Intrinsic value of Companhia Brasileira de Distribuicao Gru - CBD

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$21.12

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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$21.12

 
Intrinsic value

$44.40

 
Up/down potential

+110%

 
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 CBD 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 6.4

 

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, %
  11.44
  11.40
  10.76
  10.18
  9.67
  9.20
  8.78
  8.40
  8.06
  7.75
  7.48
  7.23
  7.01
  6.81
  6.63
  6.46
  6.32
  6.19
  6.07
  5.96
  5.86
  5.78
  5.70
  5.63
  5.57
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
Revenue, $m
  13,107
  14,601
  16,172
  17,819
  19,542
  21,339
  23,213
  25,163
  27,191
  29,300
  31,491
  33,769
  36,135
  38,595
  41,153
  43,813
  46,581
  49,462
  52,464
  55,591
  58,851
  62,251
  65,800
  69,504
  73,374
  77,417
  81,644
  86,064
  90,687
  95,525
  100,589
Variable operating expenses, $m
 
  13,969
  15,469
  17,040
  18,684
  20,400
  22,188
  24,049
  25,984
  27,997
  30,088
  32,226
  34,485
  36,833
  39,273
  41,812
  44,454
  47,204
  50,068
  53,052
  56,163
  59,408
  62,795
  66,330
  70,023
  73,882
  77,915
  82,133
  86,545
  91,162
  95,995
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
  12,836
  13,969
  15,469
  17,040
  18,684
  20,400
  22,188
  24,049
  25,984
  27,997
  30,088
  32,226
  34,485
  36,833
  39,273
  41,812
  44,454
  47,204
  50,068
  53,052
  56,163
  59,408
  62,795
  66,330
  70,023
  73,882
  77,915
  82,133
  86,545
  91,162
  95,995
Operating income, $m
  271
  632
  704
  779
  857
  940
  1,025
  1,114
  1,207
  1,303
  1,403
  1,542
  1,650
  1,763
  1,879
  2,001
  2,127
  2,259
  2,396
  2,539
  2,688
  2,843
  3,005
  3,174
  3,351
  3,536
  3,729
  3,931
  4,142
  4,363
  4,594
EBITDA, $m
  615
  1,003
  1,111
  1,224
  1,342
  1,466
  1,595
  1,729
  1,868
  2,013
  2,163
  2,320
  2,482
  2,651
  2,827
  3,010
  3,200
  3,398
  3,604
  3,819
  4,043
  4,276
  4,520
  4,775
  5,040
  5,318
  5,608
  5,912
  6,230
  6,562
  6,910
Interest expense (income), $m
  0
  32
  73
  116
  161
  208
  257
  309
  362
  417
  475
  535
  597
  662
  729
  799
  872
  948
  1,026
  1,109
  1,194
  1,283
  1,376
  1,473
  1,575
  1,680
  1,791
  1,907
  2,028
  2,154
  2,286
Earnings before tax, $m
  -15
  600
  631
  663
  696
  731
  768
  806
  845
  886
  928
  1,007
  1,053
  1,101
  1,150
  1,202
  1,255
  1,311
  1,370
  1,430
  1,494
  1,560
  1,629
  1,701
  1,776
  1,855
  1,938
  2,024
  2,114
  2,209
  2,308
Tax expense, $m
  7
  162
  170
  179
  188
  197
  207
  218
  228
  239
  251
  272
  284
  297
  311
  324
  339
  354
  370
  386
  403
  421
  440
  459
  480
  501
  523
  546
  571
  596
  623
Net income, $m
  -152
  438
  460
  484
  508
  534
  560
  588
  617
  647
  678
  735
  769
  803
  840
  877
  916
  957
  1,000
  1,044
  1,090
  1,139
  1,189
  1,242
  1,297
  1,354
  1,414
  1,477
  1,543
  1,612
  1,685

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,616
  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
  14,296
  14,121
  15,641
  17,233
  18,899
  20,638
  22,449
  24,335
  26,297
  28,336
  30,456
  32,658
  34,947
  37,326
  39,800
  42,372
  45,049
  47,836
  50,738
  53,763
  56,916
  60,204
  63,636
  67,219
  70,961
  74,872
  78,959
  83,234
  87,705
  92,384
  97,282
Adjusted assets (=assets-cash), $m
  12,680
  14,121
  15,641
  17,233
  18,899
  20,638
  22,449
  24,335
  26,297
  28,336
  30,456
  32,658
  34,947
  37,326
  39,800
  42,372
  45,049
  47,836
  50,738
  53,763
  56,916
  60,204
  63,636
  67,219
  70,961
  74,872
  78,959
  83,234
  87,705
  92,384
  97,282
Revenue / Adjusted assets
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
  1.034
Average production assets, $m
  3,894
  4,337
  4,803
  5,292
  5,804
  6,338
  6,894
  7,473
  8,076
  8,702
  9,353
  10,029
  10,732
  11,463
  12,222
  13,012
  13,835
  14,690
  15,582
  16,510
  17,479
  18,489
  19,543
  20,643
  21,792
  22,993
  24,248
  25,561
  26,934
  28,371
  29,875
Working capital, $m
  1,286
  672
  744
  820
  899
  982
  1,068
  1,157
  1,251
  1,348
  1,449
  1,553
  1,662
  1,775
  1,893
  2,015
  2,143
  2,275
  2,413
  2,557
  2,707
  2,864
  3,027
  3,197
  3,375
  3,561
  3,756
  3,959
  4,172
  4,394
  4,627
Total debt, $m
  1,856
  2,087
  3,315
  4,602
  5,947
  7,352
  8,816
  10,340
  11,925
  13,573
  15,285
  17,065
  18,914
  20,837
  22,835
  24,914
  27,077
  29,329
  31,674
  34,117
  36,665
  39,322
  42,095
  44,990
  48,014
  51,173
  54,476
  57,930
  61,543
  65,323
  69,281
Total liabilities, $m
  11,179
  11,410
  12,638
  13,925
  15,270
  16,675
  18,139
  19,663
  21,248
  22,896
  24,608
  26,388
  28,237
  30,160
  32,158
  34,237
  36,400
  38,652
  40,997
  43,440
  45,988
  48,645
  51,418
  54,313
  57,337
  60,496
  63,799
  67,253
  70,866
  74,646
  78,604
Total equity, $m
  3,117
  2,711
  3,003
  3,309
  3,629
  3,962
  4,310
  4,672
  5,049
  5,441
  5,848
  6,270
  6,710
  7,167
  7,642
  8,135
  8,649
  9,185
  9,742
  10,322
  10,928
  11,559
  12,218
  12,906
  13,625
  14,375
  15,160
  15,981
  16,839
  17,738
  18,678
Total liabilities and equity, $m
  14,296
  14,121
  15,641
  17,234
  18,899
  20,637
  22,449
  24,335
  26,297
  28,337
  30,456
  32,658
  34,947
  37,327
  39,800
  42,372
  45,049
  47,837
  50,739
  53,762
  56,916
  60,204
  63,636
  67,219
  70,962
  74,871
  78,959
  83,234
  87,705
  92,384
  97,282
Debt-to-equity ratio
  0.595
  0.770
  1.100
  1.390
  1.640
  1.860
  2.050
  2.210
  2.360
  2.490
  2.610
  2.720
  2.820
  2.910
  2.990
  3.060
  3.130
  3.190
  3.250
  3.310
  3.360
  3.400
  3.450
  3.490
  3.520
  3.560
  3.590
  3.620
  3.650
  3.680
  3.710
Adjusted equity ratio
  0.118
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192
  0.192

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -152
  438
  460
  484
  508
  534
  560
  588
  617
  647
  678
  735
  769
  803
  840
  877
  916
  957
  1,000
  1,044
  1,090
  1,139
  1,189
  1,242
  1,297
  1,354
  1,414
  1,477
  1,543
  1,612
  1,685
Depreciation, amort., depletion, $m
  344
  371
  407
  445
  485
  526
  569
  614
  661
  710
  760
  777
  832
  889
  947
  1,009
  1,072
  1,139
  1,208
  1,280
  1,355
  1,433
  1,515
  1,600
  1,689
  1,782
  1,880
  1,981
  2,088
  2,199
  2,316
Funds from operations, $m
  -1,643
  809
  868
  929
  993
  1,060
  1,130
  1,202
  1,278
  1,356
  1,438
  1,513
  1,601
  1,692
  1,787
  1,886
  1,989
  2,096
  2,208
  2,324
  2,445
  2,572
  2,704
  2,842
  2,986
  3,137
  3,294
  3,459
  3,631
  3,812
  4,000
Change in working capital, $m
  -1,231
  69
  72
  76
  79
  83
  86
  90
  93
  97
  101
  105
  109
  113
  118
  122
  127
  133
  138
  144
  150
  156
  163
  170
  178
  186
  194
  203
  213
  223
  233
Cash from operations, $m
  -412
  3
  795
  853
  914
  978
  1,044
  1,113
  1,185
  1,259
  1,337
  1,408
  1,492
  1,579
  1,669
  1,764
  1,862
  1,963
  2,070
  2,180
  2,295
  2,415
  2,541
  2,672
  2,808
  2,951
  3,100
  3,256
  3,419
  3,589
  3,768
Maintenance CAPEX, $m
  0
  -302
  -336
  -372
  -410
  -450
  -491
  -534
  -579
  -626
  -675
  -725
  -777
  -832
  -889
  -947
  -1,009
  -1,072
  -1,139
  -1,208
  -1,280
  -1,355
  -1,433
  -1,515
  -1,600
  -1,689
  -1,782
  -1,880
  -1,981
  -2,088
  -2,199
New CAPEX, $m
  -488
  -443
  -467
  -489
  -512
  -534
  -556
  -579
  -602
  -626
  -651
  -676
  -703
  -731
  -760
  -790
  -822
  -856
  -891
  -929
  -968
  -1,010
  -1,054
  -1,100
  -1,149
  -1,201
  -1,255
  -1,313
  -1,373
  -1,437
  -1,504
Cash from investing activities, $m
  -639
  -745
  -803
  -861
  -922
  -984
  -1,047
  -1,113
  -1,181
  -1,252
  -1,326
  -1,401
  -1,480
  -1,563
  -1,649
  -1,737
  -1,831
  -1,928
  -2,030
  -2,137
  -2,248
  -2,365
  -2,487
  -2,615
  -2,749
  -2,890
  -3,037
  -3,193
  -3,354
  -3,525
  -3,703
Free cash flow, $m
  -1,051
  -742
  -7
  -8
  -8
  -6
  -4
  -1
  3
  7
  11
  7
  11
  16
  21
  26
  31
  35
  39
  43
  47
  51
  54
  56
  59
  61
  62
  63
  64
  64
  64
Issuance/(repayment) of debt, $m
  491
  1,166
  1,228
  1,287
  1,346
  1,405
  1,464
  1,524
  1,585
  1,648
  1,712
  1,780
  1,849
  1,922
  1,999
  2,079
  2,163
  2,252
  2,345
  2,444
  2,548
  2,657
  2,773
  2,895
  3,024
  3,160
  3,303
  3,454
  3,613
  3,781
  3,957
Issuance/(repurchase) of shares, $m
  2
  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  
  467
  1,166
  1,228
  1,287
  1,346
  1,405
  1,464
  1,524
  1,585
  1,648
  1,712
  1,780
  1,849
  1,922
  1,999
  2,079
  2,163
  2,252
  2,345
  2,444
  2,548
  2,657
  2,773
  2,895
  3,024
  3,160
  3,303
  3,454
  3,613
  3,781
  3,957
Total cash flow (excl. dividends), $m
  -591
  424
  1,220
  1,279
  1,338
  1,398
  1,460
  1,523
  1,588
  1,655
  1,724
  1,786
  1,861
  1,939
  2,020
  2,105
  2,194
  2,287
  2,385
  2,487
  2,595
  2,708
  2,827
  2,951
  3,082
  3,220
  3,365
  3,517
  3,677
  3,845
  4,021
Retained Cash Flow (-), $m
  157
  -275
  -292
  -306
  -320
  -334
  -348
  -362
  -377
  -392
  -407
  -423
  -439
  -457
  -475
  -494
  -514
  -535
  -557
  -581
  -605
  -631
  -659
  -688
  -719
  -751
  -785
  -821
  -859
  -898
  -940
Prev. year cash balance distribution, $m
 
  681
  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
 
  829
  929
  973
  1,018
  1,065
  1,112
  1,161
  1,211
  1,263
  1,317
  1,363
  1,421
  1,482
  1,545
  1,611
  1,680
  1,752
  1,827
  1,906
  1,989
  2,076
  2,168
  2,263
  2,364
  2,469
  2,580
  2,696
  2,818
  2,947
  3,081
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  795
  850
  847
  839
  825
  807
  784
  757
  726
  690
  647
  607
  563
  519
  473
  427
  381
  337
  294
  253
  215
  180
  148
  120
  96
  75
  58
  44
  32
  23
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

Companhia Brasileira de Distribuição engages in the retail of food, clothing, home appliances, electronics, and other products through its chain of hypermarkets, supermarkets, specialized stores, and department stores primarily in Brazil. The company operates through four segments: Food Retail, Cash and Carry, Home Appliances, and E-Commerce. It sells non-perishable food products, beverages, fruits, vegetables, meat, bread, cold cuts, dairy products, cleaning products, disposable products, and personal care products; non-food products, which include clothing items, baby items, shoes and accessories, household articles, books, magazines, CDs and DVDs, stationery, handcraft, toys, sports and camping gear, furniture, mattresses, pet products, and gardening products; and electronic products, such as personal computers, software, computer accessories, and sound and image systems. The company also provides medications and cosmetics at its drugstores; and non-food products at gas stations. In addition, it is involved in e-commerce operations through the Websites, including Extra.com.br, PontoFrio.com.br, CasasBahia.com.br, Barateiro.com.br, PartiuViagens.com.br, and Cdiscount.com primarily in France; wholesale activities, such as B2B; E-Hub operations; and the rental of commercial spaces. The company operates its stores primarily under the Pão de Açúcar, Barateiro, Extra Supermercado, Minuto Pão de Açúcar, Pontofrio, Extra Hiper, Extra Super, Minimercado Extra, Assaí, Ponto Frio, Casas Bahia, and Conviva names. As of December 31, 2015, it operated 1,941 stores, 83 gas stations, and 157 drugstores in 20 Brazilian states and the Federal District. Companhia Brasileira de Distribuição was founded in 1948 and is headquartered in São Paulo, Brazil.

FINANCIAL RATIOS  of  Companhia Brasileira de Distribuicao Gru (CBD)

Valuation Ratios
P/E Ratio -36.9
Price to Sales 0.4
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow -13.6
Price to Free Cash Flow -6.2
Growth Rates
Sales Growth Rate 11.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -22.3%
Cap. Spend. - 3 Yr. Gr. Rate -3.6%
Financial Strength
Quick Ratio 2
Current Ratio 0.7
LT Debt to Equity 29.5%
Total Debt to Equity 59.5%
Interest Coverage 0
Management Effectiveness
Return On Assets -1%
Ret/ On Assets - 3 Yr. Avg. 0.8%
Return On Total Capital -2.8%
Ret/ On T. Cap. - 3 Yr. Avg. 1.6%
Return On Equity -4.8%
Return On Equity - 3 Yr. Avg. 3.3%
Asset Turnover 0.9
Profitability Ratios
Gross Margin 23%
Gross Margin - 3 Yr. Avg. 24.3%
EBITDA Margin 2.5%
EBITDA Margin - 3 Yr. Avg. 4.2%
Operating Margin 2.1%
Oper. Margin - 3 Yr. Avg. 4.1%
Pre-Tax Margin -0.1%
Pre-Tax Margin - 3 Yr. Avg. 1.9%
Net Profit Margin -1.2%
Net Profit Margin - 3 Yr. Avg. 0.5%
Effective Tax Rate -46.7%
Eff/ Tax Rate - 3 Yr. Avg. 4.1%
Payout Ratio -0.7%

CBD stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CBD stock intrinsic value calculation we used $13107 million for the last fiscal year's total revenue generated by Companhia Brasileira de Distribuicao Gru. The default revenue input number comes from 2016 income statement of Companhia Brasileira de Distribuicao Gru. 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 CBD stock valuation model: a) initial revenue growth rate of 11.4% 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 4.3%, whose default value for CBD is calculated based on our internal credit rating of Companhia Brasileira de Distribuicao Gru, 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 Companhia Brasileira de Distribuicao Gru.
    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 CBD stock the variable cost ratio is equal to 95.7%.

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 CBD 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 Companhia Brasileira de Distribuicao Gru.

Corporate tax rate of 27% is the nominal tax rate for Companhia Brasileira de Distribuicao Gru. 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 CBD 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 CBD are equal to 29.7%.

Life of production assets of 12.9 years is the average useful life of capital assets used in Companhia Brasileira de Distribuicao Gru 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 CBD is equal to 4.6%. 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 - $3117 million for Companhia Brasileira de Distribuicao Gru - 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 303.125 million for Companhia Brasileira de Distribuicao Gru 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 Companhia Brasileira de Distribuicao Gru at the current share price and the inputted number of shares is $6.4 billion.


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