Intrinsic value of Bunge Limited - BG

Previous Close

$55.80

  Intrinsic Value

$8.41

stock screener

  Rating & Target

str. sell

-85%

Previous close

$55.80

 
Intrinsic value

$8.41

 
Up/down potential

-85%

 
Rating

str. sell

We calculate the intrinsic value of BG 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 0001), $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 7.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  46,658
  47,731
  48,958
  50,335
  51,861
  53,535
  55,358
  57,332
  59,458
  61,740
  64,181
  66,786
  69,560
  72,507
  75,635
  78,949
  82,458
  86,168
  90,089
  94,228
  98,596
  103,202
  108,057
  113,173
  118,561
  124,233
  130,204
  136,487
  143,097
  150,050
Variable operating expenses, $m
  46,328
  47,391
  48,605
  49,968
  51,479
  53,136
  54,941
  56,895
  58,999
  61,258
  63,532
  66,111
  68,856
  71,774
  74,870
  78,151
  81,624
  85,297
  89,178
  93,275
  97,599
  102,158
  106,964
  112,028
  117,362
  122,977
  128,887
  135,107
  141,650
  148,532
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
  46,328
  47,391
  48,605
  49,968
  51,479
  53,136
  54,941
  56,895
  58,999
  61,258
  63,532
  66,111
  68,856
  71,774
  74,870
  78,151
  81,624
  85,297
  89,178
  93,275
  97,599
  102,158
  106,964
  112,028
  117,362
  122,977
  128,887
  135,107
  141,650
  148,532
Operating income, $m
  329
  340
  353
  367
  382
  399
  417
  437
  459
  482
  649
  675
  703
  733
  765
  798
  834
  871
  911
  953
  997
  1,044
  1,093
  1,145
  1,199
  1,256
  1,317
  1,380
  1,447
  1,517
EBITDA, $m
  1,047
  1,071
  1,099
  1,130
  1,164
  1,201
  1,242
  1,287
  1,334
  1,386
  1,440
  1,499
  1,561
  1,627
  1,697
  1,772
  1,851
  1,934
  2,022
  2,115
  2,213
  2,316
  2,425
  2,540
  2,661
  2,788
  2,922
  3,063
  3,212
  3,368
Interest expense (income), $m
  234
  360
  377
  398
  422
  449
  478
  511
  546
  584
  626
  670
  717
  768
  822
  879
  940
  1,004
  1,072
  1,144
  1,220
  1,300
  1,385
  1,474
  1,569
  1,668
  1,772
  1,883
  1,998
  2,120
  2,249
Earnings before tax, $m
  -30
  -37
  -45
  -55
  -67
  -79
  -93
  -109
  -126
  -144
  -21
  -42
  -64
  -88
  -114
  -141
  -170
  -201
  -233
  -267
  -303
  -341
  -382
  -424
  -469
  -516
  -566
  -618
  -673
  -731
Tax expense, $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
Net income, $m
  -30
  -37
  -45
  -55
  -67
  -79
  -93
  -109
  -126
  -144
  -21
  -42
  -64
  -88
  -114
  -141
  -170
  -201
  -233
  -267
  -303
  -341
  -382
  -424
  -469
  -516
  -566
  -618
  -673
  -731

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  19,812
  20,268
  20,789
  21,374
  22,022
  22,733
  23,507
  24,345
  25,248
  26,217
  27,253
  28,359
  29,537
  30,789
  32,117
  33,524
  35,014
  36,590
  38,254
  40,012
  41,867
  43,822
  45,884
  48,056
  50,344
  52,753
  55,288
  57,956
  60,763
  63,715
Adjusted assets (=assets-cash), $m
  19,812
  20,268
  20,789
  21,374
  22,022
  22,733
  23,507
  24,345
  25,248
  26,217
  27,253
  28,359
  29,537
  30,789
  32,117
  33,524
  35,014
  36,590
  38,254
  40,012
  41,867
  43,822
  45,884
  48,056
  50,344
  52,753
  55,288
  57,956
  60,763
  63,715
Revenue / Adjusted assets
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
  2.355
Average production assets, $m
  5,926
  6,062
  6,218
  6,393
  6,586
  6,799
  7,031
  7,281
  7,551
  7,841
  8,151
  8,482
  8,834
  9,208
  9,606
  10,027
  10,472
  10,943
  11,441
  11,967
  12,522
  13,107
  13,723
  14,373
  15,057
  15,778
  16,536
  17,334
  18,173
  19,056
Working capital, $m
  4,759
  4,869
  4,994
  5,134
  5,290
  5,461
  5,647
  5,848
  6,065
  6,297
  6,546
  6,812
  7,095
  7,396
  7,715
  8,053
  8,411
  8,789
  9,189
  9,611
  10,057
  10,527
  11,022
  11,544
  12,093
  12,672
  13,281
  13,922
  14,596
  15,305
Total debt, $m
  5,632
  5,943
  6,298
  6,697
  7,139
  7,624
  8,152
  8,723
  9,339
  10,000
  10,707
  11,461
  12,264
  13,118
  14,024
  14,983
  16,000
  17,074
  18,209
  19,408
  20,673
  22,007
  23,413
  24,894
  26,455
  28,098
  29,827
  31,646
  33,560
  35,574
Total liabilities, $m
  13,512
  13,823
  14,178
  14,577
  15,019
  15,504
  16,032
  16,603
  17,219
  17,880
  18,587
  19,341
  20,144
  20,998
  21,904
  22,863
  23,880
  24,954
  26,089
  27,288
  28,553
  29,887
  31,293
  32,774
  34,335
  35,978
  37,707
  39,526
  41,440
  43,454
Total equity, $m
  6,300
  6,445
  6,611
  6,797
  7,003
  7,229
  7,475
  7,742
  8,029
  8,337
  8,667
  9,018
  9,393
  9,791
  10,213
  10,661
  11,134
  11,635
  12,165
  12,724
  13,314
  13,936
  14,591
  15,282
  16,009
  16,775
  17,582
  18,430
  19,323
  20,262
Total liabilities and equity, $m
  19,812
  20,268
  20,789
  21,374
  22,022
  22,733
  23,507
  24,345
  25,248
  26,217
  27,254
  28,359
  29,537
  30,789
  32,117
  33,524
  35,014
  36,589
  38,254
  40,012
  41,867
  43,823
  45,884
  48,056
  50,344
  52,753
  55,289
  57,956
  60,763
  63,716
Debt-to-equity ratio
  0.890
  0.920
  0.950
  0.990
  1.020
  1.050
  1.090
  1.130
  1.160
  1.200
  1.240
  1.270
  1.310
  1.340
  1.370
  1.410
  1.440
  1.470
  1.500
  1.530
  1.550
  1.580
  1.600
  1.630
  1.650
  1.670
  1.700
  1.720
  1.740
  1.760
Adjusted equity ratio
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318
  0.318

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -30
  -37
  -45
  -55
  -67
  -79
  -93
  -109
  -126
  -144
  -21
  -42
  -64
  -88
  -114
  -141
  -170
  -201
  -233
  -267
  -303
  -341
  -382
  -424
  -469
  -516
  -566
  -618
  -673
  -731
Depreciation, amort., depletion, $m
  718
  731
  746
  763
  782
  802
  825
  849
  876
  904
  791
  823
  858
  894
  933
  973
  1,017
  1,062
  1,111
  1,162
  1,216
  1,272
  1,332
  1,395
  1,462
  1,532
  1,605
  1,683
  1,764
  1,850
Funds from operations, $m
  687
  694
  701
  708
  715
  723
  732
  741
  750
  760
  770
  782
  793
  806
  819
  832
  847
  862
  878
  895
  912
  931
  951
  971
  993
  1,016
  1,040
  1,065
  1,091
  1,119
Change in working capital, $m
  93
  109
  125
  140
  156
  171
  186
  201
  217
  233
  249
  266
  283
  301
  319
  338
  358
  378
  400
  422
  446
  470
  495
  522
  550
  579
  609
  641
  674
  709
Cash from operations, $m
  594
  584
  575
  567
  560
  552
  546
  539
  533
  527
  521
  516
  510
  505
  500
  494
  489
  483
  478
  473
  467
  461
  455
  449
  443
  437
  431
  424
  417
  410
Maintenance CAPEX, $m
  -565
  -575
  -589
  -604
  -621
  -639
  -660
  -683
  -707
  -733
  -761
  -791
  -823
  -858
  -894
  -933
  -973
  -1,017
  -1,062
  -1,111
  -1,162
  -1,216
  -1,272
  -1,332
  -1,395
  -1,462
  -1,532
  -1,605
  -1,683
  -1,764
New CAPEX, $m
  -105
  -136
  -156
  -175
  -194
  -213
  -232
  -251
  -270
  -290
  -310
  -331
  -352
  -374
  -397
  -421
  -446
  -471
  -498
  -526
  -555
  -585
  -617
  -650
  -684
  -720
  -758
  -798
  -839
  -883
Cash from investing activities, $m
  -670
  -711
  -745
  -779
  -815
  -852
  -892
  -934
  -977
  -1,023
  -1,071
  -1,122
  -1,175
  -1,232
  -1,291
  -1,354
  -1,419
  -1,488
  -1,560
  -1,637
  -1,717
  -1,801
  -1,889
  -1,982
  -2,079
  -2,182
  -2,290
  -2,403
  -2,522
  -2,647
Free cash flow, $m
  -76
  -127
  -169
  -211
  -255
  -300
  -346
  -394
  -444
  -496
  -550
  -606
  -665
  -727
  -792
  -859
  -930
  -1,004
  -1,082
  -1,164
  -1,250
  -1,339
  -1,434
  -1,533
  -1,636
  -1,745
  -1,859
  -1,979
  -2,105
  -2,238
Issuance/(repayment) of debt, $m
  260
  311
  355
  399
  442
  485
  528
  572
  616
  661
  707
  754
  803
  854
  906
  960
  1,016
  1,075
  1,135
  1,199
  1,265
  1,334
  1,406
  1,481
  1,560
  1,643
  1,729
  1,820
  1,914
  2,013
Issuance/(repurchase) of shares, $m
  158
  182
  211
  241
  273
  305
  340
  375
  413
  452
  351
  394
  439
  486
  536
  589
  644
  702
  762
  826
  893
  963
  1,037
  1,115
  1,196
  1,282
  1,372
  1,466
  1,566
  1,670
Cash from financing (excl. dividends), $m  
  418
  493
  566
  640
  715
  790
  868
  947
  1,029
  1,113
  1,058
  1,148
  1,242
  1,340
  1,442
  1,549
  1,660
  1,777
  1,897
  2,025
  2,158
  2,297
  2,443
  2,596
  2,756
  2,925
  3,101
  3,286
  3,480
  3,683
Total cash flow (excl. dividends), $m
  342
  366
  397
  429
  460
  491
  522
  553
  585
  617
  508
  542
  577
  613
  650
  689
  730
  772
  815
  861
  908
  958
  1,010
  1,064
  1,120
  1,180
  1,242
  1,307
  1,375
  1,446
Retained Cash Flow (-), $m
  -158
  -182
  -211
  -241
  -273
  -305
  -340
  -375
  -413
  -452
  -351
  -394
  -439
  -486
  -536
  -589
  -644
  -702
  -762
  -826
  -893
  -963
  -1,037
  -1,115
  -1,196
  -1,282
  -1,372
  -1,466
  -1,566
  -1,670
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
  184
  184
  186
  188
  187
  185
  182
  178
  172
  165
  157
  148
  138
  127
  114
  101
  86
  70
  53
  35
  15
  -5
  -28
  -51
  -76
  -102
  -130
  -160
  -191
  -224
Discount rate, %
  8.90
  9.35
  9.81
  10.30
  10.82
  11.36
  11.93
  12.52
  13.15
  13.81
  14.50
  15.22
  15.98
  16.78
  17.62
  18.50
  19.43
  20.40
  21.42
  22.49
  23.61
  24.80
  26.03
  27.34
  28.70
  30.14
  31.65
  33.23
  34.89
  36.63
PV of cash for distribution, $m
  169
  154
  141
  127
  112
  97
  83
  69
  57
  45
  35
  27
  20
  14
  10
  7
  4
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  98.0
  95.9
  93.5
  90.9
  88.1
  85.2
  82.2
  79.0
  75.9
  72.7
  70.4
  67.9
  65.4
  62.9
  60.3
  57.7
  55.1
  52.5
  49.9
  47.4
  44.9
  42.5
  40.2
  37.9
  35.7
  33.6
  31.6
  29.6
  27.8
  26.0

Bunge Limited is an agribusiness and food company with integrated operations that stretch from the farm field to consumer foods. The Company operates through five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. Its Agribusiness segment is an integrated, global business involved in the purchase, storage, transport, processing and sale of agricultural commodities and commodity products. Its edible oil products include packaged and bulk oils, shortenings, margarines, mayonnaise and other products derived from the vegetable oil refining process. Its milling products segment includes the production and sale of a range of wheat flours and bakery mixes. The Company is a producer and exporter of sugar. Through the Company's operations in Argentina, it produces, blends and distributes a range of nitrogen, phosphate and potassium (NPK) fertilizers, including phosphate-based liquid and solid nitrogen fertilizers.

FINANCIAL RATIOS  of  Bunge Limited (BG)

Valuation Ratios
P/E Ratio 10.4
Price to Sales 0.2
Price to Book 1.1
Price to Tangible Book
Price to Cash Flow 4.1
Price to Free Cash Flow 7
Growth Rates
Sales Growth Rate -1.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 20.8%
Cap. Spend. - 3 Yr. Gr. Rate -5.5%
Financial Strength
Quick Ratio 1
Current Ratio 0.3
LT Debt to Equity 43%
Total Debt to Equity 67.1%
Interest Coverage 5
Management Effectiveness
Return On Assets 5%
Ret/ On Assets - 3 Yr. Avg. 4.2%
Return On Total Capital 6.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5.3%
Return On Equity 11%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 2.3
Profitability Ratios
Gross Margin 5.6%
Gross Margin - 3 Yr. Avg. 5.5%
EBITDA Margin 4.2%
EBITDA Margin - 3 Yr. Avg. 3.7%
Operating Margin 2.5%
Oper. Margin - 3 Yr. Avg. 2.3%
Pre-Tax Margin 2.3%
Pre-Tax Margin - 3 Yr. Avg. 2%
Net Profit Margin 1.7%
Net Profit Margin - 3 Yr. Avg. 1.5%
Effective Tax Rate 22.1%
Eff/ Tax Rate - 3 Yr. Avg. 28.1%
Payout Ratio 34.5%

BG stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BG stock intrinsic value calculation we used $45743 million for the last fiscal year's total revenue generated by Bunge Limited. The default revenue input number comes from 0001 income statement of Bunge Limited. 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 BG stock valuation model: a) initial revenue growth rate of 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 8.9%, whose default value for BG is calculated based on our internal credit rating of Bunge Limited, 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 Bunge Limited.
    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 BG stock the variable cost ratio is equal to 99.3%.

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 BG 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 6.7% for Bunge Limited.

Corporate tax rate of 27% is the nominal tax rate for Bunge Limited. 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 BG 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 BG are equal to 12.7%.

Life of production assets of 10.3 years is the average useful life of capital assets used in Bunge Limited 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 BG is equal to 10.2%. 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 - $6173 million for Bunge Limited - 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 141.128 million for Bunge Limited 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 Bunge Limited at the current share price and the inputted number of shares is $7.9 billion.

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