SUPERVALU INC. (SVU)
Discount cash flow analysis
Price history
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $38.73 | $37.55 | $36.40 | |
| Terminal Growth% | 0 | $39.11 | $37.91 | $36.75 |
| +1% | $39.49 | $38.28 | $37.11 |
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 $93.14 (undervalued by 1894.43%) - over 4 years ago
- Diegoengel created a new valuation of $41.78 (undervalued by 184.99%) - over 11 years ago
- GordonGekko created a new valuation of $12.29 (overvalued by 17.96%) - almost 12 years ago
- Diegoengel created a new valuation of $37.91 (undervalued by 45.19%) - almost 13 years ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 9,581 |
| Net Debt (Long-term borrowings less cash): | 8,590 |
| Equity Value: | 6,557 |
| Number of Shares Outstanding: | 212,000,000 |
| Calculated value per share: | $37.91 |
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.
I'm generally a fan of this company, but there is a lot of questions that remain. The company doesn't really seem to have any true competitive advantages, strong strategies or catalysts for realizing this value. I think of this as a very speculative position in a portfolio. No doubt, the company has been overly punished and I expect it to have a tremendous return. The company really needs to demonstrate some changes to their operations before I really believe in them.