Current Price: ~ $34/share
Projected Yield: ~ 2.80%
Projected Yield: ~ 2.80%
Bemis manufactures flexible packaging materials primarily for the food packaging industry as well as for the health, hygiene and medical sectors. Additionally, Bemis develops pressure-sensitive materials used for labels, signage, and industrial applications. In 2010, Bemis completed its acquisition of Alcan's Food Americas business. This acquisition should boost Bemis' revenue by more than a third and increase its mix of revenue from food packaging.
I estimated the firm's WACC today at 7.91% using the Capital Asset Pricing Model and the company's recent SEC filings.
Recent free cash flows and growth rates:
| Year | FCF $Millions |
| 2001 | 200 |
| 2002 | 196 |
| 2003 | 299 |
| 2004 | 137 |
| 2005 | 93 |
| 2006 | 190 |
| 2007 | 227 |
| 2008 | 173 |
| 2009 | 387 |
| 2010 | 255 |
| TTM | 233 |
Average Annual Growth FCF: ~ 17%
CAGR FCF: ~ 3%
Consensus Forecast Industry 5-Year Growth: ~ 11% per yearConsensus Forecast Company 5-Year Growth: ~ 9% per year
Average FCF in last three years is $272 million. Starting at $272 million FCF, assuming the company achieves a 5-year growth rate in FCF of 9% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:
Discounted Cash Flow Valuation
| Year | FCF $Millions |
| 0 | 272 |
| 1 | 296 |
| 2 | 323 |
| 3 | 352 |
| 4 | 384 |
| 5 | 419 |
| Terminal Value | 5771 |
The firm's future cash flows, discounted at a WACC of 7.91%, give a present value for the entire firm (Debt + Equity) of $5347 million. If the firm's fair value of debt is estimated at $1521 million, then the fair value of the firm's equity could be $3826 million. $3826 million / 105 million outstanding shares is approximately $36 per share and a 20% margin of safety is $29/share.
Sources
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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