Intrinsic value of Adecoagro - AGRO

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$10.03

  Intrinsic Value

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  Value-price divergence*

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$10.03

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AGRO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 1.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  32.93
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  989
  1,162
  1,795
  2,684
  3,894
  5,494
  7,553
  10,139
  13,313
  17,130
  21,637
  26,868
  32,849
  39,594
  47,109
  55,392
  64,434
  74,223
  84,742
  95,975
  107,904
  120,514
  133,793
  147,729
  162,317
  177,554
  193,442
  209,988
  227,203
  245,103
  263,708
Variable operating expenses, $m
 
  1,025
  1,583
  2,366
  3,433
  4,842
  6,656
  8,934
  11,731
  15,094
  19,065
  23,673
  28,942
  34,885
  41,507
  48,804
  56,771
  65,396
  74,664
  84,561
  95,071
  106,182
  117,881
  130,160
  143,013
  156,437
  170,436
  185,015
  200,182
  215,954
  232,346
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  818
  1,025
  1,583
  2,366
  3,433
  4,842
  6,656
  8,934
  11,731
  15,094
  19,065
  23,673
  28,942
  34,885
  41,507
  48,804
  56,771
  65,396
  74,664
  84,561
  95,071
  106,182
  117,881
  130,160
  143,013
  156,437
  170,436
  185,015
  200,182
  215,954
  232,346
Operating income, $m
  171
  137
  212
  318
  462
  652
  897
  1,204
  1,582
  2,036
  2,572
  3,195
  3,907
  4,709
  5,603
  6,588
  7,663
  8,827
  10,078
  11,414
  12,833
  14,333
  15,912
  17,569
  19,304
  21,116
  23,006
  24,974
  27,021
  29,150
  31,362
EBITDA, $m
  299
  248
  383
  573
  832
  1,174
  1,614
  2,166
  2,844
  3,660
  4,623
  5,741
  7,019
  8,460
  10,066
  11,835
  13,767
  15,859
  18,106
  20,506
  23,055
  25,750
  28,587
  31,565
  34,681
  37,937
  41,332
  44,867
  48,545
  52,370
  56,345
Interest expense (income), $m
  48
  36
  62
  99
  152
  224
  320
  442
  596
  785
  1,013
  1,281
  1,592
  1,949
  2,350
  2,798
  3,291
  3,830
  4,413
  5,039
  5,708
  6,419
  7,170
  7,960
  8,790
  9,659
  10,566
  11,513
  12,498
  13,523
  14,589
Earnings before tax, $m
  13
  101
  150
  219
  310
  428
  577
  762
  986
  1,251
  1,559
  1,914
  2,314
  2,760
  3,252
  3,790
  4,372
  4,997
  5,666
  6,375
  7,125
  7,914
  8,742
  9,609
  10,514
  11,457
  12,439
  13,461
  14,523
  15,626
  16,773
Tax expense, $m
  9
  27
  41
  59
  84
  115
  156
  206
  266
  338
  421
  517
  625
  745
  878
  1,023
  1,180
  1,349
  1,530
  1,721
  1,924
  2,137
  2,360
  2,594
  2,839
  3,093
  3,359
  3,634
  3,921
  4,219
  4,529
Net income, $m
  2
  74
  110
  160
  226
  312
  421
  556
  720
  913
  1,138
  1,398
  1,689
  2,015
  2,374
  2,767
  3,191
  3,648
  4,136
  4,654
  5,201
  5,777
  6,382
  7,014
  7,675
  8,364
  9,081
  9,826
  10,602
  11,407
  12,244

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  159
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  1,456
  1,850
  2,858
  4,274
  6,201
  8,749
  12,028
  16,144
  21,199
  27,278
  34,454
  42,784
  52,307
  63,048
  75,015
  88,204
  102,602
  118,189
  134,939
  152,826
  171,822
  191,902
  213,046
  235,237
  258,466
  282,729
  308,028
  334,376
  361,789
  390,292
  419,917
Adjusted assets (=assets-cash), $m
  1,297
  1,850
  2,858
  4,274
  6,201
  8,749
  12,028
  16,144
  21,199
  27,278
  34,454
  42,784
  52,307
  63,048
  75,015
  88,204
  102,602
  118,189
  134,939
  152,826
  171,822
  191,902
  213,046
  235,237
  258,466
  282,729
  308,028
  334,376
  361,789
  390,292
  419,917
Revenue / Adjusted assets
  0.763
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
  0.628
Average production assets, $m
  409
  627
  969
  1,449
  2,103
  2,967
  4,079
  5,475
  7,189
  9,250
  11,684
  14,509
  17,738
  21,381
  25,439
  29,912
  34,794
  40,080
  45,761
  51,826
  58,268
  65,078
  72,248
  79,774
  87,651
  95,879
  104,459
  113,394
  122,690
  132,356
  142,402
Working capital, $m
  236
  410
  634
  947
  1,375
  1,939
  2,666
  3,579
  4,699
  6,047
  7,638
  9,484
  11,596
  13,977
  16,630
  19,553
  22,745
  26,201
  29,914
  33,879
  38,090
  42,542
  47,229
  52,148
  57,298
  62,676
  68,285
  74,126
  80,203
  86,521
  93,089
Total debt, $m
  635
  905
  1,460
  2,239
  3,299
  4,700
  6,503
  8,767
  11,547
  14,891
  18,838
  23,419
  28,657
  34,564
  41,146
  48,400
  56,319
  64,892
  74,105
  83,942
  94,390
  105,434
  117,063
  129,268
  142,044
  155,389
  169,304
  183,795
  198,872
  214,549
  230,843
Total liabilities, $m
  792
  1,017
  1,572
  2,351
  3,411
  4,812
  6,615
  8,879
  11,659
  15,003
  18,950
  23,531
  28,769
  34,676
  41,258
  48,512
  56,431
  65,004
  74,217
  84,054
  94,502
  105,546
  117,175
  129,380
  142,156
  155,501
  169,416
  183,907
  198,984
  214,661
  230,955
Total equity, $m
  664
  832
  1,286
  1,923
  2,790
  3,937
  5,412
  7,265
  9,539
  12,275
  15,504
  19,253
  23,538
  28,372
  33,757
  39,692
  46,171
  53,185
  60,723
  68,772
  77,320
  86,356
  95,871
  105,857
  116,310
  127,228
  138,613
  150,469
  162,805
  175,631
  188,963
Total liabilities and equity, $m
  1,456
  1,849
  2,858
  4,274
  6,201
  8,749
  12,027
  16,144
  21,198
  27,278
  34,454
  42,784
  52,307
  63,048
  75,015
  88,204
  102,602
  118,189
  134,940
  152,826
  171,822
  191,902
  213,046
  235,237
  258,466
  282,729
  308,029
  334,376
  361,789
  390,292
  419,918
Debt-to-equity ratio
  0.956
  1.090
  1.140
  1.160
  1.180
  1.190
  1.200
  1.210
  1.210
  1.210
  1.210
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
  1.220
Adjusted equity ratio
  0.389
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450
  0.450

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2
  74
  110
  160
  226
  312
  421
  556
  720
  913
  1,138
  1,398
  1,689
  2,015
  2,374
  2,767
  3,191
  3,648
  4,136
  4,654
  5,201
  5,777
  6,382
  7,014
  7,675
  8,364
  9,081
  9,826
  10,602
  11,407
  12,244
Depreciation, amort., depletion, $m
  128
  111
  171
  256
  370
  522
  717
  962
  1,263
  1,624
  2,051
  2,545
  3,112
  3,751
  4,463
  5,248
  6,104
  7,032
  8,028
  9,092
  10,222
  11,417
  12,675
  13,995
  15,377
  16,821
  18,326
  19,894
  21,525
  23,220
  24,983
Funds from operations, $m
  202
  185
  281
  415
  596
  834
  1,138
  1,518
  1,982
  2,537
  3,189
  3,943
  4,801
  5,766
  6,837
  8,014
  9,296
  10,680
  12,164
  13,746
  15,424
  17,194
  19,057
  21,010
  23,052
  25,185
  27,407
  29,720
  32,126
  34,628
  37,227
Change in working capital, $m
  -53
  154
  223
  314
  427
  565
  727
  913
  1,120
  1,348
  1,591
  1,847
  2,111
  2,381
  2,653
  2,924
  3,192
  3,455
  3,713
  3,965
  4,211
  4,451
  4,687
  4,919
  5,149
  5,379
  5,609
  5,841
  6,077
  6,319
  6,567
Cash from operations, $m
  255
  -358
  58
  101
  169
  269
  412
  606
  862
  1,190
  1,599
  2,096
  2,690
  3,385
  4,184
  5,090
  6,104
  7,224
  8,451
  9,781
  11,213
  12,743
  14,370
  16,090
  17,903
  19,806
  21,798
  23,879
  26,049
  28,309
  30,660
Maintenance CAPEX, $m
  0
  -69
  -110
  -170
  -254
  -369
  -521
  -716
  -961
  -1,261
  -1,623
  -2,050
  -2,545
  -3,112
  -3,751
  -4,463
  -5,248
  -6,104
  -7,032
  -8,028
  -9,092
  -10,222
  -11,417
  -12,675
  -13,995
  -15,377
  -16,821
  -18,326
  -19,894
  -21,525
  -23,220
New CAPEX, $m
  -135
  -235
  -342
  -480
  -654
  -864
  -1,112
  -1,396
  -1,714
  -2,061
  -2,434
  -2,825
  -3,230
  -3,642
  -4,058
  -4,473
  -4,883
  -5,286
  -5,680
  -6,066
  -6,442
  -6,810
  -7,170
  -7,526
  -7,877
  -8,228
  -8,580
  -8,935
  -9,296
  -9,666
  -10,047
Cash from investing activities, $m
  -122
  -304
  -452
  -650
  -908
  -1,233
  -1,633
  -2,112
  -2,675
  -3,322
  -4,057
  -4,875
  -5,775
  -6,754
  -7,809
  -8,936
  -10,131
  -11,390
  -12,712
  -14,094
  -15,534
  -17,032
  -18,587
  -20,201
  -21,872
  -23,605
  -25,401
  -27,261
  -29,190
  -31,191
  -33,267
Free cash flow, $m
  133
  -662
  -394
  -549
  -739
  -964
  -1,221
  -1,506
  -1,813
  -2,133
  -2,458
  -2,778
  -3,085
  -3,369
  -3,625
  -3,845
  -4,027
  -4,166
  -4,261
  -4,313
  -4,322
  -4,289
  -4,218
  -4,110
  -3,970
  -3,799
  -3,602
  -3,382
  -3,141
  -2,882
  -2,607
Issuance/(repayment) of debt, $m
  -125
  381
  554
  779
  1,060
  1,401
  1,803
  2,264
  2,780
  3,343
  3,947
  4,582
  5,238
  5,907
  6,582
  7,254
  7,919
  8,573
  9,213
  9,838
  10,448
  11,044
  11,629
  12,205
  12,776
  13,344
  13,915
  14,491
  15,077
  15,677
  16,294
Issuance/(repurchase) of shares, $m
  0
  593
  293
  407
  546
  709
  893
  1,094
  1,307
  1,525
  1,740
  1,945
  2,133
  2,295
  2,428
  2,526
  2,587
  2,607
  2,586
  2,524
  2,422
  2,281
  2,103
  1,891
  1,647
  1,373
  1,072
  747
  399
  31
  0
Cash from financing (excl. dividends), $m  
  -182
  974
  847
  1,186
  1,606
  2,110
  2,696
  3,358
  4,087
  4,868
  5,687
  6,527
  7,371
  8,202
  9,010
  9,780
  10,506
  11,180
  11,799
  12,362
  12,870
  13,325
  13,732
  14,096
  14,423
  14,717
  14,987
  15,238
  15,476
  15,708
  16,294
Total cash flow (excl. dividends), $m
  -40
  -280
  160
  230
  321
  438
  582
  758
  967
  1,210
  1,489
  1,803
  2,153
  2,538
  2,957
  3,409
  3,893
  4,407
  4,951
  5,525
  6,126
  6,755
  7,411
  8,095
  8,806
  9,545
  10,313
  11,109
  11,936
  12,795
  13,687
Retained Cash Flow (-), $m
  -144
  -312
  -454
  -637
  -867
  -1,146
  -1,475
  -1,853
  -2,274
  -2,735
  -3,229
  -3,749
  -4,286
  -4,833
  -5,385
  -5,935
  -6,479
  -7,014
  -7,538
  -8,049
  -8,548
  -9,036
  -9,515
  -9,986
  -10,453
  -10,918
  -11,385
  -11,856
  -12,336
  -12,826
  -13,331
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  355
Discount rate, %
 
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.12
  16.93
  17.78
  18.67
  19.60
  20.58
  21.61
  22.69
  23.82
  25.01
  26.26
  27.58
PV of cash for distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  100
  67.1
  58.2
  51.2
  45.6
  41.1
  37.5
  34.5
  32.0
  29.9
  28.2
  26.7
  25.5
  24.5
  23.6
  22.9
  22.3
  21.7
  21.3
  20.9
  20.6
  20.3
  20.1
  20.0
  19.8
  19.7
  19.6
  19.6
  19.6
  19.6
  19.6

Adecoagro S.A., an agricultural company, engages in farming, energy production, and land transformation activities. It operates through Farming; Sugar, Ethanol, and Energy; and Land Transformation businesses. The company is involved in planting, harvesting, and selling grains, oilseeds, and fibers, including wheat, corn, soybeans, cotton, sunflowers, and others; and providing grain warehousing/conditioning, and handling and drying services to third parties. It also engages in planting, harvesting, processing, and marketing rice; and producing and selling raw milk and other dairy products. In addition, the company is involved in the cultivation and processing of sugar and ethanol, as well as cogeneration of electricity from sugarcane bagasse; and identification and acquisition of underdeveloped and undermanaged farmland, and realization of value through the strategic disposition of assets. As of December 31, 2015, it owned a total of 246,139 hectares comprising 19 farms in Argentina, 11 farms in Brazil, and 1 farm in Uruguay; 3 rice processing facilities in Argentina; 2 dairy facilities with approximately 6,752 milking cows in Argentina; 11 grain and rice conditioning and storage plants in Argentina; and 3 sugar and ethanol mills in Brazil with a sugarcane crushing capacity of 10.2 million tons, as well as had a total 232 MW of installed cogeneration capacity. Adecoagro S.A. was founded in 2002 and is based in Luxembourg.

FINANCIAL RATIOS  of  Adecoagro (AGRO)

Valuation Ratios
P/E Ratio 607.5
Price to Sales 1.2
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 4.8
Price to Free Cash Flow 10.1
Growth Rates
Sales Growth Rate 32.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.6%
Cap. Spend. - 3 Yr. Gr. Rate -9.9%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 64.8%
Total Debt to Equity 95.6%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.2%
Ret/ On Assets - 3 Yr. Avg. 0.9%
Return On Total Capital 0.2%
Ret/ On T. Cap. - 3 Yr. Avg. -0%
Return On Equity 0.3%
Return On Equity - 3 Yr. Avg. -0.1%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 31.3%
Gross Margin - 3 Yr. Avg. 28%
EBITDA Margin 19.1%
EBITDA Margin - 3 Yr. Avg. 21.4%
Operating Margin 17.3%
Oper. Margin - 3 Yr. Avg. 14%
Pre-Tax Margin 1.3%
Pre-Tax Margin - 3 Yr. Avg. 0.3%
Net Profit Margin 0.2%
Net Profit Margin - 3 Yr. Avg. -0.1%
Effective Tax Rate 69.2%
Eff/ Tax Rate - 3 Yr. Avg. 71.2%
Payout Ratio 0%

AGRO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGRO stock intrinsic value calculation we used $726 million for the last fiscal year's total revenue generated by Adecoagro. The default revenue input number comes from 2016 income statement of Adecoagro. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AGRO stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.7%, whose default value for AGRO is calculated based on our internal credit rating of Adecoagro, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Adecoagro.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AGRO stock the variable cost ratio is equal to 88.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AGRO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.8% for Adecoagro.

Corporate tax rate of 27% is the nominal tax rate for Adecoagro. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AGRO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AGRO are equal to 54%.

Life of production assets of 5.7 years is the average useful life of capital assets used in Adecoagro operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AGRO is equal to 35.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $520 million for Adecoagro - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 120.232 million for Adecoagro is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Adecoagro at the current share price and the inputted number of shares is $1.2 billion.


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COMPANY NEWS

▶ ETFs with exposure to Adecoagro SA : June 22, 2017   [Jun-22-17 03:16PM  Capital Cube]
▶ Adecoagro announces filing of Annual Report   [Jun-12-17 05:48PM  PR Newswire]
▶ Adecoagro Sees Opportunity Selling Corn, Rice to Mexico   [May-17-17 10:23PM  Bloomberg Video]
▶ Adecoagro posts 1Q profit   [May-15-17 07:47PM  Associated Press]
▶ Adecoagro SA Value Analysis (NYSE:AGRO) : May 12, 2017   [May-12-17 04:52PM  Capital Cube]
▶ Top Ranked Value Stocks to Buy for May 1st   [May-01-17 09:50AM  Zacks]
▶ Top Ranked Value Stocks to Buy for April 17th   [Apr-17-17 10:38AM  Zacks]
▶ Adecoagro SA Value Analysis (NYSE:AGRO) : January 5, 2017   [Jan-05-17 10:34AM  Capital Cube]
▶ Adecoagro Appoints Jim Anderson to Board of Directors   [Dec-29-16 04:23PM  PR Newswire]
▶ ETFs with exposure to Adecoagro SA : December 12, 2016   [Dec-12-16 01:56PM  Capital Cube]
▶ Is Adecoagro SA (AGRO) A Good Stock To Buy?   [Nov-30-16 04:35PM  at Insider Monkey]
▶ Adecoagro Announces Approval of Share Repurchase Program   [Sep-26-16 06:48PM  PR Newswire]
▶ ADECOAGRO S.A. Financials   [01:04PM  EDGAR Online Financials]
▶ Argentina Summit Panel on Agribusiness Outlook   [Apr-06-16 02:00PM  at Bloomberg]
▶ Billionaire George Soros Top Long-Term Holdings   [Apr-01-16 04:54PM  at Insider Monkey]
▶ AGR to provide consultancy manpower to Lundin Norway   [Mar-29-16 01:52AM  at noodls]
▶ Proxy Card for AGM 2016   [02:52PM  at noodls]
▶ Stocks Stage Positive Reversal; Picks Of Buffett, Soros, Danoff Up   [Jan-12-16 04:28PM  at Investor's Business Daily]
▶ Do Hedge Funds Love Adecoagro SA (AGRO)?   [Nov-29  04:45PM  at Insider Monkey]
▶ Do Hedge Funds Love Mantech International Corp (MANT)?   [Nov-24  09:06AM  at Insider Monkey]
Stock chart of AGRO Financial statements of AGRO Annual reports of AGRO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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