Discounted Cash Flow Calculation for DB:10I using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:10I DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Kier Group's share price is below the future cash flow value, and at a moderate discount (> 20%).
Kier Group's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Kier Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
Kier Group's earnings are expected to grow significantly at over 20% yearly.
Kier Group's revenue is expected to grow by 4.6% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Kier Group's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Andrew O. B. Davies is the Chief Executive Officer of Kier Group plc since April 15, 2019 and its Executive Director since April 2019. He was the Chief Executive Officer of Carillion plc until January 22, 2018 and serves as its Director. Mr. Davies served as the Chief Executive Officer at Wates Group Limited since January 6, 2014 until November 16, 2017. Mr. Davies served as Interim Group Finance Director at Chemring Group plc since September 30, 2016 until January 9, 2017 and served as its Deputy Group Finance Director until September 30, 2016. Mr. Davies He has a wealth of relevant sector experience, having served in senior roles at BAE Systems Plc for more than fourteen years. Prior to joining Wates Group in January 2014, Mr. Davies served as Group Strategy Director at BAE Systems plc since 2008. Mr. Davies served as Group Strategic Development Director of BAE Systems plc since July 2003 and Managing Director of Land Systems and Training Solutions since October 2004. He served as Managing Director of Training Solutions at BAE Systems plc. He served as Managing Director of BAE Systems' Maritime business, a major division of BAE Systems, managing a turnover in excess of £2 billion and with over 14,000 employees. He joined British Aerospace Civil Aircraft Division in 1985. From 1985 to 1997, he spent time in various commercial roles, culminating in his appointment as General Manager of the Asset Management Jets business in 1996. In 1997, he worked in Abu Dhabi, setting up Oasis Leasing JSC and becoming its first General Manager, after which he returned to Military Aircraft at Warton working in various strategic and commercial roles. He has been an Independent Non-Executive Director at Chemring Group plc since May 17, 2016. Mr. Davies served as a Director of Wates Group Limited since January 2014 until November 16, 2017. He graduated from Sheffield University.
Insufficient data for Andrew O. to compare compensation growth.
Insufficient data for Andrew O. to establish whether their remuneration is reasonable compared to companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Kier Group management team is about average.
Finance Director & Executive Director
COO & Executive Director
Andrew O. Davies
CEO & Executive Director
Chief Information Officer
Head of Investor Relations
General Counsel & Company Secretary
Group HR Director
Regional Managing Director
Managing Director of Kier Workplace Services
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Kier Group board of directors is about average.
Kier Group plc primarily engages in construction business in the United Kingdom, the Americas, the Middle East, the Far East, and Australia. The company operates in four divisions: Property, Residential, Construction, and Services. It offers construction services, including civil engineering, construction management, engineering design, mechanical and electrical design, interiors and refurbishments, and construction related technical services, as well as infrastructure support services for rail network. The company also provides range of services, such as strategic asset management, planned and reactive housing maintenance, and facilities management services; and environmental services comprising street and grounds maintenance, refuse collection and recycling to highways maintenance, street lighting, fleet, and waterway services, as well as energy solutions. In addition, it invests in, develops, and manages offices, industrial, retail leisure, and mixed-use properties; and develops housing schemes; and offers a range of property maintenance services to social housing providers. It serves clients in various markets, such as public sector, commercial, defense and justice, education, energy and waste, healthcare, residential, industrial, infrastructure, leisure and hotels, retail, science and pharmaceuticals, transport, and utilities. Kier Group plc was founded in 1992 and is headquartered in Sandy, the United Kingdom.
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