Intrinsic value of People's United Financial - PBCT

Previous Close

$18.72

  Intrinsic Value

$1.09

stock screener

  Rating & Target

str. sell

-94%

Previous close

$18.72

 
Intrinsic value

$1.09

 
Up/down potential

-94%

 
Rating

str. sell

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

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

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 6.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  11.70
  11.03
  10.43
  9.88
  9.40
  8.96
  8.56
  8.20
  7.88
  7.60
  7.34
  7.10
  6.89
  6.70
  6.53
  6.38
  6.24
  6.12
  6.01
  5.91
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.32
Revenue, $m
  1,594
  1,770
  1,954
  2,147
  2,349
  2,560
  2,779
  3,007
  3,244
  3,490
  3,746
  4,012
  4,289
  4,576
  4,875
  5,186
  5,510
  5,847
  6,198
  6,564
  6,946
  7,344
  7,760
  8,194
  8,647
  9,121
  9,617
  10,135
  10,678
  11,245
Variable operating expenses, $m
  979
  1,087
  1,200
  1,319
  1,442
  1,572
  1,706
  1,846
  1,992
  2,143
  2,300
  2,464
  2,633
  2,810
  2,993
  3,184
  3,383
  3,590
  3,806
  4,030
  4,265
  4,509
  4,765
  5,031
  5,310
  5,601
  5,905
  6,223
  6,556
  6,905
Fixed operating expenses, $m
  88
  90
  92
  94
  96
  98
  100
  102
  105
  107
  109
  112
  114
  117
  119
  122
  124
  127
  130
  133
  136
  139
  142
  145
  148
  151
  155
  158
  162
  165
Total operating expenses, $m
  1,067
  1,177
  1,292
  1,413
  1,538
  1,670
  1,806
  1,948
  2,097
  2,250
  2,409
  2,576
  2,747
  2,927
  3,112
  3,306
  3,507
  3,717
  3,936
  4,163
  4,401
  4,648
  4,907
  5,176
  5,458
  5,752
  6,060
  6,381
  6,718
  7,070
Operating income, $m
  527
  593
  663
  735
  811
  890
  972
  1,058
  1,148
  1,240
  1,337
  1,437
  1,541
  1,650
  1,763
  1,880
  2,002
  2,130
  2,263
  2,401
  2,545
  2,696
  2,853
  3,018
  3,190
  3,369
  3,557
  3,754
  3,960
  4,175
EBITDA, $m
  5,277
  5,867
  6,486
  7,134
  7,811
  8,517
  9,252
  10,018
  10,813
  11,640
  12,500
  13,393
  14,321
  15,286
  16,290
  17,334
  18,421
  19,552
  20,732
  21,961
  23,242
  24,580
  25,976
  27,433
  28,957
  30,548
  32,213
  33,954
  35,776
  37,683
Interest expense (income), $m
  153
  2,137
  2,144
  2,343
  2,551
  2,770
  2,998
  3,236
  3,483
  3,741
  4,009
  4,287
  4,577
  4,877
  5,190
  5,515
  5,853
  6,204
  6,570
  6,951
  7,348
  7,762
  8,193
  8,643
  9,113
  9,604
  10,116
  10,652
  11,212
  11,798
  12,411
Earnings before tax, $m
  -1,610
  -1,551
  -1,680
  -1,816
  -1,959
  -2,108
  -2,263
  -2,425
  -2,593
  -2,769
  -2,951
  -3,140
  -3,336
  -3,540
  -3,752
  -3,973
  -4,202
  -4,440
  -4,689
  -4,947
  -5,216
  -5,497
  -5,790
  -6,095
  -6,414
  -6,747
  -7,094
  -7,458
  -7,838
  -8,235
Tax expense, $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
Net income, $m
  -1,610
  -1,551
  -1,680
  -1,816
  -1,959
  -2,108
  -2,263
  -2,425
  -2,593
  -2,769
  -2,951
  -3,140
  -3,336
  -3,540
  -3,752
  -3,973
  -4,202
  -4,440
  -4,689
  -4,947
  -5,216
  -5,497
  -5,790
  -6,095
  -6,414
  -6,747
  -7,094
  -7,458
  -7,838
  -8,235

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
  37,069
  41,158
  45,449
  49,941
  54,634
  59,527
  64,623
  69,925
  75,438
  81,168
  87,122
  93,310
  99,742
  106,427
  113,380
  120,613
  128,141
  135,980
  144,146
  152,658
  161,535
  170,796
  180,462
  190,557
  201,103
  212,126
  223,650
  235,704
  248,316
  261,515
Adjusted assets (=assets-cash), $m
  37,069
  41,158
  45,449
  49,941
  54,634
  59,527
  64,623
  69,925
  75,438
  81,168
  87,122
  93,310
  99,742
  106,427
  113,380
  120,613
  128,141
  135,980
  144,146
  152,658
  161,535
  170,796
  180,462
  190,557
  201,103
  212,126
  223,650
  235,704
  248,316
  261,515
Revenue / Adjusted assets
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
  0.043
Average production assets, $m
  47,495
  52,734
  58,232
  63,988
  70,001
  76,270
  82,799
  89,593
  96,656
  103,998
  111,627
  119,556
  127,796
  136,362
  145,270
  154,538
  164,183
  174,227
  184,690
  195,597
  206,970
  218,835
  231,221
  244,155
  257,668
  271,790
  286,557
  302,001
  318,160
  335,072
Working capital, $m
  -40,283
  -44,726
  -49,389
  -54,271
  -59,370
  -64,688
  -70,225
  -75,987
  -81,978
  -88,205
  -94,676
  -101,400
  -108,389
  -115,654
  -123,209
  -131,070
  -139,250
  -147,769
  -156,643
  -165,893
  -175,539
  -185,603
  -196,108
  -207,078
  -218,538
  -230,516
  -243,040
  -256,139
  -269,844
  -284,188
Total debt, $m
  39,706
  43,386
  47,248
  51,291
  55,514
  59,918
  64,504
  69,276
  74,238
  79,395
  84,754
  90,323
  96,111
  102,128
  108,386
  114,895
  121,671
  128,726
  136,075
  143,736
  151,725
  160,060
  168,760
  177,845
  187,337
  197,257
  207,629
  218,477
  229,828
  241,707
Total liabilities, $m
  33,362
  37,042
  40,904
  44,947
  49,170
  53,574
  58,160
  62,932
  67,894
  73,051
  78,410
  83,979
  89,767
  95,785
  102,042
  108,552
  115,327
  122,382
  129,732
  137,392
  145,381
  153,716
  162,416
  171,501
  180,993
  190,913
  201,285
  212,134
  223,484
  235,364
Total equity, $m
  3,707
  4,116
  4,545
  4,994
  5,463
  5,953
  6,462
  6,992
  7,544
  8,117
  8,712
  9,331
  9,974
  10,643
  11,338
  12,061
  12,814
  13,598
  14,415
  15,266
  16,153
  17,080
  18,046
  19,056
  20,110
  21,213
  22,365
  23,570
  24,832
  26,152
Total liabilities and equity, $m
  37,069
  41,158
  45,449
  49,941
  54,633
  59,527
  64,622
  69,924
  75,438
  81,168
  87,122
  93,310
  99,741
  106,428
  113,380
  120,613
  128,141
  135,980
  144,147
  152,658
  161,534
  170,796
  180,462
  190,557
  201,103
  212,126
  223,650
  235,704
  248,316
  261,516
Debt-to-equity ratio
  10.710
  10.540
  10.400
  10.270
  10.160
  10.070
  9.980
  9.910
  9.840
  9.780
  9.730
  9.680
  9.640
  9.600
  9.560
  9.530
  9.500
  9.470
  9.440
  9.420
  9.390
  9.370
  9.350
  9.330
  9.320
  9.300
  9.280
  9.270
  9.260
  9.240
Adjusted equity ratio
  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
  -1,610
  -1,551
  -1,680
  -1,816
  -1,959
  -2,108
  -2,263
  -2,425
  -2,593
  -2,769
  -2,951
  -3,140
  -3,336
  -3,540
  -3,752
  -3,973
  -4,202
  -4,440
  -4,689
  -4,947
  -5,216
  -5,497
  -5,790
  -6,095
  -6,414
  -6,747
  -7,094
  -7,458
  -7,838
  -8,235
Depreciation, amort., depletion, $m
  4,750
  5,273
  5,823
  6,399
  7,000
  7,627
  8,280
  8,959
  9,666
  10,400
  11,163
  11,956
  12,780
  13,636
  14,527
  15,454
  16,418
  17,423
  18,469
  19,560
  20,697
  21,884
  23,122
  24,416
  25,767
  27,179
  28,656
  30,200
  31,816
  33,507
Funds from operations, $m
  3,139
  3,723
  4,143
  4,583
  5,041
  5,519
  6,017
  6,534
  7,072
  7,631
  8,212
  8,816
  9,444
  10,096
  10,775
  11,481
  12,216
  12,982
  13,780
  14,613
  15,481
  16,386
  17,332
  18,320
  19,353
  20,432
  21,561
  22,742
  23,978
  25,272
Change in working capital, $m
  -4,219
  -4,443
  -4,664
  -4,882
  -5,099
  -5,317
  -5,538
  -5,762
  -5,991
  -6,227
  -6,471
  -6,724
  -6,989
  -7,265
  -7,555
  -7,860
  -8,181
  -8,518
  -8,874
  -9,250
  -9,646
  -10,064
  -10,505
  -10,970
  -11,461
  -11,978
  -12,524
  -13,099
  -13,705
  -14,344
Cash from operations, $m
  7,359
  8,166
  8,807
  9,464
  10,141
  10,837
  11,554
  12,296
  13,063
  13,858
  14,683
  15,540
  16,432
  17,361
  18,330
  19,341
  20,397
  21,501
  22,655
  23,862
  25,126
  26,450
  27,837
  29,290
  30,813
  32,410
  34,085
  35,841
  37,683
  39,616
Maintenance CAPEX, $m
  -4,253
  -4,750
  -5,273
  -5,823
  -6,399
  -7,000
  -7,627
  -8,280
  -8,959
  -9,666
  -10,400
  -11,163
  -11,956
  -12,780
  -13,636
  -14,527
  -15,454
  -16,418
  -17,423
  -18,469
  -19,560
  -20,697
  -21,884
  -23,122
  -24,416
  -25,767
  -27,179
  -28,656
  -30,200
  -31,816
New CAPEX, $m
  -4,964
  -5,239
  -5,499
  -5,756
  -6,012
  -6,269
  -6,529
  -6,793
  -7,064
  -7,342
  -7,629
  -7,928
  -8,240
  -8,566
  -8,908
  -9,267
  -9,646
  -10,044
  -10,463
  -10,906
  -11,373
  -11,866
  -12,386
  -12,934
  -13,513
  -14,123
  -14,766
  -15,444
  -16,159
  -16,912
Cash from investing activities, $m
  -9,217
  -9,989
  -10,772
  -11,579
  -12,411
  -13,269
  -14,156
  -15,073
  -16,023
  -17,008
  -18,029
  -19,091
  -20,196
  -21,346
  -22,544
  -23,794
  -25,100
  -26,462
  -27,886
  -29,375
  -30,933
  -32,563
  -34,270
  -36,056
  -37,929
  -39,890
  -41,945
  -44,100
  -46,359
  -48,728
Free cash flow, $m
  -1,858
  -1,822
  -1,965
  -2,115
  -2,271
  -2,433
  -2,602
  -2,777
  -2,960
  -3,149
  -3,346
  -3,551
  -3,763
  -3,984
  -4,214
  -4,453
  -4,702
  -4,961
  -5,231
  -5,513
  -5,806
  -6,112
  -6,432
  -6,766
  -7,115
  -7,479
  -7,860
  -8,259
  -8,676
  -9,112
Issuance/(repayment) of debt, $m
  124
  3,680
  3,862
  4,043
  4,223
  4,404
  4,586
  4,772
  4,962
  5,157
  5,359
  5,569
  5,788
  6,017
  6,257
  6,510
  6,775
  7,055
  7,350
  7,661
  7,989
  8,335
  8,700
  9,085
  9,492
  9,920
  10,372
  10,848
  11,351
  11,879
Issuance/(repurchase) of shares, $m
  5,499
  1,960
  2,109
  2,266
  2,428
  2,597
  2,773
  2,955
  3,145
  3,342
  3,546
  3,758
  3,979
  4,209
  4,448
  4,696
  4,955
  5,224
  5,505
  5,798
  6,104
  6,423
  6,756
  7,105
  7,469
  7,849
  8,247
  8,663
  9,099
  9,555
Cash from financing (excl. dividends), $m  
  5,623
  5,640
  5,971
  6,309
  6,651
  7,001
  7,359
  7,727
  8,107
  8,499
  8,905
  9,327
  9,767
  10,226
  10,705
  11,206
  11,730
  12,279
  12,855
  13,459
  14,093
  14,758
  15,456
  16,190
  16,961
  17,769
  18,619
  19,511
  20,450
  21,434
Total cash flow (excl. dividends), $m
  3,764
  3,817
  4,006
  4,194
  4,381
  4,568
  4,757
  4,950
  5,147
  5,349
  5,559
  5,777
  6,004
  6,241
  6,491
  6,752
  7,028
  7,318
  7,624
  7,946
  8,287
  8,646
  9,024
  9,424
  9,845
  10,290
  10,759
  11,253
  11,774
  12,322
Retained Cash Flow (-), $m
  -5,499
  -1,960
  -2,109
  -2,266
  -2,428
  -2,597
  -2,773
  -2,955
  -3,145
  -3,342
  -3,546
  -3,758
  -3,979
  -4,209
  -4,448
  -4,696
  -4,955
  -5,224
  -5,505
  -5,798
  -6,104
  -6,423
  -6,756
  -7,105
  -7,469
  -7,849
  -8,247
  -8,663
  -9,099
  -9,555
Prev. year cash balance distribution, $m
  182
  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
  21
  24
  27
  29
  32
  35
  38
  42
  45
  49
  52
  56
  60
  64
  69
  73
  78
  83
  88
  93
  98
  104
  110
  116
  123
  130
  137
  144
  152
  160
Cash available for distribution, $m
  -1,552
  1,857
  1,897
  1,928
  1,953
  1,971
  1,985
  1,995
  2,002
  2,008
  2,013
  2,018
  2,025
  2,033
  2,043
  2,056
  2,073
  2,094
  2,118
  2,148
  2,183
  2,222
  2,268
  2,319
  2,377
  2,441
  2,512
  2,590
  2,675
  2,767
Discount rate, %
  14.60
  15.33
  16.10
  16.90
  17.75
  18.63
  19.57
  20.54
  21.57
  22.65
  23.78
  24.97
  26.22
  27.53
  28.91
  30.35
  31.87
  33.46
  35.14
  36.89
  38.74
  40.68
  42.71
  44.84
  47.09
  49.44
  51.91
  54.51
  57.23
  60.10
PV of cash for distribution, $m
  -1,355
  1,396
  1,212
  1,033
  863
  707
  568
  447
  345
  261
  193
  139
  98
  68
  45
  30
  19
  12
  7
  4
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  32.7
  21.6
  14.4
  9.7
  6.6
  4.5
  3.1
  2.1
  1.5
  1.0
  0.7
  0.5
  0.4
  0.2
  0.2
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

People's United Financial, Inc. is a bank holding company and a financial holding company of People's United Bank (the Bank). The Bank is engaged in providing commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company operates through two segments: Commercial Banking and Retail Banking. Commercial Banking segment is engaged in commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. It offers cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services and private banking, among others. Retail Banking segment provides consumer lending (including residential mortgage and home equity lending) and consumer deposit gathering activities. The Retail Banking segment also includes brokerage, financial advisory services, investment management services, and life insurance and non-institutional trust services.

FINANCIAL RATIOS  of  People's United Financial (PBCT)

Valuation Ratios
P/E Ratio 21
Price to Sales 0
Price to Book 1.2
Price to Tangible Book
Price to Cash Flow 17.6
Price to Free Cash Flow 20.1
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -47.5%
Cap. Spend. - 3 Yr. Gr. Rate -12.9%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 39.4%
Total Debt to Equity 39.4%
Interest Coverage 4
Management Effectiveness
Return On Assets 1%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 4.1%
Ret/ On T. Cap. - 3 Yr. Avg. 3.9%
Return On Equity 5.7%
Return On Equity - 3 Yr. Avg. 5.6%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 31.5%
Eff/ Tax Rate - 3 Yr. Avg. 32.9%
Payout Ratio 74%

PBCT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PBCT stock intrinsic value calculation we used $1427 million for the last fiscal year's total revenue generated by People's United Financial. The default revenue input number comes from 2017 income statement of People's United Financial. 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 PBCT stock valuation model: a) initial revenue growth rate of 11.7% 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 14.6%, whose default value for PBCT is calculated based on our internal credit rating of People's United Financial, 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 People's United Financial.
    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 PBCT stock the variable cost ratio is equal to 61.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $86 million in the base year in the intrinsic value calculation for PBCT 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 People's United Financial.

Corporate tax rate of 27% is the nominal tax rate for People's United Financial. 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 PBCT stock is equal to 1.5%.

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 PBCT are equal to 2979.7%.

Life of production assets of 10 years is the average useful life of capital assets used in People's United Financial 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 PBCT is equal to -2527.2%. 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 - $0 million for People's United Financial - 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 346 million for People's United Financial 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 People's United Financial at the current share price and the inputted number of shares is $6.5 billion.

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COMPANY NEWS

▶ People's United: 2Q Earnings Snapshot   [04:08PM  Associated Press]
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▶ Santander gets good news on regulatory, customer service marks   [May-01-18 02:56PM  American City Business Journals]
▶ People's United: 1Q Earnings Snapshot   [07:14AM  Associated Press]
▶ People's United tops 4Q profit forecasts   [04:42PM  Associated Press]
▶ These 5 Dividend Aristocrats Pay Up to 5.6%   [Dec-15-17 03:56AM  Harvest Exchange]
▶ November Dividend Stock Picks   [Nov-19-17 08:02AM  Simply Wall St.]
▶ People's United beats 3Q profit forecasts   [04:13PM  Associated Press]
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