Intrinsic value of Buenaventura Mining Company Inc. - BVN

Previous Close

$15.11

  Intrinsic Value

$2.81

stock screener

  Rating & Target

str. sell

-81%

Previous close

$15.11

 
Intrinsic value

$2.81

 
Up/down potential

-81%

 
Rating

str. sell

We calculate the intrinsic value of BVN 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 3.8

 

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, %
  19.20
  17.78
  16.50
  15.35
  14.32
  13.38
  12.55
  11.79
  11.11
  10.50
  9.95
  9.46
  9.01
  8.61
  8.25
  7.92
  7.63
  7.37
  7.13
  6.92
  6.73
  6.55
  6.40
  6.26
  6.13
  6.02
  5.92
  5.83
  5.74
  5.67
Revenue, $m
  1,519
  1,789
  2,084
  2,404
  2,748
  3,116
  3,506
  3,920
  4,356
  4,813
  5,292
  5,792
  6,314
  6,858
  7,424
  8,012
  8,623
  9,259
  9,919
  10,605
  11,318
  12,060
  12,832
  13,635
  14,471
  15,342
  16,250
  17,197
  18,184
  19,215
Variable operating expenses, $m
  1,358
  1,599
  1,863
  2,149
  2,457
  2,785
  3,135
  3,504
  3,894
  4,303
  4,731
  5,178
  5,645
  6,131
  6,637
  7,163
  7,709
  8,277
  8,867
  9,481
  10,119
  10,782
  11,472
  12,190
  12,937
  13,716
  14,527
  15,374
  16,257
  17,178
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
  1,358
  1,599
  1,863
  2,149
  2,457
  2,785
  3,135
  3,504
  3,894
  4,303
  4,731
  5,178
  5,645
  6,131
  6,637
  7,163
  7,709
  8,277
  8,867
  9,481
  10,119
  10,782
  11,472
  12,190
  12,937
  13,716
  14,527
  15,374
  16,257
  17,178
Operating income, $m
  161
  190
  221
  255
  291
  330
  372
  416
  462
  510
  561
  614
  669
  727
  787
  849
  914
  981
  1,051
  1,124
  1,200
  1,278
  1,360
  1,445
  1,534
  1,626
  1,722
  1,823
  1,928
  2,037
EBITDA, $m
  628
  740
  862
  994
  1,136
  1,289
  1,450
  1,621
  1,801
  1,991
  2,189
  2,396
  2,612
  2,836
  3,070
  3,314
  3,567
  3,829
  4,102
  4,386
  4,681
  4,988
  5,307
  5,639
  5,985
  6,345
  6,721
  7,113
  7,521
  7,947
Interest expense (income), $m
  -34
  39
  55
  72
  90
  111
  132
  155
  180
  206
  234
  262
  293
  324
  357
  391
  427
  464
  502
  542
  584
  627
  672
  719
  768
  818
  871
  926
  983
  1,043
  1,105
Earnings before tax, $m
  122
  135
  149
  164
  181
  198
  216
  235
  256
  277
  299
  321
  345
  370
  396
  422
  450
  479
  509
  540
  572
  606
  641
  678
  716
  755
  797
  840
  885
  932
Tax expense, $m
  33
  36
  40
  44
  49
  53
  58
  64
  69
  75
  81
  87
  93
  100
  107
  114
  122
  129
  137
  146
  155
  164
  173
  183
  193
  204
  215
  227
  239
  252
Net income, $m
  89
  98
  109
  120
  132
  144
  158
  172
  187
  202
  218
  235
  252
  270
  289
  308
  329
  350
  371
  394
  418
  442
  468
  495
  522
  551
  582
  613
  646
  680

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
  5,165
  6,084
  7,088
  8,176
  9,346
  10,597
  11,927
  13,333
  14,815
  16,371
  18,000
  19,702
  21,477
  23,326
  25,250
  27,251
  29,330
  31,492
  33,737
  36,071
  38,498
  41,021
  43,645
  46,377
  49,221
  52,184
  55,272
  58,492
  61,851
  65,357
Adjusted assets (=assets-cash), $m
  5,165
  6,084
  7,088
  8,176
  9,346
  10,597
  11,927
  13,333
  14,815
  16,371
  18,000
  19,702
  21,477
  23,326
  25,250
  27,251
  29,330
  31,492
  33,737
  36,071
  38,498
  41,021
  43,645
  46,377
  49,221
  52,184
  55,272
  58,492
  61,851
  65,357
Revenue / Adjusted assets
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
  0.294
Average production assets, $m
  2,336
  2,751
  3,205
  3,697
  4,226
  4,792
  5,393
  6,029
  6,699
  7,402
  8,139
  8,909
  9,711
  10,547
  11,417
  12,322
  13,262
  14,240
  15,255
  16,310
  17,408
  18,548
  19,735
  20,970
  22,256
  23,596
  24,992
  26,448
  27,967
  29,553
Working capital, $m
  175
  206
  240
  276
  316
  358
  403
  451
  501
  553
  609
  666
  726
  789
  854
  921
  992
  1,065
  1,141
  1,220
  1,302
  1,387
  1,476
  1,568
  1,664
  1,764
  1,869
  1,978
  2,091
  2,210
Total debt, $m
  1,016
  1,331
  1,676
  2,049
  2,450
  2,879
  3,335
  3,818
  4,326
  4,860
  5,418
  6,002
  6,611
  7,245
  7,905
  8,592
  9,305
  10,046
  10,816
  11,617
  12,449
  13,315
  14,215
  15,152
  16,127
  17,144
  18,203
  19,307
  20,459
  21,662
Total liabilities, $m
  1,772
  2,087
  2,431
  2,804
  3,206
  3,635
  4,091
  4,573
  5,081
  5,615
  6,174
  6,758
  7,367
  8,001
  8,661
  9,347
  10,060
  10,802
  11,572
  12,372
  13,205
  14,070
  14,970
  15,907
  16,883
  17,899
  18,958
  20,063
  21,215
  22,418
Total equity, $m
  3,394
  3,997
  4,657
  5,371
  6,140
  6,962
  7,836
  8,760
  9,733
  10,756
  11,826
  12,944
  14,110
  15,325
  16,589
  17,904
  19,270
  20,690
  22,165
  23,699
  25,293
  26,951
  28,675
  30,470
  32,338
  34,285
  36,314
  38,429
  40,636
  42,940
Total liabilities and equity, $m
  5,166
  6,084
  7,088
  8,175
  9,346
  10,597
  11,927
  13,333
  14,814
  16,371
  18,000
  19,702
  21,477
  23,326
  25,250
  27,251
  29,330
  31,492
  33,737
  36,071
  38,498
  41,021
  43,645
  46,377
  49,221
  52,184
  55,272
  58,492
  61,851
  65,358
Debt-to-equity ratio
  0.300
  0.330
  0.360
  0.380
  0.400
  0.410
  0.430
  0.440
  0.440
  0.450
  0.460
  0.460
  0.470
  0.470
  0.480
  0.480
  0.480
  0.490
  0.490
  0.490
  0.490
  0.490
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
  0.500
Adjusted equity ratio
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657
  0.657

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  89
  98
  109
  120
  132
  144
  158
  172
  187
  202
  218
  235
  252
  270
  289
  308
  329
  350
  371
  394
  418
  442
  468
  495
  522
  551
  582
  613
  646
  680
Depreciation, amort., depletion, $m
  467
  550
  641
  739
  845
  958
  1,079
  1,206
  1,340
  1,480
  1,628
  1,782
  1,942
  2,109
  2,283
  2,464
  2,652
  2,848
  3,051
  3,262
  3,482
  3,710
  3,947
  4,194
  4,451
  4,719
  4,998
  5,290
  5,593
  5,911
Funds from operations, $m
  556
  649
  750
  859
  977
  1,103
  1,236
  1,378
  1,526
  1,682
  1,846
  2,016
  2,194
  2,380
  2,572
  2,773
  2,981
  3,198
  3,423
  3,656
  3,899
  4,152
  4,415
  4,689
  4,974
  5,271
  5,580
  5,903
  6,239
  6,591
Change in working capital, $m
  28
  31
  34
  37
  40
  42
  45
  48
  50
  53
  55
  58
  60
  63
  65
  68
  70
  73
  76
  79
  82
  85
  89
  92
  96
  100
  104
  109
  114
  119
Cash from operations, $m
  528
  617
  716
  823
  938
  1,061
  1,191
  1,330
  1,476
  1,630
  1,791
  1,959
  2,134
  2,317
  2,507
  2,705
  2,911
  3,124
  3,347
  3,577
  3,817
  4,067
  4,326
  4,596
  4,878
  5,170
  5,476
  5,794
  6,126
  6,472
Maintenance CAPEX, $m
  -392
  -467
  -550
  -641
  -739
  -845
  -958
  -1,079
  -1,206
  -1,340
  -1,480
  -1,628
  -1,782
  -1,942
  -2,109
  -2,283
  -2,464
  -2,652
  -2,848
  -3,051
  -3,262
  -3,482
  -3,710
  -3,947
  -4,194
  -4,451
  -4,719
  -4,998
  -5,290
  -5,593
New CAPEX, $m
  -376
  -415
  -454
  -492
  -529
  -566
  -601
  -636
  -670
  -703
  -737
  -770
  -803
  -836
  -870
  -905
  -940
  -977
  -1,015
  -1,055
  -1,097
  -1,141
  -1,187
  -1,235
  -1,286
  -1,340
  -1,396
  -1,456
  -1,519
  -1,585
Cash from investing activities, $m
  -768
  -882
  -1,004
  -1,133
  -1,268
  -1,411
  -1,559
  -1,715
  -1,876
  -2,043
  -2,217
  -2,398
  -2,585
  -2,778
  -2,979
  -3,188
  -3,404
  -3,629
  -3,863
  -4,106
  -4,359
  -4,623
  -4,897
  -5,182
  -5,480
  -5,791
  -6,115
  -6,454
  -6,809
  -7,178
Free cash flow, $m
  -240
  -265
  -288
  -310
  -331
  -350
  -368
  -384
  -400
  -413
  -426
  -439
  -450
  -461
  -472
  -483
  -494
  -505
  -517
  -529
  -542
  -556
  -570
  -586
  -603
  -621
  -640
  -661
  -683
  -707
Issuance/(repayment) of debt, $m
  287
  315
  344
  373
  401
  429
  456
  482
  508
  534
  559
  584
  609
  634
  660
  686
  713
  741
  770
  801
  832
  865
  900
  937
  976
  1,016
  1,059
  1,104
  1,152
  1,203
Issuance/(repurchase) of shares, $m
  457
  505
  551
  595
  637
  677
  716
  752
  787
  820
  852
  884
  914
  945
  975
  1,006
  1,038
  1,070
  1,104
  1,139
  1,176
  1,215
  1,256
  1,300
  1,346
  1,395
  1,447
  1,502
  1,561
  1,623
Cash from financing (excl. dividends), $m  
  744
  820
  895
  968
  1,038
  1,106
  1,172
  1,234
  1,295
  1,354
  1,411
  1,468
  1,523
  1,579
  1,635
  1,692
  1,751
  1,811
  1,874
  1,940
  2,008
  2,080
  2,156
  2,237
  2,322
  2,411
  2,506
  2,606
  2,713
  2,826
Total cash flow (excl. dividends), $m
  504
  555
  607
  658
  708
  756
  804
  850
  896
  940
  985
  1,029
  1,073
  1,118
  1,163
  1,209
  1,257
  1,306
  1,357
  1,411
  1,467
  1,525
  1,586
  1,651
  1,719
  1,791
  1,867
  1,946
  2,031
  2,119
Retained Cash Flow (-), $m
  -546
  -603
  -660
  -715
  -769
  -822
  -874
  -924
  -973
  -1,022
  -1,070
  -1,118
  -1,166
  -1,215
  -1,264
  -1,314
  -1,366
  -1,420
  -1,475
  -1,533
  -1,594
  -1,658
  -1,724
  -1,795
  -1,869
  -1,947
  -2,029
  -2,116
  -2,207
  -2,304
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
  -42
  -48
  -53
  -57
  -62
  -66
  -70
  -74
  -78
  -82
  -86
  -89
  -93
  -97
  -101
  -105
  -109
  -114
  -118
  -123
  -127
  -133
  -138
  -144
  -149
  -156
  -162
  -169
  -177
  -184
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  -40
  -44
  -46
  -47
  -48
  -48
  -47
  -46
  -45
  -43
  -41
  -38
  -35
  -33
  -30
  -27
  -24
  -21
  -18
  -16
  -13
  -11
  -9
  -7
  -6
  -5
  -3
  -3
  -2
  -1
Current shareholders' claim on cash, %
  89.4
  80.5
  73.0
  66.7
  61.3
  56.6
  52.6
  49.1
  46.0
  43.3
  40.9
  38.8
  36.8
  35.1
  33.5
  32.1
  30.7
  29.5
  28.4
  27.4
  26.4
  25.5
  24.6
  23.8
  23.1
  22.3
  21.7
  21.0
  20.4
  19.8

Compania de Minas Buenaventura S.A.A. (Buenaventura) is a precious metals company. The Company is engaged in the exploration, mining and processing of gold, silver and other metals in Peru. The Company's segments include Production and sale of minerals; Exploration and development activities; Construction and engineering services; Energy generation and transmission services; Insurance brokerage; Rental of mining concessions; Holding of investment in shares (mainly in Minera Yanacocha S.R.L. and S.M.R.L. Chaupiloma Dos de Cajamarca), and Industrial activities. The Company operates the Orcopampa, Uchucchacua, Julcani, Mallay and Breapampa mines and has controlling interests in over three other mining companies, which operate the Colquijirca-Marcapunta, Tantahuatay and La Zanja mines. It also owns an electric power transmission company, a hydroelectric plant, a processing plant and an engineering services consulting company and non-controlling interests in various other mining companies.

FINANCIAL RATIOS  of  Buenaventura Mining Company Inc. (BVN)

Valuation Ratios
P/E Ratio -11.9
Price to Sales 3.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 9.8
Price to Free Cash Flow 202.1
Growth Rates
Sales Growth Rate 12.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 67.6%
Cap. Spend. - 3 Yr. Gr. Rate -5.9%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 19.6%
Total Debt to Equity 22.9%
Interest Coverage 9
Management Effectiveness
Return On Assets -8.3%
Ret/ On Assets - 3 Yr. Avg. -5.7%
Return On Total Capital -8.9%
Ret/ On T. Cap. - 3 Yr. Avg. -6.3%
Return On Equity -10.8%
Return On Equity - 3 Yr. Avg. -7.5%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 22.8%
Gross Margin - 3 Yr. Avg. 12.2%
EBITDA Margin -27%
EBITDA Margin - 3 Yr. Avg. -21.3%
Operating Margin 12.3%
Oper. Margin - 3 Yr. Avg. 0.7%
Pre-Tax Margin -23.9%
Pre-Tax Margin - 3 Yr. Avg. -19.2%
Net Profit Margin -30.2%
Net Profit Margin - 3 Yr. Avg. -23.3%
Effective Tax Rate -21.2%
Eff/ Tax Rate - 3 Yr. Avg. 54.4%
Payout Ratio 0%

BVN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BVN stock intrinsic value calculation we used $1274 million for the last fiscal year's total revenue generated by Buenaventura Mining Company Inc.. The default revenue input number comes from 0001 income statement of Buenaventura Mining Company Inc.. 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 BVN stock valuation model: a) initial revenue growth rate of 19.2% 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 4.3%, whose default value for BVN is calculated based on our internal credit rating of Buenaventura Mining Company Inc., 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 Buenaventura Mining Company Inc..
    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 BVN stock the variable cost ratio is equal to 89.4%.

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 BVN 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 5.4% for Buenaventura Mining Company Inc..

Corporate tax rate of 27% is the nominal tax rate for Buenaventura Mining Company Inc.. 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 BVN 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 BVN are equal to 153.8%.

Life of production assets of 0 years is the average useful life of capital assets used in Buenaventura Mining Company Inc. 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 BVN is equal to 11.5%. 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 - $2848.037 million for Buenaventura Mining Company Inc. - 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 253.792 million for Buenaventura Mining Company Inc. 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 Buenaventura Mining Company Inc. at the current share price and the inputted number of shares is $3.8 billion.

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