Valuecruncher places a mid-point value of $17.29 on each Rinker share. The current share price of $18.24 is close to the mid-point valuation and is well within the valuation range of $13.78 to $21.06.

Key Assumptions

Revenue Growth

Rinker has experienced very strong revenue growth in the 05/06 period with a growth rate of 17%. This is higher than the growth rates seen in the previous two periods of 9.43% and 14.09%. We have forecasted growth rates of 17%, 14% and 10% for the next three periods, following trends and forecasts that have been stated in the company’s 2006 annual report.

EBIT Margins

EBIT margins have increased from 13.36% in 2004 to 22.43% in 2006 but it is unlikely that these margins will remain high due to increasing raw material, energy and freight costs. We have forecasted EBIT margins at 20%, 17% and 14% in the next three years.

Discount Rate (WACC)

The discount rate applied is 9%.

Terminal Growth

Terminal growth is expected to be 3%.

Rinker Group Valuation

This entry was posted on Friday, January 19th, 2007 at 5:57 pm and is filed under ASX, Rinker Group. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.