The Warehouse Group Limited (WHS)

Discount cash flow analysis

Buy Undervalued by 42.8%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for The Warehouse Group 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% $4.21 $4.16 $4.10
Terminal Growth% 0 $4.23 $4.17 $4.12
  +1% $4.25 $4.19 $4.13

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 $2.07 (overvalued by 29.11%) - 9 months ago
  • Valuecruncher created a new valuation of $2.07 (overvalued by 28.13%) - 9 months ago
  • GordonGekko created a new valuation of $2.84 (undervalued by 6.37%) - 5 years ago
  • baconboy created a new valuation of $3.41 (overvalued by 10.26%) - over 7 years ago
  • sambling created a new valuation of $5.00 (undervalued by 24.38%) - over 7 years ago
  • sambling created a new valuation of $3.79 (overvalued by 5.25%) - over 7 years ago
  • GordonGekko created a new valuation of $4.17 (undervalued by 11.5%) - 8 years ago
  • gordonsk created a new valuation of $3.47 (overvalued by 1.14%) - over 8 years ago
  • GordonGekko created a new valuation of $3.47 (undervalued by 0.58%) - over 8 years ago
  • nzvikram created a new valuation of $3.15 (overvalued by 4.83%) - over 8 years ago
  • KiwiEMH created a new valuation of $3.43 (undervalued by 0.88%) - over 8 years ago
  • KiwiEMH created a new valuation of $3.58 (undervalued by 18.54%) - over 8 years ago
  • KiwiEMH created a new valuation of $3.69 (undervalued by 12.5%) - almost 9 years ago
  • KiwiEMH created a new valuation of $3.91 (overvalued by 1.01%) - 9 years ago
  • TheCrunchBlog created a new valuation of $4.13 (undervalued by 0.73%) - 9 years ago
  • GordonGekko created a new valuation of $4.61 (undervalued by 2.22%) - 9 years ago
  • GordonGekko created a new valuation of $5.65 (overvalued by 0.88%) - 9 years ago

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The boring details

All amounts in millions Figures
Enterprise Value: 1,036
Net Debt (Long-term borrowings less cash): 134
Equity Value: 1,154
Number of Shares Outstanding: 308,000,000
Calculated value per share: $4.17

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.