Contact Energy Limited (CEN)
Discount cash flow analysis
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $12.48 | $11.66 | $10.93 | |
| Terminal Growth% | 0 | $13.27 | $12.36 | $11.55 |
| +1% | $13.27 | $12.36 | $11.55 |
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 $2.23 (overvalued by 60.6%) - 13 hours ago
- sambling created a new valuation of $0.00 (overvalued by 100.0%) - 10 months ago
- sambling created a new valuation of $0.00 (overvalued by 100.0%) - 10 months ago
- sambling created a new valuation of $0.00 (overvalued by 100.0%) - 10 months ago
- sambling created a new valuation of $0.00 (overvalued by 100.0%) - 10 months ago
- sambling created a new valuation of $6.47 (undervalued by 13.31%) - 10 months ago
- DarrylLundy created a new valuation of $6.54 (overvalued by 1.06%) - 11 months ago
- DarrylLundy created a new valuation of $0.00 (overvalued by 100.0%) - 11 months ago
- DarrylLundy created a new valuation of $5.59 (overvalued by 15.43%) - 11 months ago
- GordonGekko created a new valuation of $6.35 (undervalued by 0.95%) - 1 year ago
- GordonGekko created a new valuation of $5.55 (overvalued by 4.8%) - 1 year ago
- GordonGekko created a new valuation of $5.55 (overvalued by 4.8%) - 1 year ago
- GordonGekko created a new valuation of $5.55 (overvalued by 4.8%) - 1 year ago
- GordonGekko created a new valuation of $5.55 (overvalued by 4.8%) - 1 year ago
- GordonGekko created a new valuation of $5.55 (overvalued by 4.8%) - 1 year ago
- GordonGekko created a new valuation of $5.55 (overvalued by 4.8%) - 1 year ago
- GordonGekko created a new valuation of $6.04 (undervalued by 2.55%) - 1 year ago
- GordonGekko created a new valuation of $5.95 (undervalued by 6.25%) - 1 year ago
- KiwiEMH created a new valuation of $6.44 (overvalued by 8.78%) - 1 year ago
- Bert created a new valuation of $12.36 (undervalued by 30.38%) - over 2 years ago
- Sam created a new valuation of $11.07 (undervalued by 18.02%) - over 2 years ago
- tiger created a new valuation of $9.45 (undervalued by 1.61%) - over 2 years ago
- GordonGekko created a new valuation of $7.73 (overvalued by 16.88%) - over 2 years ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 3,796 |
| Net Debt (Long-term borrowings less cash): | 532 |
| Equity Value: | 5,467 |
| Number of Shares Outstanding: | 576,000,000 |
| Calculated value per share: | $12.36 |
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.
Over the next 3-5 years we can expect to se a hike in the cost of energy prices. Interestingly enough, this is what industry analysts have used to jusitfy the expenditure on alternate (wind) energy. With the increase in investment in wind energy particularly around the manawatu area, I would expect the analysts to "make sure" energy prices increase to match their expectations.