Regarding the previous post (Market Value x Enterprise Value), I did some calculations on Suzano numbers (average last 3 years).
- I first calculated cash from operations and then divided by its market value, which gives a nice yield above 20%.
- Then I added to the previous calculated CFO interests expenses and then divided by enterprise value, yielding 12.5%.
So, not taking into account for now the risk of owning that high debt, Suzano is more efficient issuing debt (yields almost double).
Is that it?
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2 comments:
When i want to consider the debt to reduce the valuation i assume the first years's cfo will be used to pay the debt. The next year's cfo will be mine. Can you valueate suzb5 that way?
It's not that simple. As interest payments will be reducing, tax payments will increase.
I think that the effort doesn't pay, since the high current FCF yield offers a nice margin of safety.
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