Intrinsic value of Bunge - BG

Previous Close

$79.63

  Intrinsic Value

$1,429

stock screener

  Rating & Target

str. buy

+999%

  Value-price divergence*

+376%

Previous close

$79.63

 
Intrinsic value

$1,429

 
Up/down potential

+999%

 
Rating

str. buy

 
Value-price divergence*

+376%

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

We calculate the intrinsic value of BG 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 11.2

 

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, %
  -1.79
  24.70
  22.73
  20.96
  19.36
  17.93
  16.63
  15.47
  14.42
  13.48
  12.63
  11.87
  11.18
  10.56
  10.01
  9.51
  9.06
  8.65
  8.29
  7.96
  7.66
  7.40
  7.16
  6.94
  6.75
  6.57
  6.41
  6.27
  6.15
  6.03
  5.93
Revenue, $m
  42,679
  53,221
  65,318
  79,006
  94,303
  111,207
  129,704
  149,768
  171,368
  194,469
  219,035
  245,032
  272,432
  301,211
  331,355
  362,856
  395,716
  429,947
  465,570
  502,615
  541,121
  581,137
  622,721
  665,938
  710,862
  757,576
  806,168
  856,738
  909,389
  964,235
  1,021,393
Variable operating expenses, $m
 
  40,066
  49,165
  59,460
  70,965
  83,679
  97,591
  112,682
  128,928
  146,303
  164,779
  184,295
  204,903
  226,549
  249,220
  272,913
  297,628
  323,375
  350,167
  378,030
  406,991
  437,089
  468,365
  500,869
  534,658
  569,792
  606,340
  644,375
  683,975
  725,226
  768,217
Fixed operating expenses, $m
 
  9,989
  10,238
  10,494
  10,757
  11,026
  11,301
  11,584
  11,873
  12,170
  12,474
  12,786
  13,106
  13,434
  13,769
  14,114
  14,467
  14,828
  15,199
  15,579
  15,968
  16,368
  16,777
  17,196
  17,626
  18,067
  18,518
  18,981
  19,456
  19,942
  20,441
Total operating expenses, $m
  41,626
  50,055
  59,403
  69,954
  81,722
  94,705
  108,892
  124,266
  140,801
  158,473
  177,253
  197,081
  218,009
  239,983
  262,989
  287,027
  312,095
  338,203
  365,366
  393,609
  422,959
  453,457
  485,142
  518,065
  552,284
  587,859
  624,858
  663,356
  703,431
  745,168
  788,658
Operating income, $m
  1,053
  3,166
  5,915
  9,052
  12,581
  16,502
  20,812
  25,503
  30,567
  35,996
  41,781
  47,951
  54,423
  61,229
  68,365
  75,829
  83,621
  91,745
  100,204
  109,006
  118,162
  127,681
  137,580
  147,873
  158,578
  169,717
  181,310
  193,382
  205,958
  219,066
  232,736
EBITDA, $m
  1,600
  3,839
  6,732
  10,033
  13,745
  17,868
  22,398
  27,328
  32,651
  38,356
  44,434
  50,877
  57,676
  64,826
  72,322
  80,162
  88,347
  96,879
  105,764
  115,008
  124,623
  134,621
  145,016
  155,825
  167,067
  178,763
  190,937
  203,613
  216,818
  230,581
  244,933
Interest expense (income), $m
  234
  169
  299
  447
  616
  804
  1,011
  1,239
  1,485
  1,751
  2,035
  2,337
  2,656
  2,993
  3,347
  3,717
  4,105
  4,508
  4,929
  5,367
  5,822
  6,296
  6,787
  7,298
  7,830
  8,382
  8,956
  9,553
  10,175
  10,822
  11,496
Earnings before tax, $m
  996
  2,997
  5,616
  8,605
  11,966
  15,699
  19,800
  24,264
  29,082
  34,245
  39,746
  45,614
  51,766
  58,236
  65,018
  72,111
  79,517
  87,236
  95,275
  103,639
  112,339
  121,386
  130,792
  140,574
  150,748
  161,335
  172,354
  183,829
  195,783
  208,244
  221,240
Tax expense, $m
  220
  809
  1,516
  2,323
  3,231
  4,239
  5,346
  6,551
  7,852
  9,246
  10,732
  12,316
  13,977
  15,724
  17,555
  19,470
  21,470
  23,554
  25,724
  27,983
  30,332
  32,774
  35,314
  37,955
  40,702
  43,560
  46,536
  49,634
  52,861
  56,226
  59,735
Net income, $m
  745
  2,188
  4,100
  6,281
  8,735
  11,460
  14,454
  17,713
  21,230
  24,999
  29,015
  33,298
  37,790
  42,512
  47,463
  52,641
  58,047
  63,682
  69,551
  75,657
  82,008
  88,612
  95,478
  102,619
  110,046
  117,774
  125,818
  134,195
  142,922
  152,018
  161,505

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,343
  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
  19,188
  22,249
  27,307
  33,029
  39,424
  46,491
  54,224
  62,612
  71,642
  81,300
  91,570
  102,438
  113,893
  125,924
  138,526
  151,696
  165,433
  179,744
  194,636
  210,123
  226,221
  242,950
  260,335
  278,402
  297,183
  316,712
  337,027
  358,168
  380,179
  403,108
  427,004
Adjusted assets (=assets-cash), $m
  17,845
  22,249
  27,307
  33,029
  39,424
  46,491
  54,224
  62,612
  71,642
  81,300
  91,570
  102,438
  113,893
  125,924
  138,526
  151,696
  165,433
  179,744
  194,636
  210,123
  226,221
  242,950
  260,335
  278,402
  297,183
  316,712
  337,027
  358,168
  380,179
  403,108
  427,004
Revenue / Adjusted assets
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
  2.392
Average production assets, $m
  5,249
  6,546
  8,034
  9,718
  11,599
  13,678
  15,954
  18,421
  21,078
  23,920
  26,941
  30,139
  33,509
  37,049
  40,757
  44,631
  48,673
  52,884
  57,265
  61,822
  66,558
  71,480
  76,595
  81,910
  87,436
  93,182
  99,159
  105,379
  111,855
  118,601
  125,631
Working capital, $m
  3,408
  4,737
  5,813
  7,032
  8,393
  9,897
  11,544
  13,329
  15,252
  17,308
  19,494
  21,808
  24,246
  26,808
  29,491
  32,294
  35,219
  38,265
  41,436
  44,733
  48,160
  51,721
  55,422
  59,268
  63,267
  67,424
  71,749
  76,250
  80,936
  85,817
  90,904
Total debt, $m
  4,792
  6,098
  9,132
  12,566
  16,403
  20,643
  25,282
  30,315
  35,733
  41,528
  47,690
  54,211
  61,084
  68,303
  75,864
  83,765
  92,008
  100,594
  109,530
  118,822
  128,481
  138,518
  148,949
  159,789
  171,058
  182,775
  194,964
  207,649
  220,856
  234,613
  248,950
Total liabilities, $m
  12,044
  13,350
  16,384
  19,818
  23,655
  27,895
  32,534
  37,567
  42,985
  48,780
  54,942
  61,463
  68,336
  75,555
  83,116
  91,017
  99,260
  107,846
  116,782
  126,074
  135,733
  145,770
  156,201
  167,041
  178,310
  190,027
  202,216
  214,901
  228,108
  241,865
  256,202
Total equity, $m
  7,144
  8,900
  10,923
  13,212
  15,770
  18,597
  21,690
  25,045
  28,657
  32,520
  36,628
  40,975
  45,557
  50,370
  55,410
  60,678
  66,173
  71,898
  77,855
  84,049
  90,488
  97,180
  104,134
  111,361
  118,873
  126,685
  134,811
  143,267
  152,072
  161,243
  170,802
Total liabilities and equity, $m
  19,188
  22,250
  27,307
  33,030
  39,425
  46,492
  54,224
  62,612
  71,642
  81,300
  91,570
  102,438
  113,893
  125,925
  138,526
  151,695
  165,433
  179,744
  194,637
  210,123
  226,221
  242,950
  260,335
  278,402
  297,183
  316,712
  337,027
  358,168
  380,180
  403,108
  427,004
Debt-to-equity ratio
  0.671
  0.690
  0.840
  0.950
  1.040
  1.110
  1.170
  1.210
  1.250
  1.280
  1.300
  1.320
  1.340
  1.360
  1.370
  1.380
  1.390
  1.400
  1.410
  1.410
  1.420
  1.430
  1.430
  1.430
  1.440
  1.440
  1.450
  1.450
  1.450
  1.460
  1.460
Adjusted equity ratio
  0.369
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400
  0.400

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  745
  2,188
  4,100
  6,281
  8,735
  11,460
  14,454
  17,713
  21,230
  24,999
  29,015
  33,298
  37,790
  42,512
  47,463
  52,641
  58,047
  63,682
  69,551
  75,657
  82,008
  88,612
  95,478
  102,619
  110,046
  117,774
  125,818
  134,195
  142,922
  152,018
  161,505
Depreciation, amort., depletion, $m
  547
  673
  817
  981
  1,163
  1,365
  1,586
  1,826
  2,084
  2,360
  2,653
  2,926
  3,253
  3,597
  3,957
  4,333
  4,726
  5,134
  5,560
  6,002
  6,462
  6,940
  7,436
  7,952
  8,489
  9,047
  9,627
  10,231
  10,860
  11,515
  12,197
Funds from operations, $m
  2,335
  2,861
  4,917
  7,262
  9,898
  12,825
  16,040
  19,538
  23,313
  27,359
  31,668
  36,224
  41,043
  46,109
  51,420
  56,975
  62,773
  68,817
  75,110
  81,659
  88,470
  95,551
  102,915
  110,572
  118,535
  126,821
  135,445
  144,426
  153,782
  163,533
  173,702
Change in working capital, $m
  431
  938
  1,077
  1,218
  1,361
  1,504
  1,646
  1,786
  1,922
  2,056
  2,186
  2,314
  2,439
  2,561
  2,683
  2,804
  2,925
  3,047
  3,170
  3,297
  3,427
  3,561
  3,701
  3,846
  3,998
  4,158
  4,325
  4,501
  4,686
  4,881
  5,087
Cash from operations, $m
  1,904
  1,923
  3,840
  6,044
  8,537
  11,321
  14,394
  17,753
  21,391
  25,303
  29,482
  33,911
  38,604
  43,548
  48,737
  54,171
  59,848
  65,770
  71,940
  78,362
  85,043
  91,990
  99,214
  106,725
  114,537
  122,664
  131,121
  139,925
  149,096
  158,652
  168,615
Maintenance CAPEX, $m
  0
  -510
  -636
  -780
  -943
  -1,126
  -1,328
  -1,549
  -1,788
  -2,046
  -2,322
  -2,616
  -2,926
  -3,253
  -3,597
  -3,957
  -4,333
  -4,726
  -5,134
  -5,560
  -6,002
  -6,462
  -6,940
  -7,436
  -7,952
  -8,489
  -9,047
  -9,627
  -10,231
  -10,860
  -11,515
New CAPEX, $m
  -784
  -1,298
  -1,488
  -1,684
  -1,881
  -2,079
  -2,275
  -2,468
  -2,657
  -2,841
  -3,022
  -3,198
  -3,370
  -3,540
  -3,708
  -3,875
  -4,042
  -4,210
  -4,382
  -4,557
  -4,736
  -4,922
  -5,115
  -5,316
  -5,526
  -5,746
  -5,977
  -6,220
  -6,476
  -6,746
  -7,031
Cash from investing activities, $m
  -926
  -1,808
  -2,124
  -2,464
  -2,824
  -3,205
  -3,603
  -4,017
  -4,445
  -4,887
  -5,344
  -5,814
  -6,296
  -6,793
  -7,305
  -7,832
  -8,375
  -8,936
  -9,516
  -10,117
  -10,738
  -11,384
  -12,055
  -12,752
  -13,478
  -14,235
  -15,024
  -15,847
  -16,707
  -17,606
  -18,546
Free cash flow, $m
  978
  115
  1,717
  3,580
  5,712
  8,116
  10,791
  13,736
  16,946
  20,415
  24,138
  28,097
  32,308
  36,755
  41,433
  46,339
  51,473
  56,834
  62,424
  68,246
  74,304
  80,606
  87,159
  93,973
  101,059
  108,429
  116,097
  124,078
  132,388
  141,046
  150,070
Issuance/(repayment) of debt, $m
  61
  2,649
  3,034
  3,434
  3,837
  4,240
  4,640
  5,033
  5,418
  5,795
  6,162
  6,521
  6,873
  7,219
  7,561
  7,902
  8,243
  8,586
  8,936
  9,292
  9,659
  10,038
  10,431
  10,840
  11,269
  11,717
  12,189
  12,685
  13,207
  13,757
  14,337
Issuance/(repurchase) of shares, $m
  -200
  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  
  -231
  2,649
  3,034
  3,434
  3,837
  4,240
  4,640
  5,033
  5,418
  5,795
  6,162
  6,521
  6,873
  7,219
  7,561
  7,902
  8,243
  8,586
  8,936
  9,292
  9,659
  10,038
  10,431
  10,840
  11,269
  11,717
  12,189
  12,685
  13,207
  13,757
  14,337
Total cash flow (excl. dividends), $m
  780
  2,764
  4,751
  7,014
  9,549
  12,356
  15,431
  18,769
  22,364
  26,209
  30,300
  34,618
  39,181
  43,973
  48,994
  54,241
  59,716
  65,421
  71,359
  77,538
  83,963
  90,644
  97,590
  104,814
  112,328
  120,146
  128,286
  136,763
  145,595
  154,803
  164,408
Retained Cash Flow (-), $m
  -703
  -1,756
  -2,023
  -2,289
  -2,558
  -2,827
  -3,093
  -3,355
  -3,612
  -3,863
  -4,108
  -4,347
  -4,582
  -4,813
  -5,041
  -5,268
  -5,495
  -5,724
  -5,957
  -6,195
  -6,439
  -6,692
  -6,954
  -7,227
  -7,512
  -7,812
  -8,126
  -8,456
  -8,805
  -9,171
  -9,558
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
 
  1,008
  2,728
  4,725
  6,991
  9,529
  12,338
  15,413
  18,752
  22,346
  26,192
  30,271
  34,599
  39,161
  43,953
  48,973
  54,221
  59,696
  65,402
  71,343
  77,524
  83,952
  90,636
  97,587
  104,815
  112,335
  120,160
  128,306
  136,791
  145,632
  154,849
Discount rate, %
 
  5.20
  5.46
  5.73
  6.02
  6.32
  6.64
  6.97
  7.32
  7.68
  8.07
  8.47
  8.89
  9.34
  9.81
  10.30
  10.81
  11.35
  11.92
  12.51
  13.14
  13.80
  14.49
  15.21
  15.97
  16.77
  17.61
  18.49
  19.41
  20.38
  21.40
PV of cash for distribution, $m
 
  958
  2,453
  3,997
  5,533
  7,014
  8,391
  9,619
  10,658
  11,479
  12,057
  12,377
  12,446
  12,269
  11,865
  11,261
  10,492
  9,597
  8,617
  7,593
  6,563
  5,563
  4,620
  3,758
  2,992
  2,329
  1,771
  1,315
  952
  671
  460
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

Bunge Limited, together with its subsidiaries, operates as an agribusiness and food company worldwide. It operates through five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. The Agribusiness segment engages in the purchase, storage, transport, processing, and sale of agricultural commodities and commodity products, such as oilseeds and grains, including soybeans, rapeseed, canola, sunflower seeds, wheat, and corn to animal feed manufacturers, livestock producers, wheat and corn millers, and other oilseed processors, as well as third-party edible oil processing companies, and biodiesel industries. The Edible Oil Products segment provides packaged and bulk oils, shortenings, margarines, mayonnaise, sauces, pastes, condiments, and seasonings to baked goods companies, snack food producers, restaurant chains, food service distributors, and other food manufacturers, as well as grocery chains, wholesalers, distributors, and other retailers. The Milling Products segment produces and sells various wheat flours and bakery mixes; and corn milling products, including dry-milled corn meals, flours, flaking and brewer's grits, soy-fortified corn meals, corn-soy blend products, and other products, as well as sells rice products. The Sugar and Bioenergy segment produces and sells sugar and ethanol; trades and merchandises sugar; and generates electricity from burning sugarcane bagasse. As of December 31, 2015, this segment had a total installed capacity of approximately 322 megawatts. The Fertilizer segment produces, blends, and distributes nitrogen, phosphate, and potassium fertilizers comprising phosphate-based liquid and solid nitrogen fertilizers; single super phosphate; and ammonia, urea, ammonium thiosulfate, monoammonium phosphate, diammonium phosphate, triple supersphosphate, UAN, ammonium sulfate, and potassium chloride products. Bunge Limited was founded in 1818 and is headquartered in White Plains, New York.

FINANCIAL RATIOS  of  Bunge (BG)

Valuation Ratios
P/E Ratio 14.9
Price to Sales 0.3
Price to Book 1.6
Price to Tangible Book
Price to Cash Flow 5.8
Price to Free Cash Flow 9.9
Growth Rates
Sales Growth Rate -1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20.8%
Cap. Spend. - 3 Yr. Gr. Rate -5.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 43%
Total Debt to Equity 67.1%
Interest Coverage 5
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 6.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5.3%
Return On Equity 11%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 5.6%
Gross Margin - 3 Yr. Avg. 5.5%
EBITDA Margin 4.2%
EBITDA Margin - 3 Yr. Avg. 3.7%
Operating Margin 2.5%
Oper. Margin - 3 Yr. Avg. 2.3%
Pre-Tax Margin 2.3%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 1.5%
Effective Tax Rate 22.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.1%
Payout Ratio 34.5%

BG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BG stock intrinsic value calculation we used $42679 million for the last fiscal year's total revenue generated by Bunge. The default revenue input number comes from 2016 income statement of Bunge. 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 BG stock valuation model: a) initial revenue growth rate of 24.7% 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 5.2%, whose default value for BG is calculated based on our internal credit rating of Bunge, 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 Bunge.
    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 BG stock the variable cost ratio is equal to 75.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $9745 million in the base year in the intrinsic value calculation for BG 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 4.9% for Bunge.

Corporate tax rate of 27% is the nominal tax rate for Bunge. 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 BG 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 BG are equal to 12.3%.

Life of production assets of 10.3 years is the average useful life of capital assets used in Bunge 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 BG is equal to 8.9%. 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 - $7144 million for Bunge - 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 140.246 million for Bunge 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 Bunge at the current share price and the inputted number of shares is $11.2 billion.

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COMPANY NEWS

▶ Bunge Ltd. Value Analysis (NYSE:BG) : July 5, 2017   [Jul-05-17 01:21PM  Capital Cube]
▶ Huge grain supplies dampen impact of USDA reports   [Jun-08-17 07:00AM  Reuters]
▶ Huge grain supplies dampen impact of USDA reports   [Jun-07-17 04:32PM  Reuters]
▶ 3 No-Brainer Stocks to Buy in Agriculture   [09:28AM  Motley Fool]
▶ Glencore CEO Says Bunge Isn't Only Opportunity Out There   [Jun-01-17 09:00AM  Bloomberg Video]
▶ Bunge Announces Annual Meeting Results   [May-25-17 01:20PM  PR Newswire]
▶ Bunge To Glencore: What M&A Engagement?   [11:01AM  Barrons.com]
▶ Company News for May 24, 2017   [10:10AM  Zacks]
▶ [$$] Glencore Makes Takeover Approach to Bunge   [12:26AM  The Wall Street Journal]
▶ [$$] Glencore Makes Takeover Approach to Bunge   [May-23-17 10:17PM  The Wall Street Journal]
▶ Bunge Issues Statement   [08:13PM  PR Newswire]
▶ Sowing Glencore's Waves of Grain   [05:47PM  Bloomberg]
▶ What Happened in the Stock Market Today   [04:51PM  Motley Fool]
▶ Bunge jumps on takeover talk   [01:17PM  CNBC Videos]
▶ ETFs with exposure to Bunge Ltd. : May 19, 2017   [May-19-17 01:41PM  Capital Cube]
▶ ETFs with exposure to Bunge Ltd. : May 8, 2017   [May-08-17 04:11PM  Capital Cube]
▶ [$$] Grain Traders Have a Problem: Too Much Grain   [12:11PM  The Wall Street Journal]
▶ Bunge misses 1Q profit forecasts   [06:14AM  Associated Press]
▶ Bunge Reports First Quarter 2017 Results   [06:00AM  PR Newswire]
▶ ETFs with exposure to Bunge Ltd. : April 7, 2017   [Apr-07-17 03:58PM  Capital Cube]
▶ [$$] Lower tax rate boosts Louis Dreyfus earnings   [Apr-03-17 12:37PM  Financial Times]
▶ [$$] Lower tax rate boosts Louis Dreyfus earnings   [12:37PM  at Financial Times]
▶ Here's Why Bunge Rose 19.2% in February   [Mar-10-17 11:15AM  Motley Fool]
Stock chart of BG Financial statements of BG Annual reports of BG
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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