Comcast Corporation (CMCSA)

Discount cash flow analysis

Sell Overvalued by 64.8%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Comcast Corporation, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $24.03 $23.53 $23.05
Terminal Growth% 0 $24.20 $23.70 $23.21
  +1% $24.38 $23.87 $23.37

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 $53.35 (overvalued by 20.73%) - 12 months ago
  • SethWellbourne created a new valuation of $13.60 (overvalued by 0.37%) - over 8 years ago
  • afi created a new valuation of $13.00 (overvalued by 0.23%) - over 8 years ago
  • GordonGekko created a new valuation of $12.98 (undervalued by 11.61%) - over 8 years ago
  • TheCrunchBlog created a new valuation of $23.70 (undervalued by 50.38%) - almost 9 years ago
  • italianvilla created a new valuation of $11.74 (overvalued by 25.51%) - almost 9 years ago

Comments

Running The Numbers - Comcast ($CMCSA) well below our intrinsic value estimate

This valuation is part of this blog post:

http://blog.valuecruncher.com/2008/11/running-the-numbers-comcast-cmcsa/

Assumptions

Revenue: Reuters aggregates 17 analysts covering $CMCSA and these analysts have mean estimates of 2008 and 2009 revenues of US$34.4 billion and US$37.1 billion respectively. For our analysis we have used US$34.0 billion in 2008, US$36.0 billion in 2009 and US$38.0 billion in 2010.

Profitability: We have used an EBITDA margin of 37.0% to 2010. Reuters has $CMCSA‘s EBITD margin at 38.3% last year and averaging 37.4% over the last five-years.

Capital Expenditure: We have assumed capital expenditures of US$6.25 billion per annum moving forward.

Discount Rate: 8.5%. You could make an argument for a discount rate anywhere in the 8-9% range.

Terminal Growth Rate: 3.0%. The US economy grew at an average of 3.6% over the last five-years.

Our analysis incorporates the cash and debt the $CMCSA balance sheet – Valuecruncher calculates a net debt number.

By TheCrunchBlog, almost 9 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 224,071
Net Debt (Long-term borrowings less cash): 30,262
Equity Value: 45,385
Number of Shares Outstanding: 2,879,000,000
Calculated value per share: $23.70

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

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.


Perpetuity

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.


CAPM model

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.