Soul Patts, Brickworks Combine After 56 Years of Cross-Ownership
Soul Patts, as it's known, owns 43% of Brickworks. Australia's largest brickmaker has a 26% stake in Soul Patts. The arrangement was designed to deliver stable dividends during construction downturns.
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An Intrinsic Calculation For Mainfreight Limited (NZSE:MFT) Suggests It's 21% Undervalued
Explore Mainfreight's Fair Values from the Community and select yours Key Insights Mainfreight's estimated fair value is NZ$75.24 based on 2 Stage Free Cash Flow to Equity Current share price of NZ$59.57 suggests Mainfreight is potentially 21% undervalued The NZ$72.61 analyst price target for MFT is 3.5% less than our estimate of fair value Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Mainfreight Limited (NZSE:MFT) as an investment opportunity by estimating the company's future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. There's really not all that much to it, even though it might appear quite complex. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. Crunching The Numbers We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF (NZ$, Millions) NZ$174.2m NZ$189.5m NZ$240.1m NZ$294.6m NZ$335.5m NZ$367.1m NZ$395.2m NZ$420.6m NZ$443.9m NZ$465.9m Growth Rate Estimate Source Analyst x2 Analyst x2 Analyst x2 Analyst x1 Analyst x1 Est @ 9.42% Est @ 7.66% Est @ 6.42% Est @ 5.55% Est @ 4.95% Present Value (NZ$, Millions) Discounted @ 7.7% NZ$162 NZ$163 NZ$192 NZ$219 NZ$231 NZ$235 NZ$235 NZ$232 NZ$227 NZ$221 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = NZ$2.1b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.5%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.7%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = NZ$466m× (1 + 3.5%) ÷ (7.7%– 3.5%) = NZ$11b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= NZ$11b÷ ( 1 + 7.7%)10= NZ$5.5b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is NZ$7.6b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of NZ$59.6, the company appears a touch undervalued at a 21% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Important Assumptions The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Mainfreight as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.7%, which is based on a levered beta of 0.997. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Mainfreight SWOT Analysis for Mainfreight Strength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Dividends are covered by earnings and cash flows. Weakness Dividend is low compared to the top 25% of dividend payers in the Logistics market. Opportunity Annual revenue is forecast to grow faster than the New Zealander market. Good value based on P/E ratio and estimated fair value. Significant insider buying over the past 3 months. Threat Annual earnings are forecast to grow slower than the New Zealander market. Moving On: Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Why is the intrinsic value higher than the current share price? For Mainfreight, there are three further items you should further research: Financial Health: Does MFT have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk. Future Earnings: How does MFT's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NZSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
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Mizuho Lowers PT on Acadia Healthcare Company (ACHC) to $22 From $32, Keeps a Neutral Rating
Acadia Healthcare Company, Inc. (NASDAQ:ACHC) is one of the top cheap stocks that will go to the moon according to Reddit. On August 14, Mizuho analyst Ann Hynes lowered the firm's price target on Acadia Healthcare Company, Inc. (NASDAQ:ACHC) to $22 from $32, keeping a Neutral rating on the shares. A healthcare professional discussing a treatment plan with a patient in an outpatient clinic. The rating update came after Acadia Healthcare Company, Inc. (NASDAQ:ACHC) reported fiscal Q2 results that missed consensus estimates when excluding the incremental effect of direct provider payments in the quarter. The firm slashed its 2025-2027 adjusted EBITDA estimates and is staying on the sidelines, attributing the stance to 'execution missteps' and uncertainty regarding the effects of the ongoing Medicaid Redeterminations and the One Big Beautiful Bill Act. Acadia Healthcare Company, Inc. (NASDAQ:ACHC) provides behavioral healthcare services across the US in various settings, including inpatient psychiatric hospitals, residential treatment centers, specialty treatment facilities, and outpatient clinics. While we acknowledge the potential of XXXX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
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Daunting work revelation turns sour as boss reacts poorly: 'The law is on your side'
Welcome to legal column where lawyers Alison and Jillian Barrett from Maurice Blackburn tackle problems everyday Aussies face — whether it be consumer, property, money matters impacting relationships or work. This week, a worker has had an uncomfortable encounter with her boss. Question "I work for a small company and recently got pregnant. My boss is quite an odd man and I've been dreading telling him I'm pregnant but I need to be able to go to appointments and want to start the ball rolling with maternity leave as I know he will make it difficult. When I told him I was pregnant, instead of saying congratulations he seemed to take it as a personal attack and said he'd need proof from my doctor before allowing me to go to daytime medical appointments. Then when I asked about maternity pay and other benefits he said he needs proof once the baby has been born before committing to anything. Are his demands fair? I need my job now more than ever so I don't want to rock the boat.." Answer Navigating pregnancy at work can be daunting, especially when your boss reacts poorly to the news. But if you're working in Australia, the law is firmly on your side. Pregnant employees are protected under federal legislation and various state and territory laws. These protections ensure you can access medical care, plan for parental leave, and continue working without being treated unfairly. Let's start with medical appointments. RELATED Gen Z with $100,000 in savings reveals 'common' money traps Aussies waste cash on Hidden $3,000 per year cost of cashless revolt as record number of banknotes hoarded ATO $2,548 tax refund cash boost for 2.6 million Aussies If you need time off during work hours to attend pregnancy-related appointments, you may be entitled to use personal leave if your contract or enterprise agreement provides for that. Otherwise, you're entitled to request to use your annual leave to cover those absences, which your employer cannot unreasonably refuse. You are also entitled to request a flexible work arrangement while pregnant, which could enable you to condense your hours so you can attend appointments on one particular day each month, for example. Your employer must genuinely try to reach agreement with you on that request and can only refuse it on reasonable business you are unfit for work because of your pregnancy, you can use your accrued personal (sick) leave, just like you would for any other illness. Your employer can ask for reasonable evidence, such as a medical certificate, before approving that leave. When it comes to maternity leave, if you've worked as a permanent employee for your employer for at least 12 months, you're entitled to 12 months of unpaid parental leave, with the option to request an additional 12 months. You must give at least 10 weeks' written notice before starting your leave and confirm the details at least four weeks before your intended start date. Your employer can ask for a medical certificate confirming the expected date of birth and can request medical evidence that you are fit to continue working once you are within six weeks of the baby's due date. However, they cannot delay planning, or deny your entitlements, until after the baby is born. In addition to unpaid leave, you may be eligible for government-funded Paid Parental Leave, which provides up to 20 weeks of pay at the national minimum wage. Your employer plays a role in administering this payment, but they don't control your eligibility. You apply through Services Australia, and once approved, your employer must process the payments if they're participating in the scheme. If your boss is making things difficult, by withholding information, questioning your rights, or treating your pregnancy as a burden, you're not alone, and you don't have to accept it. This kind of behaviour may amount to pregnancy discrimination, which is unlawful. You can seek help from the Fair Work Ombudsman, your union, or a community legal centre. They can guide you through your options and help you protect your rights without jeopardising your job. This legal information is general in nature and should not be regarded as specific legal advice. If you need legal advice, you should consult a solicitor.
