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

| About: Monsanto Company (MON)

Monsanto (NYSE: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

  • RevenueReuters 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?

Disclosure: None.