Could you please explain a bit how you come to the fair value of Mercado Libre? The DCF value seems really low to me. With such a high predicted growth in combination with such a decent P/FCF it seems the value should be way higher, no?
The FCF of the last 12 months is 5628 million USD. If you grow this with 24% annually for 5 years and the assume a terminal growth of 2,4% annually, then you get a prive of 3300 USD. What am I doing wrong? It seems I’m more conservative than yet, yet I get a higher price.
Are you claiming that the company will go from 5628 LTM to 2358 at end of year? Wouldn’t that mean it would stop having any free cash flow in the second half of the year? That could be, but it’s not very likely. Could it be that your estimations are old or incorrect? Or do you expect 5628 LTM to be a bad calculation? I got the number out of Finchat.
Could you please explain a bit how you come to the fair value of Mercado Libre? The DCF value seems really low to me. With such a high predicted growth in combination with such a decent P/FCF it seems the value should be way higher, no?
The fair value is the average between the DCF + Analyst + fair pe
For the DCF, my inputs are:
- A discount rate at 10%
- 24% growth for the next 10 years
- 5% terminal growth
You can of course change it if you find it too conservative
The FCF of the last 12 months is 5628 million USD. If you grow this with 24% annually for 5 years and the assume a terminal growth of 2,4% annually, then you get a prive of 3300 USD. What am I doing wrong? It seems I’m more conservative than yet, yet I get a higher price.
For FCF I didn t use LTM but 2024 estimates
Here are the estimated FCF for
- 2024 $2,358M
- 2025 $2,732M
Are you claiming that the company will go from 5628 LTM to 2358 at end of year? Wouldn’t that mean it would stop having any free cash flow in the second half of the year? That could be, but it’s not very likely. Could it be that your estimations are old or incorrect? Or do you expect 5628 LTM to be a bad calculation? I got the number out of Finchat.
I am just using the analyst consensus gathered by S&P Global
This can be wrong but I usually use this methodology
I’ll try out your numbers this evening, but I could sweat those numbers should lead to a way higher valuation. I’ll come back to you later.