Intrinsic value of BRF ADR - BRFS

Previous Close

$12.92

  Intrinsic Value

$12.47

stock screener

  Rating & Target

hold

-3%

  Value-price divergence*

+701%

Previous close

$12.92

 
Intrinsic value

$12.47

 
Up/down potential

-3%

 
Rating

hold

 
Value-price divergence*

+701%

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

We calculate the intrinsic value of BRFS 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 10.4

 

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, %
  4.76
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  10,665
  10,878
  11,129
  11,415
  11,736
  12,091
  12,482
  12,907
  13,367
  13,863
  14,395
  14,964
  15,571
  16,218
  16,905
  17,634
  18,407
  19,225
  20,090
  21,004
  21,969
  22,988
  24,062
  25,194
  26,386
  27,642
  28,965
  30,357
  31,822
  33,363
  34,984
Variable operating expenses, $m
 
  9,450
  9,665
  9,910
  10,184
  10,489
  10,823
  11,187
  11,581
  12,006
  12,461
  12,811
  13,331
  13,885
  14,473
  15,097
  15,759
  16,459
  17,200
  17,982
  18,809
  19,680
  20,600
  21,569
  22,590
  23,665
  24,798
  25,990
  27,244
  28,563
  29,951
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
  10,091
  9,450
  9,665
  9,910
  10,184
  10,489
  10,823
  11,187
  11,581
  12,006
  12,461
  12,811
  13,331
  13,885
  14,473
  15,097
  15,759
  16,459
  17,200
  17,982
  18,809
  19,680
  20,600
  21,569
  22,590
  23,665
  24,798
  25,990
  27,244
  28,563
  29,951
Operating income, $m
  574
  1,428
  1,464
  1,505
  1,551
  1,602
  1,658
  1,720
  1,786
  1,857
  1,934
  2,153
  2,240
  2,333
  2,432
  2,537
  2,648
  2,766
  2,890
  3,022
  3,161
  3,307
  3,462
  3,625
  3,796
  3,977
  4,167
  4,368
  4,578
  4,800
  5,033
EBITDA, $m
  1,081
  1,977
  2,023
  2,075
  2,133
  2,198
  2,269
  2,346
  2,430
  2,520
  2,617
  2,720
  2,831
  2,948
  3,073
  3,206
  3,346
  3,495
  3,652
  3,818
  3,994
  4,179
  4,374
  4,580
  4,797
  5,025
  5,265
  5,518
  5,785
  6,065
  6,360
Interest expense (income), $m
  269
  248
  257
  268
  280
  293
  308
  324
  341
  360
  381
  403
  426
  451
  478
  506
  536
  568
  602
  638
  676
  716
  758
  802
  849
  898
  950
  1,005
  1,062
  1,123
  1,186
Earnings before tax, $m
  -100
  1,179
  1,206
  1,237
  1,272
  1,310
  1,351
  1,396
  1,445
  1,497
  1,553
  1,750
  1,814
  1,882
  1,954
  2,031
  2,112
  2,198
  2,288
  2,384
  2,485
  2,592
  2,704
  2,823
  2,948
  3,079
  3,217
  3,363
  3,516
  3,677
  3,847
Tax expense, $m
  16
  318
  326
  334
  343
  354
  365
  377
  390
  404
  419
  473
  490
  508
  528
  548
  570
  593
  618
  644
  671
  700
  730
  762
  796
  831
  869
  908
  949
  993
  1,039
Net income, $m
  -118
  861
  881
  903
  928
  956
  986
  1,019
  1,055
  1,093
  1,134
  1,278
  1,324
  1,374
  1,427
  1,482
  1,542
  1,604
  1,670
  1,740
  1,814
  1,892
  1,974
  2,061
  2,152
  2,248
  2,349
  2,455
  2,567
  2,685
  2,808

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  2,207
  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
  13,578
  11,597
  11,864
  12,169
  12,511
  12,891
  13,307
  13,760
  14,251
  14,779
  15,346
  15,953
  16,600
  17,290
  18,022
  18,800
  19,624
  20,496
  21,418
  22,393
  23,421
  24,507
  25,652
  26,859
  28,130
  29,470
  30,880
  32,364
  33,925
  35,568
  37,297
Adjusted assets (=assets-cash), $m
  11,371
  11,597
  11,864
  12,169
  12,511
  12,891
  13,307
  13,760
  14,251
  14,779
  15,346
  15,953
  16,600
  17,290
  18,022
  18,800
  19,624
  20,496
  21,418
  22,393
  23,421
  24,507
  25,652
  26,859
  28,130
  29,470
  30,880
  32,364
  33,925
  35,568
  37,297
Revenue / Adjusted assets
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
  0.938
Average production assets, $m
  4,449
  4,536
  4,641
  4,760
  4,894
  5,042
  5,205
  5,382
  5,574
  5,781
  6,003
  6,240
  6,493
  6,763
  7,049
  7,354
  7,676
  8,017
  8,378
  8,759
  9,161
  9,586
  10,034
  10,506
  11,003
  11,527
  12,078
  12,659
  13,270
  13,912
  14,588
Working capital, $m
  1,977
  816
  835
  856
  880
  907
  936
  968
  1,003
  1,040
  1,080
  1,122
  1,168
  1,216
  1,268
  1,323
  1,381
  1,442
  1,507
  1,575
  1,648
  1,724
  1,805
  1,890
  1,979
  2,073
  2,172
  2,277
  2,387
  2,502
  2,624
Total debt, $m
  5,995
  5,148
  5,355
  5,591
  5,856
  6,150
  6,473
  6,824
  7,204
  7,614
  8,053
  8,524
  9,025
  9,560
  10,127
  10,730
  11,368
  12,044
  12,759
  13,514
  14,312
  15,153
  16,040
  16,976
  17,961
  18,999
  20,092
  21,242
  22,452
  23,726
  25,065
Total liabilities, $m
  9,835
  8,988
  9,195
  9,431
  9,696
  9,990
  10,313
  10,664
  11,044
  11,454
  11,893
  12,364
  12,865
  13,400
  13,967
  14,570
  15,208
  15,884
  16,599
  17,354
  18,152
  18,993
  19,880
  20,816
  21,801
  22,839
  23,932
  25,082
  26,292
  27,566
  28,905
Total equity, $m
  3,743
  2,609
  2,669
  2,738
  2,815
  2,900
  2,994
  3,096
  3,206
  3,325
  3,453
  3,589
  3,735
  3,890
  4,055
  4,230
  4,415
  4,612
  4,819
  5,038
  5,270
  5,514
  5,772
  6,043
  6,329
  6,631
  6,948
  7,282
  7,633
  8,003
  8,392
Total liabilities and equity, $m
  13,578
  11,597
  11,864
  12,169
  12,511
  12,890
  13,307
  13,760
  14,250
  14,779
  15,346
  15,953
  16,600
  17,290
  18,022
  18,800
  19,623
  20,496
  21,418
  22,392
  23,422
  24,507
  25,652
  26,859
  28,130
  29,470
  30,880
  32,364
  33,925
  35,569
  37,297
Debt-to-equity ratio
  1.602
  1.970
  2.010
  2.040
  2.080
  2.120
  2.160
  2.200
  2.250
  2.290
  2.330
  2.370
  2.420
  2.460
  2.500
  2.540
  2.570
  2.610
  2.650
  2.680
  2.720
  2.750
  2.780
  2.810
  2.840
  2.870
  2.890
  2.920
  2.940
  2.960
  2.990
Adjusted equity ratio
  0.135
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225
  0.225

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -118
  861
  881
  903
  928
  956
  986
  1,019
  1,055
  1,093
  1,134
  1,278
  1,324
  1,374
  1,427
  1,482
  1,542
  1,604
  1,670
  1,740
  1,814
  1,892
  1,974
  2,061
  2,152
  2,248
  2,349
  2,455
  2,567
  2,685
  2,808
Depreciation, amort., depletion, $m
  507
  550
  559
  570
  582
  596
  610
  627
  644
  663
  683
  567
  590
  615
  641
  669
  698
  729
  762
  796
  833
  871
  912
  955
  1,000
  1,048
  1,098
  1,151
  1,206
  1,265
  1,326
Funds from operations, $m
  676
  1,411
  1,440
  1,473
  1,510
  1,552
  1,597
  1,646
  1,699
  1,756
  1,817
  1,845
  1,915
  1,989
  2,067
  2,151
  2,239
  2,333
  2,432
  2,537
  2,647
  2,763
  2,886
  3,016
  3,152
  3,296
  3,447
  3,606
  3,773
  3,949
  4,135
Change in working capital, $m
  100
  16
  19
  21
  24
  27
  29
  32
  35
  37
  40
  43
  46
  48
  52
  55
  58
  61
  65
  69
  72
  76
  81
  85
  89
  94
  99
  104
  110
  116
  122
Cash from operations, $m
  576
  1,395
  1,421
  1,452
  1,486
  1,525
  1,567
  1,614
  1,664
  1,718
  1,777
  1,802
  1,869
  1,940
  2,016
  2,096
  2,181
  2,272
  2,367
  2,468
  2,575
  2,687
  2,806
  2,931
  3,063
  3,201
  3,348
  3,501
  3,663
  3,834
  4,013
Maintenance CAPEX, $m
  0
  -404
  -412
  -422
  -433
  -445
  -458
  -473
  -489
  -507
  -526
  -546
  -567
  -590
  -615
  -641
  -669
  -698
  -729
  -762
  -796
  -833
  -871
  -912
  -955
  -1,000
  -1,048
  -1,098
  -1,151
  -1,206
  -1,265
New CAPEX, $m
  -856
  -88
  -104
  -119
  -134
  -148
  -163
  -177
  -192
  -207
  -222
  -237
  -253
  -270
  -287
  -304
  -322
  -341
  -361
  -381
  -402
  -425
  -448
  -472
  -497
  -524
  -552
  -581
  -611
  -643
  -676
Cash from investing activities, $m
  -1,315
  -492
  -516
  -541
  -567
  -593
  -621
  -650
  -681
  -714
  -748
  -783
  -820
  -860
  -902
  -945
  -991
  -1,039
  -1,090
  -1,143
  -1,198
  -1,258
  -1,319
  -1,384
  -1,452
  -1,524
  -1,600
  -1,679
  -1,762
  -1,849
  -1,941
Free cash flow, $m
  -739
  902
  904
  911
  920
  932
  946
  963
  983
  1,005
  1,029
  1,019
  1,049
  1,080
  1,115
  1,151
  1,191
  1,233
  1,278
  1,325
  1,376
  1,430
  1,486
  1,547
  1,610
  1,677
  1,748
  1,823
  1,902
  1,985
  2,072
Issuance/(repayment) of debt, $m
  1,718
  179
  207
  236
  265
  294
  323
  351
  380
  410
  440
  470
  502
  534
  568
  603
  639
  676
  715
  755
  797
  841
  887
  935
  985
  1,038
  1,093
  1,150
  1,210
  1,273
  1,339
Issuance/(repurchase) of shares, $m
  -170
  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  
  1,548
  179
  207
  236
  265
  294
  323
  351
  380
  410
  440
  470
  502
  534
  568
  603
  639
  676
  715
  755
  797
  841
  887
  935
  985
  1,038
  1,093
  1,150
  1,210
  1,273
  1,339
Total cash flow (excl. dividends), $m
  686
  1,081
  1,111
  1,147
  1,185
  1,226
  1,269
  1,315
  1,363
  1,415
  1,469
  1,489
  1,550
  1,615
  1,682
  1,754
  1,829
  1,909
  1,992
  2,080
  2,173
  2,271
  2,374
  2,482
  2,596
  2,715
  2,841
  2,973
  3,112
  3,258
  3,412
Retained Cash Flow (-), $m
  531
  -47
  -60
  -69
  -77
  -85
  -94
  -102
  -110
  -119
  -128
  -137
  -146
  -155
  -165
  -175
  -185
  -196
  -208
  -219
  -231
  -244
  -258
  -272
  -286
  -301
  -317
  -334
  -351
  -370
  -389
Prev. year cash balance distribution, $m
 
  1,181
  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
 
  2,215
  1,051
  1,078
  1,108
  1,140
  1,175
  1,213
  1,253
  1,296
  1,341
  1,353
  1,405
  1,459
  1,517
  1,579
  1,644
  1,712
  1,785
  1,861
  1,942
  2,027
  2,116
  2,210
  2,309
  2,414
  2,524
  2,639
  2,761
  2,888
  3,023
Discount rate, %
 
  7.70
  8.09
  8.49
  8.91
  9.36
  9.83
  10.32
  10.83
  11.38
  11.95
  12.54
  13.17
  13.83
  14.52
  15.25
  16.01
  16.81
  17.65
  18.53
  19.46
  20.43
  21.45
  22.52
  23.65
  24.83
  26.07
  27.38
  28.75
  30.18
  31.69
PV of cash for distribution, $m
 
  2,057
  900
  844
  787
  729
  670
  610
  550
  491
  434
  369
  318
  271
  227
  188
  153
  122
  96
  74
  55
  41
  29
  21
  14
  9
  6
  4
  2
  1
  1
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

BRF S.A., together with its subsidiaries, focuses on raising, producing, and slaughtering poultry and pork in Brazil. It also engages in processing and selling fresh meat, processed foods, pasta, sauce, mayonnaise, frozen vegetables and soybean by-products. Its product portfolio consists of whole chickens and frozen cuts of chicken, turkey, and pork; ham products, bologna, sausages, frankfurters, and other smoked products; hamburgers, breaded meat products, and meatballs; lasagnas, pizzas, cheese breads, pies, and frozen vegetables; margarine, sauces and mayonnaise; and soy meal and refined soy flour, and animal feed. The company primarily sells its products under the Sadia, Perdigão, and Qualy brands, as well as Deline, Hot Pocket, Soltíssimo, Miss Daisy, Chester, Ouro, Na Brasa, Meu Menu, Sanduba, Mini Chicken, Perdix, Borella, Hilal, Unef, Confidence, Paty, Danica, Vienissima, GoodMark, Delicia, and Manty brands to supermarkets, retail stores, wholesalers, restaurants, and other institutional customers. BRF S.A. exports its products to the Middle East, Africa, Asia, Europe, and Latin America. The company was formerly known as BRF-Brasil Foods S.A. and changed its name to BRF S.A. in April 2013. BRF S.A. was founded in 1900 and is headquartered in Itajai, Brazil.

FINANCIAL RATIOS  of  BRF ADR (BRFS)

Valuation Ratios
P/E Ratio -87.5
Price to Sales 1
Price to Book 2.8
Price to Tangible Book
Price to Cash Flow 17.9
Price to Free Cash Flow -36.9
Growth Rates
Sales Growth Rate 4.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 29.5%
Cap. Spend. - 3 Yr. Gr. Rate 9.1%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 132.8%
Total Debt to Equity 160.2%
Interest Coverage 1
Management Effectiveness
Return On Assets 1.5%
Ret/ On Assets - 3 Yr. Avg. 6.6%
Return On Total Capital -1.3%
Ret/ On T. Cap. - 3 Yr. Avg. 6.1%
Return On Equity -2.9%
Return On Equity - 3 Yr. Avg. 11%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 22.3%
Gross Margin - 3 Yr. Avg. 27.7%
EBITDA Margin 6.3%
EBITDA Margin - 3 Yr. Avg. 11.8%
Operating Margin 5.4%
Oper. Margin - 3 Yr. Avg. 10.2%
Pre-Tax Margin -0.9%
Pre-Tax Margin - 3 Yr. Avg. 5.2%
Net Profit Margin -1.1%
Net Profit Margin - 3 Yr. Avg. 5.4%
Effective Tax Rate -16%
Eff/ Tax Rate - 3 Yr. Avg. -5.7%
Payout Ratio -315.3%

BRFS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BRFS stock intrinsic value calculation we used $10665 million for the last fiscal year's total revenue generated by BRF ADR. The default revenue input number comes from 2016 income statement of BRF ADR. 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 BRFS stock valuation model: a) initial revenue growth rate of 2% 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 7.7%, whose default value for BRFS is calculated based on our internal credit rating of BRF ADR, 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 BRF ADR.
    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 BRFS stock the variable cost ratio is equal to 86.9%.

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 BRFS 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 5% for BRF ADR.

Corporate tax rate of 27% is the nominal tax rate for BRF ADR. 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 BRFS 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 BRFS are equal to 41.7%.

Life of production assets of 11 years is the average useful life of capital assets used in BRF ADR 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 BRFS is equal to 7.5%. 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 - $3743 million for BRF ADR - 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 807.87 million for BRF ADR 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 BRF ADR at the current share price and the inputted number of shares is $10.4 billion.

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COMPANY NEWS

▶ BRF - Material Fact   [08:52PM  PR Newswire]
▶ Tyson Foods: Here's the Beef   [Jun-06-17 03:48PM  Barrons.com]
▶ ETFs with exposure to BRF SA : May 19, 2017   [May-19-17 01:42PM  Capital Cube]
▶ [$$] Brazil stocks: no time for Temerity   [12:20PM  Financial Times]
▶ Announcement to the Market   [Apr-25-17 10:54PM  PR Newswire]
▶ New Strong Sell Stocks for April 21st   [Apr-21-17 10:43AM  Zacks]
▶ Brazil Meat Scandal Losses Could Reach $5 Billion   [Mar-30-17 04:18PM  at Forbes]
▶ Announcement To The Market   [Mar-24-17 09:03PM  PR Newswire]
▶ Brazil GDP Could Fall Lower On Meat Scandal   [Mar-23-17 11:07AM  at Forbes]
▶ How Waters Corporation (WAT) Stacks Up Against Its Peers   [Dec-13-16 10:42AM  at Insider Monkey]
▶ Is BRF SA (ADR) (BRFS) a Good Stock to Buy?   [07:52AM  at Insider Monkey]
▶ Should You Add KLA-Tencor Corp (KLAC) to Your Portfolio?   [Nov-28-16 09:41AM  at Insider Monkey]
▶ Hedge Funds Are Selling Coach Inc (COH)   [Nov-25-16 11:16AM  at Insider Monkey]
▶ Brazil's Ambev Has 20% Upside, J.P. Morgan Says   [Nov-10-16 12:08PM  at Barrons.com]
Stock chart of BRFS Financial statements of BRFS
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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