Time Warner Inc. (TWX)
Discount cash flow analysis
5% margin of safety What's this?
Price history
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $19.22 | $18.79 | $18.38 | |
| Terminal Growth% | 0 | $19.37 | $18.93 | $18.51 |
| +1% | $19.51 | $19.07 | $18.65 |
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 $29.45 (overvalued by 3.57%) - 9 hours ago
- GordonGekko created a new valuation of $29.12 (undervalued by 7.06%) - 1 month ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - 9 months ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - 9 months ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - 9 months ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - 9 months ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - 9 months ago
- GordonGekko created a new valuation of $17.25 (overvalued by 24.47%) - 10 months ago
- SethWellbourne created a new valuation of $5.10 (overvalued by 72.02%) - 11 months ago
- GordonGekko created a new valuation of $8.15 (undervalued by 9.1%) - 1 year ago
- KiwiEMH created a new valuation of $14.57 (overvalued by 1.55%) - 1 year ago
- contrarian created a new valuation of $18.93 (undervalued by 24.62%) - 1 year ago
- TheCrunchBlog created a new valuation of $15.08 (overvalued by 0.72%) - 1 year ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 144,896 |
| Net Debt (Long-term borrowings less cash): | 35,614 |
| Equity Value: | 54,354 |
| Number of Shares Outstanding: | 3,578,000,000 |
| Calculated value per share: | $18.93 |
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.