417,297
  440,363
  464,552
  489,928
  516,556
  544,503
  573,838
  604,636
  636,972
  670,924
Total cash flow (excl. dividends), $m
  6,964
  114,209
  124,149
  131,023
  137,771
  144,429
  151,034
  157,629
  164,259
  170,970
  177,807
  183,895
  191,121
  198,607
  206,394
  214,524
  223,036
  231,967
  241,356
  251,238
  261,650
  272,627
  284,205
  296,420
  309,308
  322,906
  337,251
  352,382
  368,339
  385,162
  402,896
Retained Cash Flow (-), $m
  640
  -33,921
  -12,350
  -13,730
  -19,864
  -26,276
  -32,967
  -39,937
  -47,190
  -54,732
  -62,570
  -69,792
  -78,254
  -87,045
  -96,182
  -105,681
  -115,559
  -125,836
  -136,534
  -147,676
  -159,284
  -171,386
  -184,009
  -197,180
  -210,931
  -225,293
  -240,301
  -255,988
  -272,393
  -289,553
  -307,510
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
 
  80,288
  111,799
  117,293
  117,907
  118,152
  118,067
  117,692
  117,069
  116,238
  115,237
  114,103
  112,867
  111,561
  110,212
  108,843
  107,477
  106,131
  104,821
  103,562
  102,365
  101,240
  100,196
  99,240
  98,377
  97,612
  96,950
  96,393
  95,946
  95,609
  95,386
Discount rate, %
 
  7.40
  7.77
  8.16
  8.57
  8.99
  9.44
  9.92
  10.41
  10.93
  11.48
  12.05
  12.66
  13.29
  13.95
  14.65
  15.38
  16.15
  16.96
  17.81
  18.70
  19.63
  20.62
  21.65
  22.73
  23.87
  25.06
  26.31
  27.63
  29.01
  30.46
PV of cash for distribution, $m
 
  74,756
  96,259
  92,702
  84,871
  76,809
  68,701
  60,716
  53,002
  45,687
  38,871
  32,629
  27,008
  22,032
  17,702
  13,999
  10,889
  8,324
  6,248
  4,601
  3,320
  2,346
  1,622
  1,095
  721
  463
  289
  176
  104
  59
  33
Current shareholders' claim on cash, %
  100
  65.9
  59.4
  51.7
  43.3
  35.2
  27.8
  21.6
  16.4
  12.3
  9.1
  6.7
  4.8
  3.5
  2.5
  1.8
  1.2
  0.9
  0.6
  0.4
  0.3
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

MetLife, Inc. is a provider of life insurance, annuities, employee benefits and asset management. The Company's segments include U.S.; Asia; Latin America; Europe, the Middle East and Africa (EMEA); MetLife Holdings, and Corporate & Other. Its U.S. segment is organized into Group Benefits, Retirement and Income Solutions and Property & Casualty businesses. Its Asia segment offers products, including life insurance; accident and health insurance, and retirement and savings products. Latin America offers products, including life insurance, and retirement and savings products. Life insurance includes universal, variable and term life products. EMEA offers products, including life insurance, accident and health insurance, retirement and savings products, and credit insurance.

FINANCIAL RATIOS  of  MetLife (MET)

Valuation Ratios
P/E Ratio 70.4
Price to Sales 0.9
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 3.8
Price to Free Cash Flow 4.2
Growth Rates
Sales Growth Rate -9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 16.7%
Cap. Spend. - 3 Yr. Gr. Rate -4.2%
Financial Strength
Quick Ratio 0
Current Ratio NaN
LT Debt to Equity 29.2%
Total Debt to Equity 29.6%
Interest Coverage 1
Management Effectiveness
Return On Assets -0.5%
Ret/ On Assets - 3 Yr. Avg. 0.3%
Return On Total Capital 0.9%
Ret/ On T. Cap. - 3 Yr. Avg. 4.7%
Return On Equity 1.2%
Return On Equity - 3 Yr. Avg. 6.1%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 2.6%
EBITDA Margin - 3 Yr. Avg. 10.2%
Operating Margin 1.6%
Oper. Margin - 3 Yr. Avg. 9.2%
Pre-Tax Margin -0.3%
Pre-Tax Margin - 3 Yr. Avg. 7.5%
Net Profit Margin 1.3%
Net Profit Margin - 3 Yr. Avg. 5.8%
Effective Tax Rate 512.3%
Eff/ Tax Rate - 3 Yr. Avg. 189.7%
Payout Ratio 229.9%

MET stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MET stock intrinsic value calculation we used $63605 million for the last fiscal year's total revenue generated by MetLife. The default revenue input number comes from 2016 income statement of MetLife. 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 MET stock valuation model: a) initial revenue growth rate of 13% 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 7.4%, whose default value for MET is calculated based on our internal credit rating of MetLife, 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 MetLife.
    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 MET stock the variable cost ratio is equal to 87.6%.

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 MET 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 5.8% for MetLife.

Corporate tax rate of 27% is the nominal tax rate for MetLife. 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 MET 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 MET are equal to 2.9%.

Life of production assets of 17.2 years is the average useful life of capital assets used in MetLife 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 MET is equal to 0.4%. 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 - $67309 million for MetLife - 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 1060.99 million for MetLife 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 MetLife at the current share price and the inputted number of shares is $54.5 billion.

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COMPANY NEWS

▶ [$$] MetLife Discloses Failure to Pay Thousands of Workers Pensions   [Dec-15-17 11:42PM  The Wall Street Journal]
▶ [$$] MetLife Failed to Pay Monthly Pensions to Thousands   [06:39PM  The Wall Street Journal]
▶ Assessing MetLifes Assets and Liabilities   [10:30AM  Market Realist]
▶ Why MetLife May Have Strong Growth Potential   [09:00AM  Market Realist]
▶ A Look at MetLifes Holdings Division   [07:30AM  Market Realist]
▶ Why MetLifes Total Expenses Rose   [09:03AM  Market Realist]
▶ MetLifes Total Revenue Rises   [07:35AM  Market Realist]
▶ MetLifes Strong 3Q17 Results Beat Estimates   [Dec-12-17 05:43PM  Market Realist]
▶ Powell Won't Differ From Yellen on Policy, Says Matus   [Nov-28-17 09:04AM  Bloomberg Video]
▶ How Wall Street Analysts View Chubb Limited after 3Q17   [Nov-27-17 07:30AM  Market Realist]
▶ Top Financial Dividend Yielding Stocks To Profit From   [Nov-23-17 12:02PM  Simply Wall St.]
▶ [$$] Treasury Calls for Overhaul of Systemically Important Designation   [Nov-17-17 11:05PM  The Wall Street Journal]
▶ MetLife to Hold Investor Outlook Call   [Nov-15-17 04:18PM  Business Wire]
▶ Top Stock Reports for Apple, Facebook & MetLife   [Nov-09-17 04:52PM  Zacks]
▶ MetLife Recognized for Innovative Customer Solutions   [Nov-02-17 11:29PM  Business Wire]
▶ MetLife, Inc. to Host Earnings Call   [06:00AM  ACCESSWIRE]
▶ [$$] MetLife Swings to Loss on Brighthouse Charges   [12:49AM  The Wall Street Journal]
▶ [$$] MetLife Swings to Loss on Brighthouse Charges   [06:01PM  The Wall Street Journal]
▶ MetLife reports 3Q loss   [05:02PM  Associated Press]
▶ These 4 Top Financials Just Reported Earnings, 3 Are Near Buys   [04:39PM  Investor's Business Daily]
▶ MetLife Announces Third Quarter 2017 Results   [04:15PM  Business Wire]
▶ MetLife to team up with Techstars on 'digital accelerator' in Cary   [02:50PM  American City Business Journals]
▶ MetLife reveals new details about hiring plans for Cary expansion   [Oct-27-17 05:25PM  American City Business Journals]
▶ [$$] CIO Pay Jumps With Demand For Digital Change   [02:47PM  The Wall Street Journal]
▶ Principal to Acquire MetLife Afore in Mexico   [08:30AM  Business Wire]
▶ MetLife Declares Fourth Quarter 2017 Common Stock Dividend   [Oct-24-17 04:15PM  Business Wire]
▶ MetLife Shareholders Approve Proposal at Special Meeting   [Oct-19-17 04:15PM  Business Wire]
▶ ETFs with exposure to MetLife, Inc. : October 18, 2017   [Oct-18-17 09:51AM  Capital Cube]
Financial statements of MET
Valuation of Stocks

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

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