Goodman Fielder Limited (GFF)
Discount cash flow analysis
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $1.74 | $1.71 | $1.68 | |
| Terminal Growth% | 0 | $1.74 | $1.71 | $1.68 |
| +1% | $1.74 | $1.71 | $1.69 |
How does a change in discount rate or terminal growth affect valuation?
This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate
Valuations and comments
- Valuecruncher created a new valuation of $1.33 (undervalued by 98.51%) - over 4 years ago
- GordonGekko created a new valuation of $1.13 (overvalued by 15.04%) - over 11 years ago
- gordonsk created a new valuation of $1.09 (undervalued by 1.87%) - almost 12 years ago
- GordonGekko created a new valuation of $1.09 (undervalued by 11.22%) - almost 12 years ago
- GordonGekko created a new valuation of $1.18 (undervalued by 19.19%) - almost 12 years ago
- GordonGekko created a new valuation of $1.17 (undervalued by 18.18%) - almost 12 years ago
- NZXCrunchBlog created a new valuation of $1.71 (undervalued by 11.04%) - 12 years ago
- KiwiEMH created a new valuation of $1.87 (undervalued by 3.89%) - over 12 years ago
- johna created a new valuation of $1.67 (undervalued by 18.44%) - over 12 years ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 1,918 |
| Net Debt (Long-term borrowings less cash): | 1,030 |
| Equity Value: | 2,033 |
| Number of Shares Outstanding: | 1,325,000,000 |
| Calculated value per share: | $1.71 |
Enterprise Value is the present value of the post-tax cash flows for a business into the future.
Where:
- C1, C2, C3 - the cash flow in period 1, 2, 3, ...
- r - the discount rate
To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.
Where:
- Cn - the cash flow in the final forecast period.
- LTG - the long-term growth rate
- r - the discount rate
- g - the terminal growth rate
The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.
Where:
- rt - the risk free rate
- t - the tax rate
- B - the beta of the company
- MRP - the Market Risk Premium
Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/11/running-the-numbers-goodman-fielder-gffnz/
Assumptions
Revenue: Reuters aggregates seven analysts covering $GFF.NZ and the mean estimates of 2009 revenues are A$2.77 billion. For our analysis we have used A$2.75 billion in 2009, A$2.85 billion in 2010 and A$3.0 billion in 2011.
Profitability: We have used an EBITDA margin of 14.5% in 2009 rising to 15.5% in 2011. Reuters don’t list an EBITD margin for $GFF.NZ.
Capital Expenditure: We have assumed capital expenditures of A$90.0 million in 2009, A$120 million in 2010, A$85 million in 2011 and then A$75 million per annum moving forward.
Discount Rate: 9.0%. The PwC New Zealand cost of capital report does not list $GFF.NZ but has the wider New Zealand market at 9.5%. We believe a discount rate in the 8-10% range is appropriate. We have chosen the middle of this range.
Terminal Growth Rate: 1.0%.