Mainfreight Limited (MFT)

Discount cash flow analysis

Sell Overvalued by 63.7%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Mainfreight 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% $6.48 $6.38 $6.29
Terminal Growth% 0 $6.50 $6.40 $6.31
  +1% $6.52 $6.43 $6.33

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 $6.24 (overvalued by 64.63%) - over 4 years ago
  • GordonGekko created a new valuation of $4.07 (overvalued by 8.54%) - over 11 years ago
  • Lespe959 created a new valuation of $3.77 (overvalued by 21.46%) - over 11 years ago
  • gordonsk created a new valuation of $3.75 (overvalued by 7.18%) - almost 12 years ago
  • GordonGekko created a new valuation of $3.97 (undervalued by 12.78%) - almost 12 years ago
  • KiwiEMH created a new valuation of $4.61 (overvalued by 2.95%) - 12 years ago
  • GordonGekko created a new valuation of $6.40 (overvalued by 5.88%) - over 12 years ago
  • KiwiEMH created a new valuation of $7.58 (undervalued by 2.43%) - over 12 years ago

Comments

MFT Assumptions

Global assumptions similar to Freightway's: WACC 12.0%, LTG 3.5% and Tax 30.0%. Key is EBITDA margins rising from ~7.5% in 2008 to 10.0% by 2011.

By GordonGekko, over 12 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 1,768
Net Debt (Long-term borrowings less cash): 64
Equity Value: 656
Number of Shares Outstanding: 96,000,000
Calculated value per share: $6.40

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.