Is Virbac SA (EPA:VIRP) Trading At A 22% Discount?

Simply Wall St
July 15, 2021

In this article we are going to estimate the intrinsic value of Virbac SA (EPA:VIRP) by projecting its future cash flows and then discounting them to today's value. This will be done using the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.


See our latest analysis for Virbac

The method



10-year free cash flow (FCF) estimate

2022 2023 2024 2025 2026 2027 2028 2029 2030 2031
Levered FCF (€, Millions) €81.0m €106.1m €116.9m €127.4m €134.6m €140.1m €144.3m €147.4m €149.8m €151.7m
Growth Rate Estimate Source Analyst x5 Analyst x5 Analyst x2 Analyst x2 Est @ 5.67% Est @ 4.08% Est @ 2.96% Est @ 2.18% Est @ 1.64% Est @ 1.25%
Present Value (€, Millions) Discounted @ 4.5% €77.5 €97.2 €102 €107 €108 €107 €106 €104 €101 €97.5

Present Value of 10-year Cash Flow (PVCF) = €1.0b

The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 0.4%. We discount the terminal cash flows to today's value at a cost of equity of 4.5%.

Terminal Value (TV)= FCF2031 × (1 + g) ÷ (r – g) = €152m× (1 + 0.4%) ÷ (4.5%– 0.4%) = €3.7b

Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €3.7b÷ ( 1 + 4.5%)10= €2.4b

The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €3.4b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of €311, the company appears a touch undervalued at a 22% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.

ENXTPA:VIRP Discounted Cash Flow July 15th 2021

The assumptions


Next Steps:


  1. Risks: Every company has them, and we've spotted 3 warning signs for Virbac (of which 1 is concerning!) you should know about.
  2. Future Earnings: How does VIRP'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.

PS. Simply Wall St updates its DCF calculation for every French stock every day, so if you want to find the intrinsic value of any other stock just search here.


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