Discounted Cash Flow Calculation for OTCPK:PILB.F 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:PILB.F 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.
Pilbara Minerals's share price is below the future cash flow value, and at a moderate discount (> 20%).
Pilbara Minerals'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
Pilbara Minerals's earnings available for a low price, and how does
this compare to other companies in the same industry?
Pilbara Minerals's earnings are expected to grow significantly at over 20% yearly.
Pilbara Minerals's revenue is expected to grow significantly at over 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.
Pilbara Minerals'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
0/6, 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
Pilbara Minerals's finances.
The net worth of a company is the difference between its assets and liabilities.
Pilbara Minerals is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Pilbara Minerals's long term commitments exceed its cash and other short term assets.
This treemap shows a more detailed breakdown of
Pilbara Minerals'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 not covered by short term assets, assets are 0.8x 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. Kenneth Edward Brinsden, also known as Ken, B.Eng (Mining), WASM, MAusIMM, MAICD, has been the Chief Executive Officer at Pilbara Minerals Limited since January 18, 2016 and has been its Managing Director since May 4, 2016. Mr. Brinsden served as the Managing Director of Atlas Iron Ltd., from February 2012 to June 11, 2015 and served as its Chief Development Officer until February 2012. He served as the Chief Operating Officer of Atlas Iron Ltd and its Executive Director Commercial until December 02, 2014. He served as Executive Director of Atlas Iron Limited from June 11, 2015 to September 1, 2015. He served as Operations Manager at Atlas Iron Limited since May 22, 2006. Mr. Brinsden is a Mining Engineer with over 23 years experience in surface and underground mining operations. Mr. Brinsden has worked for major mining companies including WMC Resources, Normandy Mining Limited, Central Norseman Gold Corporation, Goldfields and Iluka Resources in a range of production, management, brownfields and greenfields mine development roles. Prior to commencing with Atlas Iron. He was Mining Manager with Iluka Resources Limited, responsible for the green fields development of Iluka's Murray Basin Mining Operations in Sth West Victoria. Mr. Brinsden held Senior Mine Management and Project Development roles with Gold Fields and WMC Resources. He has been a Director of Pilbara Minerals Limited since May 04, 2016. He served as a Non-Executive Director of Atlas Iron Limited from September 1, 2015 to May 6, 2016. He was Non Executive Director of Rolek Resources Limited (formerly, Shaw River Manganese Limited) since February 19, 2009 until August 31, 2012. He is a graduate of the Western Australian School of Mines.
Ken's compensation has been consistent with company performance over the past year, both up more than 20%.
Ken's remuneration is lower than average for companies of similar size in United States of America.
Management Team Tenure
Average tenure of the
management team in years:
The tenure for the Pilbara Minerals management team is about average.
MD, CEO & Director
Chief Financial Officer
Chief Operating Officer
Company Secretary & General Counsel
Mining Consultant of Operations
Board of Directors Tenure
Average tenure of the
board of directors in years:
The average tenure for the Pilbara Minerals board of directors is less than 3 years, this suggests a new board.
Pilbara Minerals Limited engages in the exploration, evaluation, and development of mineral resources in Australia. The company focuses on the development of Pilgangoora lithium-tantalum project located in the Pilbara region of Western Australia. Pilbara Minerals Limited is headquartered in West Perth, Australia.
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