Intrinsic value of ArcelorMittal ADR - MT

Previous Close

$24.80

  Intrinsic Value

$362.38

stock screener

  Rating & Target

str. buy

+999%

Previous close

$24.80

 
Intrinsic value

$362.38

 
Up/down potential

+999%

 
Rating

str. buy

We calculate the intrinsic value of MT 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 1.6

 

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, %
  20.90
  19.31
  17.88
  16.59
  15.43
  14.39
  13.45
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.95
  7.65
  7.39
  7.15
  6.93
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
Revenue, $m
  83,033
  99,067
  116,779
  136,154
  157,165
  179,779
  203,959
  229,668
  256,871
  285,537
  315,644
  347,176
  380,125
  414,494
  450,296
  487,552
  526,294
  566,565
  608,414
  651,903
  697,099
  744,082
  792,937
  843,758
  896,647
  951,715
  1,009,077
  1,068,861
  1,131,198
  1,196,230
Variable operating expenses, $m
  74,028
  88,213
  103,882
  121,021
  139,609
  159,614
  181,005
  203,749
  227,813
  253,173
  279,234
  307,128
  336,276
  366,681
  398,353
  431,311
  465,585
  501,210
  538,231
  576,703
  616,687
  658,250
  701,469
  746,428
  793,216
  841,931
  892,677
  945,564
  1,000,711
  1,058,241
Fixed operating expenses, $m
  2,005
  2,049
  2,094
  2,140
  2,188
  2,236
  2,285
  2,335
  2,386
  2,439
  2,493
  2,547
  2,604
  2,661
  2,719
  2,779
  2,840
  2,903
  2,967
  3,032
  3,099
  3,167
  3,236
  3,308
  3,380
  3,455
  3,531
  3,608
  3,688
  3,769
Total operating expenses, $m
  76,033
  90,262
  105,976
  123,161
  141,797
  161,850
  183,290
  206,084
  230,199
  255,612
  281,727
  309,675
  338,880
  369,342
  401,072
  434,090
  468,425
  504,113
  541,198
  579,735
  619,786
  661,417
  704,705
  749,736
  796,596
  845,386
  896,208
  949,172
  1,004,399
  1,062,010
Operating income, $m
  6,999
  8,805
  10,803
  12,992
  15,368
  17,929
  20,669
  23,584
  26,671
  29,925
  33,918
  37,500
  41,245
  45,153
  49,224
  53,462
  57,870
  62,452
  67,216
  72,167
  77,314
  82,666
  88,232
  94,023
  100,051
  106,329
  112,870
  119,688
  126,800
  134,220
EBITDA, $m
  10,695
  13,103
  15,767
  18,685
  21,851
  25,262
  28,911
  32,793
  36,903
  41,235
  45,786
  50,554
  55,538
  60,738
  66,155
  71,794
  77,658
  83,755
  90,092
  96,679
  103,525
  110,643
  118,046
  125,748
  133,765
  142,113
  150,811
  159,877
  169,333
  179,198
Interest expense (income), $m
  1,354
  853
  1,494
  2,210
  3,002
  3,868
  4,806
  5,817
  6,897
  8,046
  9,262
  10,542
  11,888
  13,297
  14,769
  16,305
  17,904
  19,569
  21,300
  23,100
  24,970
  26,913
  28,932
  31,032
  33,215
  35,486
  37,849
  40,309
  42,873
  45,544
  48,329
Earnings before tax, $m
  6,146
  7,311
  8,592
  9,990
  11,501
  13,122
  14,852
  16,687
  18,625
  20,663
  23,376
  25,613
  27,949
  30,384
  32,919
  35,557
  38,300
  41,152
  44,116
  47,198
  50,401
  53,733
  57,200
  60,808
  64,565
  68,480
  72,560
  76,816
  81,256
  85,891
Tax expense, $m
  1,659
  1,974
  2,320
  2,697
  3,105
  3,543
  4,010
  4,505
  5,029
  5,579
  6,311
  6,915
  7,546
  8,204
  8,888
  9,600
  10,341
  11,111
  11,911
  12,743
  13,608
  14,508
  15,444
  16,418
  17,433
  18,490
  19,591
  20,740
  21,939
  23,191
Net income, $m
  4,487
  5,337
  6,272
  7,293
  8,396
  9,579
  10,842
  12,181
  13,596
  15,084
  17,064
  18,697
  20,402
  22,180
  24,031
  25,957
  27,959
  30,041
  32,205
  34,454
  36,793
  39,225
  41,756
  44,390
  47,133
  49,990
  52,969
  56,075
  59,317
  62,700

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
  103,146
  123,064
  145,067
  169,135
  195,236
  223,328
  253,365
  285,302
  319,094
  354,705
  392,105
  431,275
  472,205
  514,900
  559,374
  605,655
  653,782
  703,807
  755,794
  809,817
  865,962
  924,326
  985,015
  1,048,147
  1,113,848
  1,182,254
  1,253,512
  1,327,778
  1,405,215
  1,486,000
Adjusted assets (=assets-cash), $m
  103,146
  123,064
  145,067
  169,135
  195,236
  223,328
  253,365
  285,302
  319,094
  354,705
  392,105
  431,275
  472,205
  514,900
  559,374
  605,655
  653,782
  703,807
  755,794
  809,817
  865,962
  924,326
  985,015
  1,048,147
  1,113,848
  1,182,254
  1,253,512
  1,327,778
  1,405,215
  1,486,000
Revenue / Adjusted assets
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
  0.805
Average production assets, $m
  46,831
  55,874
  65,863
  76,791
  88,641
  101,395
  115,033
  129,533
  144,875
  161,043
  178,023
  195,807
  214,391
  233,775
  253,967
  274,979
  296,830
  319,542
  343,146
  367,673
  393,164
  419,662
  447,217
  475,880
  505,709
  536,767
  569,120
  602,838
  637,996
  674,674
Working capital, $m
  6,477
  7,727
  9,109
  10,620
  12,259
  14,023
  15,909
  17,914
  20,036
  22,272
  24,620
  27,080
  29,650
  32,331
  35,123
  38,029
  41,051
  44,192
  47,456
  50,848
  54,374
  58,038
  61,849
  65,813
  69,938
  74,234
  78,708
  83,371
  88,233
  93,306
Total debt, $m
  22,635
  33,490
  45,481
  58,598
  72,823
  88,134
  104,504
  121,909
  140,326
  159,734
  180,117
  201,465
  223,772
  247,040
  271,279
  296,502
  322,731
  349,995
  378,328
  407,770
  438,369
  470,178
  503,253
  537,660
  573,467
  610,748
  649,584
  690,059
  732,262
  776,290
Total liabilities, $m
  56,215
  67,070
  79,061
  92,178
  106,403
  121,714
  138,084
  155,489
  173,906
  193,314
  213,697
  235,045
  257,352
  280,620
  304,859
  330,082
  356,311
  383,575
  411,908
  441,350
  471,949
  503,758
  536,833
  571,240
  607,047
  644,328
  683,164
  723,639
  765,842
  809,870
Total equity, $m
  46,932
  55,994
  66,005
  76,956
  88,832
  101,614
  115,281
  129,812
  145,188
  161,391
  178,408
  196,230
  214,853
  234,279
  254,515
  275,573
  297,471
  320,232
  343,886
  368,467
  394,013
  420,568
  448,182
  476,907
  506,801
  537,926
  570,348
  604,139
  639,373
  676,130
Total liabilities and equity, $m
  103,147
  123,064
  145,066
  169,134
  195,235
  223,328
  253,365
  285,301
  319,094
  354,705
  392,105
  431,275
  472,205
  514,899
  559,374
  605,655
  653,782
  703,807
  755,794
  809,817
  865,962
  924,326
  985,015
  1,048,147
  1,113,848
  1,182,254
  1,253,512
  1,327,778
  1,405,215
  1,486,000
Debt-to-equity ratio
  0.480
  0.600
  0.690
  0.760
  0.820
  0.870
  0.910
  0.940
  0.970
  0.990
  1.010
  1.030
  1.040
  1.050
  1.070
  1.080
  1.080
  1.090
  1.100
  1.110
  1.110
  1.120
  1.120
  1.130
  1.130
  1.140
  1.140
  1.140
  1.150
  1.150
Adjusted equity ratio
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  4,487
  5,337
  6,272
  7,293
  8,396
  9,579
  10,842
  12,181
  13,596
  15,084
  17,064
  18,697
  20,402
  22,180
  24,031
  25,957
  27,959
  30,041
  32,205
  34,454
  36,793
  39,225
  41,756
  44,390
  47,133
  49,990
  52,969
  56,075
  59,317
  62,700
Depreciation, amort., depletion, $m
  3,696
  4,299
  4,965
  5,693
  6,483
  7,333
  8,243
  9,209
  10,232
  11,310
  11,868
  13,054
  14,293
  15,585
  16,931
  18,332
  19,789
  21,303
  22,876
  24,512
  26,211
  27,977
  29,814
  31,725
  33,714
  35,784
  37,941
  40,189
  42,533
  44,978
Funds from operations, $m
  8,182
  9,635
  11,237
  12,986
  14,879
  16,913
  19,085
  21,391
  23,828
  26,394
  28,932
  31,751
  34,695
  37,765
  40,962
  44,289
  47,748
  51,344
  55,081
  58,966
  63,004
  67,203
  71,570
  76,115
  80,847
  85,775
  90,910
  96,265
  101,850
  107,679
Change in working capital, $m
  1,120
  1,251
  1,382
  1,511
  1,639
  1,764
  1,886
  2,005
  2,122
  2,236
  2,348
  2,459
  2,570
  2,681
  2,793
  2,906
  3,022
  3,141
  3,264
  3,392
  3,525
  3,665
  3,811
  3,964
  4,125
  4,295
  4,474
  4,663
  4,862
  5,072
Cash from operations, $m
  7,063
  8,385
  9,855
  11,474
  13,240
  15,149
  17,198
  19,385
  21,706
  24,158
  26,584
  29,292
  32,125
  35,084
  38,170
  41,383
  44,726
  48,203
  51,817
  55,574
  59,479
  63,538
  67,760
  72,151
  76,721
  81,480
  86,436
  91,601
  96,987
  102,606
Maintenance CAPEX, $m
  -2,583
  -3,122
  -3,725
  -4,391
  -5,119
  -5,909
  -6,760
  -7,669
  -8,636
  -9,658
  -10,736
  -11,868
  -13,054
  -14,293
  -15,585
  -16,931
  -18,332
  -19,789
  -21,303
  -22,876
  -24,512
  -26,211
  -27,977
  -29,814
  -31,725
  -33,714
  -35,784
  -37,941
  -40,189
  -42,533
New CAPEX, $m
  -8,083
  -9,043
  -9,990
  -10,927
  -11,850
  -12,754
  -13,638
  -14,500
  -15,342
  -16,168
  -16,980
  -17,784
  -18,583
  -19,384
  -20,192
  -21,012
  -21,851
  -22,712
  -23,603
  -24,528
  -25,491
  -26,498
  -27,554
  -28,663
  -29,829
  -31,058
  -32,353
  -33,718
  -35,158
  -36,678
Cash from investing activities, $m
  -10,666
  -12,165
  -13,715
  -15,318
  -16,969
  -18,663
  -20,398
  -22,169
  -23,978
  -25,826
  -27,716
  -29,652
  -31,637
  -33,677
  -35,777
  -37,943
  -40,183
  -42,501
  -44,906
  -47,404
  -50,003
  -52,709
  -55,531
  -58,477
  -61,554
  -64,772
  -68,137
  -71,659
  -75,347
  -79,211
Free cash flow, $m
  -3,603
  -3,780
  -3,859
  -3,844
  -3,730
  -3,515
  -3,199
  -2,783
  -2,272
  -1,668
  -1,133
  -360
  488
  1,407
  2,393
  3,439
  4,543
  5,702
  6,911
  8,170
  9,476
  10,829
  12,228
  13,674
  15,166
  16,708
  18,299
  19,942
  21,640
  23,395
Issuance/(repayment) of debt, $m
  9,707
  10,855
  11,991
  13,117
  14,225
  15,310
  16,370
  17,405
  18,417
  19,408
  20,383
  21,347
  22,307
  23,269
  24,238
  25,223
  26,229
  27,264
  28,333
  29,443
  30,599
  31,808
  33,076
  34,407
  35,807
  37,282
  38,836
  40,475
  42,204
  44,028
Issuance/(repurchase) of shares, $m
  3,656
  3,726
  3,739
  3,658
  3,480
  3,203
  2,825
  2,350
  1,779
  1,119
  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  
  13,363
  14,581
  15,730
  16,775
  17,705
  18,513
  19,195
  19,755
  20,196
  20,527
  20,383
  21,347
  22,307
  23,269
  24,238
  25,223
  26,229
  27,264
  28,333
  29,443
  30,599
  31,808
  33,076
  34,407
  35,807
  37,282
  38,836
  40,475
  42,204
  44,028
Total cash flow (excl. dividends), $m
  9,760
  10,801
  11,871
  12,932
  13,975
  14,998
  15,997
  16,972
  17,925
  18,858
  19,250
  20,987
  22,795
  24,676
  26,631
  28,662
  30,773
  32,965
  35,244
  37,612
  40,075
  42,637
  45,304
  48,080
  50,973
  53,989
  57,135
  60,417
  63,844
  67,423
Retained Cash Flow (-), $m
  -8,143
  -9,063
  -10,011
  -10,951
  -11,876
  -12,782
  -13,667
  -14,531
  -15,376
  -16,203
  -17,017
  -17,822
  -18,623
  -19,426
  -20,236
  -21,058
  -21,898
  -22,761
  -23,654
  -24,580
  -25,546
  -26,556
  -27,614
  -28,725
  -29,894
  -31,125
  -32,422
  -33,791
  -35,234
  -36,757
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
  1,617
  1,738
  1,860
  1,981
  2,100
  2,216
  2,330
  2,441
  2,549
  2,655
  2,233
  3,165
  4,172
  5,250
  6,395
  7,604
  8,875
  10,204
  11,590
  13,032
  14,529
  16,082
  17,690
  19,355
  21,080
  22,864
  24,712
  26,626
  28,609
  30,666
Discount rate, %
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
  1,549
  1,588
  1,614
  1,624
  1,618
  1,597
  1,560
  1,509
  1,446
  1,372
  1,043
  1,325
  1,552
  1,720
  1,827
  1,874
  1,867
  1,810
  1,712
  1,582
  1,430
  1,263
  1,092
  924
  764
  618
  488
  377
  283
  208
Current shareholders' claim on cash, %
  88.1
  79.2
  72.3
  67.0
  62.9
  59.8
  57.5
  55.9
  54.8
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2
  54.2

ArcelorMittal S.A. (ArcelorMittal) is a holding company. The Company, together with its subsidiaries, owns and operates steel manufacturing and mining facilities in Europe, North and South America, Asia and Africa. ArcelorMittal operates through five segments, which include NAFTA; Europe; Brazil; Africa and Commonwealth of Independent States (ACIS), and Mining. The NAFTA segment produces flat, long and tubular products. The Brazil segment includes the flat operations of Brazil, and the long and tubular operations of Brazil and neighboring countries. The Europe segment is the flat steel producer in Europe. The ACIS segment produces a combination of flat, long products and tubular products. The Mining segment comprises all mines owned by ArcelorMittal in the Americas, Asia, Europe and Africa. It produces a range of finished and semi-finished steel products (semis).

FINANCIAL RATIOS  of  ArcelorMittal ADR (MT)

Valuation Ratios
P/E Ratio 14.2
Price to Sales 0.4
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 9.4
Price to Free Cash Flow 100.7
Growth Rates
Sales Growth Rate -10.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.7%
Cap. Spend. - 3 Yr. Gr. Rate -6.7%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 39.1%
Total Debt to Equity 45.4%
Interest Coverage 3
Management Effectiveness
Return On Assets 3.5%
Ret/ On Assets - 3 Yr. Avg. -0.5%
Return On Total Capital 4%
Ret/ On T. Cap. - 3 Yr. Avg. -4.2%
Return On Equity 6.4%
Return On Equity - 3 Yr. Avg. -6.5%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 10.1%
Gross Margin - 3 Yr. Avg. 7.6%
EBITDA Margin 12%
EBITDA Margin - 3 Yr. Avg. 4.7%
Operating Margin 7.3%
Oper. Margin - 3 Yr. Avg. 1.5%
Pre-Tax Margin 4.8%
Pre-Tax Margin - 3 Yr. Avg. -2.6%
Net Profit Margin 3.1%
Net Profit Margin - 3 Yr. Avg. -3.6%
Effective Tax Rate 36.3%
Eff/ Tax Rate - 3 Yr. Avg. -21%
Payout Ratio 3.4%

MT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MT stock intrinsic value calculation we used $68679 million for the last fiscal year's total revenue generated by ArcelorMittal ADR. The default revenue input number comes from 0001 income statement of ArcelorMittal ADR. 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 MT stock valuation model: a) initial revenue growth rate of 20.9% 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 4.4%, whose default value for MT is calculated based on our internal credit rating of ArcelorMittal ADR, 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 ArcelorMittal ADR.
    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 MT stock the variable cost ratio is equal to 89.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1962 million in the base year in the intrinsic value calculation for MT 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 6.6% for ArcelorMittal ADR.

Corporate tax rate of 27% is the nominal tax rate for ArcelorMittal ADR. 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 MT 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 MT are equal to 56.4%.

Life of production assets of 15 years is the average useful life of capital assets used in ArcelorMittal ADR 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 MT is equal to 7.8%. 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 - $38789 million for ArcelorMittal ADR - 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 64.158 million for ArcelorMittal ADR 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 ArcelorMittal ADR at the current share price and the inputted number of shares is $1.6 billion.

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COMPANY NEWS

▶ Designated person notification   [Nov-13-18 12:11PM  GlobeNewswire]
▶ [$$] Steelworkers, ArcelorMittal Reach Labor Pact   [Nov-02-18 05:53PM  The Wall Street Journal]
▶ [$$] European Corporate Roundup   [04:59AM  The Wall Street Journal]
▶ [$$] ArcelorMittal Gets Offer for Benelux Assets   [04:12AM  The Wall Street Journal]
▶ [$$] ArcelorMittal Profit Falls on Charges, Forex   [02:28AM  The Wall Street Journal]
▶ [$$] ArcelorMittal: drop forged   [Oct-31-18 11:55PM  Financial Times]
▶ Morning News Call - India, October 29   [Oct-28-18 11:27PM  Reuters]
▶ [$$] ArcelorMittal Gets Nod as Preferred Bidder for Essar Steel India   [Oct-22-18 10:54AM  The Wall Street Journal]
▶ [$$] Steelworkers, U.S. Steel Reach Tentative Contract Agreement   [Oct-15-18 06:12PM  The Wall Street Journal]
▶ [$$] ArcelorMittal and Numetal cleared to bid for Essar Steel   [Oct-03-18 11:07PM  Financial Times]
▶ [$$] Low Unemployment, Slow Wage Growth Bring Renewed Labor Strife   [Sep-23-18 10:51PM  The Wall Street Journal]
▶ Options traders say these four stocks set to move   [Sep-20-18 01:23PM  CNBC Videos]
▶ New Strong Buy Stocks for September 18th   [Sep-18-18 10:15AM  Zacks]
▶ Is ArcelorMittal a Bargain?   [Sep-17-18 02:00PM  GuruFocus.com]
▶ Estimating The Intrinsic Value Of ArcelorMittal (AMS:MT)   [Sep-13-18 07:31AM  Simply Wall St.]
▶ [$$] Steelworkers Demand Higher Pay as Tariffs Lift Profits   [Sep-11-18 10:41PM  The Wall Street Journal]
▶ Steelworkers Demand Higher Pay as Tariffs Lift Profits   [11:36AM  The Wall Street Journal]
▶ ArcelorMittal Is Said to Boost Essar Steel Bid   [01:34AM  Bloomberg Video]
▶ Mittal's Good Essar Show Mired in Legal Farce   [Sep-10-18 09:53PM  Bloomberg]

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