Fairfax Media Limited (FXJ)

Discount cash flow analysis

Buy Undervalued by 92.7%

5% margin of safety What's this?

close

How does this work?

This is an interactive analyst report for Fairfax Media 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% $1.88 $1.84 $1.81
Terminal Growth% 0 $1.88 $1.85 $1.81
  +1% $1.88 $1.85 $1.81

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 $2.12 (undervalued by 120.83%) - 12 months ago
  • althecat created a new valuation of $0.77 (overvalued by 45.39%) - 8 years ago
  • z3186297 created a new valuation of $0.34 (overvalued by 67.62%) - over 8 years ago
  • reallyrichard created a new valuation of $1.34 (undervalued by 27.62%) - over 8 years ago
  • reallyrichard created a new valuation of $1.35 (undervalued by 28.57%) - over 8 years ago
  • reallyrichard created a new valuation of $1.35 (undervalued by 28.57%) - over 8 years ago
  • reallyrichard created a new valuation of $1.28 (undervalued by 21.9%) - over 8 years ago
  • althecat created a new valuation of $0.00 (overvalued by 100.0%) - over 8 years ago
  • althecat created a new valuation of $0.45 (overvalued by 58.33%) - over 8 years ago
  • gordonsk created a new valuation of $0.97 (overvalued by 6.73%) - over 8 years ago
  • althecat created a new valuation of $0.38 (overvalued by 55.29%) - over 8 years ago
  • NZXCrunchBlog created a new valuation of $1.68 (undervalued by 20.0%) - almost 9 years ago
  • KiwiEMH created a new valuation of $1.85 (undervalued by 32.14%) - almost 9 years ago
  • GordonGekko created a new valuation of $3.65 (undervalued by 7.99%) - over 9 years ago

Comments

No comments yet. Login to comment.

The boring details

All amounts in millions Figures
Enterprise Value: 3,865
Net Debt (Long-term borrowings less cash): 2,412
Equity Value: 2,118
Number of Shares Outstanding: 1,513,000,000
Calculated value per share: $1.85

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.