Fletcher Building Limited (FBU)

Discount cash flow analysis

Sell Overvalued by 41.5%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Fletcher Building 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.

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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% $6.38 $6.27 $6.17
Terminal Growth% 0 $6.40 $6.29 $6.18
  +1% $6.42 $6.31 $6.20

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 $0.08 (overvalued by 99.26%) - 12 months ago
  • sambling created a new valuation of $7.73 (overvalued by 0.64%) - almost 8 years ago
  • GordonGekko created a new valuation of $5.85 (overvalued by 10.41%) - 8 years ago
  • Neil created a new valuation of $3.66 (overvalued by 39.0%) - over 8 years ago
  • gordonsk created a new valuation of $5.64 (overvalued by 7.84%) - over 8 years ago
  • GordonGekko created a new valuation of $5.63 (undervalued by 6.03%) - over 8 years ago
  • nzvikram created a new valuation of $1.97 (overvalued by 62.48%) - over 8 years ago
  • KiwiEMH created a new valuation of $5.88 (undervalued by 2.08%) - almost 9 years ago
  • NZXCrunchBlog created a new valuation of $5.98 (overvalued by 7.29%) - almost 9 years ago
  • KiwiEMH created a new valuation of $5.80 (overvalued by 3.01%) - almost 9 years ago
  • KiwiEMH created a new valuation of $7.55 (undervalued by 8.01%) - 9 years ago
  • KiwiEMH created a new valuation of $6.29 (undervalued by 0.32%) - over 9 years ago
  • sahjid created a new valuation of $8.22 (undervalued by 22.32%) - over 9 years ago
  • KiwiEMH created a new valuation of $7.86 (overvalued by 0.38%) - over 9 years ago
  • tiger created a new valuation of $8.62 (overvalued by 1.71%) - over 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 6,014
Net Debt (Long-term borrowings less cash): 654
Equity Value: 3,123
Number of Shares Outstanding: 498,000,000
Calculated value per share: $6.29

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.