Rakon Limited (RAK)

Discount cash flow analysis

Buy Undervalued by 785.7%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Rakon 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
2009 2010 2011 2012 2013 2014 2015 2016
 
                 
               
 

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 $1.86 $1.83
Terminal Growth% 0 $1.89 $1.86 $1.84
  +1% $1.90 $1.87 $1.85

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 $1.19 (undervalued by 466.67%) - 11 months ago
  • blackgrape created a new valuation of $1.65 (undervalued by 79.35%) - 7 years ago
  • Scarydog created a new valuation of $1.71 (undervalued by 48.7%) - over 7 years ago
  • GordonGekko created a new valuation of $1.86 (undervalued by 20.0%) - 8 years ago
  • Traderchan created a new valuation of $1.36 (overvalued by 17.07%) - 8 years ago
  • Traderchan created a new valuation of $2.68 (undervalued by 78.67%) - 8 years ago
  • GordonGekko created a new valuation of $1.17 (overvalued by 12.69%) - over 8 years ago
  • GordonGekko created a new valuation of $1.10 (undervalued by 13.4%) - over 8 years ago
  • nzvikram created a new valuation of $1.10 (undervalued by 50.68%) - over 8 years ago
  • isambard created a new valuation of $1.59 (undervalued by 54.37%) - almost 9 years ago
  • Sam created a new valuation of $0.92 (overvalued by 9.8%) - almost 9 years ago
  • isambard created a new valuation of $1.07 (undervalued by 2.88%) - almost 9 years ago
  • jamess created a new valuation of $3.61 (undervalued by 247.12%) - almost 9 years ago
  • KiwiEMH created a new valuation of $1.31 (undervalued by 4.8%) - almost 9 years ago
  • NZXCrunchBlog created a new valuation of $1.99 (undervalued by 1.02%) - almost 9 years ago
  • KiwiEMH created a new valuation of $2.94 (overvalued by 3.29%) - almost 10 years ago
  • GordonGekko created a new valuation of $2.93 (overvalued by 2.98%) - 9 years ago
  • jeremy created a new valuation of $2.91 (undervalued by 10.65%) - 9 years ago
  • LordTrask created a new valuation of $5.39 (undervalued by 66.87%) - over 9 years ago
  • andrew created a new valuation of $5.38 (undervalued by 66.56%) - over 9 years ago
  • Sam created a new valuation of $2.71 (overvalued by 17.88%) - over 9 years ago
  • KiwiEMH created a new valuation of $2.99 (overvalued by 9.39%) - over 9 years ago
  • Julian created a new valuation of $6.02 (undervalued by 83.54%) - over 9 years ago
  • tiger created a new valuation of $1.02 (overvalued by 68.9%) - over 9 years ago
  • KiwiEMH created a new valuation of $3.27 (undervalued by 5.48%) - over 9 years ago
  • KiwiEMH created a new valuation of $2.83 (undervalued by 1.07%) - over 9 years ago
  • KiwiEMH created a new valuation of $3.02 (undervalued by 7.86%) - over 9 years ago
  • jeremy created a new valuation of $3.03 (undervalued by 8.21%) - over 9 years ago
  • jeremy created a new valuation of $2.65 (undervalued by 0.76%) - over 9 years ago
  • GordonGekko created a new valuation of $3.22 (undervalued by 1.26%) - over 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 34
Net Debt (Long-term borrowings less cash): 8
Equity Value: 196
Number of Shares Outstanding: 126,000,000
Calculated value per share: $1.86

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.