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Yahoo
11 hours ago
- Business
- Yahoo
DTE Energy (DTE) Could Be a Great Choice
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments. While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases. Based in Detroit, DTE Energy (DTE) is in the Utilities sector, and so far this year, shares have seen a price change of 7.88%. Currently paying a dividend of $1.09 per share, the company has a dividend yield of 3.35%. In comparison, the Utility - Electric Power industry's yield is 3.3%, while the S&P 500's yield is 1.53%. Looking at dividend growth, the company's current annualized dividend of $4.36 is up 5.1% from last year. Over the last 5 years, DTE Energy has increased its dividend 4 times on a year-over-year basis for an average annual increase of 1.80%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. DTE Energy's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend. Earnings growth looks solid for DTE for this fiscal year. The Zacks Consensus Estimate for 2025 is $7.21 per share, with earnings expected to increase 5.56% from the year ago period. Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout. Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, DTE is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DTE Energy Company (DTE) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
A Look At The Fair Value Of Balchem Corporation (NASDAQ:BCPC)
The projected fair value for Balchem is US$164 based on 2 Stage Free Cash Flow to Equity With US$165 share price, Balchem appears to be trading close to its estimated fair value Our fair value estimate is 17% lower than Balchem's analyst price target of US$197 Does the July share price for Balchem Corporation (NASDAQ:BCPC) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF ($, Millions) US$189.0m US$202.7m US$214.8m US$225.7m US$235.7m US$245.1m US$254.1m US$262.8m US$271.5m US$280.1m Growth Rate Estimate Source Analyst x2 Est @ 7.27% Est @ 5.97% Est @ 5.06% Est @ 4.42% Est @ 3.98% Est @ 3.67% Est @ 3.45% Est @ 3.30% Est @ 3.19% Present Value ($, Millions) Discounted @ 6.9% US$177 US$177 US$176 US$173 US$169 US$164 US$159 US$154 US$149 US$144 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$1.6b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. 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 (2.9%) 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 6.9%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = US$280m× (1 + 2.9%) ÷ (6.9%– 2.9%) = US$7.2b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$7.2b÷ ( 1 + 6.9%)10= US$3.7b 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 US$5.4b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$165, the company appears around fair value at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual 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 Balchem 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 6.9%, which is based on a levered beta of 0.919. 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. Check out our latest analysis for Balchem Strength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Weakness Dividend is low compared to the top 25% of dividend payers in the Chemicals market. Expensive based on P/E ratio and estimated fair value. Opportunity Annual earnings are forecast to grow for the next 2 years. Threat Annual earnings are forecast to grow slower than the American market. 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. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Balchem, there are three pertinent aspects you should assess: Financial Health: Does BCPC 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 BCPC'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. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock 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. Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
A Look At The Fair Value Of Balchem Corporation (NASDAQ:BCPC)
The projected fair value for Balchem is US$164 based on 2 Stage Free Cash Flow to Equity With US$165 share price, Balchem appears to be trading close to its estimated fair value Our fair value estimate is 17% lower than Balchem's analyst price target of US$197 Does the July share price for Balchem Corporation (NASDAQ:BCPC) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the forecast future cash flows of the company and discounting them back to today's value. This will be done using the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF ($, Millions) US$189.0m US$202.7m US$214.8m US$225.7m US$235.7m US$245.1m US$254.1m US$262.8m US$271.5m US$280.1m Growth Rate Estimate Source Analyst x2 Est @ 7.27% Est @ 5.97% Est @ 5.06% Est @ 4.42% Est @ 3.98% Est @ 3.67% Est @ 3.45% Est @ 3.30% Est @ 3.19% Present Value ($, Millions) Discounted @ 6.9% US$177 US$177 US$176 US$173 US$169 US$164 US$159 US$154 US$149 US$144 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$1.6b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. 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 (2.9%) 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 6.9%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = US$280m× (1 + 2.9%) ÷ (6.9%– 2.9%) = US$7.2b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$7.2b÷ ( 1 + 6.9%)10= US$3.7b 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 US$5.4b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$165, the company appears around fair value at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual 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 Balchem 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 6.9%, which is based on a levered beta of 0.919. 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. Check out our latest analysis for Balchem Strength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Weakness Dividend is low compared to the top 25% of dividend payers in the Chemicals market. Expensive based on P/E ratio and estimated fair value. Opportunity Annual earnings are forecast to grow for the next 2 years. Threat Annual earnings are forecast to grow slower than the American market. 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. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Balchem, there are three pertinent aspects you should assess: Financial Health: Does BCPC 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 BCPC'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. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock 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
4 days ago
- Business
- Yahoo
Here's how a £20k ISA could earn £1,400 in passive income next year
Rather than setting up a side hustle to try and generate a second income, some people take the approach of making money from a business that is already well-established – and that they do not have to do any work for. Stuffing a Stocks and Shares ISA full of dividend shares in blue-chip FTSE 100 firms is one way to do that. It can be quite lucrative too. Here is how a £20k ISA could earn £1,400 in passive income annually. The £1,400 number is easy to figure out. It is based on an average dividend yield of 7%. Dividend yield is the amount an investor receives in dividends each year from some shares, expressed as a percentage of what they paid for them. Seven percent is almost double the current FTSE 100 average yield. But I think it is achievable in today's market while sticking to carefully-chosen blue-chip shares. Dividends are never guaranteed – even if a company has paid them in the past, it can stop doing so at any moment. So it is important to choose carefully when selecting what shares to buy. As well as that, an investor can reduce risk by diversifying across different shares. Twenty grand is ample for that. Given that no dividend is guaranteed, how might investors go about finding shares to buy for their ISA? To pay dividends over the long run, a business needs to generate more free cash flow than it requires for its business. So when passive income is my goal, I tend to look for a proven business with high cash generation capability and limited investment needs to grow or even maintain the business. One dividend share I think investors should consider is FTSE 100 insurer Aviva (LSE: AV). It was already the country's largest insurer even before last week's completion of its takeover of rival Direct Line. That ought to add still more economies of scale to the business, as well as a famous brand. But I see a risk that integrating Direct Line could distract management attention from other tasks to keep the core business humming. Insurance is pretty straightforward in principle, but the devil is in the details. Aviva has deep underwriting experience and is focused on general insurance lines in markets it understands well. From a risk management perspective, that appeals to me. I also see appeal in the dividend yield. Aviva has been growing its dividend per share annually of late and currently yields 5.8%. Striking the right balance between reward and risk is important. Something else that affects the return an investor can make is how much of their dividend income gets swallowed up in fees, commissions, taxes and other charges. Each investor has their own financial priorities. So it makes sense to spend time comparing different Stocks and Shares ISAs on the market when deciding which one seems most suited to their individual needs. The post Here's how a £20k ISA could earn £1,400 in passive income next year – and every year appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool C Ruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 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
4 days ago
- Business
- Yahoo
Is Regis Healthcare Limited (ASX:REG) Trading At A 28% Discount?
Regis Healthcare's estimated fair value is AU$10.45 based on 2 Stage Free Cash Flow to Equity Regis Healthcare is estimated to be 28% undervalued based on current share price of AU$7.52 Our fair value estimate is 29% higher than Regis Healthcare's analyst price target of AU$8.08 In this article we are going to estimate the intrinsic value of Regis Healthcare Limited (ASX:REG) by taking the expected future cash flows and discounting them to their present value. Our analysis will employ the Discounted Cash Flow (DCF) model. There's really not all that much to it, even though it might appear quite complex. We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF (A$, Millions) AU$188.6m AU$205.3m AU$133.5m AU$139.8m AU$146.4m AU$136.5m AU$131.3m AU$128.9m AU$128.4m AU$129.2m Growth Rate Estimate Source Analyst x3 Analyst x3 Analyst x1 Analyst x1 Analyst x1 Est @ -6.75% Est @ -3.84% Est @ -1.80% Est @ -0.38% Est @ 0.62% Present Value (A$, Millions) Discounted @ 6.4% AU$177 AU$181 AU$111 AU$109 AU$107 AU$94.0 AU$85.0 AU$78.4 AU$73.4 AU$69.4 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$1.1b The second stage is also known as Terminal Value, this is the business's cash flow after 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 (2.9%) 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 6.4%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = AU$129m× (1 + 2.9%) ÷ (6.4%– 2.9%) = AU$3.8b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$3.8b÷ ( 1 + 6.4%)10= AU$2.1b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is AU$3.1b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of AU$7.5, the company appears a touch undervalued at a 28% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. 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 Regis Healthcare 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 6.4%, which is based on a levered beta of 0.800. 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. View our latest analysis for Regis Healthcare Strength Currently debt free. Weakness Dividend is low compared to the top 25% of dividend payers in the Healthcare 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 Total liabilities exceed total assets, which raises the risk of financial distress. Dividends are not covered by earnings. Revenue is forecast to grow slower than 20% per year. Whilst important, the DCF calculation 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. 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. Can we work out why the company is trading at a discount to intrinsic value? For Regis Healthcare, we've compiled three essential items you should further research: Risks: We feel that you should assess the 1 warning sign for Regis Healthcare we've flagged before making an investment in the company. Future Earnings: How does REG'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. Simply Wall St updates its DCF calculation for every Australian stock every day, so if you want to find the intrinsic value of any other stock just search here. — Investing narratives with Fair Values Suncorp's Next Chapter: Insurance-Only and Ready to Grow By Robbo – Community Contributor Fair Value Estimated: A$22.83 · 0.1% Overvalued Thyssenkrupp Nucera Will Achieve Double-Digit Profits by 2030 Boosted by Hydrogen Growth By Chris1 – Community Contributor Fair Value Estimated: €14.40 · 0.3% Overvalued Tesla's Nvidia Moment – The AI & Robotics Inflection Point By BlackGoat – Community Contributor Fair Value Estimated: $359.72 · 0.1% Overvalued View more featured narratives — 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. Sign in to access your portfolio
