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10 June 2008 |
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Valuation Details
| Member: | TheCrunchBlog |
| On: | 24 Jun 2008 |
| Views: | 272 |
| Comments: | 1 |
| Updated: | 5 hours ago |
| Ticker: | MMM |
| Market: | NYSE |
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/06/3m-more-more-more-looks-cheap/
3M grew revenues from US$16.3 billion in 2002 to US$24.5 billion in 2007 – 8.4% compound annual growth rate. Our assumptions of revenues for the next three years are US$26.5 billion in 2008 growing to US$29.5 billion in 2010 – 6.4% compound annual growth rate. We have projected EBITDA margins remaining flat at 26.5%.
We have used a terminal growth rate of 2.5%. We calculated this terminal growth rate based on year three growth (2009 to 2010) of 5% dropping to a 2% stable growth rate over the next ten years.
We have used a WACC (discount rate) of 9%. The WACC (discount rate) has a material impact on a discounted cash flow valuation (as does the terminal growth rate). We think this WACC of 9% is reasonable but recognise that the actual number could be as low as 7.5-8.0% or as high as 10%.
We used a terminal capital expenditure number of US$1.5 billion.