Discounted Cash Flow Calculation for LSE:NLMK 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.
LSE:NLMK DCF 1st Stage: Next 10 year cash flow forecast
The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
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
Novolipetsk Steel's earnings available for a low price, and how does
this compare to other companies in the same industry?
Novolipetsk Steel's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
Novolipetsk Steel's revenue is expected to decrease over the next 1-3 years, this is not considered high growth.
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.
Novolipetsk Steel'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
Metals and Mining
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
6/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Novolipetsk Steel's finances.
The net worth of a company is the difference between its assets and liabilities.
Novolipetsk Steel is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Novolipetsk Steel's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Novolipetsk Steel's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of physical assets or inventory.
Debt is covered by short term assets, assets are 1.9x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
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. Grigory Fedorishin has been President, Chief Executive Officer and Chairman of the Management Board of PJSC Novolipetsk Steel since March 12, 2018 and as its Member of Management Board since November 06, 2012. Mr. Fedorishin served as Deputy Chairman of the Management Board and Senior Vice President at OJSC Novolipetsk Steel from March 13, 2017 until March 12, 2018. Mr. Fedorishin served as the Chief Financial Officer of OJSC Novolipetsk Steel until March 13, 2017. Mr. Fedorishin served as Vice President of Finance of OJSC Novolipetsk Steel from December 28, 2012 to March 13, 2017. Prior to that, Mr. Fedorishin served as Director of Strategy and Business Development at OJSC Novolipetsk Steel. From 2009 to 2011 served as an investment manager at Libra Capital, a Moscow-based investment management company. From 2001 to 2009 worked for PricewaterhouseCoopers consulting company where he held positions up to a director of business restructuring practice. He graduated from Academy of Finance, Moscow. He holds a master degree in Business Administration from INSEAD business school, France & Singapore. He is a member of an association of Certified Financial Analysts (CFA).
Insufficient data for Grigory to compare compensation growth.
Insufficient data for Grigory to establish whether their remuneration is reasonable compared to companies of similar size in United Kingdom of Great Britain and Northern Ireland.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Novolipetsk Steel management team is less than 2 years, this suggests a new team.
Chief Financial Officer
Ben De Vos
VP of International Operations & Member of the Management Board
MD & Member of Management Board
VP of Sales & Member of the Management Board
VP of Logistics & Member of the Management Board
VP of Risk Management & Member of the Management Board
VP of Energy & Member of the Management Board
VP of Operational Efficiency & Member of Management Board
VP for Human Resources & Management System and member of the Management Board
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Novolipetsk Steel board of directors is about average.
Board of Directors
Chairman of the Board
Chairman of the Audit Commission & Director of Audit Division
A Look At The Fair Value Of Novolipetsk Steel (LON:NLMK)
In this article I am going to calculate the intrinsic value of Novolipetsk Steel (LON:NLMK). … by estimating the company's future cash flows and discounting them to their present value. … Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model
Novolipetsk Steel, together with its subsidiaries, manufactures and sells steel products. It operates in six segments: Mining, Russian Flat Products, Russian Long Products, NLMK USA, NLMK DanSteel and Plates Distribution Network, and Investments in NBH. The Mining segment mines, processes, and sells iron ore, fluxing limestone, and metallurgical dolomite, as well as supplies raw materials to the steel segment and third parties. The Russian Flat Products segment produces and sells coke and steel products, such as pig iron, steel slabs, hot rolled steel, cold rolled steel, galvanized cold rolled sheets, and cold rolled sheets with polymeric coatings, as well as electro-technical steel. The Russian Long Products segment produces long products, reinforcing rebars, and metalware from scrap iron collection and recycling. The NLMK USA segment produces and sells steel products in the United States. The NLMK DanSteel and Plates Distribution Network segment produces and sells steel plates in Europe and internationally. The Investments in NBH segment produces hot rolled, cold rolled coil, plate, and galvanized and pre-pained steel products. The company’s products are used in oil and gas infrastructure, automotive industry, trucks, railroad transportation, mining machinery, agriculture machinery, shipbuilding, construction, white goods, energy equipment, and special equipment applications. It has operations in Russia, the European Union, the Middle East, Asia, Oceania, North America, and internationally. The company was founded in 1931 and is based in Lipetsk, Russia. Novolipetsk Steel is a subsidiary of Fletcher Group Holdings Limited.
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