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GuruFocus has detected 4 Warning Signs with NewMarket Corp $NEU.
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NewMarket Corp (NYSE:NEU)
Intrinsic Value: Projected FCF
$181.85 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, NewMarket Corp's projected FCF intrinsic value is $181.85. The stock price of NewMarket Corp is $444.54. Therefore, NewMarket Corp's Price to Intrinsic Value: Projected FCF Ratio of today is 2.4.

NEU' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 0.07   Max: 2.45
Current: 2.44

0.07
2.45

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of NewMarket Corp was 2.45. The lowest was 0.07. And the median was 1.06.

NEU's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
71% of the 476 Companies
in the Global Specialty Chemicals industry.

( Industry Median: 1.44 vs. NEU: 2.44 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here NewMarket Corp's FCF(6 year avg) is calculate as

NewMarket Corp Quarterly Data

201409201412201503201506201509201512201603201606201609201612
total_freecashflow 59533637313746783453
201203201206201209201212201303201306201309201312201403201406
total_freecashflow 5625797411807058-569
201103201106201109201112
total_freecashflow -8206553

Add all the Free Cash Flow together and divide 6 will get NewMarket Corp's FCF(6 year avg) = $185.32.

NewMarket Corp's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Dec16)*0.8)/Shares Outstanding
=(9.52035159596*185.3215+483.251*0.8)/11.828
=181.85

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

NewMarket Corp's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=444.54/181.850409054
=2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

NewMarket Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
Projected FCF 56.0940.3960.2582.92107.31143.03182.43225.17184.73181.85

NewMarket Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
Projected FCF 220.16225.17208.22199.16194.65184.73181.78187.00187.01181.85
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