AIM:AMER Intrinsic Value Nov 22nd 17
In the visual above, we see how how AMER’s earnings are expected to move going forward, which should give you some color on AMER’s outlook. Next, I calculate the terminal value, which is the business’s cash flow after the first stage. I’ve decided to use the 10-year government bond rate of 2.8% as the stable growth rate, which is rightly below GDP growth, but more towards the conservative side. After discounting the terminal value back five years, the present value becomes $273M.
The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is $342M. In the final step we divide the equity value by the number of shares outstanding. This results in an intrinsic value of £0.21, which, compared to the current share price of £0.1925, we find that Amerisur Resources is about right, perhaps slightly undervalued at a 9.70% discount to what it is available for right now.
Next Steps:
Whilst important, DCF calculation shouldn’t be the only metric you look at when researching a company.
For AMER, I’ve compiled three important aspects you should further examine:
PS. Simply Wall St does a DCF calculation for every GB stock every 6 hours, so if you want to find the intrinsic value of any other stock just search here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.