Calculating The Intrinsic Value Of Sylvamo Corporation (NYSE:SLVM)
Calculating The Intrinsic Value Of Sylvamo Corporation (NYSE:SLVM)
Key Insights
- Using the 2 Stage Free Cash Flow to Equity, Sylvamo fair value estimate is US$74.13
- With US$62.03 share price, Sylvamo appears to be trading close to its estimated fair value
- Sylvamo's peers are currently trading at a premium of 34% on average
Does the April share price for Sylvamo Corporation (NYSE:SLVM) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by estimating the company's future cash flows and discounting them to their present value. We will use the Discounted Cash Flow (DCF) model on this occasion. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model.
Crunching The Numbers
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars:
10-year free cash flow (FCF) forecast
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF ($, Millions) | US$209.0m | US$270.0m | US$259.3m | US$253.9m | US$251.9m | US$252.2m | US$254.2m | US$257.4m | US$261.4m | US$266.0m |
Growth Rate Estimate Source | Analyst x1 | Analyst x1 | Est @ -3.97% | Est @ -2.09% | Est @ -0.78% | Est @ 0.14% | Est @ 0.79% | Est @ 1.24% | Est @ 1.55% | Est @ 1.77% |
Present Value ($, Millions) Discounted @ 9.6% | US$191 | US$225 | US$197 | US$176 | US$159 | US$145 | US$134 | US$124 | US$114 | US$106 |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$1.6b
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 9.6%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$266m× (1 + 2.3%) ÷ (9.6%– 2.3%) = US$3.7b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$3.7b÷ ( 1 + 9.6%)10= US$1.5b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$3.1b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$62.0, the company appears about fair value at a 16% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
Important Assumptions
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Sylvamo as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 9.6%, which is based on a levered beta of 1.591. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for Sylvamo
- Debt is well covered by earnings and cashflows.
- Dividends are covered by earnings and cash flows.
- Dividend information for SLVM.
- Earnings declined over the past year.
- Dividend is low compared to the top 25% of dividend payers in the Forestry market.
- What are analysts forecasting for SLVM?
- Good value based on P/E ratio and estimated fair value.
- No apparent threats visible for SLVM.
Looking Ahead:
Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Sylvamo, we've put together three additional elements you should consider:
- Risks: Every company has them, and we've spotted 4 warning signs for Sylvamo (of which 1 is significant!) you should know about.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for SLVM's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
關鍵見解
- 使用兩階段的股本自由現金流,Sylvamo的公允價值估計爲74.13美元
- Sylvamo的股價爲62.03美元,其交易價格似乎接近其估計的公允價值
- Sylvamo的同行目前的平均交易溢價爲34%
西爾瓦莫公司(紐約證券交易所代碼:SLVM)4月份的股價是否反映了其真正價值?今天,我們將通過估算公司未來的現金流並將其折現爲現值來估算股票的內在價值。在這種情況下,我們將使用折扣現金流(DCF)模型。在你認爲自己無法理解之前,請繼續閱讀!實際上,它沒有你想象的那麼複雜。
公司可以在很多方面得到估值,因此我們要指出,DCF並不適合所有情況。任何有興趣進一步了解內在價值的人都應該讀一讀 Simply Wall St 分析模型。
計算數字
我們使用的是兩階段增長模型,這只是意味着我們考慮了公司增長的兩個階段。在初始階段,公司的增長率可能更高,而第二階段通常被認爲具有穩定的增長率。首先,我們必須估算出未來十年的現金流。在可能的情況下,我們會使用分析師的估計值,但是當這些估計值不可用時,我們會從最新的估計值或報告的價值中推斷出之前的自由現金流(FCF)。我們假設自由現金流萎縮的公司將減緩其萎縮速度,而自由現金流不斷增長的公司在此期間的增長率將放緩。我們這樣做是爲了反映早期增長的放緩幅度往往比後來的幾年更大。
通常,我們假設今天的一美元比未來一美元更有價值,因此我們將這些未來現金流的價值折現爲以今天的美元計算的估計價值:
10 年自由現金流 (FCF) 預測
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF(美元,百萬) | 2.090 億美元 | 2.700 億美元 | 2.593 億美元 | 253.9 億美元 | 251.9 億美元 | 2.522 億美元 | 2.542 億美元 | 257.4 億美元 | 2.614 億美元 | 2.660 億美元 |
增長率估算來源 | 分析師 x1 | 分析師 x1 | 美國東部標準時間 @ -3.97% | Est @ -2.09% | Est @ -0.78% | 美國東部標準時間 @ 0.14% | Est @ 0.79% | 東部時間 @ 1.24% | Est @ 1.55% | Est @ 1.77% |
現值(美元,百萬)折扣 @ 9.6% | 191 美元 | 225 美元 | 197 美元 | 176 美元 | 159 美元 | 145 美元 | 134 美元 | 124 美元 | 114 美元 | 106 美元 |
(“Est” = Simply Wall St估計的FCF增長率)
十年期現金流(PVCF)的現值 = 16億美元
第二階段也稱爲終值,這是第一階段之後的企業現金流。出於多種原因,使用的增長率非常保守,不能超過一個國家的GDP增長。在這種情況下,我們使用10年期國債收益率的5年平均值(2.3%)來估計未來的增長。與10年 “增長” 期一樣,我們使用9.6%的股本成本將未來的現金流折現爲今天的價值。
終端價值 (TV) = FCF2033 × (1 + g) ÷ (r — g) = 2.66億美元× (1 + 2.3%) ÷ (9.6% — 2.3%) = 37億美元
終端價值的現值 (PVTV) = 電視/ (1 + r)10= 37億美元÷ (1 + 9.6%)10= 15 億美元
總價值是未來十年的現金流總額加上貼現的終端價值,由此得出總權益價值,在本例中爲31億美元。最後一步是將股票價值除以已發行股票的數量。相對於目前的62.0美元的股價,該公司的公允價值似乎比目前的股價折扣了16%。但是,估值是不精確的工具,就像望遠鏡一樣——移動幾度,最終進入另一個星系。請記住這一點。
重要假設
我們要指出的是,貼現現金流的最重要投入是貼現率,當然還有實際的現金流。投資的一部分是自己對公司未來業績的評估,因此請自己嘗試計算並檢查自己的假設。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將Sylvamo視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了9.6%,這是基於1.591的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
Sylvamo 的 SWOT 分析
- 收益和現金流足以彌補債務。
- 股息由收益和現金流支付。
- SLVM 的股息信息。
- 在過去的一年中,收益有所下降。
- 與林業市場前25%的股息支付者相比,股息很低。
- 分析師對SLVM的預測是什麼?
- 根據市盈率和估計的公允價值,物有所值。
- SLVM 看不到明顯的威脅。
展望未來:
雖然重要,但理想情況下,DCF的計算不會是您爲公司仔細檢查的唯一分析內容。使用DCF模型不可能獲得萬無一失的估值。相反,它應該被視爲 “需要哪些假設才能低估/高估這隻股票的價值?” 的指南例如,如果稍微調整終值增長率,則可能會極大地改變整體結果。對於 Sylvamo,我們彙總了另外三個你應該考慮的元素:
- 風險:每家公司都有風險,我們發現了 Sylvamo 的 4 個警告信號(其中 1 個很重要!)你應該知道。
- 管理層:內部人士是否一直在增加股價以利用市場對SLVM未來前景的情緒?查看我們的管理層和董事會分析,了解首席執行官薪酬和治理因素。
- 其他穩健的業務:低債務、高股本回報率和良好的過去表現是強大業務的基礎。爲什麼不瀏覽我們具有堅實業務基礎的股票互動清單,看看是否還有其他你可能沒有考慮過的公司!
PS。Simply Wall St每天都會更新每隻美國股票的差價合約計算結果,因此,如果您想找到任何其他股票的內在價值,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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