Intrinsic value of Berry Plastics Group - BERY

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  Intrinsic Value

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  Value-price divergence*

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Previous close

$50.00

 
Intrinsic value

$195.72

 
Up/down potential

+291%

 
Rating

str. buy

 
Value-price divergence* premium content

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

We calculate the intrinsic value of BERY 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 6.2

 

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, %
  32.94
  32.90
  30.11
  27.60
  25.34
  23.31
  21.47
  19.83
  18.34
  17.01
  15.81
  14.73
  13.76
  12.88
  12.09
  11.38
  10.74
  10.17
  9.65
  9.19
  8.77
  8.39
  8.05
  7.75
  7.47
  7.23
  7.00
  6.80
  6.62
  6.46
  6.31
Revenue, $m
  6,489
  8,624
  11,221
  14,317
  17,945
  22,127
  26,879
  32,208
  38,117
  44,601
  51,652
  59,259
  67,410
  76,092
  85,293
  95,002
  105,209
  115,909
  127,098
  138,775
  150,944
  163,611
  176,786
  190,483
  204,717
  219,509
  234,881
  250,859
  267,472
  284,751
  302,731
Variable operating expenses, $m
 
  7,130
  9,205
  11,679
  14,577
  17,919
  21,715
  25,973
  30,693
  35,873
  41,506
  47,343
  53,855
  60,792
  68,143
  75,899
  84,054
  92,602
  101,541
  110,870
  120,592
  130,712
  141,238
  152,181
  163,553
  175,371
  187,652
  200,417
  213,689
  227,494
  241,858
Fixed operating expenses, $m
 
  508
  521
  534
  547
  561
  575
  590
  604
  619
  635
  651
  667
  684
  701
  718
  736
  755
  774
  793
  813
  833
  854
  875
  897
  920
  943
  966
  990
  1,015
  1,040
Total operating expenses, $m
  5,912
  7,638
  9,726
  12,213
  15,124
  18,480
  22,290
  26,563
  31,297
  36,492
  42,141
  47,994
  54,522
  61,476
  68,844
  76,617
  84,790
  93,357
  102,315
  111,663
  121,405
  131,545
  142,092
  153,056
  164,450
  176,291
  188,595
  201,383
  214,679
  228,509
  242,898
Operating income, $m
  577
  985
  1,494
  2,104
  2,820
  3,648
  4,589
  5,646
  6,820
  8,108
  9,510
  11,265
  12,888
  14,617
  16,450
  18,384
  20,419
  22,552
  24,783
  27,112
  29,539
  32,066
  34,694
  37,427
  40,267
  43,219
  46,287
  49,476
  52,793
  56,242
  59,832
EBITDA, $m
  1,102
  1,625
  2,255
  3,008
  3,892
  4,913
  6,075
  7,379
  8,826
  10,415
  12,144
  14,011
  16,011
  18,142
  20,402
  22,786
  25,294
  27,922
  30,672
  33,542
  36,532
  39,646
  42,885
  46,252
  49,752
  53,389
  57,170
  61,099
  65,185
  69,436
  73,859
Interest expense (income), $m
  0
  200
  248
  341
  451
  580
  729
  898
  1,088
  1,298
  1,529
  1,780
  2,050
  2,341
  2,650
  2,977
  3,323
  3,686
  4,067
  4,465
  4,881
  5,314
  5,765
  6,234
  6,721
  7,228
  7,754
  8,301
  8,870
  9,461
  10,076
Earnings before tax, $m
  308
  785
  1,246
  1,764
  2,369
  3,068
  3,860
  4,748
  5,732
  6,810
  7,982
  9,485
  10,837
  12,276
  13,800
  15,407
  17,096
  18,866
  20,716
  22,647
  24,658
  26,752
  28,929
  31,193
  33,546
  35,991
  38,533
  41,175
  43,922
  46,781
  49,756
Tax expense, $m
  72
  212
  337
  476
  640
  828
  1,042
  1,282
  1,548
  1,839
  2,155
  2,561
  2,926
  3,315
  3,726
  4,160
  4,616
  5,094
  5,593
  6,115
  6,658
  7,223
  7,811
  8,422
  9,057
  9,718
  10,404
  11,117
  11,859
  12,631
  13,434
Net income, $m
  236
  573
  910
  1,287
  1,730
  2,239
  2,818
  3,466
  4,184
  4,971
  5,827
  6,924
  7,911
  8,962
  10,074
  11,247
  12,480
  13,772
  15,123
  16,532
  18,000
  19,529
  21,118
  22,771
  24,489
  26,274
  28,129
  30,058
  32,063
  34,150
  36,322

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  323
  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
  7,653
  9,744
  12,679
  16,178
  20,277
  25,003
  30,372
  36,394
  43,070
  50,396
  58,363
  66,959
  76,170
  85,980
  96,377
  107,347
  118,881
  130,971
  143,613
  156,808
  170,558
  184,871
  199,759
  215,235
  231,319
  248,033
  265,402
  283,457
  302,228
  321,753
  342,069
Adjusted assets (=assets-cash), $m
  7,330
  9,744
  12,679
  16,178
  20,277
  25,003
  30,372
  36,394
  43,070
  50,396
  58,363
  66,959
  76,170
  85,980
  96,377
  107,347
  118,881
  130,971
  143,613
  156,808
  170,558
  184,871
  199,759
  215,235
  231,319
  248,033
  265,402
  283,457
  302,228
  321,753
  342,069
Revenue / Adjusted assets
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
  0.885
Average production assets, $m
  2,706
  3,596
  4,679
  5,970
  7,483
  9,227
  11,209
  13,431
  15,895
  18,598
  21,539
  24,711
  28,110
  31,731
  35,567
  39,616
  43,872
  48,334
  53,000
  57,869
  62,944
  68,226
  73,720
  79,431
  85,367
  91,535
  97,945
  104,608
  111,536
  118,741
  126,239
Working capital, $m
  761
  638
  830
  1,059
  1,328
  1,637
  1,989
  2,383
  2,821
  3,300
  3,822
  4,385
  4,988
  5,631
  6,312
  7,030
  7,785
  8,577
  9,405
  10,269
  11,170
  12,107
  13,082
  14,096
  15,149
  16,244
  17,381
  18,564
  19,793
  21,072
  22,402
Total debt, $m
  5,755
  7,090
  9,731
  12,880
  16,569
  20,822
  25,655
  31,074
  37,083
  43,677
  50,847
  58,583
  66,873
  75,702
  85,059
  94,932
  105,312
  116,194
  127,572
  139,447
  151,822
  164,704
  178,103
  192,031
  206,507
  221,549
  237,182
  253,431
  270,325
  287,897
  306,182
Total liabilities, $m
  7,435
  8,770
  11,411
  14,560
  18,249
  22,502
  27,335
  32,754
  38,763
  45,357
  52,527
  60,263
  68,553
  77,382
  86,739
  96,612
  106,992
  117,874
  129,252
  141,127
  153,502
  166,384
  179,783
  193,711
  208,187
  223,229
  238,862
  255,111
  272,005
  289,577
  307,862
Total equity, $m
  218
  974
  1,268
  1,618
  2,028
  2,500
  3,037
  3,639
  4,307
  5,040
  5,836
  6,696
  7,617
  8,598
  9,638
  10,735
  11,888
  13,097
  14,361
  15,681
  17,056
  18,487
  19,976
  21,523
  23,132
  24,803
  26,540
  28,346
  30,223
  32,175
  34,207
Total liabilities and equity, $m
  7,653
  9,744
  12,679
  16,178
  20,277
  25,002
  30,372
  36,393
  43,070
  50,397
  58,363
  66,959
  76,170
  85,980
  96,377
  107,347
  118,880
  130,971
  143,613
  156,808
  170,558
  184,871
  199,759
  215,234
  231,319
  248,032
  265,402
  283,457
  302,228
  321,752
  342,069
Debt-to-equity ratio
  26.399
  7.280
  7.670
  7.960
  8.170
  8.330
  8.450
  8.540
  8.610
  8.670
  8.710
  8.750
  8.780
  8.800
  8.830
  8.840
  8.860
  8.870
  8.880
  8.890
  8.900
  8.910
  8.920
  8.920
  8.930
  8.930
  8.940
  8.940
  8.940
  8.950
  8.950
Adjusted equity ratio
  -0.014
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  236
  573
  910
  1,287
  1,730
  2,239
  2,818
  3,466
  4,184
  4,971
  5,827
  6,924
  7,911
  8,962
  10,074
  11,247
  12,480
  13,772
  15,123
  16,532
  18,000
  19,529
  21,118
  22,771
  24,489
  26,274
  28,129
  30,058
  32,063
  34,150
  36,322
Depreciation, amort., depletion, $m
  525
  640
  760
  904
  1,072
  1,266
  1,486
  1,733
  2,007
  2,307
  2,634
  2,746
  3,123
  3,526
  3,952
  4,402
  4,875
  5,370
  5,889
  6,430
  6,994
  7,581
  8,191
  8,826
  9,485
  10,171
  10,883
  11,623
  12,393
  13,193
  14,027
Funds from operations, $m
  902
  1,213
  1,670
  2,191
  2,802
  3,505
  4,304
  5,199
  6,191
  7,279
  8,460
  9,670
  11,035
  12,487
  14,026
  15,649
  17,355
  19,143
  21,012
  22,962
  24,994
  27,109
  29,310
  31,597
  33,974
  36,444
  39,012
  41,681
  44,456
  47,343
  50,348
Change in working capital, $m
  45
  158
  192
  229
  268
  309
  352
  394
  437
  480
  522
  563
  603
  642
  681
  718
  755
  792
  828
  864
  901
  937
  975
  1,014
  1,053
  1,095
  1,138
  1,182
  1,229
  1,279
  1,330
Cash from operations, $m
  857
  1,774
  1,478
  1,962
  2,533
  3,196
  3,952
  4,805
  5,754
  6,799
  7,939
  9,107
  10,431
  11,845
  13,345
  14,931
  16,600
  18,351
  20,184
  22,098
  24,094
  26,172
  28,335
  30,583
  32,920
  35,350
  37,874
  40,498
  43,227
  46,065
  49,018
Maintenance CAPEX, $m
  0
  -301
  -400
  -520
  -663
  -831
  -1,025
  -1,245
  -1,492
  -1,766
  -2,066
  -2,393
  -2,746
  -3,123
  -3,526
  -3,952
  -4,402
  -4,875
  -5,370
  -5,889
  -6,430
  -6,994
  -7,581
  -8,191
  -8,826
  -9,485
  -10,171
  -10,883
  -11,623
  -12,393
  -13,193
New CAPEX, $m
  -288
  -891
  -1,083
  -1,291
  -1,513
  -1,744
  -1,981
  -2,222
  -2,464
  -2,704
  -2,940
  -3,172
  -3,399
  -3,621
  -3,837
  -4,048
  -4,256
  -4,462
  -4,666
  -4,869
  -5,074
  -5,282
  -5,494
  -5,711
  -5,936
  -6,168
  -6,410
  -6,663
  -6,928
  -7,205
  -7,497
Cash from investing activities, $m
  -2,579
  -1,192
  -1,483
  -1,811
  -2,176
  -2,575
  -3,006
  -3,467
  -3,956
  -4,470
  -5,006
  -5,565
  -6,145
  -6,744
  -7,363
  -8,000
  -8,658
  -9,337
  -10,036
  -10,758
  -11,504
  -12,276
  -13,075
  -13,902
  -14,762
  -15,653
  -16,581
  -17,546
  -18,551
  -19,598
  -20,690
Free cash flow, $m
  -1,722
  583
  -4
  151
  357
  620
  946
  1,337
  1,798
  2,329
  2,932
  3,541
  4,287
  5,101
  5,983
  6,930
  7,941
  9,014
  10,148
  11,340
  12,589
  13,896
  15,260
  16,681
  18,159
  19,696
  21,293
  22,953
  24,676
  26,467
  28,327
Issuance/(repayment) of debt, $m
  1,966
  1,378
  2,641
  3,149
  3,689
  4,253
  4,832
  5,420
  6,009
  6,594
  7,170
  7,736
  8,289
  8,829
  9,357
  9,873
  10,380
  10,881
  11,378
  11,875
  12,375
  12,882
  13,399
  13,929
  14,476
  15,043
  15,633
  16,249
  16,894
  17,572
  18,284
Issuance/(repurchase) of shares, $m
  26
  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 from financing (excl. dividends), $m  
  1,817
  1,378
  2,641
  3,149
  3,689
  4,253
  4,832
  5,420
  6,009
  6,594
  7,170
  7,736
  8,289
  8,829
  9,357
  9,873
  10,380
  10,881
  11,378
  11,875
  12,375
  12,882
  13,399
  13,929
  14,476
  15,043
  15,633
  16,249
  16,894
  17,572
  18,284
Total cash flow (excl. dividends), $m
  95
  1,961
  2,636
  3,300
  4,046
  4,873
  5,778
  6,757
  7,806
  8,923
  10,102
  11,278
  12,576
  13,930
  15,340
  16,803
  18,322
  19,896
  21,526
  23,215
  24,965
  26,778
  28,658
  30,609
  32,635
  34,739
  36,926
  39,202
  41,571
  44,038
  46,611
Retained Cash Flow (-), $m
  -286
  -1,036
  -293
  -350
  -410
  -473
  -537
  -602
  -668
  -733
  -797
  -860
  -921
  -981
  -1,040
  -1,097
  -1,153
  -1,209
  -1,264
  -1,319
  -1,375
  -1,431
  -1,489
  -1,548
  -1,608
  -1,671
  -1,737
  -1,805
  -1,877
  -1,952
  -2,032
Prev. year cash balance distribution, $m
 
  280
  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
 
  1,204
  2,343
  2,950
  3,637
  4,401
  5,241
  6,155
  7,139
  8,190
  9,306
  10,418
  11,655
  12,949
  14,300
  15,706
  17,168
  18,687
  20,262
  21,895
  23,589
  25,347
  27,170
  29,062
  31,026
  33,067
  35,189
  37,396
  39,693
  42,086
  44,579
Discount rate, %
 
  12.80
  13.44
  14.11
  14.82
  15.56
  16.34
  17.15
  18.01
  18.91
  19.86
  20.85
  21.89
  22.99
  24.14
  25.34
  26.61
  27.94
  29.34
  30.80
  32.34
  33.96
  35.66
  37.44
  39.32
  41.28
  43.35
  45.51
  47.79
  50.18
  52.69
PV of cash for distribution, $m
 
  1,068
  1,821
  1,986
  2,092
  2,136
  2,114
  2,032
  1,898
  1,723
  1,521
  1,297
  1,083
  879
  693
  530
  394
  283
  198
  133
  87
  55
  33
  19
  11
  6
  3
  1
  1
  0
  0
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Berry Plastics Group, Inc. manufactures and distributes plastic consumer packaging and engineered materials in the United States, Canada, Mexico, Belgium, France, Spain, the United Kingdom, Italy, Germany, Australia, Brazil, Argentina, Colombia, Malaysia, India, China, and the Netherlands. The company operates through three segments: Health, Hygiene & Specialties; Consumer Packaging; and Engineered Materials. It offers containers; foodservice products, such as thermoformed polypropylene and injection-molded plastic drink cups; closures and over caps comprising continuous-thread and child-resistant closures, as well as aerosol over caps; bottle and prescription containers; and extruded and laminate tubes. The company also provides engineered materials, including corrosion protection products; and cloth and foil, splicing and laminating, flame-retardant, vinyl-coated and carton sealing, electrical, double-faced cloth, masking, mounting, OEM, and medical and specialty tapes. The company’s engineered materials also consists of drop cloths and retail trash bags; polyvinyl chloride films and boxed products; trash-can liners and food bags; and stretch and shrink films. In addition, it offers flexible packaging products, such as personal care films; food and consumer films, as well as barrier films; and converter films, including coated and laminated products, as well as a range of products for the food, healthcare, and personal care markets. The company sells its products through direct sales force and distributors. Berry Plastics Group, Inc. was founded in 1967 and is headquartered in Evansville, Indiana.

FINANCIAL RATIOS  of  Berry Plastics Group (BERY)

Valuation Ratios
P/E Ratio 25.8
Price to Sales 0.9
Price to Book 28
Price to Tangible Book
Price to Cash Flow 7.1
Price to Free Cash Flow 10.7
Growth Rates
Sales Growth Rate 32.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 60%
Cap. Spend. - 3 Yr. Gr. Rate 3.8%
Financial Strength
Quick Ratio 8
Current Ratio 0
LT Debt to Equity 2620.2%
Total Debt to Equity 2639.9%
Interest Coverage 0
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 2.2%
Return On Total Capital 4.9%
Ret/ On T. Cap. - 3 Yr. Avg. 3%
Return On Equity 314.7%
Return On Equity - 3 Yr. Avg. 60.8%
Asset Turnover 1
Profitability Ratios
Gross Margin 19.8%
Gross Margin - 3 Yr. Avg. 17.7%
EBITDA Margin 12.8%
EBITDA Margin - 3 Yr. Avg. 10.4%
Operating Margin 8.9%
Oper. Margin - 3 Yr. Avg. 7%
Pre-Tax Margin 4.7%
Pre-Tax Margin - 3 Yr. Avg. 2.9%
Net Profit Margin 3.6%
Net Profit Margin - 3 Yr. Avg. 2.2%
Effective Tax Rate 23.4%
Eff/ Tax Rate - 3 Yr. Avg. 19.6%
Payout Ratio 0%

BERY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BERY stock intrinsic value calculation we used $6489 million for the last fiscal year's total revenue generated by Berry Plastics Group. The default revenue input number comes from 2016 income statement of Berry Plastics Group. 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 BERY stock valuation model: a) initial revenue growth rate of 32.9% 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 12.8%, whose default value for BERY is calculated based on our internal credit rating of Berry Plastics Group, 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 Berry Plastics Group.
    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 BERY stock the variable cost ratio is equal to 83.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $496 million in the base year in the intrinsic value calculation for BERY 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 3.5% for Berry Plastics Group.

Corporate tax rate of 27% is the nominal tax rate for Berry Plastics Group. 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 BERY 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 BERY are equal to 41.7%.

Life of production assets of 9 years is the average useful life of capital assets used in Berry Plastics Group 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 BERY is equal to 7.4%. 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 - $218 million for Berry Plastics Group - 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 123.121 million for Berry Plastics Group 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 Berry Plastics Group at the current share price and the inputted number of shares is $6.2 billion.


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COMPANY NEWS

▶ Berry Plastics Changes Name to Berry Global   [Apr-03-17 04:45PM  Business Wire]
▶ Taking a Look at Berry Plastics   [Mar-27-17 06:12PM  GuruFocus.com]
▶ Berry Plastics beats 1Q profit forecasts   [08:40AM  Associated Press]
▶ Top Mid-Cap Stocks for 2017: Berry Plastics, Crane Co.   [Dec-19-16 08:31AM  at TheStreet]
▶ Is Erie Indemnity Company (ERIE) a Good Stock to Buy?   [Dec-13-16 06:54AM  at Insider Monkey]
▶ This Hedge Fund Just Made A Massive Bet Against the SPY   [Nov-11-16 02:43PM  at Insider Monkey]
▶ 7 Good Growth Stocks to Buy Ahead of 2017   [09:20AM  at Kiplinger]
▶ [$$] Plastic Investor Opts for Cash With Insider Selling   [Sep-28-16 07:49AM  at Barrons.com]
Stock chart of BERY Financial statements of BERY
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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