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 valuation model of $MVN.NZ with interactive assumptions

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.
• Profitability: We have used a flat EBITDA margin of 14.0% to 2011. Reuters don’t list an EBITD margin for $MVN.NZ.
• 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.
• Terminal Growth Rate: 3.0%.

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

Play with our assumptions – what does your analysis say?

Disclosure: None