I'm posting my estimate because I got different numbers from yours (click to enlarge):
I considered just cost of goods sold and taxes variables. Other expenses fixed. I got a net income reduction of just 12,7%.
This is because the ratio fixed expenses to revenue is very low. Also, company will have to pay less taxes.
Am I right?
4 comments:
I didn't understand why you reduced the costs. Aneel reduced the revenue, not the costs. The power plants will not reduce their prices nor the employees will reduce their salaries.
Yeah, you're right, I've just realized my mistake.
Demand and costs for electric energy will be the same (unless power plants will be forced to reduce their prices as well).
Redoing my calculations I get a net income reduction of 48%, quite the same.
With that earnings my buy target price is 27.80.
Let's just wait the behavioral finance do its work when "investors" get disappointed...
Why 27.80? The FCF, considering the same CAPEX invested in 2010 will be less than 50M.
I just had changed the numbers on my worksheet...
Analyzing FCF in the last 3 years, I get 300 mi (of FCF). Applying the reduction of 50% in net income (considering no reduction in the price of electric energy purchased for resale), FCF goes to 70 millions, a decrease over 75%! (considering same amount of investments).
Is that it? That shit has to go down a lot!
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