General Electric Company (GE)
Discount cash flow analysis
Price history
Sensitivity matrix
-1% |
Discount Rate % 0% |
1% |
||
---|---|---|---|---|
-1% | $22.31 | $21.15 | $20.03 | |
Terminal Growth% | 0 | $22.79 | $21.62 | $20.48 |
+1% | $23.28 | $22.09 | $20.94 |
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 $24.70 (overvalued by 16.75%) - over 4 years ago
- mvacca created a new valuation of $16.13 (undervalued by 4.88%) - over 10 years ago
- pbemech created a new valuation of $14.90 (overvalued by 6.29%) - almost 12 years ago
- GordonGekko created a new valuation of $14.68 (overvalued by 8.88%) - 11 years ago
- baselsina created a new valuation of $18.75 (undervalued by 16.39%) - 11 years ago
- jtwdc1 created a new valuation of $0.00 (overvalued by 100.0%) - over 11 years ago
- GordonGekko created a new valuation of $0.00 (overvalued by 100.0%) - over 11 years ago
- Yuvraj created a new valuation of $63.82 (undervalued by 376.27%) - over 11 years ago
- Yuvraj created a new valuation of $12.76 (overvalued by 4.78%) - over 11 years ago
- Yuvraj created a new valuation of $7.15 (overvalued by 46.64%) - over 11 years ago
- natet1 created a new valuation of $12.82 (undervalued by 18.05%) - over 11 years ago
- SethWellbourne created a new valuation of $0.00 (overvalued by 100.0%) - almost 12 years ago
- jtmoney15 created a new valuation of $10.76 (undervalued by 11.39%) - almost 12 years ago
- GordonGekko created a new valuation of $10.76 (undervalued by 11.85%) - almost 12 years ago
- dweis created a new valuation of $37.74 (undervalued by 135.58%) - over 12 years ago
- wyomingkid created a new valuation of $63.76 (undervalued by 226.81%) - over 12 years ago
- Derek created a new valuation of $21.62 (undervalued by 14.03%) - over 12 years ago
- GordonGekko created a new valuation of $20.88 (overvalued by 18.12%) - over 12 years ago
- peypar created a new valuation of $11.23 (overvalued by 55.52%) - over 12 years ago
- GordonGekko created a new valuation of $24.95 (overvalued by 6.27%) - over 12 years ago
- Ashkat created a new valuation of $46.68 (undervalued by 66.12%) - over 12 years ago
- KiwiEMH created a new valuation of $26.49 (overvalued by 7.73%) - almost 13 years ago
- GordonGekko created a new valuation of $27.01 (overvalued by 1.35%) - almost 13 years ago
- TheCrunchBlog created a new valuation of $36.16 (undervalued by 32.07%) - almost 13 years ago
- GordonGekko created a new valuation of $29.39 (undervalued by 7.34%) - almost 13 years ago
- GordonGekko created a new valuation of $31.30 (undervalued by 0.94%) - almost 13 years ago
Comments
The boring details
All amounts in millions | Figures |
Enterprise Value: | 809,780 |
Net Debt (Long-term borrowings less cash): | 498,369 |
Equity Value: | 199,001 |
Number of Shares Outstanding: | 10,495,000,000 |
Calculated value per share: | $21.62 |
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.
Valuation very sensitive to choice of discount rate!
Bottom line earnings are not just a function of profitability margin.
They will be impacted by loss provisions/asset writedowns of the Finance Group.
Completely agree - especially re the situation in GE Finance. If GE Finance is "OK" then GE looks undervalued. But if there are nasty surprises there (and that is hard to make a call on right now) - that changes everything.