Goodman Fielder Limited (GFF)

Discount cash flow analysis

Buy Undervalued by 155.2%

5% margin of safety What's this?

close

How does this work?

This is an interactive analyst report for Goodman Fielder Limited, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

Spacer
Values in $ millions
2008 2009 2010 2011 2012 2013 2014 2015
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

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

Running The Numbers - Goodman Fielder ($GFF.NZ)

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%.

By NZXCrunchBlog, about 12 years ago

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.


Calcuation of EV

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.


Perpetuity

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.


CAPM model

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.