PGG Wrightson Limited (PGW)

Discount cash flow analysis

Buy Undervalued by 346.0%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for PGG Wrightson 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
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

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% $2.26 $2.22 $2.18
Terminal Growth% 0 $2.28 $2.23 $2.19
  +1% $2.29 $2.25 $2.20

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 $1.27 (undervalued by 154.0%) - 12 months ago
  • sambling created a new valuation of $0.70 (undervalued by 16.67%) - almost 8 years ago
  • gpameek created a new valuation of $0.85 (undervalued by 32.81%) - almost 8 years ago
  • GordonGekko created a new valuation of $1.20 (undervalued by 0.0%) - 8 years ago
  • GordonGekko created a new valuation of $1.06 (overvalued by 12.4%) - over 8 years ago
  • gordonsk created a new valuation of $0.90 (overvalued by 26.23%) - over 8 years ago
  • GordonGekko created a new valuation of $0.90 (overvalued by 4.26%) - over 8 years ago
  • NZXCrunchBlog created a new valuation of $1.96 (undervalued by 15.29%) - almost 9 years ago
  • KiwiEMH created a new valuation of $1.62 (undervalued by 1.89%) - almost 9 years ago
  • KiwiEMH created a new valuation of $2.64 (overvalued by 7.04%) - 9 years ago
  • KiwiEMH created a new valuation of $2.23 (undervalued by 11.5%) - over 9 years ago

Comments

WRI Assumptions

WACC at 9%. PWC Cost of Capital Report has WRI at 8.7%. LTG at 2.5%. Getting growth above the expected 3.5% NZ economy growth rate will be hard. EBITDA margins constant at around 7.5%.

By KiwiEMH, over 9 years ago

Updating Growth

Growth to 3%.

By KiwiEMH, over 9 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 630
Net Debt (Long-term borrowings less cash): 487
Equity Value: 573
Number of Shares Outstanding: 286,000,000
Calculated value per share: $2.23

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.