Intrinsic value of Fresh Del Monte Produce, Inc. - FDP

Previous Close

$28.05

  Intrinsic Value

$5.68

stock screener

  Rating & Target

str. sell

-80%

Previous close

$28.05

 
Intrinsic value

$5.68

 
Up/down potential

-80%

 
Rating

str. sell

We calculate the intrinsic value of FDP 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 1.4

 

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, %
  9.70
  9.23
  8.81
  8.43
  8.08
  7.78
  7.50
  7.25
  7.02
  6.82
  6.64
  6.47
  6.33
  6.19
  6.08
  5.97
  5.87
  5.78
  5.71
  5.63
  5.57
  5.51
  5.46
  5.42
  5.37
  5.34
  5.30
  5.27
  5.25
  5.22
Revenue, $m
  4,930
  5,385
  5,859
  6,353
  6,866
  7,400
  7,955
  8,532
  9,131
  9,754
  10,401
  11,075
  11,776
  12,505
  13,265
  14,056
  14,882
  15,742
  16,640
  17,578
  18,558
  19,581
  20,651
  21,769
  22,939
  24,163
  25,445
  26,787
  28,192
  29,664
Variable operating expenses, $m
  4,742
  5,174
  5,624
  6,093
  6,581
  7,088
  7,615
  8,163
  8,732
  9,324
  9,880
  10,520
  11,185
  11,878
  12,600
  13,352
  14,136
  14,953
  15,806
  16,697
  17,627
  18,599
  19,615
  20,678
  21,789
  22,952
  24,170
  25,444
  26,779
  28,177
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
  4,742
  5,174
  5,624
  6,093
  6,581
  7,088
  7,615
  8,163
  8,732
  9,324
  9,880
  10,520
  11,185
  11,878
  12,600
  13,352
  14,136
  14,953
  15,806
  16,697
  17,627
  18,599
  19,615
  20,678
  21,789
  22,952
  24,170
  25,444
  26,779
  28,177
Operating income, $m
  188
  211
  235
  259
  285
  312
  340
  369
  399
  430
  521
  555
  590
  627
  665
  705
  746
  789
  834
  881
  930
  982
  1,035
  1,091
  1,150
  1,211
  1,276
  1,343
  1,413
  1,487
EBITDA, $m
  344
  376
  409
  443
  479
  516
  555
  595
  637
  680
  725
  772
  821
  872
  925
  980
  1,038
  1,098
  1,161
  1,226
  1,294
  1,366
  1,440
  1,518
  1,600
  1,685
  1,775
  1,868
  1,966
  2,069
Interest expense (income), $m
  3
  36
  44
  52
  61
  71
  80
  90
  101
  111
  123
  134
  147
  159
  172
  186
  200
  215
  231
  247
  264
  281
  300
  319
  339
  360
  382
  405
  429
  454
  480
Earnings before tax, $m
  152
  167
  182
  198
  215
  232
  250
  268
  287
  307
  387
  409
  431
  454
  479
  504
  531
  558
  587
  617
  649
  682
  716
  752
  790
  829
  871
  914
  959
  1,007
Tax expense, $m
  41
  45
  49
  53
  58
  63
  67
  72
  78
  83
  104
  110
  116
  123
  129
  136
  143
  151
  159
  167
  175
  184
  193
  203
  213
  224
  235
  247
  259
  272
Net income, $m
  111
  122
  133
  145
  157
  169
  182
  196
  210
  224
  282
  298
  315
  332
  350
  368
  387
  408
  429
  451
  474
  498
  523
  549
  577
  605
  636
  667
  700
  735

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
  3,570
  3,899
  4,243
  4,600
  4,972
  5,359
  5,760
  6,178
  6,612
  7,063
  7,532
  8,019
  8,527
  9,055
  9,605
  10,178
  10,776
  11,399
  12,050
  12,729
  13,438
  14,179
  14,953
  15,763
  16,611
  17,497
  18,425
  19,397
  20,414
  21,480
Adjusted assets (=assets-cash), $m
  3,570
  3,899
  4,243
  4,600
  4,972
  5,359
  5,760
  6,178
  6,612
  7,063
  7,532
  8,019
  8,527
  9,055
  9,605
  10,178
  10,776
  11,399
  12,050
  12,729
  13,438
  14,179
  14,953
  15,763
  16,611
  17,497
  18,425
  19,397
  20,414
  21,480
Revenue / Adjusted assets
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
  1.381
Average production assets, $m
  1,740
  1,901
  2,068
  2,243
  2,424
  2,612
  2,808
  3,012
  3,223
  3,443
  3,672
  3,909
  4,157
  4,414
  4,682
  4,962
  5,253
  5,557
  5,874
  6,205
  6,551
  6,912
  7,290
  7,684
  8,098
  8,530
  8,982
  9,456
  9,952
  10,471
Working capital, $m
  582
  635
  691
  750
  810
  873
  939
  1,007
  1,077
  1,151
  1,227
  1,307
  1,390
  1,476
  1,565
  1,659
  1,756
  1,858
  1,964
  2,074
  2,190
  2,311
  2,437
  2,569
  2,707
  2,851
  3,003
  3,161
  3,327
  3,500
Total debt, $m
  813
  971
  1,136
  1,307
  1,486
  1,671
  1,864
  2,065
  2,273
  2,489
  2,714
  2,949
  3,192
  3,446
  3,710
  3,985
  4,272
  4,571
  4,883
  5,209
  5,549
  5,905
  6,277
  6,666
  7,072
  7,498
  7,943
  8,410
  8,898
  9,410
Total liabilities, $m
  1,714
  1,872
  2,037
  2,208
  2,387
  2,572
  2,765
  2,965
  3,174
  3,390
  3,615
  3,849
  4,093
  4,346
  4,610
  4,886
  5,172
  5,472
  5,784
  6,110
  6,450
  6,806
  7,178
  7,566
  7,973
  8,399
  8,844
  9,310
  9,799
  10,310
Total equity, $m
  1,856
  2,028
  2,206
  2,392
  2,585
  2,787
  2,995
  3,213
  3,438
  3,673
  3,917
  4,170
  4,434
  4,709
  4,995
  5,293
  5,603
  5,928
  6,266
  6,619
  6,988
  7,373
  7,776
  8,197
  8,637
  9,098
  9,581
  10,086
  10,615
  11,170
Total liabilities and equity, $m
  3,570
  3,900
  4,243
  4,600
  4,972
  5,359
  5,760
  6,178
  6,612
  7,063
  7,532
  8,019
  8,527
  9,055
  9,605
  10,179
  10,775
  11,400
  12,050
  12,729
  13,438
  14,179
  14,954
  15,763
  16,610
  17,497
  18,425
  19,396
  20,414
  21,480
Debt-to-equity ratio
  0.440
  0.480
  0.510
  0.550
  0.570
  0.600
  0.620
  0.640
  0.660
  0.680
  0.690
  0.710
  0.720
  0.730
  0.740
  0.750
  0.760
  0.770
  0.780
  0.790
  0.790
  0.800
  0.810
  0.810
  0.820
  0.820
  0.830
  0.830
  0.840
  0.840
Adjusted equity ratio
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520
  0.520

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  111
  122
  133
  145
  157
  169
  182
  196
  210
  224
  282
  298
  315
  332
  350
  368
  387
  408
  429
  451
  474
  498
  523
  549
  577
  605
  636
  667
  700
  735
Depreciation, amort., depletion, $m
  156
  165
  174
  184
  194
  204
  215
  226
  238
  250
  204
  217
  231
  245
  260
  276
  292
  309
  326
  345
  364
  384
  405
  427
  450
  474
  499
  525
  553
  582
Funds from operations, $m
  267
  287
  307
  328
  350
  373
  397
  422
  448
  475
  486
  515
  546
  577
  610
  644
  679
  716
  755
  795
  838
  882
  928
  976
  1,027
  1,079
  1,135
  1,192
  1,253
  1,317
Change in working capital, $m
  51
  54
  56
  58
  61
  63
  65
  68
  71
  73
  76
  79
  83
  86
  90
  93
  97
  102
  106
  111
  116
  121
  126
  132
  138
  144
  151
  158
  166
  174
Cash from operations, $m
  215
  233
  251
  270
  290
  310
  332
  354
  377
  401
  410
  436
  463
  491
  520
  550
  582
  615
  649
  685
  722
  761
  802
  844
  888
  935
  983
  1,034
  1,087
  1,143
Maintenance CAPEX, $m
  -88
  -97
  -106
  -115
  -125
  -135
  -145
  -156
  -167
  -179
  -191
  -204
  -217
  -231
  -245
  -260
  -276
  -292
  -309
  -326
  -345
  -364
  -384
  -405
  -427
  -450
  -474
  -499
  -525
  -553
New CAPEX, $m
  -155
  -161
  -167
  -174
  -181
  -188
  -196
  -204
  -212
  -220
  -229
  -238
  -247
  -257
  -268
  -279
  -291
  -304
  -317
  -331
  -346
  -361
  -378
  -395
  -413
  -432
  -452
  -474
  -496
  -520
Cash from investing activities, $m
  -243
  -258
  -273
  -289
  -306
  -323
  -341
  -360
  -379
  -399
  -420
  -442
  -464
  -488
  -513
  -539
  -567
  -596
  -626
  -657
  -691
  -725
  -762
  -800
  -840
  -882
  -926
  -973
  -1,021
  -1,073
Free cash flow, $m
  -28
  -24
  -22
  -19
  -16
  -13
  -9
  -6
  -2
  2
  -10
  -6
  -2
  3
  7
  11
  15
  19
  23
  28
  32
  36
  40
  44
  49
  53
  57
  61
  66
  70
Issuance/(repayment) of debt, $m
  150
  158
  165
  172
  178
  186
  193
  200
  208
  216
  225
  234
  244
  254
  264
  275
  287
  299
  312
  326
  340
  356
  372
  389
  407
  426
  445
  466
  488
  512
Issuance/(repurchase) of shares, $m
  53
  49
  46
  41
  37
  32
  27
  21
  16
  10
  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  
  203
  207
  211
  213
  215
  218
  220
  221
  224
  226
  225
  234
  244
  254
  264
  275
  287
  299
  312
  326
  340
  356
  372
  389
  407
  426
  445
  466
  488
  512
Total cash flow (excl. dividends), $m
  175
  183
  188
  194
  199
  205
  210
  216
  222
  229
  215
  228
  242
  256
  271
  286
  302
  318
  336
  353
  372
  392
  412
  433
  455
  478
  503
  528
  554
  582
Retained Cash Flow (-), $m
  -164
  -171
  -179
  -186
  -193
  -201
  -209
  -217
  -226
  -235
  -244
  -254
  -264
  -275
  -286
  -298
  -311
  -324
  -338
  -353
  -369
  -385
  -403
  -421
  -441
  -461
  -483
  -505
  -529
  -554
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
  11
  12
  10
  8
  6
  4
  1
  -1
  -3
  -6
  -29
  -25
  -22
  -19
  -15
  -12
  -9
  -6
  -3
  0
  3
  6
  9
  12
  15
  17
  20
  23
  25
  28
Discount rate, %
  5.00
  5.25
  5.51
  5.79
  6.08
  6.38
  6.70
  7.04
  7.39
  7.76
  8.14
  8.55
  8.98
  9.43
  9.90
  10.39
  10.91
  11.46
  12.03
  12.63
  13.27
  13.93
  14.63
  15.36
  16.13
  16.93
  17.78
  18.67
  19.60
  20.58
PV of cash for distribution, $m
  11
  11
  8
  6
  4
  2
  1
  0
  -2
  -3
  -12
  -9
  -7
  -5
  -4
  -2
  -2
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  96.2
  93.2
  90.6
  88.6
  86.9
  85.6
  84.6
  83.8
  83.3
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0
  83.0

Fresh Del Monte Produce Inc. is a holding company. The Company, through its subsidiaries, is engaged in sourcing, transportation and marketing of fresh and fresh-cut produce together with prepared food products in Europe, Africa and the Middle East. Its operations are aggregated into business segments on the basis of its products: bananas, other fresh produce and prepared food. It sources its fresh produced products, such as bananas, pineapples, melons, tomatoes, grapes, apples, pears, peaches, plums, nectarines, cherries, citrus, avocados, blueberries and kiwi from Central and South America, Africa, the Philippines, North America and Europe. It sources its prepared food products from Africa, Europe and the Middle East. It distributes its products in North America, Europe, Asia, the Middle East, Africa and South America. It markets its products under the DEL MONTE brand, as well as under other brands, including UTC, Rosy, Fruit Express, Just Juice, Fruitini and other regional brands.

FINANCIAL RATIOS  of  Fresh Del Monte Produce, Inc. (FDP)

Valuation Ratios
P/E Ratio 6.4
Price to Sales 0.4
Price to Book 0.8
Price to Tangible Book
Price to Cash Flow 4.3
Price to Free Cash Flow 7.8
Growth Rates
Sales Growth Rate -1.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.4%
Cap. Spend. - 3 Yr. Gr. Rate -1.7%
Financial Strength
Quick Ratio 20
Current Ratio 0
LT Debt to Equity 12.9%
Total Debt to Equity 12.9%
Interest Coverage 80
Management Effectiveness
Return On Assets 8.7%
Ret/ On Assets - 3 Yr. Avg. 5.6%
Return On Total Capital 11.3%
Ret/ On T. Cap. - 3 Yr. Avg. 7.2%
Return On Equity 12.9%
Return On Equity - 3 Yr. Avg. 8.2%
Asset Turnover 1.5
Profitability Ratios
Gross Margin 11.5%
Gross Margin - 3 Yr. Avg. 9.7%
EBITDA Margin 8%
EBITDA Margin - 3 Yr. Avg. 5.9%
Operating Margin 6.1%
Oper. Margin - 3 Yr. Avg. 4.3%
Pre-Tax Margin 5.9%
Pre-Tax Margin - 3 Yr. Avg. 4%
Net Profit Margin 5.6%
Net Profit Margin - 3 Yr. Avg. 3.6%
Effective Tax Rate 4.6%
Eff/ Tax Rate - 3 Yr. Avg. 10.3%
Payout Ratio 12.4%

FDP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the FDP stock intrinsic value calculation we used $4494 million for the last fiscal year's total revenue generated by Fresh Del Monte Produce, Inc.. The default revenue input number comes from 0001 income statement of Fresh Del Monte Produce, 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 FDP stock valuation model: a) initial revenue growth rate of 9.7% 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%, whose default value for FDP is calculated based on our internal credit rating of Fresh Del Monte Produce, 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 Fresh Del Monte Produce, 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 FDP stock the variable cost ratio is equal to 96.3%.

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 FDP 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 Fresh Del Monte Produce, Inc..

Corporate tax rate of 27% is the nominal tax rate for Fresh Del Monte Produce, 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 FDP 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 FDP are equal to 35.3%.

Life of production assets of 18 years is the average useful life of capital assets used in Fresh Del Monte Produce, 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 FDP is equal to 11.8%. 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 - $1692 million for Fresh Del Monte Produce, 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 48.491 million for Fresh Del Monte Produce, 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 Fresh Del Monte Produce, Inc. at the current share price and the inputted number of shares is $1.4 billion.

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