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Mercantil do Brasil Financeira S.A. (MERC3.SA)

Company Dividend Discount ModelIndustry: Banks - RegionalSector: Financial Services

Valuation Snapshot

Stable Growth$303.09 - $1,080.68$986.80
Multi-Stage$136.50 - $149.41$142.84
Blended Fair Value$564.82
Current Price$54.11
Upside943.83%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS61.28%0.00%1.760.770.540.620.340.160.130.080.280.28
YoY Growth--127.77%42.55%-12.82%84.23%109.22%19.93%78.74%-73.30%1.41%0.00%
Dividend Yield--4.96%3.29%6.09%7.00%4.81%3.89%4.85%4.13%20.86%24.36%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)567.76
(-) Cash Dividends Paid (M)130.77
(=) Cash Retained (M)436.99
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)113.5570.9742.58
Cash Retained (M)436.99436.99436.99
(-) Cash Required (M)-113.55-70.97-42.58
(=) Excess Retained (M)323.44366.02394.41
(/) Shares Outstanding (M)104.48104.48104.48
(=) Excess Retained per Share3.103.503.77
LTM Dividend per Share1.251.251.25
(+) Excess Retained per Share3.103.503.77
(=) Adjusted Dividend4.354.755.03
WACC / Discount Rate7.01%7.01%7.01%
Growth Rate5.50%6.50%7.50%
Fair Value$303.09$986.80$1,080.68
Upside / Downside460.15%1,723.69%1,897.20%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)567.76604.66643.97685.83730.40777.88801.22
Payout Ratio23.03%36.43%49.82%63.21%76.61%90.00%92.50%
Projected Dividends (M)130.77220.26320.82433.53559.54700.09741.13

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate7.01%7.01%7.01%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)203.89205.82207.76
Year 2 PV (M)274.91280.15285.44
Year 3 PV (M)343.89353.76363.82
Year 4 PV (M)410.86426.66442.91
Year 5 PV (M)475.87498.85522.71
PV of Terminal Value (M)12,552.6213,158.9213,788.42
Equity Value (M)14,262.0414,924.1615,611.05
Shares Outstanding (M)104.48104.48104.48
Fair Value$136.50$142.84$149.41
Upside / Downside152.27%163.98%176.13%

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