New valuation techniques

Finally I can get to the new valuation techniques I have been working on lately, some are from the Manual of Ideas free download that I wrote about here, and see how they apply when used on Vivendi.

I will only put the base case on here and explain how you can change the values higher and lower if you would like to incorporate some of these into your use.

First up is a revenue and EBIT based valuation:

  • TTM revenue=28.8 billion
  • Multiplied by:
  • Average 7 year EBIT %: 18.24%
  • Equals:
  • Estimated EBIT: 5.11 billion
  • Multiplied by:
  • Assumed fair value multiple of EBIT: 8X
  • Equals:
  • Estimated fair enterprise value of VIVHY:40.86 billion
  • Plus:
  • Cash, cash equivalents, and short term investments:4.85 billion
  • Minus:
  • Total debt: 15.71 billion
  • Equals:
  • Estimated fair value of common equity of VIVHY: 29.99 billion Euros.
  • Equals:
  • $36.60 billion.
  • Divided by
  • Number of shares: 1.242 billion
  • Equals:
  • $29.47 per share.

If you want higher and lower estimate of values than you just change the EBIT multiple.

Second technique is a book value and P/B technique.

  • Book Value: 23.75 billion
  • Minus:
  • Intangibles: 6.814 billion
  • Equals:
  • Tangible book value: 16.94 billion
  • Multiplied by:
  • Industry P/B: 2X
  • Equals:
  • Industry multiple implied fair value: 33.88 billion (27.28 Euros per share)
  • Multiplied by:
  • Assumed multiple as a percentage of industry multiple: 95% (1.9X multiple of tangible book.
  • Equals:
  • Estimated fair value of the common equity of VIVHY: 32.19 billion Euros.
  • Equals:
  • $39.4 billion
  • Divided by:
  • Number of shares of 1.242 billion
  • Equals:
  • $31.72 per share.

To adjust this valuation change the industry multiple percentage.

As you can see, using these techniques I am still finding VIVHY to be very undervalued to its current price of $18.33 per share.

I was originally planning on putting more on here, but I will save those for my next company analysis and valuation.  I used five different valuation techniques to value the company I am researching right now, including one that is not in the MoI publication.

I will hopefully have the analysis up at the latest by Monday since I am going to be at one of my best friends weddings this weekend.

This is just a sample of some of the techniques in the Manual of Ideas free publication.  There are several more, including some industry specific ones, like how to value gas and oil reserves.  I highly recommend downloading the free publication from MoI to hone some of your techniques and maybe learn some new ones.

Hope you enjoy


Shifting gears, Dole news, and my latest article published

Shifting Gears

Recently I have been concentrating pretty heavily on trying to find, assess, and value new companies that I could invest in.  I am now going to be shifting gears for a bit to expand my knowledge.

The Manual of Ideas that I posted about a few days ago, and the 32 free books from csinvesting are amazing,  I am most of the way through the MoI free publication and the information in it is incredible.

I am going to be studying specifically from the MoI publication the valuation techniques that they go over, try to learn them, revalue some of the companies I have already valued, and incorporate some of them into my valuation techniques.

When I feel comfortable with the new techniques I will post some of the new valuations here, and see if that changes my assumptions on some of the stocks I have already talked about.

After I finish up with the MoI, I am going to start one of the free books that I downloaded yesterday from csinvesting’s site, so it will probably be a little while before I look for a new company to evaluate.

In the meantime I will still be posting any news I find on companies I own, my random thoughts, and any new, good information I find from websites and blogs.

Dole News

The first article talks about the best and worst boards in the country, Dole came out as one of the worst.  The main reason being that Dole, being majority owned by one person, is not a very transparent company.

The second article is another article, from another analyst, saying that if Dole decides to do some kind of asset sale or spin off they could be worth $16 a share, and talks about how the packaged fruit business has amazing margins. I have specifically talked about all of this in my article here.  So why am I posting this?  Because stated in the article from Dole CEO David DeLorenzo “Our goal would be to accomplish something by the end of this year. We have come across some opportunities that, if we are able to execute, would be good for both the packaged foods business and the commodities business.” That is new news.  Emphasis is mine.

For those who are interested in the company, which I am, it looks like we have the rest of this year to accumulate shares before they announce anything on the spin off or asset sale front.

Latest article posted

My latest article, on L.B. Foster, has been posted to Seeking Alpha and can be viewed here, for those who want to follow the discussion in the comments section.