Expedia, Inc. (EXPE)
Discount cash flow analysis
5% margin of safety What's this?
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $12.16 | $12.01 | $11.86 | |
| Terminal Growth% | 0 | $12.19 | $12.04 | $11.89 |
| +1% | $12.23 | $12.07 | $11.92 |
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 $11.33 (overvalued by 49.22%) - 12 hours ago
- SethWellbourne created a new valuation of $10.50 (undervalued by 17.85%) - 11 months ago
- GordonGekko created a new valuation of $9.50 (undervalued by 28.73%) - 12 months ago
- TheCrunchBlog created a new valuation of $23.21 (undervalued by 20.45%) - 1 year ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 7,228 |
| Net Debt (Long-term borrowings less cash): | 786 |
| Equity Value: | 6,138 |
| Number of Shares Outstanding: | 288,000,000 |
| Calculated value per share: | $12.04 |
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.