Motorola ($MOT) announced terrible third-quarter results and forward looking guidance this week.  The communications company had a worse than expected financial result for the quarter (due to the cell phone business), delayed the spin-off of the cell phone business unit until after 2009 and cut yet more jobs.  The stock is trading close to a 52-week low.  How does the current share price look from an intrinsic value perspective?

Valuecruncher valuation model of $MOT with interactive assumptions

Valuecruncher produces a valuation of US$7.04 for $MOT. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 36.2% above the current share price of US$5.17.

Assumptions

• Revenue: Reuters aggregates 25 analysts covering $MOT and these analysts have mean estimates of 2008 and 2009 revenues of US$32.3 billion and US$34.7 billion respectively. For our analysis we have used US$32.0 billion in 2008, US$33.0 billion in 2009 and US$33.5 billion in 2010.
• Profitability: We have used an EBITDA margin of 3.0% in 2008 rising to 8.0% in 2010. Reuters has $MOT‘s EBITD margin at 1.6% last year and 9.2% over the last five-years.  The current share price appears to imply that the market does not believe $MOT can achieve a return to historic profitability.
• Capital Expenditure: We have assumed capital expenditures of US$515 million in 2008 then US$600 million per annum moving forward.
• Discount Rate: 12.0%.
• Terminal Growth Rate: 0.0%.  Yes – we are assuming zero growth growing forward.

Our analysis incorporates the cash and debt the $MOT balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

Verizon ($VZ) announced positive third-quarter results this week.  Analysts have been generally impressed.  How does the current share price look from an intrinsic value perspective?

Valuecruncher valuation model of $VZ with interactive assumptions

Valuecruncher produces a valuation of US$37.77 for $VZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 23.8% above the current share price of US$30.50.

Assumptions

• Revenue: Reuters aggregates 22 analysts covering $VZ and these analysts have mean estimates of 2008 and 2009 revenues of US$97.0 billion and US$103.3 billion respectively. For our analysis we have used US$97.0 billion in 2008, US$103.0 billion in 2009 and US$105.0 billion in 2010.
• Profitability: We have used an EBITDA margin of 32.0% in 2008 rising to 33.0% in 2010. Reuters has $VZ‘s EBITD margin at 32.7% last year and 34.4% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of US$17.5 billion per annum moving forward.
• Discount Rate: 9.0%.
• Terminal Growth Rate: 1.5%.

Our analysis incorporates the cash and debt the $VZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

Walt Disney Company ($DIS) was founded in 1923 as an animation studio. Today $DIS is one of the largest media and entertainment companies in the world with annual revenues over US$35 billion. With the release of High School Musical 3 $DIS is continuing to refine their media strategy. $DIS is trading just above their 52-week low. How does the current share price look?

Valuecruncher valuation model of $DIS with interactive assumptions

Valuecruncher produces a valuation of US$26.45 for $DIS. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 10.6% above the current share price of US$23.91.

Assumptions

• Revenue: Reuters aggregates 18 analysts covering $DIS and these analysts have a mean estimate of 2009 revenues of US$38.9 billion. For our analysis we have used US$38.5 billion in 2009, US$40.0 billion in 2010 and US$41.0 billion in 2011.
• Profitability: We have used an EBITDA margin of 20.0% flat to 2011. Reuters has $DIS‘s EBITD margin at 24.3% last year and 19.1% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of US$1.75 billion per annum moving forward.
• Discount Rate: 10.0%.
• Terminal Growth Rate: 3.0%.

Our analysis incorporates the cash and debt the $DIS balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

Rakon ($RAK.NZ) is a New Zealand-based designer and manufacturer of high-performance frequency control technology. $RAK.NZ had been a star performer on the NZX since listing in May 2006 (the company was started in 1967). The share price has however dropped significantly over the last 12 months. The current share price is NZ$1.82 – this is $RAK.NZ’s 52-week low. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $RAK.NZ with interactive assumptions

Valuecruncher produces a valuation of NZ$1.99 for $RAK.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 9.3% above the current share price of NZ$1.82.

Assumptions

• Revenue: Reuters aggregates four analysts covering $RAK.NZ and the mean estimates of 2009 and 2010 revenues are NZ$212.4 million and NZ$270.4 million respectively. For our analysis we have used NZ$210.0 million in 2009, NZ$265.0 million in 2010 and NZ$315.0 million in 2011.
• Profitability: We have used a flat EBITDA margin of 15% to 2011. Reuters has $RAK.NZ‘s EBITD margin at 14.0% last year and an average of 14.75% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of NZ$20.0 million in 2009 then NZ$25.0 million in 2010 then NZ$20.0 million per annum moving forward.
• Discount Rate: 11.0%. $RAK.NZ is not included in the PwC New Zealand cost of capital report. PwC puts the discount rate (WACC) for the NZ market at 9.5%.
• Terminal Growth Rate: 5.0%.

Our analysis incorporates the cash and debt the $RAK.NZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

We have previously looked at Fisher & Paykel Healthcare ($FPH.NZ). Fisher & Paykel Appliances (FPA.NZ) is the original appliances side of the business. The current share price is NZ$1.33 – just above the 52-week low. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $FPA.NZ with interactive assumptions

Valuecruncher produces a valuation of NZ$1.33 for $FPA.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is right on the current share price of NZ$1.33.

Assumptions

• Revenue: Reuters aggregates seven analysts covering $FPA.NZ and this produces mean estimates of 2009 and 2010 revenues of NZ$1.445 billion and NZ$1.549 billion respectively. For our analysis we have used NZ$1.425 billion in 2009, NZ$1.525 billion in 2010 and NZ$1.60 billion in 2011.
• Profitability: We have used an EBITDA margin of 10% in 2009 rising to 11% in 2011. Reuters has $FPA.NZ‘s EBITD margin at 10.3% last year and an average of 12.8% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of NZ$85.0 million in 2009 then NZ$65.0 million moving forward.
• Discount Rate: 9.5%. The PwC New Zealand cost of capital report has $FPA.NZ at a WACC of 9.3% with the wider NZ market at 9.5%.
• Terminal Growth Rate: 3.5%.

Our analysis incorporates the cash and debt the $FPH.NZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

Henry Blodget at Silicon Alley Insider working with 24/7 Wall Street has put up a seven-point plan to save the New York Times ($NYT). The follow-up is here. This is our contribution. A valuation of the intrinsic value of the company with some pretty pessimistic assumptions. The model is interactive and the assumptions can be adjusted to change the valuation.

Valuecruncher valuation model of $NYT with interactive assumptions

Valuecruncher produces a valuation of US$7.66 for $NYT. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 19.8% below the current share price of US$9.55.

Assumptions

• Revenue: Reuters aggregates six analysts covering $NYT and these produce mean estimates of 2008 and 2009 revenues of US$2.99 billion and US$2.92 billion respectively. For our analysis we have used US$2.975 billion in 2008, US$2.835 billion in 2009 and US$2.725 billion in 2010.
• Profitability: We have used an EBITDA margin of 14.0% flat to 2010.
• Capital Expenditure: We have assumed capital expenditures of US$150.0 million in 2008 then US$75.0 million in 2009 and 2010. We have then assumed US$150 million per annum moving forward.
• Discount Rate: 8.0%.
• Terminal Growth Rate: 0%. We have assumed zero growth moving forward. If we factor in any growth at all this positively impacts the valuation.

Our analysis incorporates the cash and debt the $NYT balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

United Parcel Service ($UPS) is yet another company trading near a 52-week low. $UPS is on the front line of globalisation – and these are challenging times for the world economy. $UPS currently delivers more than 15 million packages a day to 6.1 million customers in more than 200 countries and territories around the world. How does the current share price look?

Valuecruncher valuation model of $UPS with interactive assumptions

Valuecruncher produces a valuation of US$42.57 for $UPS. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 11.6% below the current share price of US$48.13.

Assumptions

• Revenue: Reuters aggregates 12 analysts covering $UPS and these analysts have mean estimates of 2008 and 2009 revenues of US$52.8 billion and US$56.4 billion respectively. For our analysis we have used US$52.0 billion in 2008, US$54.0 billion in 2009 and US$58.0 billion in 2010. We are worried about near term global economic conditions – which will impact companies like $UPS.
• Profitability: We have used an EBITDA margin of 15.0% flat to 2010.
• Capital Expenditure: We have assumed capital expenditures of US$2.85 billion in 2008 and then US$3.0 billion per annum moving forward.
• Discount Rate: 10.0%. We believe that a discount rate in the 9-10% range is reasonable. Dropping the discount rate to 9% increases the valuation to US$51.75 (7.5% above the current share price).
• Terminal Growth Rate: 3.5%.

Our analysis incorporates the cash and debt the $UPS balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

Fisher & Paykel Healthcare ($FPH.NZ) is a New Zealand designer, manufacturer and marketer of health products and systems specialising in respiratory care.  $FPH.NZ recently announced 2009 financial performance could benefit from the falling New Zealand dollar.  The current share price is NZ$3.10.  How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $FPH.NZ with interactive assumptions

Valuecruncher produces a valuation of NZ$2.90 for $FPH.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 6.45% below the current share price of NZ$3.10.

Assumptions

• Revenue: Reuters aggregates nine analysts covering $FPH.NZ and these analysts have mean estimates of 2009 and 2010 revenues of NZ$421.7 million and NZ$522.2 million respectively. For our analysis we have used NZ$425.0 million in 2009, NZ$530.0 million in 2010 and NZ$610.0 million in 2011.
• Profitability: We have used an EBITDA margin of 25% in 2009 rising to 27% in 2011. Reuters has $FPH.NZ‘s EBITD margin at 20.6% last year and an average of 30.7% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of NZ$21.0 million in 2009 rising to NZ$30.0 million in 2011 then NZ$25.0 million moving forward.
• Discount Rate: 10.0%. The PwC New Zealand cost of capital report has $FPH.NZ at a WACC of 9.7% with the wider NZ market at 9.5%.
• Terminal Growth Rate: 4.25%.

Our analysis incorporates the cash and debt the $FPH.NZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

Previously Valuecruncher has looked at Coca-Cola ($KO).  With Nielson rating carbonated beverages a recession vulnerable category we thought it was time to have a look at PepsiCo ($PEP).  How does the current share price look?

Valuecruncher valuation model of $PEP with interactive assumptions

Valuecruncher produces a valuation of US$48.01 for $PEP. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 10.5% below the current share price of US$53.64.

Assumptions

• Revenue: Reuters aggregates 10 analysts covering $PEP and these analysts have mean estimates of 2008 and 2009 revenues of US$43.5 billion and US$46.7 billion respectively. For our analysis we have used US$43.0 billion in 2008, US$46.0 billion in 2009 and US$47.5 billion in 2010.
• Profitability: We have used an EBITDA margin of 20.0% in 2008 rising to 21.0% in 2010. Reuters has $PEP‘s EBITD margin at 20.8% last year and 22.0% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of US$2.5 billion per annum moving forward.
• Discount Rate: 9.0%.  Valuecruncher used a discount rate of 8% in our $KO valuation.  We believe a discount rate in the 8-9% range is reasonable.
• Terminal Growth Rate: 3.0%.

Our analysis incorporates the cash and debt the $PEP balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None

At Valuecruncher we have always been a fan of the business model of New Zealand-listed gaming, hotel and entertainment company Sky City (SKC.NZ).  They have a legal monopoly in key parts of the New Zealand market offering gaming with games structured to favour the house.  All businesses should be so lucky.  The SKC.NZ share price has moved in a range between NZ$5.50 and NZ$2.91 over the last year.  The current share price is NZ$3.30.  How is this in relation to the intrinsic value?

Valuecruncher valuation model of SKC.NZ with interactive assumptions

Valuecruncher produces a valuation of NZ$3.51 for SKC.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 6.4% above the current share price of NZ$3.30.

Assumptions

• Revenue: Reuters aggregates eight analysts covering SKC.NZ and these analysts have mean estimates of 2009 and 2010 revenues of NZ$853.3 million and NZ$888.3 million respectively. For our analysis we have used NZ$850.0 million in 2009, NZ$885 million in 2010 and NZ$915 million in 2011.
• Profitability: We have used an EBITDA margin of 35% in 2009 rising to 36% in 2011. Reuters has SKC.NZ‘s EBITD margin at 29.6% last year and an average of 36.8% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of NZ$90.0 million in 2009 then NZ$75 million moving forward.
• Discount Rate: 10.0%. The PwC New Zealand cost of capital report has SKC.NZ at a WACC of 10.8% with the wider NZ market at 9.5%. We feel that 10.8% is too high. We believe there is an argument for a discount rate anywhere in the 8-10% range for SKC.NZ.
• Terminal Growth Rate: 3.0%. The New Zealand economy has grown at an average rate of 2.6% over the last five-years. We see SKC.NZ growing broadly in-line with this moving forward.

Our analysis incorporates the cash and debt the SKC.NZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None