Comcast Corporation (CMCSA)
Discount cash flow analysis
5% margin of safety What's this?
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $24.03 | $23.53 | $23.05 | |
| Terminal Growth% | 0 | $24.20 | $23.70 | $23.21 |
| +1% | $24.38 | $23.87 | $23.37 |
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 $14.60 (overvalued by 16.71%) - 12 hours ago
- SethWellbourne created a new valuation of $13.60 (overvalued by 0.37%) - 11 months ago
- afi created a new valuation of $13.00 (overvalued by 0.23%) - 1 year ago
- GordonGekko created a new valuation of $12.98 (undervalued by 11.61%) - 1 year ago
- TheCrunchBlog created a new valuation of $23.70 (undervalued by 50.38%) - 1 year ago
- italianvilla created a new valuation of $11.74 (overvalued by 25.51%) - 1 year ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 80,744 |
| Net Debt (Long-term borrowings less cash): | 30,262 |
| Equity Value: | 45,385 |
| Number of Shares Outstanding: | 2,879,000,000 |
| Calculated value per share: | $23.70 |
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/2008/11/running-the-numbers-comcast-cmcsa/
Assumptions
Revenue: Reuters aggregates 17 analysts covering $CMCSA and these analysts have mean estimates of 2008 and 2009 revenues of US$34.4 billion and US$37.1 billion respectively. For our analysis we have used US$34.0 billion in 2008, US$36.0 billion in 2009 and US$38.0 billion in 2010.
Profitability: We have used an EBITDA margin of 37.0% to 2010. Reuters has $CMCSA‘s EBITD margin at 38.3% last year and averaging 37.4% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$6.25 billion per annum moving forward.
Discount Rate: 8.5%. You could make an argument for a discount rate anywhere in the 8-9% range.
Terminal Growth Rate: 3.0%. The US economy grew at an average of 3.6% over the last five-years.
Our analysis incorporates the cash and debt the $CMCSA balance sheet – Valuecruncher calculates a net debt number.