GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » Azul Azul SA (XSGO:AZUL AZUL) » Definitions » Earnings Power Value (EPV)

Azul Azul (XSGO:AZUL AZUL) Earnings Power Value (EPV) : CLP-866.97 (As of Mar25)


View and export this data going back to 2007. Start your Free Trial

What is Azul Azul Earnings Power Value (EPV)?

As of Mar25, Azul Azul's earnings power value is CLP-866.97. *

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

Margin of Safety is N/A.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future. Assumption: Current profitability is sustainable.


Azul Azul Earnings Power Value (EPV) Historical Data

The historical data trend for Azul Azul's Earnings Power Value (EPV) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Azul Azul Earnings Power Value (EPV) Chart

Azul Azul Annual Data
Trend Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23 Dec24
Earnings Power Value (EPV)
Get a 7-Day Free Trial Premium Member Only Premium Member Only -1,499.68 -1,042.78 -816.88 -955.34 -760.36

Azul Azul Quarterly Data
Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24 Dec24 Mar25
Earnings Power Value (EPV) Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -924.91 -890.58 -839.57 -760.36 -866.97

Competitive Comparison of Azul Azul's Earnings Power Value (EPV)

For the Entertainment subindustry, Azul Azul's Earnings Power Value (EPV), along with its competitors' market caps and Earnings Power Value (EPV) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Azul Azul's Earnings Power Value (EPV) Distribution in the Media - Diversified Industry

For the Media - Diversified industry and Communication Services sector, Azul Azul's Earnings Power Value (EPV) distribution charts can be found below:

* The bar in red indicates where Azul Azul's Earnings Power Value (EPV) falls into.


;
;

Azul Azul Earnings Power Value (EPV) Calculation

Earnings Power Value also known as just Earnings Power is a valuation technique popularised by Bruce Greenwald, an authority on value investing at Columbia University. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. This valuation tool excludes the potential growth that a company may have so that needs to be looked at separately. Since future growth is excluded from the analysis, only the maintenance capital expenditures are subtracted from after-tax EBIT (earnings before interest and taxes) and growth capex is ignored.

Azul Azul's "Earning Power" Calculation:

Average of Last 20 Quarters Last Quarter
Revenue 17,097
DDA 489
Operating Margin % -3.39
SGA * 25% 642
Tax Rate % 22.82
Maintenance Capex 2,457
Cash and Cash Equivalents 938
Short-Term Debt 1,511
Long-Term Debt 12,019
Shares Outstanding (Diluted) 45

1. Start with "Earnings" not including accounting adjustments (one-time charges not excluded unless policy has changed). "Earnings" are "Operating Income.

2. Look at average margins over a business/Industry cycle: Average Operating Margin = -3.39%

To normalize margins and eliminate the effects on profitability of valuing the firm at different points in the business cycle, it is usually best to take a long-term average of operating margins. Ideally this would be as long as 10 years and include at least one economic downturn. However, since most of companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year margin.

3. Multiply average margins by sustainable revenues and then adjust for maintenance SGA. This yields "normalized" EBIT:

To be conservative, GuruFocus uses an average of the 5 year revenues as the sustainable revenue.
EPV analysis recognises that part of SG&A expenditure is made to maintain and replace the existing assets, while part is made to grow sales. Since EPV is only interested in what it costs a going concern to maintain its existing asset base, it adds back a percentage of SG&A (between 15% and 50% - this is a matter of judgment and industry knowledge) to make up for the fact that some of this expenditure went to fund growth and shouldn't be accounted for. To start off, we assume 25% for the sake of prudence.
Sustainable Revenue = CLP17,097 Mil, Average Operating Margin = -3.39%, Average Adjusted SGA = 642,
therefore "Normalized" EBIT = Sustainable Revenue * Average Operating Margin + Average Adjusted SGA = 17,097 * -3.39% +642 = CLP62.080760448 Mil.

4. Multiply by one minus Average Tax Rate (NOPAT):

Same as average operating margin calculation, GuruFocus takes an average of the 5 years tax rates.
Average Tax Rate = 22.82%, and "Normalized" EBIT = CLP62.080760448 Mil,
therefore After-tax "Normalized" EBIT = "Normalized" EBIT * ( 1 - Average Tax Rate ) = 62.080760448 * ( 1 - 22.82% ) = CLP47.91579333658 Mil.

5. Add back Excess Depreciation (after tax at 1/2 average tax rate). This yields "normalized" Earnings:

Excess Depreciation = Average DDA * % of Excess Depreciation (after tax at 1/2 average tax rate) = 489 * 0.5 * 22.82% = CLP55.774080153 Mil.
"Normalized" Earnings = After-tax "Normalized" EBIT + Excess Depreciation = 47.91579333658 + 55.774080153 = CLP103.68987348958 Mil.

6. Adjusted for Maintenance Capital Expenditure:

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Third, calculate Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
Fourth, GuruFocus uses an average of the 5 year maintenance capital expenditures as maintenance CAPEX.
Azul Azul's Average Maintenance CAPEX = CLP2,457 Mil *.
* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

7. Investors require a return of "WACC" for the risk they are taking: WACC = 9%

8. Azul Azul's current cash and cash equivalent = CLP938 Mil.
Azul Azul's current interest bearing debt = Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation = 12,019 + 1,511 = CLP13529.738 Mil.
Azul Azul's current Shares Outstanding (Diluted Average) = 45 Mil.

Azul Azul's Earnings Power Value (EPV) for Mar25 is calculated as:

EPV = ( ( Norm. Earnings-Maint. CAPEX *) / WACC + CashandEquiv - Int. Bearing Debt ) / Shares Outstanding (Diluted Average)
= ( ( 103.68987348958 - 2,457)/ 9%+938-13529.738 )/45
=-866.97

Margin of Safety (EPV)=( Earnings Power Value (EPV)-Current Price )/Earnings Power Value (EPV)
=( -866.96604886035-587.50 )/-866.96604886035
= N/A

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.


Azul Azul  (XSGO:AZUL AZUL) Earnings Power Value (EPV) Explanation

Assumption: Current profitability is sustainable.

Earnings power value (EPV) uses a very basic equation which assumes no growth, although it does rely on an assumption about the cost of capital as well as the fact that current earnings are sustainable. It also involves several adjustments to clean up the underlying Earnings figures.


Be Aware

Though using today's earnings in calculating Earnings Power Value, GuruFocus is normalizing these earnings to the business cycle. This eliminates the effects on profitability of valuing the firm at different points in the business cycle. This means that we are considering the average earnings over 5 years.


Azul Azul Earnings Power Value (EPV) Related Terms

Thank you for viewing the detailed overview of Azul Azul's Earnings Power Value (EPV) provided by GuruFocus.com. Please click on the following links to see related term pages.


Azul Azul Business Description

Traded in Other Exchanges
N/A
Address
Avenida El Parron 0939, La Cisterna, Santiago, CHL
Azul Azul SA owns the Universidad de Chile soccer club. It organizes, produces, markets, and participates in professional activities of entertainment and recreation sporting. It also provides counseling services, support, equipment, and event management services. It has three segments; Bordero Collection, Advertising Revenue, and Other Revenue. The Bordero Collection segment is related to the income associated with the collections of the matches played by the Club in National Tournaments, International Tournaments, and Friendly Matches, and the Advertising segment which generates maximum revenue is related to income from stadium advertising, sponsorship, and merchandising.

Azul Azul Headlines

No Headlines