Discounted Cash Flow (DCF) Analysis Unlevered

Gerdau S.A. (GGB)

$4.79

+0.03 (+0.63%)

All numbers are in Millions, Currency in USD

Stock DCF: 548.07 | 4.79 | undervalue

Operating Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	36,917.62	46,159.48	39,644.01	43,814.66	78,345.08	97,980.13	122,536.17	153,246.51	191,653.56	239,686.28
Revenue (%)
EBITDA	3,352.03	5,204.42	4,673.98	6,994.95	23,926.14	15,412.04	19,274.65	24,105.31	30,146.65	37,702.08
EBITDA (%)
EBIT	1,259.48	3,312.60	2,599.69	4,495.85	21,267.58	10,690.16	13,369.36	16,720.02	20,910.44	26,151.07
EBIT (%)
Depreciation	2,092.55	1,891.81	2,074.30	2,499.10	2,658.56	4,721.88	5,905.29	7,385.29	9,236.21	11,551.01
Depreciation (%)

Balance Sheet Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Total Cash	3,376.86	3,349.61	6,294.60	7,658.35	6,786.87	11,448.62	14,317.90	17,906.29	22,394.02	28,006.47
Total Cash (%)
Account Receivables	3,688.48	4,174.65	3,659.76	5,990.17	8,309.68	10,296.68	12,877.27	16,104.60	20,140.78	25,188.51
Account Receivables (%)
Inventories	6,701.40	9,167.69	7,659.74	9,169.42	16,861.49	19,553.76	24,454.38	30,583.20	38,248.04	47,833.87
Inventories (%)
Accounts Payable	3,179.95	4,119.06	3,762.77	5,437.95	8,017.14	9,733.92	12,173.47	15,224.41	19,040	23,811.85
Accounts Payable (%)
Capital Expenditure	-911.27	-1,262.32	-1,846.91	-1,805.03	-3,192.33	-3,538.30	-4,425.08	-5,534.11	-6,921.08	-8,655.66
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 4.79
Beta	1.289
Diluted Shares Outstanding	1,705.75
Cost of Debt
Tax Rate	23.57
After-tax Cost of Debt	5.40%
Risk-Free Rate
Market Risk Premium
Cost of Equity	9.567
Total Debt	14,982.71
Total Equity	8,170.53
Total Capital	23,153.23
Debt Weighting	64.71
Equity Weighting	35.29
Wacc

Build Up Free Cash

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	36,917.62	46,159.48	39,644.01	43,814.66	78,345.08	97,980.13	122,536.17	153,246.51	191,653.56	239,686.28
EBITDA	3,352.03	5,204.42	4,673.98	6,994.95	23,926.14	15,412.04	19,274.65	24,105.31	30,146.65	37,702.08
EBIT	1,259.48	3,312.60	2,599.69	4,495.85	21,267.58	10,690.16	13,369.36	16,720.02	20,910.44	26,151.07
Tax Rate	-730.39%	-6.79%	28.12%	32.32%	23.57%	-130.63%	-130.63%	-130.63%	-130.63%	-130.63%
EBIAT	10,458.60	3,537.45	1,868.57	3,042.65	16,254.59	24,654.96	30,834.05	38,561.76	48,226.21	60,312.79
Depreciation	2,092.55	1,891.81	2,074.30	2,499.10	2,658.56	4,721.88	5,905.29	7,385.29	9,236.21	11,551.01
Accounts Receivable	-	-486.16	514.89	-2,330.41	-2,319.52	-1,987	-2,580.58	-3,227.33	-4,036.18	-5,047.74
Inventories	-	-2,466.29	1,507.95	-1,509.68	-7,692.07	-2,692.28	-4,900.62	-6,128.82	-7,664.84	-9,585.83
Accounts Payable	-	939.10	-356.29	1,675.18	2,579.19	1,716.78	2,439.54	3,050.95	3,815.58	4,771.85
Capital Expenditure	-911.27	-1,262.32	-1,846.91	-1,805.03	-3,192.33	-3,538.30	-4,425.08	-5,534.11	-6,921.08	-8,655.66
UFCF	11,639.89	2,153.59	3,762.50	1,571.82	8,288.42	22,876.04	27,272.60	34,107.73	42,655.90	53,346.43
WACC
PV UFCF						21,405.49	23,878.93	27,943.79	32,700.61	38,267.17
SUM PV UFCF										144,195.99

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.87
Free cash flow (t + 1)	54,413.36
Terminal Value	1,117,317.49
Present Value of Terminal Value	801,488.97

Intrinsic Value

Enterprise Value	945,684.96
Net Debt	10,822.05
Equity Value	934,862.91
Shares Outstanding	1,705.75
Equity Value Per Share	548.07