Intrinsic value of Fibria Celulose ADR - FBR

Previous Close

$16.92

  Intrinsic Value

$26.30

stock screener

  Rating & Target

str. buy

+55%

  Value-price divergence*

-151%

Previous close

$16.92

 
Intrinsic value

$26.30

 
Up/down potential

+55%

 
Rating

str. buy

 
Value-price divergence*

-151%

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

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

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 9.6

 

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
  16.20
  15.08
  14.07
  13.16
  12.35
  11.61
  10.95
  10.36
  9.82
  9.34
  8.91
  8.51
  8.16
  7.85
  7.56
  7.31
  7.08
  6.87
  6.68
  6.51
  6.36
  6.23
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.59
  5.53
Revenue, $m
  3,040
  3,532
  4,065
  4,637
  5,248
  5,896
  6,580
  7,301
  8,057
  8,849
  9,675
  10,537
  11,434
  12,367
  13,338
  14,346
  15,394
  16,483
  17,615
  18,792
  20,016
  21,290
  22,615
  23,995
  25,433
  26,932
  28,495
  30,126
  31,829
  33,607
  35,464
Variable operating expenses, $m
 
  2,274
  2,597
  2,944
  3,314
  3,707
  4,121
  4,558
  5,016
  5,496
  5,997
  6,385
  6,929
  7,494
  8,082
  8,694
  9,329
  9,989
  10,675
  11,388
  12,130
  12,901
  13,704
  14,541
  15,412
  16,321
  17,268
  18,256
  19,288
  20,365
  21,491
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
  2,589
  2,274
  2,597
  2,944
  3,314
  3,707
  4,121
  4,558
  5,016
  5,496
  5,997
  6,385
  6,929
  7,494
  8,082
  8,694
  9,329
  9,989
  10,675
  11,388
  12,130
  12,901
  13,704
  14,541
  15,412
  16,321
  17,268
  18,256
  19,288
  20,365
  21,491
Operating income, $m
  451
  1,258
  1,468
  1,693
  1,934
  2,189
  2,459
  2,743
  3,041
  3,353
  3,678
  4,152
  4,505
  4,873
  5,255
  5,653
  6,066
  6,495
  6,941
  7,404
  7,887
  8,388
  8,911
  9,454
  10,021
  10,612
  11,228
  11,870
  12,541
  13,242
  13,973
EBITDA, $m
  1,078
  1,967
  2,264
  2,582
  2,922
  3,283
  3,665
  4,066
  4,487
  4,928
  5,388
  5,868
  6,367
  6,887
  7,427
  7,989
  8,573
  9,179
  9,810
  10,465
  11,147
  11,856
  12,594
  13,363
  14,163
  14,998
  15,869
  16,777
  17,725
  18,715
  19,750
Interest expense (income), $m
  34
  166
  202
  240
  282
  326
  372
  422
  474
  528
  585
  645
  707
  771
  839
  908
  981
  1,057
  1,135
  1,217
  1,302
  1,390
  1,482
  1,577
  1,676
  1,780
  1,888
  2,001
  2,118
  2,241
  2,369
Earnings before tax, $m
  962
  1,092
  1,266
  1,453
  1,652
  1,864
  2,087
  2,321
  2,567
  2,825
  3,093
  3,507
  3,798
  4,101
  4,417
  4,744
  5,084
  5,438
  5,806
  6,188
  6,585
  6,999
  7,429
  7,877
  8,345
  8,832
  9,339
  9,869
  10,423
  11,001
  11,604
Tax expense, $m
  436
  295
  342
  392
  446
  503
  563
  627
  693
  763
  835
  947
  1,026
  1,107
  1,192
  1,281
  1,373
  1,468
  1,568
  1,671
  1,778
  1,890
  2,006
  2,127
  2,253
  2,385
  2,522
  2,665
  2,814
  2,970
  3,133
Net income, $m
  523
  797
  924
  1,061
  1,206
  1,360
  1,523
  1,695
  1,874
  2,062
  2,258
  2,560
  2,773
  2,994
  3,224
  3,463
  3,712
  3,970
  4,238
  4,517
  4,807
  5,109
  5,423
  5,751
  6,092
  6,447
  6,818
  7,205
  7,609
  8,030
  8,471

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
  10,936
  12,586
  14,357
  16,247
  18,253
  20,373
  22,604
  24,945
  27,395
  29,954
  32,621
  35,399
  38,288
  41,293
  44,415
  47,660
  51,032
  54,537
  58,181
  61,970
  65,912
  70,016
  74,289
  78,741
  83,381
  88,221
  93,270
  98,541
  104,046
  109,797
Adjusted assets (=assets-cash), $m
  9,405
  10,936
  12,586
  14,357
  16,247
  18,253
  20,373
  22,604
  24,945
  27,395
  29,954
  32,621
  35,399
  38,288
  41,293
  44,415
  47,660
  51,032
  54,537
  58,181
  61,970
  65,912
  70,016
  74,289
  78,741
  83,381
  88,221
  93,270
  98,541
  104,046
  109,797
Revenue / Adjusted assets
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
  0.323
Average production assets, $m
  5,000
  5,811
  6,687
  7,628
  8,632
  9,698
  10,825
  12,010
  13,254
  14,556
  15,915
  17,333
  18,808
  20,344
  21,940
  23,599
  25,324
  27,115
  28,977
  30,913
  32,927
  35,022
  37,202
  39,472
  41,838
  44,303
  46,875
  49,558
  52,358
  55,283
  58,339
Working capital, $m
  1,105
  -102
  -118
  -134
  -152
  -171
  -191
  -212
  -234
  -257
  -281
  -306
  -332
  -359
  -387
  -416
  -446
  -478
  -511
  -545
  -580
  -617
  -656
  -696
  -738
  -781
  -826
  -874
  -923
  -975
  -1,028
Total debt, $m
  5,038
  5,770
  6,866
  8,044
  9,301
  10,635
  12,045
  13,529
  15,086
  16,715
  18,416
  20,190
  22,037
  23,959
  25,957
  28,033
  30,191
  32,433
  34,764
  37,187
  39,707
  42,329
  45,058
  47,899
  50,860
  53,945
  57,164
  60,522
  64,027
  67,687
  71,512
Total liabilities, $m
  6,541
  7,273
  8,369
  9,547
  10,804
  12,138
  13,548
  15,032
  16,589
  18,218
  19,919
  21,693
  23,540
  25,462
  27,460
  29,536
  31,694
  33,936
  36,267
  38,690
  41,210
  43,832
  46,561
  49,402
  52,363
  55,448
  58,667
  62,025
  65,530
  69,190
  73,015
Total equity, $m
  4,348
  3,664
  4,216
  4,810
  5,443
  6,115
  6,825
  7,572
  8,357
  9,177
  10,034
  10,928
  11,858
  12,827
  13,833
  14,879
  15,966
  17,096
  18,270
  19,491
  20,760
  22,081
  23,455
  24,887
  26,378
  27,933
  29,554
  31,245
  33,011
  34,855
  36,782
Total liabilities and equity, $m
  10,889
  10,937
  12,585
  14,357
  16,247
  18,253
  20,373
  22,604
  24,946
  27,395
  29,953
  32,621
  35,398
  38,289
  41,293
  44,415
  47,660
  51,032
  54,537
  58,181
  61,970
  65,913
  70,016
  74,289
  78,741
  83,381
  88,221
  93,270
  98,541
  104,045
  109,797
Debt-to-equity ratio
  1.159
  1.570
  1.630
  1.670
  1.710
  1.740
  1.760
  1.790
  1.810
  1.820
  1.840
  1.850
  1.860
  1.870
  1.880
  1.880
  1.890
  1.900
  1.900
  1.910
  1.910
  1.920
  1.920
  1.920
  1.930
  1.930
  1.930
  1.940
  1.940
  1.940
  1.940
Adjusted equity ratio
  0.305
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  523
  797
  924
  1,061
  1,206
  1,360
  1,523
  1,695
  1,874
  2,062
  2,258
  2,560
  2,773
  2,994
  3,224
  3,463
  3,712
  3,970
  4,238
  4,517
  4,807
  5,109
  5,423
  5,751
  6,092
  6,447
  6,818
  7,205
  7,609
  8,030
  8,471
Depreciation, amort., depletion, $m
  627
  709
  796
  889
  989
  1,094
  1,206
  1,323
  1,446
  1,575
  1,710
  1,716
  1,862
  2,014
  2,172
  2,337
  2,507
  2,685
  2,869
  3,061
  3,260
  3,467
  3,683
  3,908
  4,142
  4,386
  4,641
  4,907
  5,184
  5,474
  5,776
Funds from operations, $m
  1,307
  1,506
  1,720
  1,950
  2,195
  2,455
  2,729
  3,018
  3,320
  3,637
  3,968
  4,276
  4,635
  5,008
  5,396
  5,800
  6,219
  6,654
  7,107
  7,578
  8,067
  8,577
  9,107
  9,659
  10,234
  10,833
  11,459
  12,111
  12,793
  13,504
  14,247
Change in working capital, $m
  66
  -14
  -15
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -29
  -30
  -32
  -33
  -34
  -35
  -37
  -38
  -40
  -42
  -43
  -45
  -47
  -49
  -52
  -54
Cash from operations, $m
  1,241
  1,521
  1,736
  1,966
  2,212
  2,473
  2,749
  3,038
  3,342
  3,660
  3,992
  4,301
  4,661
  5,035
  5,425
  5,829
  6,249
  6,686
  7,140
  7,612
  8,103
  8,613
  9,145
  9,699
  10,276
  10,877
  11,504
  12,159
  12,842
  13,556
  14,301
Maintenance CAPEX, $m
  0
  -495
  -575
  -662
  -755
  -855
  -960
  -1,072
  -1,189
  -1,312
  -1,441
  -1,576
  -1,716
  -1,862
  -2,014
  -2,172
  -2,337
  -2,507
  -2,685
  -2,869
  -3,061
  -3,260
  -3,467
  -3,683
  -3,908
  -4,142
  -4,386
  -4,641
  -4,907
  -5,184
  -5,474
New CAPEX, $m
  -1,925
  -811
  -876
  -941
  -1,004
  -1,066
  -1,126
  -1,186
  -1,244
  -1,302
  -1,359
  -1,417
  -1,476
  -1,535
  -1,596
  -1,659
  -1,724
  -1,792
  -1,862
  -1,936
  -2,013
  -2,095
  -2,180
  -2,270
  -2,365
  -2,466
  -2,571
  -2,683
  -2,801
  -2,925
  -3,056
Cash from investing activities, $m
  -2,172
  -1,306
  -1,451
  -1,603
  -1,759
  -1,921
  -2,086
  -2,258
  -2,433
  -2,614
  -2,800
  -2,993
  -3,192
  -3,397
  -3,610
  -3,831
  -4,061
  -4,299
  -4,547
  -4,805
  -5,074
  -5,355
  -5,647
  -5,953
  -6,273
  -6,608
  -6,957
  -7,324
  -7,708
  -8,109
  -8,530
Free cash flow, $m
  -931
  215
  284
  363
  453
  553
  662
  781
  909
  1,046
  1,191
  1,308
  1,469
  1,638
  1,814
  1,998
  2,189
  2,387
  2,593
  2,807
  3,029
  3,259
  3,497
  3,745
  4,002
  4,269
  4,546
  4,835
  5,135
  5,447
  5,772
Issuance/(repayment) of debt, $m
  1,579
  1,023
  1,097
  1,178
  1,257
  1,334
  1,410
  1,484
  1,557
  1,629
  1,701
  1,774
  1,847
  1,922
  1,998
  2,077
  2,158
  2,242
  2,331
  2,423
  2,520
  2,622
  2,729
  2,842
  2,960
  3,086
  3,218
  3,358
  3,505
  3,661
  3,825
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  
  1,578
  1,023
  1,097
  1,178
  1,257
  1,334
  1,410
  1,484
  1,557
  1,629
  1,701
  1,774
  1,847
  1,922
  1,998
  2,077
  2,158
  2,242
  2,331
  2,423
  2,520
  2,622
  2,729
  2,842
  2,960
  3,086
  3,218
  3,358
  3,505
  3,661
  3,825
Total cash flow (excl. dividends), $m
  597
  1,237
  1,381
  1,541
  1,710
  1,887
  2,072
  2,265
  2,466
  2,675
  2,892
  3,082
  3,316
  3,559
  3,812
  4,074
  4,346
  4,629
  4,924
  5,230
  5,548
  5,880
  6,226
  6,587
  6,962
  7,355
  7,765
  8,193
  8,640
  9,107
  9,596
Retained Cash Flow (-), $m
  -316
  -509
  -552
  -593
  -633
  -672
  -710
  -747
  -784
  -821
  -857
  -894
  -930
  -968
  -1,006
  -1,046
  -1,087
  -1,130
  -1,174
  -1,221
  -1,269
  -1,321
  -1,375
  -1,431
  -1,491
  -1,555
  -1,621
  -1,692
  -1,766
  -1,844
  -1,927
Prev. year cash balance distribution, $m
 
  1,193
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,922
  828
  948
  1,077
  1,215
  1,362
  1,517
  1,682
  1,854
  2,035
  2,188
  2,386
  2,591
  2,805
  3,028
  3,259
  3,500
  3,750
  4,009
  4,279
  4,560
  4,851
  5,155
  5,471
  5,800
  6,143
  6,501
  6,874
  7,263
  7,670
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  1,809
  730
  777
  816
  845
  862
  868
  861
  843
  812
  759
  712
  657
  597
  533
  468
  404
  343
  285
  233
  186
  146
  112
  83
  61
  43
  30
  20
  13
  8
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

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 17.9
Price to Sales 3.1
Price to Book 2.2
Price to Tangible Book
Price to Cash Flow 7.5
Price to Free Cash Flow -13.7
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 $3040 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 16.2% 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 6.2%, 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 65%.

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 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 3.5% 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 164.5%.

Life of production assets of 10.1 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 -2.9%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4348 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 567.816 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 $9.6 billion.

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COMPANY NEWS

▶ 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]
▶ B. Riley Expands in IPO Market With FBR   [Feb-21-17 12:55PM  The Deal Pipeline]
▶ Do Hedge Funds Love Bright Horizons Family Solutions Inc (BFAM)?   [Dec-09-16 04:34AM  at Insider Monkey]
▶ What Hedge Funds Think about RSP Permian Inc (RSPP)?   [Dec-07-16 11:44AM  at Insider Monkey]
▶ Downtrending Stocks Still Presenting Short Trades   [Oct-12-16 01:00PM  at Investopedia]
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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