Colgate-Palmolive Company (CL)
Discount cash flow analysis
Price history
Sensitivity matrix
|
-1% |
Discount Rate % 0% |
1% |
||
|---|---|---|---|---|
| -1% | $76.78 | $75.50 | $74.26 | |
| Terminal Growth% | 0 | $77.26 | $75.96 | $74.71 |
| +1% | $77.75 | $76.43 | $75.16 |
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 $70.99 (overvalued by 3.45%) - 12 months ago
- swampler created a new valuation of $74.22 (undervalued by 26.22%) - over 8 years ago
- swampler created a new valuation of $57.62 (overvalued by 2.01%) - over 8 years ago
- SethWellbourne created a new valuation of $46.61 (overvalued by 20.72%) - over 8 years ago
- nzvikram created a new valuation of $73.00 (undervalued by 19.89%) - over 8 years ago
- dweis created a new valuation of $69.83 (undervalued by 9.02%) - almost 9 years ago
- TheCrunchBlog created a new valuation of $75.96 (undervalued by 20.53%) - almost 9 years ago
- KiwiEMH created a new valuation of $74.65 (undervalued by 0.39%) - over 9 years ago
- Diegoengel created a new valuation of $81.87 (undervalued by 19.36%) - over 9 years ago
Comments
The boring details
| All amounts in millions | Figures |
| Enterprise Value: | 40,198 |
| Net Debt (Long-term borrowings less cash): | 3,087 |
| Equity Value: | 31,807 |
| Number of Shares Outstanding: | 504,000,000 |
| Calculated value per share: | $75.96 |
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.
This valuation is part of this blog post:
http://blog.valuecruncher.com/2008/11/running-the-numbers-colgate-palmolive-cl/
Assumptions
Revenue: Reuters aggregates 12 analysts covering $CL and these analysts have mean estimates of 2008 and 2009 revenues of US$15.7 billion and US$16.8 billion respectively. For our analysis we have used US$15.5 billion in 2008, US$16.5 billion in 2009 and US$17.5 billion in 2010.
Profitability: We have used a flat EBITDA margin of 22.0% to 2010. Reuters has $CL‘s EBITD margin at 21.5% last year and 22.9% over the last five-years.
Capital Expenditure: We have assumed capital expenditures of US$600.0 million per annum moving forward.
Discount Rate: 8.0%.
Terminal Growth Rate: 3.0%.