Intrinsic value of Gol Linhas Aereas Inteligentes S.A. - GOL

Previous Close

$10.42

  Intrinsic Value

$0.06

stock screener

  Rating & Target

str. sell

-99%

Previous close

$10.42

 
Intrinsic value

$0.06

 
Up/down potential

-99%

 
Rating

str. sell

We calculate the intrinsic value of GOL 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 16.3

 

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
  3,000
  3,069
  3,148
  3,236
  3,334
  3,442
  3,559
  3,686
  3,823
  3,970
  4,126
  4,294
  4,472
  4,662
  4,863
  5,076
  5,302
  5,540
  5,792
  6,058
  6,339
  6,635
  6,947
  7,276
  7,623
  7,987
  8,371
  8,775
  9,200
  9,647
Variable operating expenses, $m
  2,711
  2,772
  2,842
  2,921
  3,008
  3,104
  3,208
  3,321
  3,442
  3,572
  3,666
  3,815
  3,973
  4,142
  4,320
  4,510
  4,710
  4,922
  5,146
  5,382
  5,632
  5,895
  6,172
  6,464
  6,772
  7,096
  7,437
  7,796
  8,174
  8,571
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
  2,711
  2,772
  2,842
  2,921
  3,008
  3,104
  3,208
  3,321
  3,442
  3,572
  3,666
  3,815
  3,973
  4,142
  4,320
  4,510
  4,710
  4,922
  5,146
  5,382
  5,632
  5,895
  6,172
  6,464
  6,772
  7,096
  7,437
  7,796
  8,174
  8,571
Operating income, $m
  289
  297
  305
  315
  326
  338
  351
  365
  381
  397
  460
  479
  499
  520
  543
  566
  592
  618
  646
  676
  707
  740
  775
  812
  850
  891
  934
  979
  1,027
  1,076
EBITDA, $m
  477
  488
  501
  515
  531
  548
  566
  587
  608
  632
  657
  683
  712
  742
  774
  808
  844
  882
  922
  964
  1,009
  1,056
  1,106
  1,158
  1,213
  1,271
  1,332
  1,396
  1,464
  1,535
Interest expense (income), $m
  192
  254
  52
  60
  69
  78
  89
  101
  114
  128
  143
  159
  176
  194
  214
  235
  257
  280
  305
  331
  358
  388
  418
  451
  485
  521
  559
  599
  641
  686
  732
Earnings before tax, $m
  35
  244
  245
  247
  248
  249
  251
  252
  253
  255
  302
  303
  305
  306
  308
  310
  312
  313
  315
  317
  320
  322
  324
  327
  329
  332
  335
  338
  341
  344
Tax expense, $m
  9
  66
  66
  67
  67
  67
  68
  68
  68
  69
  81
  82
  82
  83
  83
  84
  84
  85
  85
  86
  86
  87
  88
  88
  89
  90
  90
  91
  92
  93
Net income, $m
  25
  178
  179
  180
  181
  182
  183
  184
  185
  186
  220
  221
  222
  224
  225
  226
  227
  229
  230
  232
  233
  235
  237
  238
  240
  242
  244
  247
  249
  251

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
  2,727
  2,790
  2,862
  2,942
  3,031
  3,129
  3,236
  3,351
  3,475
  3,609
  3,751
  3,904
  4,066
  4,238
  4,421
  4,615
  4,820
  5,036
  5,266
  5,508
  5,763
  6,032
  6,316
  6,615
  6,930
  7,261
  7,610
  7,978
  8,364
  8,770
Adjusted assets (=assets-cash), $m
  2,727
  2,790
  2,862
  2,942
  3,031
  3,129
  3,236
  3,351
  3,475
  3,609
  3,751
  3,904
  4,066
  4,238
  4,421
  4,615
  4,820
  5,036
  5,266
  5,508
  5,763
  6,032
  6,316
  6,615
  6,930
  7,261
  7,610
  7,978
  8,364
  8,770
Revenue / Adjusted assets
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
  1.100
Average production assets, $m
  1,113
  1,139
  1,168
  1,201
  1,237
  1,277
  1,320
  1,368
  1,418
  1,473
  1,531
  1,593
  1,659
  1,730
  1,804
  1,883
  1,967
  2,055
  2,149
  2,248
  2,352
  2,462
  2,577
  2,700
  2,828
  2,963
  3,106
  3,256
  3,413
  3,579
Working capital, $m
  -1,044
  -1,068
  -1,095
  -1,126
  -1,160
  -1,198
  -1,239
  -1,283
  -1,330
  -1,381
  -1,436
  -1,494
  -1,556
  -1,622
  -1,692
  -1,766
  -1,845
  -1,928
  -2,016
  -2,108
  -2,206
  -2,309
  -2,418
  -2,532
  -2,653
  -2,780
  -2,913
  -3,054
  -3,202
  -3,357
Total debt, $m
  391
  447
  512
  584
  664
  752
  848
  952
  1,064
  1,184
  1,312
  1,449
  1,595
  1,750
  1,915
  2,089
  2,274
  2,469
  2,675
  2,893
  3,123
  3,365
  3,620
  3,890
  4,173
  4,471
  4,785
  5,116
  5,464
  5,829
Total liabilities, $m
  2,454
  2,511
  2,575
  2,648
  2,728
  2,816
  2,912
  3,016
  3,128
  3,248
  3,376
  3,513
  3,659
  3,814
  3,979
  4,153
  4,338
  4,533
  4,739
  4,957
  5,187
  5,429
  5,684
  5,953
  6,237
  6,535
  6,849
  7,180
  7,528
  7,893
Total equity, $m
  273
  279
  286
  294
  303
  313
  324
  335
  348
  361
  375
  390
  407
  424
  442
  461
  482
  504
  527
  551
  576
  603
  632
  661
  693
  726
  761
  798
  836
  877
Total liabilities and equity, $m
  2,727
  2,790
  2,861
  2,942
  3,031
  3,129
  3,236
  3,351
  3,476
  3,609
  3,751
  3,903
  4,066
  4,238
  4,421
  4,614
  4,820
  5,037
  5,266
  5,508
  5,763
  6,032
  6,316
  6,614
  6,930
  7,261
  7,610
  7,978
  8,364
  8,770
Debt-to-equity ratio
  1.430
  1.600
  1.790
  1.980
  2.190
  2.400
  2.620
  2.840
  3.060
  3.280
  3.500
  3.710
  3.920
  4.130
  4.330
  4.530
  4.720
  4.900
  5.080
  5.250
  5.420
  5.580
  5.730
  5.880
  6.020
  6.160
  6.290
  6.410
  6.530
  6.650
Adjusted equity ratio
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  25
  178
  179
  180
  181
  182
  183
  184
  185
  186
  220
  221
  222
  224
  225
  226
  227
  229
  230
  232
  233
  235
  237
  238
  240
  242
  244
  247
  249
  251
Depreciation, amort., depletion, $m
  188
  192
  196
  200
  204
  210
  215
  221
  228
  235
  196
  204
  213
  222
  231
  241
  252
  264
  275
  288
  302
  316
  330
  346
  363
  380
  398
  417
  438
  459
Funds from operations, $m
  214
  370
  375
  380
  385
  391
  398
  405
  412
  420
  417
  426
  435
  445
  456
  468
  480
  492
  506
  520
  535
  551
  567
  585
  603
  622
  643
  664
  687
  710
Change in working capital, $m
  -20
  -24
  -27
  -31
  -34
  -37
  -41
  -44
  -48
  -51
  -55
  -58
  -62
  -66
  -70
  -74
  -79
  -83
  -88
  -93
  -98
  -103
  -109
  -114
  -121
  -127
  -134
  -141
  -148
  -156
Cash from operations, $m
  234
  394
  402
  411
  420
  429
  439
  449
  460
  471
  471
  484
  497
  511
  526
  542
  558
  575
  593
  613
  633
  654
  676
  699
  724
  749
  776
  805
  834
  866
Maintenance CAPEX, $m
  -140
  -143
  -146
  -150
  -154
  -159
  -164
  -169
  -175
  -182
  -189
  -196
  -204
  -213
  -222
  -231
  -241
  -252
  -264
  -275
  -288
  -302
  -316
  -330
  -346
  -363
  -380
  -398
  -417
  -438
New CAPEX, $m
  -21
  -26
  -29
  -33
  -36
  -40
  -43
  -47
  -51
  -54
  -58
  -62
  -66
  -70
  -75
  -79
  -84
  -89
  -94
  -99
  -104
  -110
  -116
  -122
  -129
  -135
  -142
  -150
  -158
  -166
Cash from investing activities, $m
  -161
  -169
  -175
  -183
  -190
  -199
  -207
  -216
  -226
  -236
  -247
  -258
  -270
  -283
  -297
  -310
  -325
  -341
  -358
  -374
  -392
  -412
  -432
  -452
  -475
  -498
  -522
  -548
  -575
  -604
Free cash flow, $m
  74
  226
  227
  228
  229
  230
  232
  233
  234
  235
  224
  225
  227
  228
  230
  231
  233
  235
  236
  238
  240
  242
  244
  247
  249
  251
  254
  257
  259
  262
Issuance/(repayment) of debt, $m
  -1,505
  56
  65
  72
  80
  88
  96
  104
  112
  120
  128
  137
  146
  155
  165
  174
  185
  195
  206
  218
  230
  242
  255
  269
  283
  298
  314
  331
  348
  366
Issuance/(repurchase) of shares, $m
  1,532
  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  
  27
  56
  65
  72
  80
  88
  96
  104
  112
  120
  128
  137
  146
  155
  165
  174
  185
  195
  206
  218
  230
  242
  255
  269
  283
  298
  314
  331
  348
  366
Total cash flow (excl. dividends), $m
  100
  282
  291
  301
  310
  318
  327
  337
  346
  355
  353
  362
  373
  383
  394
  406
  418
  430
  443
  456
  470
  485
  500
  516
  532
  550
  568
  587
  607
  628
Retained Cash Flow (-), $m
  -1,558
  -6
  -7
  -8
  -9
  -10
  -11
  -12
  -12
  -13
  -14
  -15
  -16
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -39
  -41
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
  -1,457
  276
  284
  292
  301
  309
  317
  325
  333
  342
  338
  347
  357
  366
  376
  386
  397
  408
  420
  432
  444
  458
  471
  486
  501
  517
  533
  550
  568
  587
Discount rate, %
  11.10
  11.66
  12.24
  12.85
  13.49
  14.17
  14.88
  15.62
  16.40
  17.22
  18.08
  18.98
  19.93
  20.93
  21.98
  23.08
  24.23
  25.44
  26.71
  28.05
  29.45
  30.92
  32.47
  34.09
  35.80
  37.59
  39.47
  41.44
  43.51
  45.69
PV of cash for distribution, $m
  -1,312
  221
  201
  180
  160
  139
  120
  102
  85
  70
  54
  43
  34
  26
  19
  14
  10
  7
  5
  3
  2
  1
  1
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

Gol Linhas Aereas Inteligentes SA is a Brazil-based airline company. The Company focuses on carrying passengers to over 60 destinations, approximately 50 in Brazil and 10 in South America and the Caribbean. The Company's fleet includes approximately 120 Boeing 737 aircrafts. The Company operates through two segments: Air transportation and Loyalty program. The Air transportation segment operations originate from its subsidiary Gol Linhas Aereas SA (GLA) for the provision of air transportation services. Its operations also include cargo operations and excess baggage. The Loyalty program segment operations are represented by SMILES coalition loyalty program, which enables clients to accumulate miles and redeem tickets for more than 700 locations worldwide.

FINANCIAL RATIOS  of  Gol Linhas Aereas Inteligentes S.A. (GOL)

Valuation Ratios
P/E Ratio 6.1
Price to Sales 0.5
Price to Book -1.4
Price to Tangible Book
Price to Cash Flow -235.7
Price to Free Cash Flow -11.3
Growth Rates
Sales Growth Rate 0.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -26.8%
Cap. Spend. - 3 Yr. Gr. Rate 8.8%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity -151.9%
Total Debt to Equity -170.9%
Interest Coverage 3
Management Effectiveness
Return On Assets 14.3%
Ret/ On Assets - 3 Yr. Avg. -10%
Return On Total Capital 23.6%
Ret/ On T. Cap. - 3 Yr. Avg. -27.9%
Return On Equity -20.8%
Return On Equity - 3 Yr. Avg. -573.6%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 23.4%
Gross Margin - 3 Yr. Avg. 19.3%
EBITDA Margin 24.5%
EBITDA Margin - 3 Yr. Avg. -0.5%
Operating Margin 7.1%
Oper. Margin - 3 Yr. Avg. 3.4%
Pre-Tax Margin 13.8%
Pre-Tax Margin - 3 Yr. Avg. -10.3%
Net Profit Margin 8.6%
Net Profit Margin - 3 Yr. Avg. -16.5%
Effective Tax Rate 18.8%
Eff/ Tax Rate - 3 Yr. Avg. -7.6%
Payout Ratio 0%

GOL stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GOL stock intrinsic value calculation we used $2941 million for the last fiscal year's total revenue generated by Gol Linhas Aereas Inteligentes S.A.. The default revenue input number comes from 0001 income statement of Gol Linhas Aereas Inteligentes S.A.. 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 GOL 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 11.1%, whose default value for GOL is calculated based on our internal credit rating of Gol Linhas Aereas Inteligentes S.A., 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 Gol Linhas Aereas Inteligentes S.A..
    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 GOL stock the variable cost ratio is equal to 90.4%.

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 GOL 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 13.4% for Gol Linhas Aereas Inteligentes S.A..

Corporate tax rate of 27% is the nominal tax rate for Gol Linhas Aereas Inteligentes S.A.. 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 GOL 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 GOL are equal to 37.1%.

Life of production assets of 7.8 years is the average useful life of capital assets used in Gol Linhas Aereas Inteligentes S.A. 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 GOL is equal to -34.8%. 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 - $-1284.9 million for Gol Linhas Aereas Inteligentes S.A. - 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 1565.579 million for Gol Linhas Aereas Inteligentes S.A. 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 Gol Linhas Aereas Inteligentes S.A. at the current share price and the inputted number of shares is $16.3 billion.

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