Goodman Fielder ($GFF.NZ) is an ASX and NZX listed manufacturer and supplier of consumer food products. $GFF.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 $GFF.NZ with interactive assumptions

Valuecruncher produces a valuation of A$1.71 for $GFF.NZ. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 11.0% above the current share price of A$1.54. All of the figures below are in Australian dollars (A$).

Assumptions

• Revenue: Reuters aggregates seven analysts covering $GFF.NZ and the mean estimates of 2009 revenues are A$2.77 billion. For our analysis we have used A$2.75 billion in 2009, A$2.85 billion in 2010 and A$3.0 billion in 2011.
• Profitability: We have used an EBITDA margin of 14.5% in 2009 rising to 15.5% in 2011. Reuters don’t list an EBITD margin for $GFF.NZ.
• Capital Expenditure: We have assumed capital expenditures of A$90.0 million in 2009, A$120 million in 2010, A$85 million in 2011 and then A$75 million per annum moving forward.
• Discount Rate: 9.0%. The PwC New Zealand cost of capital report does not list $GFF.NZ but has the wider New Zealand market at 9.5%. We believe a discount rate in the 8-10% 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 $GFF.NZ balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

Disclosure: None