Well, no rocket science, but here goes.
First, if the operating numbers make any sense to go further.
Most importantly, FCF, the lifeblood of DCF calculation is reasonable stable
Only 2 years of negative FCF, which is more than offset by the other years, with the average FCF of the last 8 years to be 15 mio and the peak at 53 mio.
To estimate the new year FCF, I use 15 mio, with a growth rate of 2%, 3% and 4%, which will be 18 mio, 19.5 mio, 21.3 mio respectively in 10 years time, conservative enough.
The problematic part is the discount rate.
Pat Dorsey suggest 10.5% for average firms, and use 14% for AMD, personally, I don’t think Lee metals is worse than AMD in terms of operating numbers, so the range should be around 11 to 13.
I calculate the numbers ......
Most importantly, FCF, the lifeblood of DCF calculation is reasonable stable
Only 2 years of negative FCF, which is more than offset by the other years, with the average FCF of the last 8 years to be 15 mio and the peak at 53 mio.
To estimate the new year FCF, I use 15 mio, with a growth rate of 2%, 3% and 4%, which will be 18 mio, 19.5 mio, 21.3 mio respectively in 10 years time, conservative enough.
The problematic part is the discount rate.
Pat Dorsey suggest 10.5% for average firms, and use 14% for AMD, personally, I don’t think Lee metals is worse than AMD in terms of operating numbers, so the range should be around 11 to 13.
I calculate the numbers ......
