Estimating The Intrinsic Value Of National Beverage Corp. (NASDAQ:FIZZ)

In This Article:

Key Insights

  • National Beverage's estimated fair value is US$46.51 based on 2 Stage Free Cash Flow to Equity

  • With US$45.21 share price, National Beverage appears to be trading close to its estimated fair value

  • Industry average discount to fair value of 31% suggests National Beverage's peers are currently trading at a higher discount

Today we will run through one way of estimating the intrinsic value of National Beverage Corp. (NASDAQ:FIZZ) by taking the forecast future cash flows of the company and discounting them back to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.

Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.

See our latest analysis for National Beverage

Is National Beverage Fairly Valued?

We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:

10-year free cash flow (FCF) forecast

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

Levered FCF ($, Millions)

US$155.6m

US$155.1m

US$155.9m

US$157.6m

US$160.1m

US$163.0m

US$166.3m

US$169.9m

US$173.7m

US$177.8m

Growth Rate Estimate Source

Est @ -1.52%

Est @ -0.32%

Est @ 0.53%

Est @ 1.12%

Est @ 1.53%

Est @ 1.82%

Est @ 2.03%

Est @ 2.17%

Est @ 2.27%

Est @ 2.34%

Present Value ($, Millions) Discounted @ 5.8%

US$147

US$139

US$132

US$126

US$121

US$116

US$112

US$108

US$105

US$101

("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$1.2b

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