United Parcel Service, Inc. (UPS)
Discount cash flow analysis
5% margin of safety What's this?
Price history
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $51.03 | $50.11 | $49.20 | |
| Terminal Growth% | 0 | $51.37 | $50.43 | $49.52 |
| +1% | $51.71 | $50.77 | $49.84 |
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 $43.70 (overvalued by 29.88%) - 21 minutes ago
- SethWellbourne created a new valuation of $35.84 (overvalued by 26.27%) - 11 months ago
- TheCrunchBlog created a new valuation of $42.57 (overvalued by 11.55%) - 1 year ago
- GordonGekko created a new valuation of $50.43 (undervalued by 8.71%) - 1 year ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 71,242 |
| Net Debt (Long-term borrowings less cash): | 8,414 |
| Equity Value: | 46,768 |
| Number of Shares Outstanding: | 1,008,000,000 |
| Calculated value per share: | $50.43 |
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.