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Discounted Cash Flow (DCF) Analysis Unlevered


Gerdau S.A.

Gerdau S.A. (GGB)

Basic Materials

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 16,883.9615,977.2911,038.7111,564.1611,150.1611,897.2211,221.4610,584.089,982.909,415.878,881.05
Revenue (%)
EBITDA 1,874.121,831.00-420.57601.341,133.971,444.32865.17816.03769.68725.96684.73
EBITDA (%)
EBIT 1,014.73993.79-1,080.69-178.09501.76956.54251.36237.08223.62210.92198.94
EBIT (%)
Depreciation 859.39837.21660.12779.42632.21487.79613.81578.95546.06515.05485.79
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 1,788.012,196.881,752.951,869.921,020.24863.741,361.161,283.851,210.931,142.151,077.27
Total Cash (%)
Account Receivables 1,727.231,666.431,162.381,098.59845.18825.671,032.37973.74918.43866.26817.06
Account Receivables (%)
Inventories 3,599.663,329.672,224.301,945.092,023.752,362.792,190.432,066.011,948.661,837.981,733.58
Inventories (%)
Accounts Payable 1,386.171,215.87919.52843.03960.031,061.23915.67863.66814.60768.34724.69
Accounts Payable (%)
Capital Expenditure -999.53-450.56-566.29-312.23-95.89728.11-210.96-198.98-187.68-177.02-166.96
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 4.09
Diluted Shares Outstanding 443.21
Cost of Debt
Tax Rate -7.91
After-tax Cost of Debt 0.45
Risk-Free Rate
Market Risk Premium
Cost of Equity 18.46
Total Debt 3,371.59
Total Equity 1,812.73
Total Capital 5,184.32
Debt Weighting 65.03
Equity Weighting 34.97
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 16,883.9615,977.2911,038.7111,564.1611,150.1611,897.2211,221.4610,584.089,982.909,415.878,881.05
EBITDA 1,874.121,831.00-420.57601.341,133.971,444.32865.17816.03769.68725.96684.73
EBIT 1,014.73993.79-1,080.69-178.09501.76956.54251.36237.08223.62210.92198.94
Tax Rate -17.95%-12.01%24.77%-11.77%-461.77%-7.91%-81.11%-81.11%-81.11%-81.11%-81.11%
EBIAT 1,196.901,113.11-813.03-199.042,818.731,032.23455.23429.38404.99381.98360.29
Depreciation 859.39837.21660.12779.42632.21487.79613.81578.95546.06515.05485.79
Accounts Receivable -60.80504.0663.78253.4119.52-206.7158.6455.3152.1749.20
Inventories -269.991,105.37279.21-78.66-339.03172.36124.42117.35110.68104.40
Accounts Payable --170.30-296.35-76.50117.00101.20-145.56-52.01-49.06-46.27-43.64
Capital Expenditure --548.97115.73-254.05-216.34-824.00939.07-11.98-11.30-10.66-10.05
UFCF 2,056.301,561.841,275.89592.823,526.36477.701,828.211,127.391,063.351,002.95945.99
WACC
PV UFCF 1,662.61932.40799.78686.03588.45
SUM PV UFCF 9,632.16

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 9.96
Free cash flow (t + 1) 983.82
Terminal Value 16,507.12
Present Value of Terminal Value 10,268.28

Intrinsic Value

Enterprise Value 19,900.44
Net Debt 2,507.85
Equity Value 17,392.59
Shares Outstanding 443.21
Equity Value Per Share 39.24