International Business Machines Corp. (IBM)
Discount cash flow analysis
5% margin of safety What's this?
Price history
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $134.99 | $132.82 | $130.72 | |
| Terminal Growth% | 0 | $135.70 | $133.50 | $131.39 |
| +1% | $136.41 | $134.19 | $132.06 |
How does a change in discount rate or terminal growth affect valuation?
This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate
Valuations and comments
- Valuecruncher created a new valuation of $114.72 (overvalued by 10.84%) - 10 hours ago
- geet011984 created a new valuation of $110.88 (overvalued by 5.12%) - 7 months ago
- geet011984 created a new valuation of $110.88 (overvalued by 5.12%) - 7 months ago
- GordonGekko created a new valuation of $108.42 (undervalued by 1.12%) - 8 months ago
- SethWellbourne created a new valuation of $67.82 (overvalued by 28.25%) - 11 months ago
- Derek created a new valuation of $108.18 (undervalued by 29.4%) - 1 year ago
- TheCrunchBlog created a new valuation of $130.55 (undervalued by 41.12%) - 1 year ago
- GordonGekko created a new valuation of $109.17 (undervalued by 24.41%) - 1 year ago
- TheCrunchBlog created a new valuation of $128.25 (undervalued by 7.39%) - 1 year ago
- GordonGekko created a new valuation of $133.50 (undervalued by 14.63%) - 1 year ago
- KiwiEMH created a new valuation of $131.42 (undervalued by 1.09%) - 1 year ago
- TheCrunchBlog created a new valuation of $141.42 (undervalued by 19.31%) - 1 year ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 193,455 |
| Net Debt (Long-term borrowings less cash): | 19,128 |
| Equity Value: | 157,784 |
| Number of Shares Outstanding: | 1,354,000,000 |
| Calculated value per share: | $133.50 |
Enterprise Value is the present value of the post-tax cash flows for a business into the future.
Where:
- C1, C2, C3 - the cash flow in period 1, 2, 3, ...
- r - the discount rate
To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.
Where:
- Cn - the cash flow in the final forecast period.
- LTG - the long-term growth rate
- r - the discount rate
- g - the terminal growth rate
The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.
Where:
- rt - the risk free rate
- t - the tax rate
- B - the beta of the company
- MRP - the Market Risk Premium
Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.