Intrinsic value of Fibria Celulose ADR - FBR

Previous Close

$18.83

  Intrinsic Value

$30.72

stock screener

  Rating & Target

str. buy

+63%

Previous close

$18.83

 
Intrinsic value

$30.72

 
Up/down potential

+63%

 
Rating

str. buy

We calculate the intrinsic value of FBR 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -4.61
  20.10
  18.59
  17.23
  16.01
  14.91
  13.92
  13.02
  12.22
  11.50
  10.85
  10.27
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.27
  7.04
  6.84
  6.65
  6.49
  6.34
  6.20
  6.08
  5.98
  5.88
  5.79
  5.71
Revenue, $m
  3,040
  4,259
  5,050
  5,921
  6,868
  7,892
  8,991
  10,162
  11,404
  12,715
  14,095
  15,542
  17,055
  18,635
  20,282
  21,997
  23,781
  25,635
  27,562
  29,565
  31,647
  33,810
  36,059
  38,398
  40,832
  43,365
  46,004
  48,753
  51,618
  54,607
  57,726
Variable operating expenses, $m
 
  2,353
  2,764
  3,217
  3,710
  4,242
  4,813
  5,422
  6,067
  6,749
  7,466
  8,080
  8,867
  9,688
  10,544
  11,436
  12,363
  13,327
  14,329
  15,371
  16,453
  17,577
  18,747
  19,963
  21,228
  22,545
  23,917
  25,346
  26,836
  28,389
  30,011
Fixed operating expenses, $m
 
  902
  922
  943
  963
  984
  1,006
  1,028
  1,051
  1,074
  1,098
  1,122
  1,146
  1,172
  1,197
  1,224
  1,251
  1,278
  1,306
  1,335
  1,365
  1,395
  1,425
  1,457
  1,489
  1,521
  1,555
  1,589
  1,624
  1,660
  1,696
Total operating expenses, $m
  2,589
  3,255
  3,686
  4,160
  4,673
  5,226
  5,819
  6,450
  7,118
  7,823
  8,564
  9,202
  10,013
  10,860
  11,741
  12,660
  13,614
  14,605
  15,635
  16,706
  17,818
  18,972
  20,172
  21,420
  22,717
  24,066
  25,472
  26,935
  28,460
  30,049
  31,707
Operating income, $m
  451
  1,004
  1,364
  1,761
  2,196
  2,666
  3,172
  3,712
  4,285
  4,892
  5,531
  6,340
  7,042
  7,775
  8,540
  9,337
  10,167
  11,029
  11,927
  12,860
  13,829
  14,838
  15,887
  16,979
  18,115
  19,299
  20,532
  21,818
  23,159
  24,558
  26,019
EBITDA, $m
  1,078
  1,826
  2,313
  2,850
  3,437
  4,071
  4,753
  5,481
  6,254
  7,071
  7,932
  8,834
  9,779
  10,766
  11,796
  12,868
  13,983
  15,144
  16,350
  17,605
  18,909
  20,265
  21,675
  23,142
  24,669
  26,259
  27,916
  29,643
  31,443
  33,322
  35,284
Interest expense (income), $m
  34
  362
  454
  556
  668
  790
  921
  1,062
  1,213
  1,373
  1,541
  1,719
  1,904
  2,099
  2,302
  2,514
  2,734
  2,963
  3,202
  3,450
  3,707
  3,974
  4,253
  4,542
  4,842
  5,155
  5,481
  5,820
  6,173
  6,541
  6,926
Earnings before tax, $m
  962
  642
  910
  1,205
  1,528
  1,876
  2,250
  2,649
  3,072
  3,519
  3,990
  4,621
  5,137
  5,676
  6,238
  6,823
  7,432
  8,066
  8,725
  9,410
  10,122
  10,864
  11,635
  12,437
  13,273
  14,144
  15,051
  15,998
  16,986
  18,016
  19,093
Tax expense, $m
  436
  173
  246
  325
  412
  507
  608
  715
  830
  950
  1,077
  1,248
  1,387
  1,533
  1,684
  1,842
  2,007
  2,178
  2,356
  2,541
  2,733
  2,933
  3,141
  3,358
  3,584
  3,819
  4,064
  4,319
  4,586
  4,864
  5,155
Net income, $m
  523
  469
  664
  880
  1,115
  1,370
  1,643
  1,934
  2,243
  2,569
  2,912
  3,374
  3,750
  4,144
  4,554
  4,981
  5,426
  5,888
  6,369
  6,869
  7,389
  7,930
  8,493
  9,079
  9,689
  10,325
  10,988
  11,679
  12,399
  13,152
  13,938

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,484
  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
  10,889
  13,738
  16,292
  19,099
  22,156
  25,459
  29,002
  32,780
  36,786
  41,017
  45,467
  50,134
  55,016
  60,113
  65,426
  70,958
  76,712
  82,694
  88,911
  95,372
  102,086
  109,064
  116,319
  123,865
  131,716
  139,888
  148,399
  157,266
  166,511
  176,152
  186,213
Adjusted assets (=assets-cash), $m
  9,405
  13,738
  16,292
  19,099
  22,156
  25,459
  29,002
  32,780
  36,786
  41,017
  45,467
  50,134
  55,016
  60,113
  65,426
  70,958
  76,712
  82,694
  88,911
  95,372
  102,086
  109,064
  116,319
  123,865
  131,716
  139,888
  148,399
  157,266
  166,511
  176,152
  186,213
Revenue / Adjusted assets
  0.323
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
  0.310
Average production assets, $m
  5,000
  6,835
  8,106
  9,503
  11,024
  12,667
  14,430
  16,310
  18,303
  20,408
  22,622
  24,944
  27,373
  29,909
  32,553
  35,305
  38,168
  41,144
  44,238
  47,452
  50,793
  54,265
  57,875
  61,629
  65,535
  69,601
  73,836
  78,248
  82,847
  87,644
  92,650
Working capital, $m
  1,105
  -537
  -636
  -746
  -865
  -994
  -1,133
  -1,280
  -1,437
  -1,602
  -1,776
  -1,958
  -2,149
  -2,348
  -2,556
  -2,772
  -2,996
  -3,230
  -3,473
  -3,725
  -3,987
  -4,260
  -4,543
  -4,838
  -5,145
  -5,464
  -5,796
  -6,143
  -6,504
  -6,881
  -7,273
Total debt, $m
  5,038
  6,989
  8,554
  10,275
  12,149
  14,174
  16,346
  18,661
  21,117
  23,710
  26,439
  29,299
  32,292
  35,417
  38,674
  42,064
  45,592
  49,259
  53,070
  57,030
  61,146
  65,424
  69,871
  74,496
  79,309
  84,319
  89,536
  94,972
  100,638
  106,549
  112,716
Total liabilities, $m
  6,541
  8,421
  9,987
  11,708
  13,582
  15,607
  17,778
  20,094
  22,550
  25,143
  27,871
  30,732
  33,725
  36,850
  40,106
  43,497
  47,024
  50,691
  54,502
  58,463
  62,578
  66,856
  71,304
  75,929
  80,742
  85,751
  90,968
  96,404
  102,071
  107,981
  114,148
Total equity, $m
  4,348
  5,317
  6,305
  7,391
  8,575
  9,853
  11,224
  12,686
  14,236
  15,873
  17,596
  19,402
  21,291
  23,264
  25,320
  27,461
  29,687
  32,003
  34,409
  36,909
  39,507
  42,208
  45,015
  47,936
  50,974
  54,137
  57,430
  60,862
  64,440
  68,171
  72,064
Total liabilities and equity, $m
  10,889
  13,738
  16,292
  19,099
  22,157
  25,460
  29,002
  32,780
  36,786
  41,016
  45,467
  50,134
  55,016
  60,114
  65,426
  70,958
  76,711
  82,694
  88,911
  95,372
  102,085
  109,064
  116,319
  123,865
  131,716
  139,888
  148,398
  157,266
  166,511
  176,152
  186,212
Debt-to-equity ratio
  1.159
  1.310
  1.360
  1.390
  1.420
  1.440
  1.460
  1.470
  1.480
  1.490
  1.500
  1.510
  1.520
  1.520
  1.530
  1.530
  1.540
  1.540
  1.540
  1.550
  1.550
  1.550
  1.550
  1.550
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
  1.560
Adjusted equity ratio
  0.305
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387
  0.387

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  523
  469
  664
  880
  1,115
  1,370
  1,643
  1,934
  2,243
  2,569
  2,912
  3,374
  3,750
  4,144
  4,554
  4,981
  5,426
  5,888
  6,369
  6,869
  7,389
  7,930
  8,493
  9,079
  9,689
  10,325
  10,988
  11,679
  12,399
  13,152
  13,938
Depreciation, amort., depletion, $m
  627
  822
  949
  1,089
  1,241
  1,405
  1,582
  1,770
  1,969
  2,179
  2,401
  2,494
  2,737
  2,991
  3,255
  3,531
  3,817
  4,114
  4,424
  4,745
  5,079
  5,426
  5,787
  6,163
  6,554
  6,960
  7,384
  7,825
  8,285
  8,764
  9,265
Funds from operations, $m
  1,307
  1,291
  1,613
  1,969
  2,356
  2,775
  3,225
  3,704
  4,212
  4,749
  5,313
  5,868
  6,488
  7,135
  7,809
  8,512
  9,243
  10,003
  10,793
  11,615
  12,469
  13,357
  14,281
  15,242
  16,243
  17,285
  18,371
  19,503
  20,684
  21,916
  23,203
Change in working capital, $m
  66
  -90
  -100
  -110
  -119
  -129
  -138
  -148
  -156
  -165
  -174
  -182
  -191
  -199
  -208
  -216
  -225
  -234
  -243
  -252
  -262
  -273
  -283
  -295
  -307
  -319
  -332
  -346
  -361
  -377
  -393
Cash from operations, $m
  1,241
  1,381
  1,713
  2,079
  2,476
  2,904
  3,363
  3,851
  4,368
  4,914
  5,487
  6,050
  6,678
  7,334
  8,017
  8,728
  9,467
  10,236
  11,036
  11,867
  12,731
  13,629
  14,564
  15,537
  16,550
  17,604
  18,704
  19,850
  21,045
  22,293
  23,596
Maintenance CAPEX, $m
  0
  -569
  -684
  -811
  -950
  -1,102
  -1,267
  -1,443
  -1,631
  -1,830
  -2,041
  -2,262
  -2,494
  -2,737
  -2,991
  -3,255
  -3,531
  -3,817
  -4,114
  -4,424
  -4,745
  -5,079
  -5,426
  -5,787
  -6,163
  -6,554
  -6,960
  -7,384
  -7,825
  -8,285
  -8,764
New CAPEX, $m
  -1,925
  -1,146
  -1,271
  -1,397
  -1,521
  -1,643
  -1,763
  -1,879
  -1,993
  -2,105
  -2,214
  -2,322
  -2,429
  -2,536
  -2,643
  -2,752
  -2,863
  -2,976
  -3,093
  -3,214
  -3,341
  -3,472
  -3,610
  -3,754
  -3,906
  -4,066
  -4,235
  -4,412
  -4,599
  -4,797
  -5,006
Cash from investing activities, $m
  -2,172
  -1,715
  -1,955
  -2,208
  -2,471
  -2,745
  -3,030
  -3,322
  -3,624
  -3,935
  -4,255
  -4,584
  -4,923
  -5,273
  -5,634
  -6,007
  -6,394
  -6,793
  -7,207
  -7,638
  -8,086
  -8,551
  -9,036
  -9,541
  -10,069
  -10,620
  -11,195
  -11,796
  -12,424
  -13,082
  -13,770
Free cash flow, $m
  -931
  -334
  -241
  -129
  4
  158
  333
  529
  744
  979
  1,232
  1,466
  1,755
  2,060
  2,382
  2,720
  3,074
  3,443
  3,828
  4,229
  4,645
  5,078
  5,528
  5,995
  6,480
  6,985
  7,509
  8,054
  8,621
  9,211
  9,826
Issuance/(repayment) of debt, $m
  1,579
  1,426
  1,566
  1,721
  1,874
  2,025
  2,172
  2,316
  2,456
  2,593
  2,728
  2,861
  2,993
  3,125
  3,257
  3,391
  3,527
  3,667
  3,811
  3,960
  4,116
  4,278
  4,447
  4,625
  4,813
  5,010
  5,217
  5,436
  5,667
  5,910
  6,167
Issuance/(repurchase) of shares, $m
  0
  423
  324
  207
  68
  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  
  1,578
  1,849
  1,890
  1,928
  1,942
  2,025
  2,172
  2,316
  2,456
  2,593
  2,728
  2,861
  2,993
  3,125
  3,257
  3,391
  3,527
  3,667
  3,811
  3,960
  4,116
  4,278
  4,447
  4,625
  4,813
  5,010
  5,217
  5,436
  5,667
  5,910
  6,167
Total cash flow (excl. dividends), $m
  597
  1,515
  1,649
  1,799
  1,946
  2,183
  2,505
  2,844
  3,200
  3,572
  3,960
  4,327
  4,748
  5,185
  5,639
  6,111
  6,601
  7,110
  7,639
  8,189
  8,761
  9,356
  9,975
  10,621
  11,293
  11,994
  12,726
  13,490
  14,288
  15,121
  15,993
Retained Cash Flow (-), $m
  -316
  -892
  -988
  -1,086
  -1,183
  -1,278
  -1,371
  -1,462
  -1,550
  -1,637
  -1,722
  -1,806
  -1,889
  -1,973
  -2,056
  -2,141
  -2,227
  -2,315
  -2,406
  -2,500
  -2,598
  -2,701
  -2,808
  -2,920
  -3,038
  -3,163
  -3,294
  -3,432
  -3,578
  -3,731
  -3,893
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
 
  623
  660
  712
  763
  905
  1,134
  1,382
  1,649
  1,935
  2,238
  2,521
  2,858
  3,212
  3,583
  3,970
  4,374
  4,795
  5,233
  5,689
  6,163
  6,655
  7,168
  7,700
  8,255
  8,832
  9,432
  10,058
  10,710
  11,390
  12,100
Discount rate, %
 
  5.10
  5.36
  5.62
  5.90
  6.20
  6.51
  6.83
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.27
  12.89
  13.53
  14.21
  14.92
  15.66
  16.45
  17.27
  18.13
  19.04
  19.99
  20.99
PV of cash for distribution, $m
 
  593
  595
  604
  607
  670
  777
  870
  947
  1,006
  1,045
  1,048
  1,048
  1,028
  991
  938
  872
  797
  715
  631
  546
  463
  385
  314
  251
  196
  150
  112
  81
  58
  40
Current shareholders' claim on cash, %
  100
  96.1
  93.7
  92.4
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0
  92.0

Fibria Celulose S.A. (Fibria) is a forestry company, which is engaged in the production of eucalyptus pulp. The Company is engaged in the production and sale of short fiber pulp from its pulp production facilities located in the cities of Aracruz (State of Espirito Santo), Tres Lagoas (State of Mato Grosso do Sul), Jacarei (State of Sao Paulo) and Eunapolis (State of Bahia). The Company's activities are focused on the growth of renewable and forests, and the manufacture and sale of bleached eucalyptus kraft pulp. The Company's annual production capacity is approximately 5.3 million tons of pulp. Fibria has over 969,000 hectares of forests, with approximately 568,000 hectares of planted forests, over 338,000 hectares of environmental preservation and conservation areas, and approximately 63,000 hectares destined for other uses. The pulp produced by Fibria is exported to approximately 40 countries. The pulp produced for export is delivered to customers by sea and through various ports.

FINANCIAL RATIOS  of  Fibria Celulose ADR (FBR)

Valuation Ratios
P/E Ratio 19.9
Price to Sales 3.4
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 8.4
Price to Free Cash Flow -15.2
Growth Rates
Sales Growth Rate -4.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 158.4%
Cap. Spend. - 3 Yr. Gr. Rate 38.6%
Financial Strength
Quick Ratio 5
Current Ratio 0.1
LT Debt to Equity 109.2%
Total Debt to Equity 115.9%
Interest Coverage 29
Management Effectiveness
Return On Assets 5.4%
Ret/ On Assets - 3 Yr. Avg. 6.7%
Return On Total Capital 6%
Ret/ On T. Cap. - 3 Yr. Avg. 2.7%
Return On Equity 12.5%
Return On Equity - 3 Yr. Avg. 5.4%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 26.1%
Gross Margin - 3 Yr. Avg. 29.8%
EBITDA Margin 53.4%
EBITDA Margin - 3 Yr. Avg. 34.6%
Operating Margin 14.8%
Oper. Margin - 3 Yr. Avg. 24.4%
Pre-Tax Margin 31.6%
Pre-Tax Margin - 3 Yr. Avg. 10.1%
Net Profit Margin 17.2%
Net Profit Margin - 3 Yr. Avg. 7.6%
Effective Tax Rate 45.3%
Eff/ Tax Rate - 3 Yr. Avg. -87.2%
Payout Ratio 18.5%

FBR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FBR stock intrinsic value calculation we used $3546 million for the last fiscal year's total revenue generated by Fibria Celulose ADR. The default revenue input number comes from 2016 income statement of Fibria Celulose 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 FBR stock valuation model: a) initial revenue growth rate of 20.1% 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 5.1%, whose default value for FBR is calculated based on our internal credit rating of Fibria Celulose 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 Fibria Celulose 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 FBR stock the variable cost ratio is equal to 55.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $883 million in the base year in the intrinsic value calculation for FBR 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 Fibria Celulose ADR.

Corporate tax rate of 27% is the nominal tax rate for Fibria Celulose 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 FBR 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 FBR are equal to 160.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Fibria Celulose 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 FBR is equal to -12.6%. 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 - $4425 million for Fibria Celulose 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 554 million for Fibria Celulose 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 Fibria Celulose ADR at the current share price and the inputted number of shares is $10.4 billion.

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COMPANY NEWS

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▶ Fibria Celulose: 1Q Earnings Snapshot   [Apr-25-18 10:40AM  Associated Press]
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▶ This Swing Trade Example Netted A 15% Gain In 15 Days   [Mar-29-18 04:23PM  Investor's Business Daily]
▶ [$$] Brazil pulp merger creates global commodities titan   [Mar-19-18 12:46AM  Financial Times]
▶ [$$] Brazils largest pulp producers Fibria and Suzano to merge   [Mar-15-18 11:59PM  Financial Times]
▶ Deals of the day-Mergers and acquisitions   [Mar-09-18 09:16AM  Reuters]
▶ [$$] Brazilian pulp-makers Suzano and Fibria in tie-up talks   [Mar-08-18 11:00PM  Financial Times]
▶ Pace of 10-Year Yield Gain Cant Keep Up, Says Hogan   [Feb-08-18 08:39AM  Bloomberg Video]
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▶ Will Disney-Fox Deal Face Regulatory Hurdles?   [Dec-19-17 11:34AM  Bloomberg Video]
▶ Stocks Showing Market Leadership: Fibria Celulose Earns 92 RS Rating   [Dec-13-17 03:00AM  Investor's Business Daily]
▶ Fibria Celulose Earns Relative Strength Rating Upgrade   [Dec-07-17 03:00AM  Investor's Business Daily]
▶ Crockett, Piecyk on the Mega-Cap Media Landscape   [Nov-20-17 10:19AM  Bloomberg Video]
▶ Disney's Challenge to Building a Future Without Netflix   [Aug-09-17 12:19PM  Bloomberg Video]
▶ ETFs with exposure to Fibria Celulose SA : August 8, 2017   [Aug-08-17 04:26PM  Capital Cube]
▶ "Fast Money' final trades: OLN, TGT & more   [May-18-17 05:59PM  CNBC Videos]
▶ ETFs with exposure to Fibria Celulose SA : May 3, 2017   [May-03-17 03:56PM  Capital Cube]
▶ Fibria Celulose posts 1Q profit   [08:14AM  Associated Press]
▶ ETFs with exposure to Fibria Celulose SA : April 5, 2017   [Apr-05-17 04:45PM  Capital Cube]
Financial statements of FBR
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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