Discounted Cash Flow Calculation for OTCPK:ECPC.Y 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.
OTCPK:ECPC.Y 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.
Estácio Participações's share price is below the future cash flow value, and at a moderate discount (> 20%).
Estácio Participações'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
Estácio Participações's earnings available for a low price, and how does
this compare to other companies in the same industry?
Estácio Participações's earnings are expected to grow by 17% yearly, however this is not considered high growth (20% yearly).
Estácio Participações's revenue is expected to grow by 3.6% 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.
Estácio Participações'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
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
Estácio Participações's finances.
The net worth of a company is the difference between its assets and liabilities.
Estácio Participações is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Estácio Participações's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Estácio Participações'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.
Low level of unsold assets.
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. Eduardo Parente Menezes has been Chief Executive Officer and Member of Board of Executive Officers at Estácio Participações S.A. since December 17, 2018. Mr. Menezes served as a Director at Bradespar S.A. He holds a Degree in Production Engineering from the Federal University of Rio de Janeiro, and a Master's Degree in Business Administration from New York University - NYU. He was previously the CEO of Companhia Siderúrgica do Pecém (CSP), Prumo Logística S.A. (controller of the Port of Açu) and MRS Logística S.A. He was also the Director for Special Projects for Vale S.A. and partner of McKinsey & Company. He was a member of the Board of Directors of Bradespar, CSP, VLI, among others, and a member of Alcoa Latam's Advisory Board.
Insufficient data for Eduardo to compare compensation growth.
Insufficient data for Eduardo to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.
Management Team Tenure
Average tenure of the
management team in years:
The average tenure for the Estácio Participações management team is less than 2 years, this suggests a new team.
CEO & Member of Board of Executive Officers
Gustavo Artur Zeno
Vice President of Finance & Investor Relations and Member of Board of Executive Officers
Hudson De Oliveira Mello
Chief Academic Officer
VP of Marketing & Member of Board of Executive Officers
VP of Sustainability & Institutional Relations and Member of Board of Executive Officers
Vice President of Presence Operations & Member of Board of Executive Officers
VP of Corporate
Member of Board of Executive Officers & VP of Distance Learning
Director of Investor Relation
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Estácio Participações board of directors is less than 3 years, this suggests a new board.
Estácio Participações S.A. operates as a post-secondary education company in Brazil. The company offers undergraduate on-campus and distance-learning courses in exact sciences, biological sciences, and humanities; and sensu lato and sensu stricto graduate, masters, and doctoral programs, as well as extension courses. It operates through 1 university, 9 university centers, 49 colleges, and 394 distance-learning centers in Brazilian states, as well as in the Federal District. Estácio Participações S.A. was founded in 1970 and is headquartered in Rio de Janeiro, Brazil.
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