Stock Analysis on Net
Stock Analysis on Net

LyondellBasell Industries N.V. (NYSE:LYB)

$22.49

This company has been moved to the archive! The financial data has not been updated since August 2, 2019.

Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

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Intrinsic Stock Value (Valuation Summary)

LyondellBasell Industries N.V., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at
01 FCFF0
1 FCFF1 = × (1 + )
2 FCFF2 = × (1 + )
3 FCFF3 = × (1 + )
4 FCFF4 = × (1 + )
5 FCFF5 = × (1 + )
5 Terminal value (TV5) = × (1 + ) ÷ ( – )
Intrinsic value of LyondellBasell Industries N.V. capital
Less: Debt including capital leases (fair value)
Intrinsic value of LyondellBasell Industries N.V. common stock
 
Intrinsic value of LyondellBasell Industries N.V. common stock (per share)
Current share price

Based on: 10-K (reporting date: 2018-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Weighted Average Cost of Capital (WACC)

LyondellBasell Industries N.V., cost of capital

Microsoft Excel
Value1 Weight Required rate of return2 Calculation
Equity (fair value)
Debt including capital leases (fair value) = × (1 – )

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= ×
=

   Debt including capital leases (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= ( + + + + ) ÷ 5
=

WACC =

FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

LyondellBasell Industries N.V., PRAT model

Microsoft Excel
Average Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (US$ in millions)
Interest expense
Net income attributable to the Company shareholders
Add: Net income attributable to noncontrolling interest
Less: Loss from discontinued operations, net of tax
Add: Income tax expense
Earnings before tax (EBT)
 
Effective income tax rate (EITR)1
 
Interest expense, after tax2
Add: Dividends, common stock
Interest expense (after tax) and dividends
 
EBIT(1 – EITR)3
 
Current maturities of long-term debt
Short-term debt
Long-term debt, excluding current maturities
Total Company share of stockholders’ equity
Total capital
Financial Ratios
Retention rate (RR)4
Return on invested capital (ROIC)5
Averages
RR
ROIC
 
FCFF growth rate (g)6

Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).

2018 Calculations

1 EITR = 100 × Income tax expense ÷ EBT
= 100 × ÷
=

2 Interest expense, after tax = Interest expense × (1 – EITR)
= × (1 – )
=

3 EBIT(1 – EITR) = Net income attributable to the Company shareholders – Loss from discontinued operations, net of tax + Interest expense, after tax
= – +
=

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [ – ] ÷
=

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × ÷
=

6 g = RR × ROIC
= ×
=

FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × ( × – ) ÷ ( + )
=

where:

Total capital, fair value0 = current fair value of LyondellBasell Industries N.V. debt and equity (US$ in millions)
FCFF0 = the last year LyondellBasell Industries N.V. free cash flow to the firm (US$ in millions)
WACC = weighted average cost of LyondellBasell Industries N.V. capital

FCFF growth rate (g) forecast

LyondellBasell Industries N.V., H-model

Microsoft Excel
Year Value gt
1 g1
2 g2
3 g3
4 g4
5 and thereafter g5

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= + ( – ) × (2 – 1) ÷ (5 – 1)
=

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= + ( – ) × (3 – 1) ÷ (5 – 1)
=

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= + ( – ) × (4 – 1) ÷ (5 – 1)
=