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Your Valuation
10 June 2008 |
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Valuation Details
| Member: | TheCrunchBlog |
| On: | 05 Sep 2008 |
| Views: | 155 |
| Comments: | 1 |
| Updated: | 5 hours ago |
| Ticker: | HPQ |
| Market: | NYSE |
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/09/running-the-numbers-hewlett-packard-hpq-looks-cheap/
HPQ grew revenues from US$79.9 billion in 2004 to US$104.3 billion in 2007 – a 9.0% compound annual growth rate. Our assumptions of revenues for the next three years are US$115.0 billion in 2008 growing to US$135.0 billion in 2010 – a 9.3% compound annual growth rate. We have projected EBITDA margins to grow from 12.5% in 2008 to 13.0% in 2010. We have used a terminal growth rate of 3.5%. We used a terminal capital expenditure number of US$4.0 billion. We have used a WACC (discount rate) of 10%.
Key assumptions as we see them are:
HPQ terminal growth rate of 3.5%. We believe this long-term growth rate could be anywhere between 3% and 4-4.5%. We have taken 3.5% as a mid-point terminal growth rate.
HPQ WACC of 10%. We believe that HPQ’s WACC (discount rate) is in the 9-11% range. Again we have taken a mid-point.