BlackRock Prefers European Government Bonds Over US Treasuries
'We prefer euro area government bonds and credit over the US,' strategists including Jean Boivin and Wei Li wrote in a weekly note. 'Yields are attractive, and term premium has risen closer to our expectations relative to US Treasuries.'
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Barcelona reach Marcus Rashford salary breakthrough with Manchester United
Barcelona are closing in on a deal to bring Marcus Rashford to the club following fresh talks with Manchester United. Widespread reports across the last 48 hours in the UK and Spain have indicated Barcelona agreed a deal to sign Rashford from United. with the 27-year-old attacker arriving in Catalonia on a season-long loan that includes an option to buy, believed to be in the region of €30-35m. Barcelona have stepped up their pursuit of Rashford in the last week following a mixed summer in the the transfer market. Rashford will offer vital cover on the left wing for Barcelona, after the club had previously chased deals for Nico Williams and Luis Diaz. He is expected to fly into Catalonia imminently and will then complete his medical and sign all appropriate documents over the coming days – If the process moves as smoothly as the club hope, Hansi Flick can include him in his squad for their pre-season tour of Japan and South Korea. One major source of excitement for Barcelona is the speculation over what number Rashford will wear with Mundo Deportivo claiming he has three choices: 14, 19 and 22 – this is because first team registered players are only able to choose from numbers 1-25. The deal reached a vital climax following a fresh round of discussions between the two clubs and a key concession from Barcelona. Despite their ongoing financial issues, Barcelona are willing to bankroll a move for Rashford, and reports from The Times claim they will cover his full wages as part of the loan. The Red Devils had set out their position over demanding a 100% coverage at the start of the summer but Barcelona had previously rejected that. A move closer to United's demands was viewed as the only route to wrapping up an agreement and Rashford has been sealed his dream move.
Yahoo
an hour ago
- Yahoo
An Intrinsic Calculation For PWR Holdings Limited (ASX:PWH) Suggests It's 24% Undervalued
Key Insights PWR Holdings' estimated fair value is AU$10.29 based on 2 Stage Free Cash Flow to Equity PWR Holdings is estimated to be 24% undervalued based on current share price of AU$7.87 The AU$8.27 analyst price target for PWH is 20% less than our estimate of fair value Does the July share price for PWR Holdings Limited (ASX:PWH) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the expected future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. There's really not all that much to it, even though it might appear quite complex. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. Is PWR Holdings Fairly Valued? We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF (A$, Millions) AU$17.3m AU$28.2m AU$33.0m AU$38.0m AU$44.0m AU$48.5m AU$52.5m AU$55.9m AU$59.0m AU$61.8m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x1 Analyst x1 Analyst x1 Est @ 10.32% Est @ 8.11% Est @ 6.56% Est @ 5.48% Est @ 4.72% Present Value (A$, Millions) Discounted @ 7.2% AU$16.1 AU$24.5 AU$26.8 AU$28.8 AU$31.1 AU$32.0 AU$32.3 AU$32.1 AU$31.6 AU$30.8 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$286m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. 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 2.9%. We discount the terminal cash flows to today's value at a cost of equity of 7.2%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = AU$62m× (1 + 2.9%) ÷ (7.2%– 2.9%) = AU$1.5b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$1.5b÷ ( 1 + 7.2%)10= AU$749m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is AU$1.0b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of AU$7.9, the company appears a touch undervalued at a 24% 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. Important Assumptions The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. 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 PWR Holdings 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 7.2%, which is based on a levered beta of 0.979. 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 PWR Holdings SWOT Analysis for PWR Holdings Strength Debt is not viewed as a risk. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Auto Components market. Opportunity Annual earnings are forecast to grow faster than the Australian market. Trading below our estimate of fair value by more than 20%. Threat Revenue is forecast to grow slower than 20% per year. Moving On: Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/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 PWR Holdings, we've put together three relevant elements you should explore: Financial Health: Does PWH 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 PWH'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 Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ASX 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 in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
How Climate Change Is Raising Your Grocery Bill
(Bloomberg) -- A 300% spike in Australian lettuce prices. A 50% rise for European olive oil and 80% for US vegetables. Researchers from the Barcelona Supercomputing Center and the European Central Bank have traced back those price jumps to extreme weather they say is linked to climate change. Why the Federal Reserve's Building Renovation Costs $2.5 Billion Milan Corruption Probe Casts Shadow Over Property Boom Mumbai Facelift Is Inspired by 200-Year-Old New York Blueprint How San Jose's Mayor Is Working to Build an AI Capital The group analyzed 16 weather events around the world between 2022 and 2024. Many were so unusual that a given region had experienced nothing like it prior to 2020, according to the analysis, which was published in the peer-reviewed journal Environmental Research Letters on Monday in Europe. 'Unprecedented conditions are set to become increasingly common across the world,' the study's authors say. 'At the same time, new records for extreme conditions will continue to be set, further from those to which agricultural production and economic systems are currently adapted.' Climate change brings with it higher temperatures and extreme rains, which can lower yields and make the crops that are harvested more expensive. British households' food bill, for instance, was £361 (about $484) more in 2022 and 2023 due to climate change, according to estimates by the nonprofit Energy and Climate Intelligence Unit. (ECIU staffer Tom Lancaster was a coauthor of the new study.) Consumers globally say they are feeling the effects of climate change on their grocery bills, making food unaffordable for some and posing a challenge for central bankers trying to tame inflation. Here are a few of the price hikes the researchers identified: Soaring US vegetable prices In 2022, California registered its driest three-year period ever recorded, leaving nearly a million acres of farm fields unplanted and producing initial crop revenue losses of nearly $2 billion that year alone. Arizona, which grows most of the US's winter lettuce supply, also saw reductions in the amount of water the state received from the Colorado River, due to a drought-related water shortage in the river basin. These conditions in two major US agricultural states, paired with Hurricane Ian hitting Florida, contributed to a more than 80% hike in the country's vegetable prices compared with the previous year. A wide-reaching Asia heat wave A heat wave that warmed Asia last year to temperatures as high as 115F (46C) was one of the disruptive weather events that led to vegetable prices in China rising more than 40% between June and September. Hot and dry conditions also left South Korean cabbages nearly 70% more expensive than the year prior, according to local media reports. Napa cabbage is commonly pickled into kimchi, a staple local dish, and the government has utilized national stocks to bolster supplies. Australian lettuce's 300% hike Eastern Australia faced record-breaking extreme flooding in early 2022, which was soon estimated to be Australia's costliest ever flood and its fifth most costly disaster. A resulting lettuce shortage led shoppers to complain about prices of around A$12 ($7.81) for a head of iceberg lettuce. The lettuce previously cost roughly A$2.80 a piece, according to the Guardian, representing a more than 300% price increase. Fast food chain KFC even began substituting in cabbage in its burgers. Is climate inflation permanent? Prices tend to respond as soon as one or two months after an instance of extreme heat or drought, says Max Kotz, the study's lead author and a postdoctoral fellow at the Barcelona Supercomputing Center. He and the other authors also looked at how unusual weather events were for each region, based on the distribution of measures like temperature over time. They found that heat, drought and floods were occurring at an increased intensity and frequency. El Niño, a climate pattern that occurred from 2023 to 2024, likely also influenced the extreme weather observed, the authors say. These kinds of food price shocks typically turn out to be short-term in nature, because high prices incentivize more production, which brings prices back down, says Andrew Stevenson, a senior climate analyst for Bloomberg Intelligence. Products like coffee and cattle are the exception, because they require certain conditions such as a tropical climate or large swathes of land for grazing that limit where they can be grown and bred. Coffee and cattle futures, contracts that represent near-term pricing in those markets, have marched up in price since 2020 — in contrast with futures for a crop like corn that's more easily grown. New US tariffs could further squeeze farmers abroad, says Stevenson. 'It puts producers in an uncomfortable position where the price of beef is too expensive to sell at home but not expensive enough to sell with a 50% tariff,' he adds. Extreme weather is only expected to continue, and the study recommends that countries consider policies that will help consumers manage rising food prices. Ultimately, though, slashing greenhouse gas emissions and containing global warming will be key to reducing food price inflation risks, the authors say. Climate forecasts can also provide early warnings, and farms can implement adaptations like irrigation, though both approaches have serious limitations. A Rebel Army Is Building a Rare-Earth Empire on China's Border Thailand's Changing Cannabis Rules Leave Farmers in a Tough Spot How Starbucks' CEO Plans to Tame the Rush-Hour Free-for-All What the Tough Job Market for New College Grads Says About the Economy How Taylor Swift Turned a Glitter Freckle Maker Into a Sensation ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
