SBS
Companhia de Saneamento Básico do Estado de São Paulo - SABESP
$6.26
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 31.4% below fair value
You pay
$6.26
Bear
$7.21
Fair
$9.12
Bull
$10.84
Bear
$7.21
+15.2%
4% stage 1 growth, 11% discount
Fair
$9.12
+45.8%
7% stage 1 growth, 11% discount
Bull
$10.84
+73.2%
9% stage 1 growth, 11% discount
Adjust Assumptions
6.7%
11.0%
3.0%
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
12.4x
Market is pricing in (growth)
2.4%
vs 6.7% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$23.79
Divergence from AlphaVal
62%
Summary
Using a two-stage FCF DCF with 7% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $9.12 per share.
Warnings
Wall Street's average price target is $23.79 (from 7 analysts). Our estimate is 62% below the consensus -- consider that gap carefully.
Financial statements were converted from BRL into USD using USDBRL at 0.1980 USD per BRL.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions