Running The Numbers – Sanford ($SAN.NZ)

.com/markets/nzsx/SAN/charts”>higher today than a year ago. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $SAN.NZ with interactive assumptions

Valuecruncher produces a valuation of NZ$6.30 for $SAN.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 16.2% above the current share price of NZ$5.42.

Assumptions

• Revenue: Reuters aggregates five analysts covering $SAN.NZ and the mean estimate of 2009 revenues is NZ$445.9 million. For our analysis we have used NZ$435.0 million in 2009, NZ$450.0 million in 2010 and NZ$475.0 million in 2011.
• Profitability: We have used an EBITDA margin of 16.0% in 2009 rising to 17.0% in 2011. Reuters has $SAN.NZ‘s EBITD margin at 14.4% last year and an average of 20.7% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of NZ$16.5 million per annum moving forward.
• Discount Rate: 9.0%. The PwC New Zealand cost of capital report lists $SAN.NZ at 8.3% with the wider market at 9.5%.
• Terminal Growth Rate: 2.5%. The New Zealand economy has grown at an average rate of 2.6% over the last five-years. We have $SAN.NZ growing at approximately that level moving forward.

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

Play with our assumptions – what does your analysis say?

Disclosure: None