Goodman Fielder ($GFF.NZ) is an ASX and NZX listed manufacturer and supplier of consumer food products. $GFF.NZ is trading toward the bottom of their 52-week range. How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher produces a valuation of A$1.71 for $GFF.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 11.0% above the current share price of A$1.54. All of the figures below are in Australian dollars (A$).
Assumptions
Revenue: Reuters aggregates seven analysts covering $GFF.NZ and the mean estimates of 2009 revenues are A$2.77 billion. For our analysis we have used A$2.75 billion in 2009, A$2.85 billion in 2010 and A$3.0 billion in 2011.
Capital Expenditure: We have assumed capital expenditures of A$90.0 million in 2009, A$120 million in 2010, A$85 million in 2011 and then A$75 million per annum moving forward.
Discount Rate: 9.0%.The PwC New Zealand cost of capital report does not list $GFF.NZ but has the wider New Zealand market at 9.5%. We believe a discount rate in the 8-10% range is appropriate. We have chosen the middle of this range.
General Mills ($GIS) the manufacturer and marketer of branded consumer foods (such as Cheerios, Betty Crocker and Hamburger Helper) is one of the rare stocks trading higher today than 12 months ago. How does the current share price of $GIS look from an intrinsic value perspective?
Valuecruncher produces a valuation of US$64.06 for $GIS. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 1.9% below the current share price of US$65.33. We believe the stock is trading broadly in-line with the intrinsic value.
Assumptions
Revenue: Reuters aggregates 11 analysts covering $GIS and these analysts have mean estimates of 2009 and 2010 revenues of US$14.5 billion and US$15.1 billion respectively. For our analysis we have used US$14.5 billion in 2009, US$15.0 billion in 2010 and US$15.5 billion in 2011.
Profitability: We have used an EBITDA margin of 19.0% in 2009 rising to 20.5% in 2011. Reuters has $GIS‘s EBITD margin at 18.8% last year and averaging 21.1% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$550 million per annum moving forward.
Skellerup Holdings ($SKL.NZ) is a New Zealand company that develops and distributes technical polymer products for a variety of specialist industrial and agricultural applications. $SKL.NZ closed today at their 52-week low. How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher produces a valuation of NZ$0.89 for $SKL.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 17.1% above the current share price of NZ$0.76.
Assumptions
Revenue: Reuters aggregates four analysts covering $SKL.NZ and the mean estimate of 2009 revenues is NZ$193.3 million. For our analysis we have used NZ$190.0 million in 2009, NZ$205.0 million in 2010 and NZ$215.0 million in 2011.
Profitability: We have used an EBITDA margin of 14.0% in 2009 rising to 15% in 2011. Reuters has $SKL.NZ‘s EBITD margin at 16.5% last year and an average of 15.1% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of NZ$7.5 million per annum moving forward.
Discount Rate: 11.0%.The PwC New Zealand cost of capital report does not list $SKL.NZ but has the wider market at 9.5%. We believe a discount rate in the 10-12% range is appropriate. We have chosen the middle of this range.
This week we want to try something new. We want to put some analysis in your hands this week. We are going to try a new feature on the blog - “Stock Of The Week“.
This is how it will work. We are going to identify a stock on Monday (today), provide some information around that stock (but not a valuation) and ask the readers of this blog to complete valuations of the company (using the Valuecruncher valuation tool). On Friday we will look at all the valuations completed for the company and provide our take on the valuation of the company.
Remember - you can be completely anonymous with the analysis. We won’t be making fun of any valuations - we want to hear what people think. We are keen to tap the wisdom of the crowd.
We have decided to start with a New Zealand stock this week. Rakon ($RAK.NZ) is a New Zealand-based designer and manufacturer of high-performance frequency control technology. Valuecruncher completed a valuation of the company at the end of October.
Since we completed our valuation the stock has dropped 39% on the back of rough financial results and guidance on future potential financial performance. We thought it was time to get some thoughts from you on what could happen next - and what that means for valuation.
Resources To Assist
Our valuation from the end of October is a good starting point. It gives a view of $RAK.NZ using information from analysts at that time. It is a solid starting point for inputs like discount rates, terminal growth rates and tax. Since that valuation $RAK.NZ has released information about their last six-months of performance and expectations moving forward. This presentation (especially slide 3) gives a good summary of where the company is at today. Some of this information could certainly feed into a new valuation. Finally here is the media take on the $RAK result.
So what do you think? Does the current share price of NZ$1.11 mean the shares look overvalued, undervalued or about right? Complete a valuation - and write some comments on your assumptions. At the end of this week we will review the view of the crowd and add our take.
As always the starting point is the $RAK.NZ company page - Here.
Nike ($NKE) is a global leader in sporting footware, apparel and equipment. We have always been fans of their advertising - especially this one. The visuals are now dated - but the music from John Lennon is just brilliant.
$NKE is trading close to a 52-week low. So how does the current share price of $NKE look from an intrinsic value perspective?
Valuecruncher produces a valuation of US$50.18 for $NKE. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 7.8% above the current share price of US$46.53.
Assumptions
Revenue: Reuters aggregates eight analysts covering $NKE and these analysts have mean estimates of 2009 and 2010 revenues of US$20.26 billion and US$23.15 billion respectively. For our analysis we have used US$20.25 billion in 2009, US$21.75 billion in 2010 and US$22.25 billion in 2011.
Profitability: We have used an EBITDA margin of 14.0% in 2009 rising to 15.0% in 2010. Reuters has $NKET‘s EBITD margin at 14.5% last year and averaging 15.1% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$400 million per annum moving forward.
Previously Valuecruncher has looked at Wal-Mart ($WMT) the discount retailer. Today we look at Target ($TGT) a competitor in the discount retailing space. $TGT is trading close to a 52-week low. So how does the current share price of $TGT look from an intrinsic value perspective?
Valuecruncher produces a valuation of US$30.48 for $TGT. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 13.7% below the current share price of US$35.33.
Assumptions
Revenue: Reuters aggregates 16 analysts covering $TGT and these analysts have mean estimates of 2009 and 2010 revenues of US$67.2 billion and US$72.4 billion respectively. For our analysis we have used US$67.15 billion in 2009, US$68.25 billion in 2010 and US$70.5 billion in 2011.
Profitability: We have used an EBITDA margin of 10.0% in 2009 rising to 10.5% in 2010. Reuters has $TGT‘s EBITD margin at 10.7% last year and also averaging 10.7% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$4.25 billion in 2009 then US$4.0 billion in 2010 and 2011 then US$3.75 billion per annum moving forward.
Our valuation is sensitive to the discount rate assumption.If we drop the discount rate to 7.5% then the valuation rises to US$37.29 5.5% above the current share price of US$35.33.
Our analysis incorporates the cash and debt on the $TGT balance sheet – Valuecruncher calculates a net debt number.
Methven ($MVN.NZ) is a New Zealand company that designs and supplies taps and shower-ware. $MVN.NZ is trading toward the bottom of their 52-week range. How is this in relation to the intrinsic value of the company’s shares?
Valuecruncher produces a valuation of NZ$1.68 for $MVN.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 18.3% above the current share price of NZ$1.42.
Assumptions
Revenue: Reuters aggregates four analysts covering $MVN.NZ and the mean estimates of 2009 and 2010 revenues are NZ$142.1 million and NZ$149.8 million respectively. For our analysis we have used NZ$140.0 million in 2009, NZ$145.0 million in 2010 and NZ$150.0 million in 2011.
Capital Expenditure: We have assumed capital expenditures of NZ$4.0 million per annum moving forward.
Discount Rate: 11.0%.The PwC New Zealand cost of capital report does not list $MVN.NZ but has the wider market at 9.5%. We believe a discount rate in the 10-12% range is appropriate. We have chosen the middle of this range.
When Valuecruncher completed our valuation the $FBU.NZ was trading at NZ$6.20 - and we produced a valuation of NZ$7.24. Today $FBU.NZ closed at NZ$5.56.
With the additional guidance we decided to revisit our valuation.
We kept all our previous assumptions constant but revised our profitability assumptions. Reuters has $FBU.NZ’s EBITD margin at 13.0% last year and an average of 14.2% for the last five-years.
For our analysis we have lowered our 2009 EBITDA margin to 9.0% with 2010 at 11.0% and 2011 at 12.0%.
Previously Valuecruncher has looked at Home Depot ($HD) the home improvement retailer. Today we look at Lowe’s ($LOW) a competitor in the home improvement retailing space. So how does the current share price of $LOW look from an intrinsic value perspective?
Valuecruncher produces a valuation of US$16.41 for $LOW. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 13.6% below the current share price of US$19.05.
Assumptions
Revenue: Reuters aggregates 20 analysts covering $LOW and these analysts have mean estimates of 2009 and 2010 revenues of US$48.6 billion and US$50.7 billion respectively. For our analysis we have used US$48.5 billion in 2009, US$48.85 billion in 2010 and US$53.5 billion in 2011.
Profitability: We have used an EBITDA margin of 11.0% in 2009 and 2010 rising to 12.0% in 2011. Reuters has $LOW‘s EBITD margin at 12.1% last year and averaging 12.8% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$3.5 billion in 2009 then US$3.0 billion per annum moving forward.
At Valuecruncher we have previously looked at Proctor & Gamble ($PG). Competitor Colgate Palmolive ($CL) announced strong Q3 results at the end of October. $CL is trading close to a 52-week low at US$63.55. So how does the current share price of $CL look from an intrinsic value perspective?
Valuecruncher produces a valuation of US$75.96 for $CL. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 19.5% above the current share price of US$58.76.
Assumptions
Revenue: Reuters aggregates 12 analysts covering $CL and these analysts have mean estimates of 2008 and 2009 revenues of US$15.7 billion and US$16.8 billion respectively. For our analysis we have used US$15.5 billion in 2008, US$16.5 billion in 2009 and US$17.5 billion in 2010.
Profitability: We have used a flat EBITDA margin of 22.0% to 2010. Reuters has $CL‘s EBITD margin at 21.5% last year and 22.9% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$600.0 million per annum moving forward.
