American Funds Inflation Linked Bond Fund - Class F-1 (BFIFX) Discounted Future Market Cap

American Funds Inflation Linked Bond Fund - Class F-1

BFIFX (NASDAQ)

(%)

Valuation
American Funds Inflation Linked Bond Fund - Class F-1 Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("quote:close") / data.get("income:eps"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

assumptions.set("%net_income_margin",
                data.average(f"%netMargin:{-assumptions.get('historical_years')}->0"))  # Historical average
assumptions.set("%revenue_growth_rate",
                data.average(f"%revenueGrowthRate:{-assumptions.get('historical_years')}->0"))  # Historical average

# Calculate a linear regression for forecasting revenues
data.compute({
    "linearRegressionRevenue": f"function:linear_regression:income:revenue start:{-assumptions.get('historical_years')}",
}, forecast=assumptions.get("projection_years"))

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"function:compound:{data.get('linearRegressionRevenue:1')} rate:{assumptions.get('%revenue_growth_rate')} offset:-1",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("quote:close"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income",
        "linearRegressionRevenue": "Linear Regression Revenue"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "number_format": "M",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ],
        "hidden_keys": ["linearRegressionRevenue"]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	-253.3 USD
Estimated net income	23.02 Mil. USD
Estimated market capitalization	-8.67 Bil. USD
Market capitalization discounted to present	-5.91 Bil. USD
Shares Outstanding	23.32 Mil.
Earnings Per Share (EPS)	-0.025 USD
Market Price	9.57 USD
Price to Earnings (PE) Ratio	-378.3

Historical and forecasted data

In Millions of USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "dates": [2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026, 2027, 2028, 2029], "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [6.07, 13.61, 17.38, 15.81, 16.57, 13.71, 23.29, 30.09, 16.26, null, {"y": 26.97, "oy": 26.97, "e": true, "c": 2025, "g": 65.86, "og": 65.86}, {"y": 30.98, "oy": 30.98, "e": true, "c": 2026, "g": 14.88, "og": 14.88}, {"y": 35.59, "oy": 35.59, "e": true, "c": 2027, "g": 14.88, "og": 14.88}, {"y": 40.89, "oy": 40.89, "e": true, "c": 2028, "g": 14.88, "og": 14.88}, {"y": 46.97, "oy": 46.97, "e": true, "c": 2029, "g": 14.88, "og": 14.88}], "dataType": ".", "numberFormat": "M", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [-11.46, 17.44, 23.84, -9.62, 37.34, 40.8, 32.24, -54.08, -0.59, null, {"y": 13.22, "oy": 13.22, "e": true, "c": 2025, "g": -2339, "og": -2339}, {"y": 15.18, "oy": 15.18, "e": true, "c": 2026, "g": 14.88, "og": 14.88}, {"y": 17.44, "oy": 17.44, "e": true, "c": 2027, "g": 14.88, "og": 14.88}, {"y": 20.04, "oy": 20.04, "e": true, "c": 2028, "g": 14.88, "og": 14.88}, {"y": 23.02, "oy": 23.02, "e": true, "c": 2029, "g": 14.88, "og": 14.88}], "dataType": ".", "numberFormat": "M", "hidden": false}, {"label": "Linear Regression Revenue", "mappingKey": "linearRegressionRevenue", "data": [10.32, 11.98, 13.65, 15.31, 16.98, 18.64, 20.31, 21.97, 23.64, 25.3, 26.97, 28.64, 30.3, 31.97, 33.63], "dataType": ".", "numberFormat": "M", "hidden": true}], "editableDates": {"2025": 36, "2026": 37, "2027": 38, "2028": 39, "2029": 40}, "properties": {"number_format": "M", "display_table": true}, "width": "full"}

Edit Chart Values	2025	2026	2027	2028	2029

↳ Growth Rate

Estimated Future Values

amounts of USD except for #	LTM	2025	2026	2027	2028	2029
Revenue	16.26	26.97	30.98	35.59	40.89	46.97
Revenue Growth Rate			14.88%	14.88%	14.88%	14.88%
Net Income	-0.59	13.22	15.18	17.44	20.04	23.02

Historical Values

amounts of USD except for #	Average	LTM	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	16.91	16.26	16.26	30.09	23.29	13.71	16.57	15.81	17.38	13.61	6.07
Cost of Revenue		0	0	0	0	0	0	0	0	0	0
Gross Profit	16.91	16.26	16.26	30.09	23.29	13.71	16.57	15.81	17.38	13.61	6.07
Gross Margin	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%	100%
Operating Income	14.05	14.4	14.4	27.96	20.86	10.67	13.69	12.71	13.64	9.77	2.39
Operating Margin	78.99%	88.53%	88.53%	92.91%	89.55%	77.8%	82.59%	80.38%	78.5%	71.81%	39.34%
Net Income	7.53	-0.59	-0.59	-54.08	32.24	40.8	37.34	-9.62	23.84	17.44	-11.46
Net Margin	48.99%	-3.63%	-3.63%	-179.7%	138.4%	297.5%	225.3%	-60.86%	137.2%	128.1%	-188.8%

Historical Growth Rates

amounts of USD except for #	Average	LTM	2023	2022	2021	2020	2019	2018	2017	2016	2015
Revenue	16.91	16.26	16.26	30.09	23.29	13.71	16.57	15.81	17.38	13.61	6.07
Revenue Growth Rate	14.89%		-45.96%	29.2%	69.83%	-17.26%	4.85%	-9.02%	27.67%	124.2%	-49.52%
Net Income	7.53	-0.59	-0.59	-54.08	32.24	40.8	37.34	-9.62	23.84	17.44	-11.46
Net Margin	48.99%	-3.63%	-3.63%	-179.7%	138.4%	297.5%	225.3%	-60.86%	137.2%	128.1%	-188.8%
Net Income Growth Rate	-155.9%		-98.91%	-267.7%	-20.98%	9.27%	-488.2%	-140.4%	36.71%	-252.1%	-181%
Stockholders Equity	328.8	215	215	241.7	342	414.8	385.2	359.9	381.6	369.1	363.4
Equity Growth Rate	-5.51%		-11.05%	-29.32%	-17.56%	7.69%	7.02%	-5.68%	3.38%	1.57%	-5.64%
Return on Invested Capital (ROIC)	-19.08%	-228.4%	16.82%	11.71%	6.08%	0.677%	3.57%	-4.68%	2.08%	1.5%	-0.137%
After-tax Operating Income	-39.25	-490	36.07	28.21	20.77	2.79	13.68	-16.78	7.8	5.48	-0.498
Income Tax Rate	386.6%	3,504%	-150.6%	-0.922%	0.429%	73.85%	0.08%	232.1%	42.79%	43.95%	120.8%
Invested Capital	326.9	214.5	214.5	240.9	341.3	412.3	382.8	358.7	375.2	364.9	363.5