Intrinsic value of Monsanto - MON

Previous Close

$116.50

  Intrinsic Value

premium content

  Rating & Target

premium content

  Value-price divergence*

premium content

Previous close

$116.50

 
Intrinsic value

$274.33

 
Up/down potential

+135%

 
Rating

str. buy

 
Value-price divergence* premium content

Premium access subscription - $499/yr

please register and log in before paying

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

We calculate the intrinsic value of MON 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 51.0

 

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, %
  -9.99
  19.40
  17.96
  16.66
  15.50
  14.45
  13.50
  12.65
  11.89
  11.20
  10.58
  10.02
  9.52
  9.07
  8.66
  8.29
  7.96
  7.67
  7.40
  7.16
  6.95
  6.75
  6.58
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
Revenue, $m
  13,502
  16,121
  19,017
  22,186
  25,624
  29,326
  33,286
  37,498
  41,955
  46,654
  51,589
  56,759
  62,162
  67,798
  73,669
  79,780
  86,134
  92,739
  99,603
  106,736
  114,149
  121,855
  129,867
  138,202
  146,876
  155,907
  165,314
  175,118
  185,340
  196,004
  207,134
Variable operating expenses, $m
 
  3,694
  4,286
  4,933
  5,635
  6,391
  7,200
  8,060
  8,970
  9,930
  10,938
  11,592
  12,695
  13,846
  15,045
  16,293
  17,591
  18,940
  20,342
  21,798
  23,312
  24,886
  26,522
  28,225
  29,996
  31,840
  33,762
  35,764
  37,851
  40,029
  42,302
Fixed operating expenses, $m
 
  8,368
  8,577
  8,792
  9,012
  9,237
  9,468
  9,704
  9,947
  10,196
  10,451
  10,712
  10,980
  11,254
  11,536
  11,824
  12,120
  12,422
  12,733
  13,051
  13,378
  13,712
  14,055
  14,406
  14,766
  15,136
  15,514
  15,902
  16,299
  16,707
  17,125
Total operating expenses, $m
  11,127
  12,062
  12,863
  13,725
  14,647
  15,628
  16,668
  17,764
  18,917
  20,126
  21,389
  22,304
  23,675
  25,100
  26,581
  28,117
  29,711
  31,362
  33,075
  34,849
  36,690
  38,598
  40,577
  42,631
  44,762
  46,976
  49,276
  51,666
  54,150
  56,736
  59,427
Operating income, $m
  2,375
  4,059
  6,154
  8,461
  10,977
  13,698
  16,618
  19,733
  23,038
  26,528
  30,201
  34,455
  38,487
  42,697
  47,088
  51,663
  56,423
  61,377
  66,528
  71,886
  77,459
  83,257
  89,290
  95,572
  102,114
  108,931
  116,039
  123,453
  131,190
  139,268
  147,707
EBITDA, $m
  3,102
  4,990
  7,179
  9,591
  12,220
  15,062
  18,112
  21,365
  24,816
  28,460
  32,295
  36,317
  40,526
  44,921
  49,505
  54,279
  59,248
  64,418
  69,795
  75,387
  81,203
  87,253
  93,549
  100,104
  106,931
  114,045
  121,461
  129,196
  137,268
  145,697
  154,501
Interest expense (income), $m
  387
  320
  435
  560
  698
  847
  1,008
  1,180
  1,362
  1,556
  1,760
  1,974
  2,198
  2,433
  2,677
  2,932
  3,197
  3,473
  3,760
  4,058
  4,367
  4,689
  5,023
  5,371
  5,733
  6,109
  6,501
  6,909
  7,335
  7,779
  8,241
Earnings before tax, $m
  1,991
  3,738
  5,719
  7,901
  10,280
  12,851
  15,611
  18,554
  21,675
  24,972
  28,441
  32,481
  36,289
  40,265
  44,411
  48,730
  53,226
  57,903
  62,769
  67,829
  73,092
  78,568
  84,267
  90,200
  96,381
  102,822
  109,538
  116,543
  123,855
  131,490
  139,466
Tax expense, $m
  695
  1,009
  1,544
  2,133
  2,775
  3,470
  4,215
  5,009
  5,852
  6,742
  7,679
  8,770
  9,798
  10,871
  11,991
  13,157
  14,371
  15,634
  16,948
  18,314
  19,735
  21,213
  22,752
  24,354
  26,023
  27,762
  29,575
  31,467
  33,441
  35,502
  37,656
Net income, $m
  1,336
  2,729
  4,175
  5,768
  7,504
  9,381
  11,396
  13,544
  15,823
  18,230
  20,762
  23,711
  26,491
  29,393
  32,420
  35,573
  38,855
  42,270
  45,821
  49,515
  53,357
  57,354
  61,515
  65,846
  70,358
  75,060
  79,962
  85,076
  90,414
  95,987
  101,810

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,858
  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
  19,736
  21,353
  25,188
  29,385
  33,939
  38,843
  44,087
  49,666
  55,570
  61,793
  68,330
  75,177
  82,333
  89,798
  97,575
  105,668
  114,085
  122,833
  131,924
  141,372
  151,191
  161,397
  172,010
  183,050
  194,538
  206,500
  218,959
  231,945
  245,484
  259,608
  274,350
Adjusted assets (=assets-cash), $m
  17,878
  21,353
  25,188
  29,385
  33,939
  38,843
  44,087
  49,666
  55,570
  61,793
  68,330
  75,177
  82,333
  89,798
  97,575
  105,668
  114,085
  122,833
  131,924
  141,372
  151,191
  161,397
  172,010
  183,050
  194,538
  206,500
  218,959
  231,945
  245,484
  259,608
  274,350
Revenue / Adjusted assets
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
  0.755
Average production assets, $m
  6,331
  7,561
  8,919
  10,405
  12,018
  13,754
  15,611
  17,586
  19,677
  21,881
  24,195
  26,620
  29,154
  31,797
  34,551
  37,417
  40,397
  43,495
  46,714
  50,059
  53,536
  57,150
  60,908
  64,817
  68,885
  73,121
  77,532
  82,130
  86,925
  91,926
  97,146
Working capital, $m
  1,428
  1,386
  1,635
  1,908
  2,204
  2,522
  2,863
  3,225
  3,608
  4,012
  4,437
  4,881
  5,346
  5,831
  6,336
  6,861
  7,408
  7,976
  8,566
  9,179
  9,817
  10,480
  11,169
  11,885
  12,631
  13,408
  14,217
  15,060
  15,939
  16,856
  17,814
Total debt, $m
  9,040
  10,109
  13,031
  16,229
  19,700
  23,436
  27,433
  31,683
  36,182
  40,924
  45,905
  51,123
  56,576
  62,264
  68,190
  74,357
  80,770
  87,437
  94,364
  101,563
  109,045
  116,823
  124,910
  133,322
  142,076
  151,191
  160,685
  170,580
  180,897
  191,660
  202,892
Total liabilities, $m
  15,202
  16,271
  19,193
  22,391
  25,862
  29,598
  33,595
  37,845
  42,344
  47,086
  52,067
  57,285
  62,738
  68,426
  74,352
  80,519
  86,932
  93,599
  100,526
  107,725
  115,207
  122,985
  131,072
  139,484
  148,238
  157,353
  166,847
  176,742
  187,059
  197,822
  209,054
Total equity, $m
  4,534
  5,082
  5,995
  6,994
  8,078
  9,245
  10,493
  11,820
  13,226
  14,707
  16,263
  17,892
  19,595
  21,372
  23,223
  25,149
  27,152
  29,234
  31,398
  33,647
  35,983
  38,412
  40,938
  43,566
  46,300
  49,147
  52,112
  55,203
  58,425
  61,787
  65,295
Total liabilities and equity, $m
  19,736
  21,353
  25,188
  29,385
  33,940
  38,843
  44,088
  49,665
  55,570
  61,793
  68,330
  75,177
  82,333
  89,798
  97,575
  105,668
  114,084
  122,833
  131,924
  141,372
  151,190
  161,397
  172,010
  183,050
  194,538
  206,500
  218,959
  231,945
  245,484
  259,609
  274,349
Debt-to-equity ratio
  1.994
  1.990
  2.170
  2.320
  2.440
  2.540
  2.610
  2.680
  2.740
  2.780
  2.820
  2.860
  2.890
  2.910
  2.940
  2.960
  2.970
  2.990
  3.010
  3.020
  3.030
  3.040
  3.050
  3.060
  3.070
  3.080
  3.080
  3.090
  3.100
  3.100
  3.110
Adjusted equity ratio
  0.150
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238
  0.238

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,336
  2,729
  4,175
  5,768
  7,504
  9,381
  11,396
  13,544
  15,823
  18,230
  20,762
  23,711
  26,491
  29,393
  32,420
  35,573
  38,855
  42,270
  45,821
  49,515
  53,357
  57,354
  61,515
  65,846
  70,358
  75,060
  79,962
  85,076
  90,414
  95,987
  101,810
Depreciation, amort., depletion, $m
  727
  931
  1,026
  1,130
  1,242
  1,364
  1,494
  1,632
  1,778
  1,932
  2,094
  1,862
  2,039
  2,224
  2,416
  2,617
  2,825
  3,042
  3,267
  3,501
  3,744
  3,996
  4,259
  4,533
  4,817
  5,113
  5,422
  5,743
  6,079
  6,428
  6,793
Funds from operations, $m
  2,605
  3,660
  5,201
  6,897
  8,746
  10,745
  12,889
  15,176
  17,601
  20,162
  22,856
  25,573
  28,529
  31,617
  34,836
  38,190
  41,680
  45,311
  49,088
  53,015
  57,101
  61,351
  65,774
  70,379
  75,175
  80,173
  85,384
  90,820
  96,493
  102,416
  108,603
Change in working capital, $m
  17
  225
  249
  273
  296
  318
  341
  362
  383
  404
  424
  445
  465
  485
  505
  525
  546
  568
  590
  613
  638
  663
  689
  717
  746
  777
  809
  843
  879
  917
  957
Cash from operations, $m
  2,588
  3,460
  4,952
  6,625
  8,451
  10,427
  12,549
  14,814
  17,218
  19,758
  22,431
  25,128
  28,065
  31,132
  34,331
  37,664
  41,134
  44,743
  48,497
  52,402
  56,463
  60,688
  65,085
  69,662
  74,429
  79,397
  84,575
  89,977
  95,613
  101,499
  107,646
Maintenance CAPEX, $m
  0
  -443
  -529
  -624
  -728
  -840
  -962
  -1,092
  -1,230
  -1,376
  -1,530
  -1,692
  -1,862
  -2,039
  -2,224
  -2,416
  -2,617
  -2,825
  -3,042
  -3,267
  -3,501
  -3,744
  -3,996
  -4,259
  -4,533
  -4,817
  -5,113
  -5,422
  -5,743
  -6,079
  -6,428
New CAPEX, $m
  -992
  -1,230
  -1,358
  -1,486
  -1,613
  -1,736
  -1,857
  -1,975
  -2,091
  -2,204
  -2,315
  -2,425
  -2,534
  -2,643
  -2,754
  -2,866
  -2,980
  -3,098
  -3,219
  -3,345
  -3,477
  -3,614
  -3,758
  -3,909
  -4,068
  -4,235
  -4,412
  -4,598
  -4,794
  -5,001
  -5,220
Cash from investing activities, $m
  -864
  -1,673
  -1,887
  -2,110
  -2,341
  -2,576
  -2,819
  -3,067
  -3,321
  -3,580
  -3,845
  -4,117
  -4,396
  -4,682
  -4,978
  -5,282
  -5,597
  -5,923
  -6,261
  -6,612
  -6,978
  -7,358
  -7,754
  -8,168
  -8,601
  -9,052
  -9,525
  -10,020
  -10,537
  -11,080
  -11,648
Free cash flow, $m
  1,724
  1,787
  3,065
  4,515
  6,111
  7,850
  9,730
  11,747
  13,897
  16,178
  18,587
  21,012
  23,669
  26,450
  29,354
  32,382
  35,537
  38,820
  42,237
  45,790
  49,486
  53,330
  57,331
  61,494
  65,829
  70,344
  75,050
  79,957
  85,076
  90,419
  95,998
Issuance/(repayment) of debt, $m
  156
  2,656
  2,922
  3,198
  3,470
  3,736
  3,997
  4,251
  4,499
  4,742
  4,981
  5,218
  5,453
  5,688
  5,926
  6,167
  6,413
  6,666
  6,928
  7,199
  7,482
  7,777
  8,087
  8,412
  8,754
  9,115
  9,494
  9,895
  10,317
  10,763
  11,233
Issuance/(repurchase) of shares, $m
  -2,920
  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  
  -2,778
  2,656
  2,922
  3,198
  3,470
  3,736
  3,997
  4,251
  4,499
  4,742
  4,981
  5,218
  5,453
  5,688
  5,926
  6,167
  6,413
  6,666
  6,928
  7,199
  7,482
  7,777
  8,087
  8,412
  8,754
  9,115
  9,494
  9,895
  10,317
  10,763
  11,233
Total cash flow (excl. dividends), $m
  -1,061
  4,443
  5,987
  7,713
  9,581
  11,586
  13,727
  15,997
  18,396
  20,920
  23,568
  26,229
  29,122
  32,138
  35,280
  38,549
  41,950
  45,487
  49,164
  52,989
  56,968
  61,108
  65,418
  69,906
  74,583
  79,459
  84,544
  89,852
  95,393
  101,181
  107,231
Retained Cash Flow (-), $m
  2,456
  -819
  -913
  -999
  -1,084
  -1,167
  -1,248
  -1,328
  -1,405
  -1,481
  -1,556
  -1,630
  -1,703
  -1,777
  -1,851
  -1,926
  -2,003
  -2,082
  -2,164
  -2,249
  -2,337
  -2,429
  -2,526
  -2,627
  -2,734
  -2,847
  -2,965
  -3,090
  -3,222
  -3,362
  -3,508
Prev. year cash balance distribution, $m
 
  271
  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
 
  3,895
  5,074
  6,714
  8,497
  10,419
  12,478
  14,670
  16,991
  19,439
  22,012
  24,600
  27,419
  30,362
  33,429
  36,623
  39,947
  43,405
  47,001
  50,741
  54,631
  58,679
  62,892
  67,279
  71,849
  76,612
  81,579
  86,761
  92,171
  97,820
  103,722
Discount rate, %
 
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
 
  3,640
  4,403
  5,372
  6,222
  6,927
  7,467
  7,831
  8,014
  8,017
  7,851
  7,501
  7,059
  6,513
  5,892
  5,227
  4,544
  3,870
  3,228
  2,634
  2,103
  1,640
  1,248
  927
  671
  472
  323
  215
  138
  86
  52
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

Monsanto Company, together with its subsidiaries, provides agricultural products for farmers worldwide. It operates in two segments, Seeds and Genomics, and Agricultural Productivity. The Seeds and Genomics segment produces row crop seeds, including corn, soybean, cotton, and canola seeds under the DEKALB, Channel, Asgrow, and Deltapine brands; and vegetable seeds, such as tomato, pepper, melon, cucumber, squash, beans, broccoli, onions, lettuce, and others under the Seminis and De Ruiter brands. It also develops biotechnology traits that assist farmers in controlling insects and weeds in corn, soybean, cotton, and canola crops under the SmartStax, YieldGard, YieldGard VT Triple, VT Triple PRO, and VT Double PRO brands; Intacta RR2 PRO brand; Bollgard and Bollgard II brands; Roundup Ready, Roundup Ready 2 Yield, and Genuity brands; and Roundup Ready 2 Xtend and Bollgard II XtendFlex brands. This segment also licenses a range of germplasm and trait technologies to large and small seed companies. The Agricultural Productivity segment manufactures and sells herbicides for agricultural, industrial, ornamental, turf, and residential lawn and garden applications for weed control, as well as for control of preemergent annual grass and small seeded broadleaf weeds in corn and other crops under the Roundup and Harness brands. The company markets its products through distributors, independent retailers and dealers, agricultural cooperatives, plant raisers, and agents, as well as directly to farmers. Monsanto Company has a collaborative agreement with Novozymes to discover, develop, and produce microbial solutions. The company was formerly known as Monsanto Ag Company and changed its name to Monsanto Company in March 2000. Monsanto Company was founded in 2000 and is headquartered in St. Louis, Missouri.

FINANCIAL RATIOS  of  Monsanto (MON)

Valuation Ratios
P/E Ratio 38.2
Price to Sales 3.8
Price to Book 11.2
Price to Tangible Book
Price to Cash Flow 19.7
Price to Free Cash Flow 32
Growth Rates
Sales Growth Rate -10%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -2.3%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 164.4%
Total Debt to Equity 199.4%
Interest Coverage 6
Management Effectiveness
Return On Assets 7.6%
Ret/ On Assets - 3 Yr. Avg. 10.9%
Return On Total Capital 9%
Ret/ On T. Cap. - 3 Yr. Avg. 13.9%
Return On Equity 23.2%
Return On Equity - 3 Yr. Avg. 27%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 52%
Gross Margin - 3 Yr. Avg. 53.5%
EBITDA Margin 23%
EBITDA Margin - 3 Yr. Avg. 26.9%
Operating Margin 17.6%
Oper. Margin - 3 Yr. Avg. 22.3%
Pre-Tax Margin 14.7%
Pre-Tax Margin - 3 Yr. Avg. 20%
Net Profit Margin 9.9%
Net Profit Margin - 3 Yr. Avg. 14.2%
Effective Tax Rate 34.9%
Eff/ Tax Rate - 3 Yr. Avg. 30.1%
Payout Ratio 72.2%

MON stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the MON stock intrinsic value calculation we used $13502 million for the last fiscal year's total revenue generated by Monsanto. The default revenue input number comes from 2016 income statement of Monsanto. 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 MON stock valuation model: a) initial revenue growth rate of 19.4% 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 7%, whose default value for MON is calculated based on our internal credit rating of Monsanto, 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 Monsanto.
    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 MON stock the variable cost ratio is equal to 23.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $8164 million in the base year in the intrinsic value calculation for MON 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 4.3% for Monsanto.

Corporate tax rate of 27% is the nominal tax rate for Monsanto. 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 MON 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 MON are equal to 46.9%.

Life of production assets of 14.3 years is the average useful life of capital assets used in Monsanto 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 MON is equal to 8.6%. 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 - $4534 million for Monsanto - 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 437.986 million for Monsanto 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 Monsanto at the current share price and the inputted number of shares is $51.0 billion.


Premium access subscription - $499/yr

please register and log in before paying
RELATED COMPANIES Price Int.Val. Rating
DD E.I. DuPont de 80.13 39.46  str.sell
FMC FMC 73.53 1.95  str.sell
SMG Scotts Miracle 97.00 35.49  str.sell
SYT Syngenta ADR 93.00 33.44  str.sell
SEED Origin Agritec 1.83 0.26  str.sell
RKDA Arcadia Biosci 0.680 0.13  str.sell
DOW Dow Chemical 63.19 136.21  str.buy

COMPANY NEWS

▶ ETFs with exposure to Monsanto Co. : April 27, 2017   [Apr-27-17 04:09PM  Capital Cube]
▶ GMO protestor throws Molotov cocktails at Monsanto facility in Europe   [01:00PM  American City Business Journals]
▶ DuPont profit beats on strong seed demand   [Apr-25-17 06:45AM  Reuters]
▶ Perfect storm brewing for stocks?   [Apr-19-17 05:04PM  CNBC Videos]
▶ ETFs with exposure to Monsanto Co. : April 17, 2017   [Apr-17-17 12:59PM  Capital Cube]
▶ The Next Stock Warren Buffett Might Sell   [Apr-12-17 09:23AM  Motley Fool]
▶ Crop Futures in April: Understanding the Weakness   [Apr-07-17 04:47PM  Market Realist]
▶ Why Monsantos Profitability Improved in 2Q17   [07:36AM  Market Realist]
▶ Monsantos Fiscal 2Q17 Sales Growth Depended on This   [Apr-06-17 02:35PM  Market Realist]
▶ Monsanto CEO: Our Bayer deal is unique   [01:05PM  American City Business Journals]
▶ Company News for April 06, 2017   [11:06AM  Zacks]
▶ Final Trade: DIN, BBBY & more   [05:59PM  CNBC Videos]
▶ Monsanto Plants Seeds for Future Growth   [12:30PM  Motley Fool]
▶ Monsanto Stock Trades Ex-Dividend Wednesday   [Apr-02-17 10:17AM  at Investopedia]
▶ [$$] EU Clears Dow-DuPont Deal With Conditions   [12:07AM  at The Wall Street Journal]
▶ [$$] EU Clears Dow-DuPont Deal With Conditions   [11:21AM  at The Wall Street Journal]
▶ [$$] Elliott Threatens to Force Akzo Nobel to Engage With PPG   [12:50AM  at The Wall Street Journal]
▶ [$$] Elliott Threatens to Force Akzo Nobel to Engage With PPG   [Mar-22-17 05:32PM  at The Wall Street Journal]
▶ Five Basic Materials Stocks Hedge Funds Love   [08:00AM  at Insider Monkey]
▶ [$$] Regulation of Monsantos Roundup Herbicide Called Into Question by Emails   [Mar-16-17 12:07AM  at The Wall Street Journal]
▶ Does Roundup Cause Cancer?   [Mar-15-17 07:17PM  at Investopedia]
▶ [$$] Regulation of Monsanto Herbicide Called Into Question   [03:33PM  at The Wall Street Journal]
▶ Who are Monsanto's main competitors?   [11:40AM  at Investopedia]
▶ Warren Buffett's Top 10 Dividend Stocks   [06:00AM  at Motley Fool]
▶ ETFs With an Appetite for Inflation   [12:19AM  at The Wall Street Journal]
▶ ETFs With Appetite for Inflation   [Mar-05-17 11:15PM  at The Wall Street Journal]
Stock chart of MON Financial statements of MON
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.