Thanks Clown, Paul for the replies.
Checking the corn price charts, I notice that corn is already at multi-year highs, am not sure how much higher it will go.
Based on my calculation, and taking into account a 10% increase in corn prices, i.e. a $50mil hit to pre-tax earnings,
SFD EV/EBIT would be 7.06,
Earnings power value = $35 per share
at 20% increase in corn prices,
EV/EBIT would be 7.62.
Earnings power value = $33 per share
This implies a significant margin of safety, though I am not sure if my calculations are 100% accurate.
P.S. Enterprise value I calculated at roughly 4.75 billion
P.P.S. EPV is a concept I learnt reading Applied Value Investing, and hope to get your thoughts on the valutation models explained
Cheers,
XC |
