eBay Inc. (EBAY)
Discount cash flow analysis
5% margin of safety What's this?
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $24.09 | $23.79 | $23.49 | |
| Terminal Growth% | 0 | $24.19 | $23.88 | $23.59 |
| +1% | $24.30 | $23.98 | $23.68 |
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 $14.07 (overvalued by 13.89%) - 8 hours ago
- SethWellbourne created a new valuation of $15.84 (undervalued by 10.85%) - 2 months ago
- SethWellbourne created a new valuation of $15.97 (undervalued by 27.96%) - 3 months ago
- GordonGekko created a new valuation of $13.68 (undervalued by 17.63%) - 3 months ago
- TheCrunchBlog created a new valuation of $23.88 (undervalued by 6.7%) - 9 months ago
- GordonGekko created a new valuation of $22.34 (undervalued by 11.98%) - 9 months ago
- TheCrunchBlog created a new valuation of $28.13 (overvalued by 0.88%) - 1 year ago
- GordonGekko created a new valuation of $28.82 (undervalued by 1.55%) - 1 year ago
- BudFox1987 created a new valuation of $49.15 (undervalued by 57.03%) - 1 year ago
- JStew82 created a new valuation of $21.15 (overvalued by 32.43%) - 1 year ago
- GordonGekko created a new valuation of $27.65 (overvalued by 11.66%) - 1 year ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 16,553 |
| Net Debt (Long-term borrowings less cash): | -4,697 |
| Equity Value: | 29,106 |
| Number of Shares Outstanding: | 1,300,000,000 |
| Calculated value per share: | $23.88 |
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.
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/10/running-the-numbers-ebay-looks-cheap-even-with-all-the-negatives/
Our assumptions are revenues of US$9.0 billion in 2008 growing to US$11.0 billion in 2010. We have used an EBITDA margin of 36.5% in 2008 decreasing to 35.0% in 2010. Our terminal growth rate is 3.75%. We used a terminal capital expenditure number of US$800 million. Our WACC (discount rate) is 11.0%. All of these assumptions can be amended in the Valuecruncher on-line valuation model to adjust the valuation.