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Your Valuation
10 June 2008 |
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Valuation Details
| Member: | TheCrunchBlog |
| On: | 08 Aug 2008 |
| Views: | 248 |
| Comments: | 1 |
| Updated: | 6 hours ago |
| Ticker: | CSCO |
| Market: | NASD |
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/08/cisco-csco-our-numbers-make-it-look-cheap/
CSCO grew revenues from US$22.0 billion in 2004 to US$39.5 billion in 2008 – a 15.7% compound annual growth rate. Our assumptions of revenues for the next three years are US$43.5 billion in 2009 growing to US$52.5 billion in 2011 – a 10% compound annual growth rate. We have projected EBITDA margins to grow from 29.0% in 2009 to 30.0% in 2011. We have used a terminal growth rate of 4.5%. We calculated this terminal growth rate based on year three growth of 10% dropping to a 4.0% stable growth rate by year 10. We used a terminal capital expenditure number of US$1.25 billion. We have used a WACC (discount rate) of 10.5%.
The key assumptions as we see them are:
CSCO Revenues for the next three years. We believe that 10% per annum growth is a reasonable estimate to start with.
CSCO EBITDA margins. We are comfortable with a slight rise. 2011 EBITDA margins in the 29-31% range appear reasonable.
CSCO WACC. We view CSCO’s WACC in the 10-11% range. We took a mid-point.