Intrinsic value of Cresud ADR - CRESY

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$18.91

  Intrinsic Value

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  Value-price divergence*

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$18.91

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

We calculate the intrinsic value of CRESY 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 0.9

 

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, %
  525.69
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  2,265
  56,614
  87,469
  130,810
  189,799
  267,779
  368,135
  494,144
  648,843
  834,903
  1,054,550
  1,309,512
  1,601,004
  1,929,748
  2,296,019
  2,699,711
  3,140,412
  3,617,491
  4,130,178
  4,677,641
  5,259,058
  5,873,669
  6,520,832
  7,200,058
  7,911,036
  8,653,657
  9,428,024
  10,234,459
  11,073,504
  11,945,920
  12,852,684
Variable operating expenses, $m
 
  28,647
  44,259
  66,190
  96,038
  135,496
  186,276
  250,037
  328,314
  422,461
  533,602
  662,613
  810,108
  976,452
  1,161,786
  1,366,054
  1,589,048
  1,830,450
  2,089,870
  2,366,887
  2,661,083
  2,972,076
  3,299,541
  3,643,229
  4,002,984
  4,378,750
  4,770,580
  5,178,636
  5,603,193
  6,044,636
  6,503,458
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
  2,047
  28,647
  44,259
  66,190
  96,038
  135,496
  186,276
  250,037
  328,314
  422,461
  533,602
  662,613
  810,108
  976,452
  1,161,786
  1,366,054
  1,589,048
  1,830,450
  2,089,870
  2,366,887
  2,661,083
  2,972,076
  3,299,541
  3,643,229
  4,002,984
  4,378,750
  4,770,580
  5,178,636
  5,603,193
  6,044,636
  6,503,458
Operating income, $m
  217
  27,968
  43,210
  64,620
  93,761
  132,283
  181,858
  244,107
  320,528
  412,442
  520,948
  646,899
  790,896
  953,295
  1,134,233
  1,333,657
  1,551,363
  1,787,040
  2,040,308
  2,310,755
  2,597,974
  2,901,592
  3,221,291
  3,556,828
  3,908,052
  4,274,906
  4,657,444
  5,055,823
  5,470,311
  5,901,285
  6,349,226
EBITDA, $m
  394
  32,396
  50,052
  74,853
  108,608
  153,230
  210,656
  282,762
  371,284
  477,752
  603,440
  749,335
  916,134
  1,104,250
  1,313,839
  1,544,842
  1,797,022
  2,070,018
  2,363,390
  2,676,663
  3,009,363
  3,361,059
  3,731,382
  4,120,052
  4,526,891
  4,951,837
  5,394,950
  5,856,412
  6,336,534
  6,835,752
  7,354,625
Interest expense (income), $m
  263
  6,098
  10,095
  17,287
  27,388
  41,136
  59,311
  82,701
  112,069
  148,125
  191,489
  242,682
  302,105
  370,043
  446,662
  532,028
  626,116
  728,829
  840,021
  959,512
  1,087,108
  1,222,617
  1,365,863
  1,516,696
  1,675,001
  1,840,707
  2,013,788
  2,194,268
  2,382,222
  2,577,777
  2,781,109
Earnings before tax, $m
  -171
  21,870
  33,114
  47,334
  66,373
  91,146
  122,547
  161,407
  208,459
  264,317
  329,458
  404,217
  488,791
  583,253
  687,571
  801,629
  925,248
  1,058,212
  1,200,287
  1,351,243
  1,510,867
  1,678,975
  1,855,428
  2,040,133
  2,233,050
  2,434,199
  2,643,655
  2,861,554
  3,088,089
  3,323,508
  3,568,117
Tax expense, $m
  -13
  5,905
  8,941
  12,780
  17,921
  24,610
  33,088
  43,580
  56,284
  71,366
  88,954
  109,139
  131,973
  157,478
  185,644
  216,440
  249,817
  285,717
  324,078
  364,836
  407,934
  453,323
  500,966
  550,836
  602,924
  657,234
  713,787
  772,620
  833,784
  897,347
  963,392
Net income, $m
  -90
  15,965
  24,174
  34,554
  48,452
  66,537
  89,460
  117,827
  152,175
  192,952
  240,505
  295,078
  356,817
  425,775
  501,927
  585,189
  675,431
  772,494
  876,210
  986,408
  1,102,933
  1,225,652
  1,354,463
  1,489,297
  1,630,127
  1,776,965
  1,929,868
  2,088,935
  2,254,305
  2,426,161
  2,604,725

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,602
  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
  10,624
  225,555
  348,483
  521,156
  756,172
  1,066,849
  1,466,671
  1,968,702
  2,585,030
  3,326,306
  4,201,395
  5,217,179
  6,378,501
  7,688,239
  9,147,487
  10,755,819
  12,511,600
  14,412,314
  16,454,892
  18,636,022
  20,952,420
  23,401,070
  25,979,411
  28,685,488
  31,518,070
  34,476,720
  37,561,848
  40,774,737
  44,117,546
  47,593,308
  51,205,911
Adjusted assets (=assets-cash), $m
  9,022
  225,555
  348,483
  521,156
  756,172
  1,066,849
  1,466,671
  1,968,702
  2,585,030
  3,326,306
  4,201,395
  5,217,179
  6,378,501
  7,688,239
  9,147,487
  10,755,819
  12,511,600
  14,412,314
  16,454,892
  18,636,022
  20,952,420
  23,401,070
  25,979,411
  28,685,488
  31,518,070
  34,476,720
  37,561,848
  40,774,737
  44,117,546
  47,593,308
  51,205,911
Revenue / Adjusted assets
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
  0.251
Average production assets, $m
  2,994
  74,844
  115,634
  172,931
  250,914
  354,004
  486,674
  653,259
  857,770
  1,103,741
  1,394,115
  1,731,175
  2,116,527
  2,551,127
  3,035,337
  3,569,017
  4,151,624
  4,782,323
  5,460,095
  6,183,842
  6,952,474
  7,764,990
  8,620,540
  9,518,476
  10,458,389
  11,440,134
  12,463,848
  13,529,955
  14,639,172
  15,792,507
  16,991,248
Working capital, $m
  -24
  -3,057
  -4,723
  -7,064
  -10,249
  -14,460
  -19,879
  -26,684
  -35,038
  -45,085
  -56,946
  -70,714
  -86,454
  -104,206
  -123,985
  -145,784
  -169,582
  -195,345
  -223,030
  -252,593
  -283,989
  -317,178
  -352,125
  -388,803
  -427,196
  -467,297
  -509,113
  -552,661
  -597,969
  -645,080
  -694,045
Total debt, $m
  7,507
  155,313
  265,948
  421,354
  632,868
  912,477
  1,272,317
  1,724,145
  2,278,840
  2,945,988
  3,733,568
  4,647,774
  5,692,964
  6,871,728
  8,185,051
  9,632,550
  11,212,753
  12,923,396
  14,761,716
  16,724,733
  18,809,491
  21,013,276
  23,333,783
  25,769,253
  28,318,576
  30,981,361
  33,757,977
  36,649,576
  39,658,104
  42,786,290
  46,037,633
Total liabilities, $m
  10,559
  203,000
  313,635
  469,041
  680,555
  960,164
  1,320,004
  1,771,832
  2,326,527
  2,993,675
  3,781,255
  4,695,461
  5,740,651
  6,919,415
  8,232,738
  9,680,237
  11,260,440
  12,971,083
  14,809,403
  16,772,420
  18,857,178
  21,060,963
  23,381,470
  25,816,940
  28,366,263
  31,029,048
  33,805,664
  36,697,263
  39,705,791
  42,833,977
  46,085,320
Total equity, $m
  66
  22,556
  34,848
  52,116
  75,617
  106,685
  146,667
  196,870
  258,503
  332,631
  420,139
  521,718
  637,850
  768,824
  914,749
  1,075,582
  1,251,160
  1,441,231
  1,645,489
  1,863,602
  2,095,242
  2,340,107
  2,597,941
  2,868,549
  3,151,807
  3,447,672
  3,756,185
  4,077,474
  4,411,755
  4,759,331
  5,120,591
Total liabilities and equity, $m
  10,625
  225,556
  348,483
  521,157
  756,172
  1,066,849
  1,466,671
  1,968,702
  2,585,030
  3,326,306
  4,201,394
  5,217,179
  6,378,501
  7,688,239
  9,147,487
  10,755,819
  12,511,600
  14,412,314
  16,454,892
  18,636,022
  20,952,420
  23,401,070
  25,979,411
  28,685,489
  31,518,070
  34,476,720
  37,561,849
  40,774,737
  44,117,546
  47,593,308
  51,205,911
Debt-to-equity ratio
  113.742
  6.890
  7.630
  8.080
  8.370
  8.550
  8.670
  8.760
  8.820
  8.860
  8.890
  8.910
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  -0.160
  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
  -90
  15,965
  24,174
  34,554
  48,452
  66,537
  89,460
  117,827
  152,175
  192,952
  240,505
  295,078
  356,817
  425,775
  501,927
  585,189
  675,431
  772,494
  876,210
  986,408
  1,102,933
  1,225,652
  1,354,463
  1,489,297
  1,630,127
  1,776,965
  1,929,868
  2,088,935
  2,254,305
  2,426,161
  2,604,725
Depreciation, amort., depletion, $m
  177
  4,429
  6,842
  10,233
  14,847
  20,947
  28,797
  38,654
  50,756
  65,310
  82,492
  102,436
  125,238
  150,954
  179,606
  211,184
  245,658
  282,978
  323,083
  365,908
  411,389
  459,467
  510,091
  563,223
  618,840
  676,931
  737,506
  800,589
  866,223
  934,468
  1,005,399
Funds from operations, $m
  197
  20,394
  31,016
  44,786
  63,299
  87,484
  118,257
  156,481
  202,931
  258,262
  322,997
  397,515
  482,055
  576,729
  681,533
  796,373
  921,089
  1,055,472
  1,199,292
  1,352,315
  1,514,322
  1,685,119
  1,864,554
  2,052,520
  2,248,966
  2,453,896
  2,667,374
  2,889,524
  3,120,528
  3,360,629
  3,610,125
Change in working capital, $m
  -63
  -1,146
  -1,666
  -2,340
  -3,185
  -4,211
  -5,419
  -6,805
  -8,354
  -10,047
  -11,861
  -13,768
  -15,741
  -17,752
  -19,779
  -21,799
  -23,798
  -25,762
  -27,685
  -29,563
  -31,396
  -33,189
  -34,947
  -36,678
  -38,393
  -40,102
  -41,816
  -43,547
  -45,308
  -47,110
  -48,965
Cash from operations, $m
  260
  62,726
  32,682
  47,127
  66,485
  91,695
  123,676
  163,286
  211,284
  268,309
  334,858
  411,283
  497,796
  594,481
  701,311
  818,173
  944,887
  1,081,234
  1,226,977
  1,381,878
  1,545,718
  1,718,308
  1,899,500
  2,089,198
  2,287,359
  2,493,998
  2,709,190
  2,933,071
  3,165,836
  3,407,739
  3,659,090
Maintenance CAPEX, $m
  0
  -2,768
  -4,429
  -6,842
  -10,233
  -14,847
  -20,947
  -28,797
  -38,654
  -50,756
  -65,310
  -82,492
  -102,436
  -125,238
  -150,954
  -179,606
  -211,184
  -245,658
  -282,978
  -323,083
  -365,908
  -411,389
  -459,467
  -510,091
  -563,223
  -618,840
  -676,931
  -737,506
  -800,589
  -866,223
  -934,468
New CAPEX, $m
  -82
  -28,058
  -40,790
  -57,297
  -77,983
  -103,089
  -132,670
  -166,585
  -204,511
  -245,972
  -290,374
  -337,060
  -385,352
  -434,600
  -484,211
  -533,680
  -582,607
  -630,699
  -677,772
  -723,747
  -768,632
  -812,516
  -855,550
  -897,936
  -939,913
  -981,745
  -1,023,713
  -1,066,107
  -1,109,218
  -1,153,334
  -1,198,741
Cash from investing activities, $m
  554
  -30,826
  -45,219
  -64,139
  -88,216
  -117,936
  -153,617
  -195,382
  -243,165
  -296,728
  -355,684
  -419,552
  -487,788
  -559,838
  -635,165
  -713,286
  -793,791
  -876,357
  -960,750
  -1,046,830
  -1,134,540
  -1,223,905
  -1,315,017
  -1,408,027
  -1,503,136
  -1,600,585
  -1,700,644
  -1,803,613
  -1,909,807
  -2,019,557
  -2,133,209
Free cash flow, $m
  814
  31,900
  -12,537
  -17,012
  -21,731
  -26,242
  -29,941
  -32,096
  -31,881
  -28,418
  -20,826
  -8,269
  10,007
  34,643
  66,147
  104,887
  151,096
  204,878
  266,227
  335,049
  411,178
  494,403
  584,484
  681,171
  784,223
  893,413
  1,008,546
  1,129,458
  1,256,030
  1,388,182
  1,525,881
Issuance/(repayment) of debt, $m
  113
  61,505
  110,635
  155,406
  211,514
  279,609
  359,840
  451,828
  554,696
  667,148
  787,580
  914,206
  1,045,190
  1,178,764
  1,313,323
  1,447,499
  1,580,203
  1,710,642
  1,838,320
  1,963,017
  2,084,759
  2,203,785
  2,320,506
  2,435,470
  2,549,324
  2,662,785
  2,776,615
  2,891,600
  3,008,528
  3,128,186
  3,251,343
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  -273
  61,505
  110,635
  155,406
  211,514
  279,609
  359,840
  451,828
  554,696
  667,148
  787,580
  914,206
  1,045,190
  1,178,764
  1,313,323
  1,447,499
  1,580,203
  1,710,642
  1,838,320
  1,963,017
  2,084,759
  2,203,785
  2,320,506
  2,435,470
  2,549,324
  2,662,785
  2,776,615
  2,891,600
  3,008,528
  3,128,186
  3,251,343
Total cash flow (excl. dividends), $m
  877
  93,404
  98,098
  138,394
  189,783
  253,368
  329,899
  419,731
  522,814
  638,730
  766,754
  905,937
  1,055,197
  1,213,407
  1,379,470
  1,552,386
  1,731,299
  1,915,520
  2,104,547
  2,298,066
  2,495,937
  2,698,188
  2,904,990
  3,116,641
  3,333,546
  3,556,198
  3,785,161
  4,021,058
  4,264,558
  4,516,367
  4,777,224
Retained Cash Flow (-), $m
  59
  -23,069
  -12,293
  -17,267
  -23,502
  -31,068
  -39,982
  -50,203
  -61,633
  -74,128
  -87,509
  -101,578
  -116,132
  -130,974
  -145,925
  -160,833
  -175,578
  -190,071
  -204,258
  -218,113
  -231,640
  -244,865
  -257,834
  -270,608
  -283,258
  -295,865
  -308,513
  -321,289
  -334,281
  -347,576
  -361,260
Prev. year cash balance distribution, $m
 
  1,537
  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
 
  71,873
  85,805
  121,126
  166,281
  222,300
  289,917
  369,528
  461,181
  564,602
  679,245
  804,359
  939,065
  1,082,433
  1,233,545
  1,391,553
  1,555,721
  1,725,448
  1,900,290
  2,079,953
  2,264,297
  2,453,323
  2,647,156
  2,846,033
  3,050,288
  3,260,333
  3,476,648
  3,699,769
  3,930,277
  4,168,791
  4,415,964
Discount rate, %
 
  12.40
  13.02
  13.67
  14.35
  15.07
  15.83
  16.62
  17.45
  18.32
  19.24
  20.20
  21.21
  22.27
  23.38
  24.55
  25.78
  27.07
  28.42
  29.84
  31.33
  32.90
  34.55
  36.27
  38.09
  39.99
  41.99
  44.09
  46.29
  48.61
  51.04
PV of cash for distribution, $m
 
  63,944
  67,174
  82,469
  97,236
  110,176
  120,072
  125,982
  127,381
  124,224
  116,933
  106,309
  93,392
  79,306
  65,107
  51,675
  39,648
  29,397
  21,056
  14,560
  9,714
  6,247
  3,869
  2,306
  1,320
  726
  382
  193
  93
  43
  19
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

Cresud Sociedad Anónima Comercial, Inmobiliaria, Financiera y Agropecuaria, an agricultural company, produces basic agricultural commodities in Brazil and other Latin American countries. The company’s Agricultural business is involved in planting, harvesting, and sale of crops, such as wheat, corn, soybean, cotton, and sunflower, as well as sugarcane; breeding, purchasing, and fattening of beef cattle for sale to meat processors and local livestock auction markets; producing raw milk for sale to local milk and milk-related products producers; leasing of farms to third parties; disposal and development of farmlands activities; and feedlot farming, as well as meat slaughtering and processing activities. Its Investment and Development Properties business engages in the commercial exploitation, development, and lease of commercial facilities and other spaces in shopping centers; lease and servicing of office spaces other rental properties; development, sale, and maintenance of undeveloped parcels of land and/or trading properties; operation of hotels; and provision of consumer financing services. The company was founded in 1936 and is headquartered in Buenos Aires, Argentina.

FINANCIAL RATIOS  of  Cresud ADR (CRESY)

Valuation Ratios
P/E Ratio -104.2
Price to Sales 4.1
Price to Book 142.1
Price to Tangible Book
Price to Cash Flow 36.1
Price to Free Cash Flow 52.7
Growth Rates
Sales Growth Rate 525.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 446.7%
Cap. Spend. - 3 Yr. Gr. Rate 28.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 9097%
Total Debt to Equity 11374.2%
Interest Coverage 0
Management Effectiveness
Return On Assets 2.6%
Ret/ On Assets - 3 Yr. Avg. 0.8%
Return On Total Capital -2.2%
Ret/ On T. Cap. - 3 Yr. Avg. -4.3%
Return On Equity -94.2%
Return On Equity - 3 Yr. Avg. -45.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 26.3%
Gross Margin - 3 Yr. Avg. 18.9%
EBITDA Margin 11.9%
EBITDA Margin - 3 Yr. Avg. 9.8%
Operating Margin 9.6%
Oper. Margin - 3 Yr. Avg. 28.3%
Pre-Tax Margin -7.5%
Pre-Tax Margin - 3 Yr. Avg. -9.2%
Net Profit Margin -4%
Net Profit Margin - 3 Yr. Avg. -8.4%
Effective Tax Rate 7.6%
Eff/ Tax Rate - 3 Yr. Avg. 19.6%
Payout Ratio -16.7%

CRESY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CRESY stock intrinsic value calculation we used $35384 million for the last fiscal year's total revenue generated by Cresud ADR. The default revenue input number comes from 2016 income statement of Cresud 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 CRESY stock valuation model: a) initial revenue growth rate of 60% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 12.4%, whose default value for CRESY is calculated based on our internal credit rating of Cresud 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 Cresud 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 CRESY stock the variable cost ratio is equal to 50.6%.

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 CRESY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.5% for Cresud ADR.

Corporate tax rate of 27% is the nominal tax rate for Cresud 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 CRESY 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 CRESY are equal to 132.2%.

Life of production assets of 16.9 years is the average useful life of capital assets used in Cresud 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 CRESY is equal to -5.4%. 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 - $1024 million for Cresud 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 50.185 million for Cresud 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 Cresud ADR at the current share price and the inputted number of shares is $0.9 billion.


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COMPANY NEWS

▶ ETFs with exposure to Cresud SA : June 23, 2017   [Jun-23-17 02:15PM  Capital Cube]
▶ ETFs with exposure to Cresud SA : June 13, 2017   [Jun-13-17 12:23PM  Capital Cube]
▶ ETFs with exposure to Cresud SA : April 5, 2017   [Apr-05-17 04:34PM  Capital Cube]
▶ Cresud posts 2Q profit   [Feb-13-17 02:36PM  Associated Press]
▶ ETFs with exposure to Cresud SA : January 3, 2017   [Jan-03-17 01:53PM  Capital Cube]
▶ ETFs with exposure to Cresud SA : December 14, 2016   [Dec-14-16 11:38AM  Capital Cube]
▶ Is Iridium Communications Inc (IRDM) A Good Stock To Buy?   [Dec-09-16 07:28PM  Insider Monkey]
▶ The 'Trump Effect' On Latin America, Explained   [Nov-28-16 08:34AM  Benzinga]
▶ Cresud S.A.C.I.F. y A. Material Fact   [Nov-20  09:59AM  PR Newswire]
▶ How To Invest In Farming Without Owning a Farm   [Sep-16  05:01PM  at Investopedia]
▶ Cresud Sacifya (CRESY) Downgraded From Hold to Sell   [Nov-14  09:30AM  at TheStreet]
▶ Earnings Release 1Q15   [Nov-11  08:39PM  at noodls]
▶ Will Better Soybean Prices Boost Cresud?   [Jun-02  02:16PM  at Motley Fool]
▶ Cresud SA Stock Upgraded (CRESY)   [May-29  11:11AM  at TheStreet]
▶ SA PRO: Top Long And Short Ideas, Monday April 14   [Apr-15  05:00AM  at Seeking Alpha]
▶ Wall Street Breakfast: Must-Know News   [Apr-14  06:31AM  at Seeking Alpha]
▶ 3 Stocks Spiking on Unusual Volume   [Apr-08  08:05AM  at TheStreet]
▶ Macro Events Buffeting Adecoagro   [Mar-22  10:07AM  at Seeking Alpha]
▶ Better Times, Worse Times For Cresud   [Dec-19  09:37AM  at Seeking Alpha]
▶ Opportunities in Agriculture   [Nov-13  10:20AM  at TheStreet]
Stock chart of CRESY Financial statements of CRESY Annual reports of CRESY
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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