Arriva plc (ARI)
Discount cash flow analysis
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | £174.68 | £172.33 | £170.05 | |
| Terminal Growth% | 0 | £175.29 | £172.93 | £170.64 |
| +1% | £175.92 | £173.54 | £171.23 |
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 £172.93 (undervalued by 39202.27%) - 9 years ago
- GordonGekko created a new valuation of £5.51 (undervalued by 0.36%) - over 12 years ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 11 |
| Net Debt (Long-term borrowings less cash): | -2 |
| Equity Value: | 13 |
| Number of Shares Outstanding: | 31,000,000 |
| Calculated value per share: | £172.93 |
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.