Monsanto Company (MON)
Discount cash flow analysis
5% margin of safety What's this?
Price history
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $83.50 | $82.13 | $80.80 | |
| Terminal Growth% | 0 | $84.02 | $82.63 | $81.29 |
| +1% | $84.55 | $83.14 | $81.78 |
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 $82.08 (undervalued by 13.87%) - 15 minutes ago
- dweis created a new valuation of $69.50 (overvalued by 7.1%) - 1 year ago
- TheCrunchBlog created a new valuation of $82.63 (overvalued by 5.39%) - 1 year ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 39,698 |
| Net Debt (Long-term borrowings less cash): | 203 |
| Equity Value: | 47,857 |
| Number of Shares Outstanding: | 547,000,000 |
| Calculated value per share: | $82.63 |
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.
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/11/running-the-numbers-intrinsic-valuation-of-monsanto-mon/
Assumptions
Revenue: Reuters aggregates 10 analysts covering $MON and these analysts have mean estimates of 2009 revenues of US$13.1 billion. For our analysis we have used US$13.0 billion in 2009, US$14.5 billion in 2010 and US$15.5 billion in 2011.
Profitability: We have used an EBITDA margin of 32.0% in 2008 rising to 34.0% in 2010. Reuters has $MON‘s EBITD margin at 31.4% last year and averaging 23.3% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$850.0 million per annum moving forward.
Discount Rate: 10.0%.
Terminal Growth Rate: 4.0%.