Intrinsic value of Tech Data - TECD

Previous Close

$96.99

  Intrinsic Value

$42,132

stock screener

  Rating & Target

str. buy

+999%

Previous close

$96.99

 
Intrinsic value

$42,132

 
Up/down potential

+999%

 
Rating

str. buy

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

We calculate the intrinsic value of TECD 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 3.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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, %
  -0.55
  39.80
  36.32
  33.19
  30.37
  27.83
  25.55
  23.49
  21.64
  19.98
  18.48
  17.13
  15.92
  14.83
  13.85
  12.96
  12.17
  11.45
  10.80
  10.22
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
Revenue, $m
  26,235
  36,677
  49,997
  66,591
  86,814
  110,976
  139,329
  172,063
  209,306
  251,126
  297,539
  348,520
  404,006
  463,915
  528,147
  596,601
  669,177
  745,788
  826,360
  910,842
  999,202
  1,091,437
  1,187,569
  1,287,645
  1,391,742
  1,499,962
  1,612,434
  1,729,310
  1,850,770
  1,977,016
  2,108,272
Variable operating expenses, $m
 
  8,831
  12,031
  16,018
  20,876
  26,681
  33,493
  41,357
  50,304
  60,351
  71,501
  83,729
  97,059
  111,452
  126,883
  143,328
  160,764
  179,169
  198,526
  218,822
  240,050
  262,208
  285,303
  309,346
  334,354
  360,353
  387,373
  415,452
  444,632
  474,961
  506,494
Fixed operating expenses, $m
 
  20,603
  21,118
  21,646
  22,187
  22,741
  23,310
  23,893
  24,490
  25,102
  25,730
  26,373
  27,032
  27,708
  28,401
  29,111
  29,839
  30,585
  31,349
  32,133
  32,936
  33,760
  34,604
  35,469
  36,355
  37,264
  38,196
  39,151
  40,130
  41,133
  42,161
Total operating expenses, $m
  25,943
  29,434
  33,149
  37,664
  43,063
  49,422
  56,803
  65,250
  74,794
  85,453
  97,231
  110,102
  124,091
  139,160
  155,284
  172,439
  190,603
  209,754
  229,875
  250,955
  272,986
  295,968
  319,907
  344,815
  370,709
  397,617
  425,569
  454,603
  484,762
  516,094
  548,655
Operating income, $m
  292
  7,243
  16,849
  28,927
  43,751
  61,554
  82,527
  106,814
  134,512
  165,673
  200,309
  238,418
  279,915
  324,755
  372,863
  424,162
  478,575
  536,034
  596,485
  659,887
  726,216
  795,469
  867,662
  942,831
  1,021,033
  1,102,345
  1,186,864
  1,274,707
  1,366,009
  1,460,922
  1,559,617
EBITDA, $m
  292
  7,292
  16,908
  29,001
  43,840
  61,662
  82,658
  106,972
  134,700
  165,894
  200,566
  238,697
  280,238
  325,126
  373,286
  424,639
  479,110
  536,631
  597,146
  660,616
  727,015
  796,342
  868,612
  943,861
  1,022,146
  1,103,545
  1,188,154
  1,276,091
  1,367,489
  1,462,503
  1,561,303
Interest expense (income), $m
  -22
  35
  102
  195
  310
  451
  620
  817
  1,045
  1,305
  1,597
  1,920
  2,275
  2,662
  3,080
  3,528
  4,005
  4,511
  5,045
  5,606
  6,195
  6,811
  7,454
  8,124
  8,822
  9,547
  10,302
  11,086
  11,900
  12,747
  13,627
Earnings before tax, $m
  257
  7,208
  16,747
  28,733
  43,441
  61,102
  81,907
  105,997
  133,467
  164,368
  198,712
  236,498
  277,640
  322,093
  369,784
  420,634
  474,570
  531,524
  591,441
  654,281
  720,021
  788,658
  860,208
  934,706
  1,012,211
  1,092,797
  1,176,563
  1,263,622
  1,354,109
  1,448,175
  1,545,990
Tax expense, $m
  62
  1,946
  4,522
  7,758
  11,729
  16,498
  22,115
  28,619
  36,036
  44,379
  53,652
  63,854
  74,963
  86,965
  99,842
  113,571
  128,134
  143,511
  159,689
  176,656
  194,406
  212,938
  232,256
  252,371
  273,297
  295,055
  317,672
  341,178
  365,609
  391,007
  417,417
Net income, $m
  195
  5,262
  12,225
  20,975
  31,712
  44,605
  59,792
  77,378
  97,431
  119,989
  145,060
  172,644
  202,677
  235,128
  269,942
  307,063
  346,436
  388,012
  431,752
  477,625
  525,615
  575,720
  627,952
  682,336
  738,914
  797,742
  858,891
  922,444
  988,499
  1,057,168
  1,128,573

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,126
  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
  7,932
  8,116
  11,064
  14,736
  19,211
  24,558
  30,832
  38,076
  46,317
  55,571
  65,842
  77,123
  89,402
  102,659
  116,873
  132,021
  148,081
  165,034
  182,864
  201,558
  221,111
  241,522
  262,795
  284,940
  307,976
  331,923
  356,812
  382,675
  409,553
  437,490
  466,535
Adjusted assets (=assets-cash), $m
  5,806
  8,116
  11,064
  14,736
  19,211
  24,558
  30,832
  38,076
  46,317
  55,571
  65,842
  77,123
  89,402
  102,659
  116,873
  132,021
  148,081
  165,034
  182,864
  201,558
  221,111
  241,522
  262,795
  284,940
  307,976
  331,923
  356,812
  382,675
  409,553
  437,490
  466,535
Revenue / Adjusted assets
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
  4.519
Average production assets, $m
  215
  293
  400
  533
  695
  888
  1,115
  1,377
  1,674
  2,009
  2,380
  2,788
  3,232
  3,711
  4,225
  4,773
  5,353
  5,966
  6,611
  7,287
  7,994
  8,731
  9,501
  10,301
  11,134
  12,000
  12,899
  13,834
  14,806
  15,816
  16,866
Working capital, $m
  2,701
  1,320
  1,800
  2,397
  3,125
  3,995
  5,016
  6,194
  7,535
  9,041
  10,711
  12,547
  14,544
  16,701
  19,013
  21,478
  24,090
  26,848
  29,749
  32,790
  35,971
  39,292
  42,752
  46,355
  50,103
  53,999
  58,048
  62,255
  66,628
  71,173
  75,898
Total debt, $m
  1,363
  2,905
  5,558
  8,863
  12,891
  17,703
  23,350
  29,869
  37,286
  45,615
  54,859
  65,012
  76,063
  87,994
  100,786
  114,419
  128,874
  144,131
  160,178
  177,003
  194,601
  212,971
  232,116
  252,047
  272,779
  294,332
  316,732
  340,009
  364,199
  389,342
  415,483
Total liabilities, $m
  5,762
  7,304
  9,957
  13,262
  17,290
  22,102
  27,749
  34,268
  41,685
  50,014
  59,258
  69,411
  80,462
  92,393
  105,185
  118,818
  133,273
  148,530
  164,577
  181,402
  199,000
  217,370
  236,515
  256,446
  277,178
  298,731
  321,131
  344,408
  368,598
  393,741
  419,882
Total equity, $m
  2,170
  812
  1,106
  1,474
  1,921
  2,456
  3,083
  3,808
  4,632
  5,557
  6,584
  7,712
  8,940
  10,266
  11,687
  13,202
  14,808
  16,503
  18,286
  20,156
  22,111
  24,152
  26,279
  28,494
  30,798
  33,192
  35,681
  38,268
  40,955
  43,749
  46,654
Total liabilities and equity, $m
  7,932
  8,116
  11,063
  14,736
  19,211
  24,558
  30,832
  38,076
  46,317
  55,571
  65,842
  77,123
  89,402
  102,659
  116,872
  132,020
  148,081
  165,033
  182,863
  201,558
  221,111
  241,522
  262,794
  284,940
  307,976
  331,923
  356,812
  382,676
  409,553
  437,490
  466,536
Debt-to-equity ratio
  0.628
  3.580
  5.020
  6.010
  6.710
  7.210
  7.570
  7.840
  8.050
  8.210
  8.330
  8.430
  8.510
  8.570
  8.620
  8.670
  8.700
  8.730
  8.760
  8.780
  8.800
  8.820
  8.830
  8.850
  8.860
  8.870
  8.880
  8.890
  8.890
  8.900
  8.910
Adjusted equity ratio
  0.008
  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
  195
  5,262
  12,225
  20,975
  31,712
  44,605
  59,792
  77,378
  97,431
  119,989
  145,060
  172,644
  202,677
  235,128
  269,942
  307,063
  346,436
  388,012
  431,752
  477,625
  525,615
  575,720
  627,952
  682,336
  738,914
  797,742
  858,891
  922,444
  988,499
  1,057,168
  1,128,573
Depreciation, amort., depletion, $m
  0
  49
  60
  73
  89
  109
  131
  158
  187
  221
  258
  279
  323
  371
  423
  477
  535
  597
  661
  729
  799
  873
  950
  1,030
  1,113
  1,200
  1,290
  1,383
  1,481
  1,582
  1,687
Funds from operations, $m
  657
  5,311
  12,285
  21,048
  31,801
  44,713
  59,924
  77,535
  97,618
  120,209
  145,318
  172,922
  203,000
  235,499
  270,365
  307,540
  346,971
  388,609
  432,413
  478,354
  526,415
  576,594
  628,902
  683,366
  740,027
  798,942
  860,181
  923,827
  989,980
  1,058,749
  1,130,259
Change in working capital, $m
  0
  376
  480
  597
  728
  870
  1,021
  1,178
  1,341
  1,506
  1,671
  1,835
  1,998
  2,157
  2,312
  2,464
  2,613
  2,758
  2,901
  3,041
  3,181
  3,320
  3,461
  3,603
  3,747
  3,896
  4,049
  4,208
  4,373
  4,545
  4,725
Cash from operations, $m
  657
  4,935
  11,806
  20,451
  31,073
  43,844
  58,903
  76,357
  96,277
  118,704
  143,647
  171,087
  201,003
  233,342
  268,052
  305,076
  344,359
  385,851
  429,512
  475,312
  523,234
  573,273
  625,441
  679,763
  736,280
  795,046
  856,132
  919,620
  985,607
  1,054,204
  1,125,534
Maintenance CAPEX, $m
  0
  -22
  -29
  -40
  -53
  -69
  -89
  -111
  -138
  -167
  -201
  -238
  -279
  -323
  -371
  -423
  -477
  -535
  -597
  -661
  -729
  -799
  -873
  -950
  -1,030
  -1,113
  -1,200
  -1,290
  -1,383
  -1,481
  -1,582
New CAPEX, $m
  -39
  -78
  -107
  -133
  -162
  -193
  -227
  -262
  -298
  -335
  -371
  -408
  -444
  -479
  -514
  -548
  -581
  -613
  -645
  -676
  -707
  -738
  -769
  -801
  -833
  -866
  -900
  -935
  -972
  -1,010
  -1,050
Cash from investing activities, $m
  -42
  -100
  -136
  -173
  -215
  -262
  -316
  -373
  -436
  -502
  -572
  -646
  -723
  -802
  -885
  -971
  -1,058
  -1,148
  -1,242
  -1,337
  -1,436
  -1,537
  -1,642
  -1,751
  -1,863
  -1,979
  -2,100
  -2,225
  -2,355
  -2,491
  -2,632
Free cash flow, $m
  615
  4,835
  11,670
  20,278
  30,858
  43,581
  58,587
  75,983
  95,842
  118,202
  143,075
  170,441
  200,280
  232,540
  267,167
  304,106
  343,301
  384,703
  428,271
  473,975
  521,798
  571,736
  623,799
  678,012
  734,417
  793,067
  854,032
  917,395
  983,252
  1,051,714
  1,122,902
Issuance/(repayment) of debt, $m
  1,002
  1,915
  2,653
  3,305
  4,028
  4,812
  5,647
  6,519
  7,417
  8,329
  9,244
  10,153
  11,051
  11,931
  12,792
  13,633
  14,454
  15,258
  16,047
  16,825
  17,598
  18,369
  19,145
  19,931
  20,732
  21,553
  22,400
  23,277
  24,190
  25,143
  26,141
Issuance/(repurchase) of shares, $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  977
  1,915
  2,653
  3,305
  4,028
  4,812
  5,647
  6,519
  7,417
  8,329
  9,244
  10,153
  11,051
  11,931
  12,792
  13,633
  14,454
  15,258
  16,047
  16,825
  17,598
  18,369
  19,145
  19,931
  20,732
  21,553
  22,400
  23,277
  24,190
  25,143
  26,141
Total cash flow (excl. dividends), $m
  1,594
  6,751
  14,323
  23,583
  34,886
  48,393
  64,234
  82,503
  103,259
  126,531
  152,318
  180,594
  211,331
  244,471
  279,960
  317,739
  357,755
  399,960
  444,318
  490,800
  539,396
  590,105
  642,944
  697,944
  755,149
  814,620
  876,432
  940,672
  1,007,442
  1,076,857
  1,149,043
Retained Cash Flow (-), $m
  -164
  -395
  -295
  -367
  -448
  -535
  -627
  -724
  -824
  -925
  -1,027
  -1,128
  -1,228
  -1,326
  -1,421
  -1,515
  -1,606
  -1,695
  -1,783
  -1,869
  -1,955
  -2,041
  -2,127
  -2,215
  -2,304
  -2,395
  -2,489
  -2,586
  -2,688
  -2,794
  -2,905
Prev. year cash balance distribution, $m
 
  1,753
  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
 
  8,109
  14,028
  23,216
  34,438
  47,858
  63,607
  81,778
  102,435
  125,605
  151,291
  179,466
  210,103
  243,145
  278,538
  316,224
  356,149
  398,265
  442,535
  488,931
  537,441
  588,064
  640,817
  695,729
  752,845
  812,225
  873,943
  938,085
  1,004,754
  1,074,063
  1,146,139
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  7,775
  12,842
  20,204
  28,356
  37,096
  46,162
  55,248
  64,024
  72,154
  79,316
  85,226
  89,658
  92,448
  93,510
  92,838
  90,505
  86,656
  81,497
  75,281
  68,292
  60,825
  53,171
  45,599
  38,344
  31,597
  25,497
  20,134
  15,545
  11,724
  8,630
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Tech Data Corporation is a wholesale distributor of technology products. The Company serves as a link in the technology supply chain by bringing products from the technology vendors to market, as well as providing its customers with logistics capabilities and services. It operates through the segment of distributing technology products, logistics management and other value-added services. It operates in two geographic segments: the Americas and Europe. It provides resellers training and technical support suite of electronic commerce tools customized shipping documents product configuration or integration services and access to financing programs. Its customers include value-added resellers, direct marketers, retailers and corporate resellers who support the diverse technology needs of end users. It sells its products to customers in approximately 100 countries throughout North America, South America, Europe, the Middle East and Africa.

FINANCIAL RATIOS  of  Tech Data (TECD)

Valuation Ratios
P/E Ratio 17.5
Price to Sales 0.1
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 5.2
Price to Free Cash Flow 5.5
Growth Rates
Sales Growth Rate -0.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 14.7%
Cap. Spend. - 3 Yr. Gr. Rate 5.4%
Financial Strength
Quick Ratio 6
Current Ratio 0
LT Debt to Equity 45.6%
Total Debt to Equity 62.8%
Interest Coverage -11
Management Effectiveness
Return On Assets 2.5%
Ret/ On Assets - 3 Yr. Avg. 3%
Return On Total Capital 6.6%
Ret/ On T. Cap. - 3 Yr. Avg. 8.4%
Return On Equity 9.3%
Return On Equity - 3 Yr. Avg. 10.5%
Asset Turnover 3.7
Profitability Ratios
Gross Margin 5%
Gross Margin - 3 Yr. Avg. 5%
EBITDA Margin 0.9%
EBITDA Margin - 3 Yr. Avg. 1%
Operating Margin 1.1%
Oper. Margin - 3 Yr. Avg. 1.2%
Pre-Tax Margin 1%
Pre-Tax Margin - 3 Yr. Avg. 1.1%
Net Profit Margin 0.7%
Net Profit Margin - 3 Yr. Avg. 0.8%
Effective Tax Rate 24.1%
Eff/ Tax Rate - 3 Yr. Avg. 27.1%
Payout Ratio 0%

TECD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TECD stock intrinsic value calculation we used $26235 million for the last fiscal year's total revenue generated by Tech Data. The default revenue input number comes from 2017 income statement of Tech Data. 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 TECD stock valuation model: a) initial revenue growth rate of 39.8% 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 4.3%, whose default value for TECD is calculated based on our internal credit rating of Tech Data, 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 Tech Data.
    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 TECD stock the variable cost ratio is equal to 24.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $20100 million in the base year in the intrinsic value calculation for TECD 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 3.5% for Tech Data.

Corporate tax rate of 27% is the nominal tax rate for Tech Data. 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 TECD 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 TECD are equal to 0.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Tech Data 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 TECD is equal to 3.6%. 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 - $2170 million for Tech Data - 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 38.181 million for Tech Data 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 Tech Data at the current share price and the inputted number of shares is $3.7 billion.

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COMPANY NEWS

▶ Tech Data Strengthens Global End-to-End Portfolio   [Dec-13-17 10:01AM  PR Newswire]
▶ Tech Data Launches Tech-as-a-Service Offering   [Dec-12-17 08:00AM  Business Wire]
▶ ETFs with exposure to Tech Data Corp. : December 5, 2017   [Dec-05-17 01:20PM  Capital Cube]
▶ Tech Data Recognized as a 2017 ChannelPro SMB All-Star   [Dec-01-17 12:32PM  Business Wire]
▶ Cramer: For Market, Bad News Isn't as Bad as It Used to Be   [Nov-28-17 07:01PM  TheStreet.com]
▶ What Happened in the Stock Market Today   [04:55PM  Motley Fool]
▶ 2 Stocks to Watch Tuesday   [02:14PM  GuruFocus.com]
▶ Company News For Nov 28, 2017   [08:37AM  Zacks]
▶ Tech Data tops Street 3Q forecasts   [04:41PM  Associated Press]
▶ David Einhorn"s Top 5 Buys of 3rd Quarter   [05:15PM  GuruFocus.com]
▶ Three Tampa Bay companies earn perfect scores on a report card for LGBTQ issues   [Nov-09-17 04:36PM  American City Business Journals]
▶ Why a Tampa Bay tech group is changing its name   [07:05AM  American City Business Journals]
▶ November Undervalued Stock Opportunities   [09:03AM  Simply Wall St.]
Financial statements of TECD
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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