Monsanto's Intrinsic Value Looks to Be 12% Below Stock Price

Monsanto (MON) is a global supplier of agricultural products for farmers.  $MON is down just over 11% over the last 12 months - compared with the S&P500 being down over 33%.  How does the current share price look from an intrinsic value perspective?

Valuecruncher valuation model of $MON with interactive assumptions

Valuecruncher produces a valuation of US$82.63 for $MON. This is a current valuation (an estimate of intrinsic value using a discounted cash flow model) not a target price. This valuation is 11.9% below the current share price of US$93.74.

Assumptions

• Revenue: Reuters aggregates 10 analysts covering $MON and these analysts have mean estimates of 2009 revenues of US$13.1 billion. For our analysis we have used US$13.0 billion in 2009, US$14.5 billion in 2010 and US$15.5 billion in 2011.
• Profitability: We have used an EBITDA margin of 32.0% in 2008 rising to 34.0% in 2010. Reuters has $MON‘s EBITD margin at 31.4% last year and averaging 23.3% over the last five-years.
• Capital Expenditure: We have assumed capital expenditures of US$850.0 million per annum moving forward.
• Discount Rate: 10.0%.
• Terminal Growth Rate: 4.0%.

Our analysis incorporates the cash and debt the $MON balance sheet – Valuecruncher calculates a net debt number.

Play with our assumptions – what does your analysis say?

View the full MON chart at Wikinvest

Disclosure: None.

Comments

[funfun:]

These arcane econometric models are what triggered much of the massive mismanagement of risk of financial assets in the first place!

This model ignores the innovative thrust and creative energy of Monsanto's superior-performing management!

...funfun..

2008 Nov 05 08:31 AM

[SteveW (Mar...:]

better still, with a stock that is making 10% moves on a regular basis and is still well above historic volatility, why not open a volatility spread? It's going to break out of the range eventually, and although it looks like the break will be to the upside, why take that chance?

<img src="https://images2.o...

2008 Nov 10 01:51 PM