Telstra ($TLS.AX) is Australia’s largest telecommunications company. $TLS.AX is listed on the ASX and NZX exchanges. The current share price is A$3.71 - the 52-week range has been A$4.95 to A$3.36. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $TLS.AX with interactive assumptions

Valuecruncher produces a valuation of A$3.57 for $TLS.AX. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 3.8% below the current share price of A$3.71. All of the figures below are in Australian dollars (A$).

Assumptions

• Revenue: Reuters aggregates 10 analysts covering $TLS.AX and the mean estimates of 2009 and 2010 revenues are A$25.5 billion and A$26.1 billion respectively. For our analysis we have used A$25.25 billion in 2009, A$26.0 billion in 2010 and A$26.5 billion in 2011.
• Profitability: We have used an EBITDA margin of 41.5% flat to 2011. Reuters has $TLS.AX‘s EBITD margin at 41.7% last year and averaging 43.9% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of A$4.5 billion in 2009 then A$4.0 billion in 2010 and 2011 then A$4.5 billion per annum moving forward.
• Discount Rate: 9.0%.
• Terminal Growth Rate: 1.0%.

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

Play with our assumptions – what does your analysis say?

Disclosure: None

Lion Nathan ($LNN.AX) is an ASX and NZX-listed producer of alcoholic beverages in both the Australian and New Zealand markets. The current share price is A$8.08 - the 52-week range has been A$9.79 to A$7.36. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $LNN.AX with interactive assumptions

Valuecruncher produces a valuation of A$8.71 for $LNN.AX. 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 A$8.08. All of the figures below are in Australian dollars (A$).

Assumptions

• Revenue: Reuters aggregates seven analysts covering $LNN.AX and the mean estimates of 2009 and 2010 revenues are A$2.27 billion and A$2.35 billion respectively. For our analysis we have used A$2.20 billion in 2009, A$2.25 billion in 2010 and A$2.35 billion in 2011.
• Profitability: We have used an EBITDA margin of 27.5% flat to 2011. Reuters has $LNN.AX‘s EBITD margin at 27.5% last year and an average of 26.4% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of A$235.0 million per annum moving forward.
• Discount Rate: 7.0%. The PwC New Zealand cost of capital report lists $LNN.AX at 6.8% with the wider New Zealand market at 9.1%. We have used a slightly higher figure.
• Terminal Growth Rate: 3.0%.

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

Play with our assumptions – what does your analysis say?

Disclosure: None

APN News and Media Limited ($APN.AX) is an ASX and NZX-listed media company with significant operations in both Australia and New Zealand. The Sir Anthony O’Reilly-controlled Independent News & Media holds a 39.1% stake in $APN.AX. Independent News & Media has recently unsuccessfully tried to exit this stake. The current share price is A$2.01 - the 52-week range has been A$5.55 to A$2.00. How is this in relation to the intrinsic value of the company’s shares?

Valuecruncher valuation model of $APN.AX with interactive assumptions

Valuecruncher produces a valuation of A$1.98 for $APN.AX. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 1.5% below the current share price of A$2.01. All of the figures below are in Australian dollars (A$).

Assumptions

• Revenue: Reuters aggregates nine analysts covering $APN.AX and the mean estimate of 2009 revenues is A$1.35 billion. For our analysis we have used A$1.30 billion in 2009, A$1.31 billion in 2010 and A$1.325 billion in 2011.
• Profitability: We have used an EBITDA margin of 25.0% flat to 2011. Reuters has $APN.AX‘s EBITD margin averaging 25.8% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of A$75.0 million per annum moving forward.
• Discount Rate: 11.0%. We believe a discount rate in the 10-12% range is appropriate. We have chosen the middle of this range.
• Terminal Growth Rate: 1.0%.

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

Play with our assumptions – what does your analysis say?

Disclosure: None

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Fairfax Media ($FXJ.ASX) is an ASX-listed media company. $FXJ.ASX has extensive operations in both the Australian and New Zealand markets. $FXJ.ASX 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 $FXJ.ASX with interactive assumptions

Valuecruncher produces a valuation of A$1.68 for $FXJ.ASX. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 20.0% above the current share price of A$1.40. All of the figures below are in Australian dollars (A$).

Assumptions

• Revenue: Reuters aggregates nine analysts covering $FXJ.ASX and the mean estimates of 2009 and 2010 revenues are A$2.94 billion and A$3.08 billion respectively. For our analysis we have used A$2.85 billion in 2009, A$2.90 billion in 2010 and A$3.0 billion in 2011.
• Profitability: We have used an EBITDA margin of 25.0% in 2009 rising to 26.0% in 2011. Reuters has $FXJ.ASX‘s EBITD margin at 28.5% last year and averaging 26.4% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of A$120.0 million per annum moving forward.
• Discount Rate: 11.0%. We believe a discount rate in the 10-12% range is appropriate. We have chosen the middle of this range.
• Terminal Growth Rate: 1.0%.

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

Play with our assumptions – what does your analysis say?

Disclosure: None