Dell Inc. (DELL)

Discount cash flow analysis

Within margin of safety Undervalued by 0.0%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Dell Inc., 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
2009 2010 2011 2012 2013 2014 2015 2016
 
                 
               
 

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% $24.44 $24.15 $23.87
Terminal Growth% 0 $24.54 $24.24 $23.96
  +1% $24.63 $24.34 $24.05

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

  • GordonGekko created a new valuation of $15.80 (undervalued by 15.84%) - over 7 years ago
  • diegovillagran created a new valuation of $24.24 (undervalued by 83.92%) - over 7 years ago
  • diegovillagran created a new valuation of $10.61 (overvalued by 19.5%) - over 7 years ago
  • macalex12 created a new valuation of $12.70 (overvalued by 11.31%) - over 7 years ago
  • macalex12 created a new valuation of $11.71 (overvalued by 18.23%) - over 7 years ago
  • jdlong43 created a new valuation of $9.70 (overvalued by 26.96%) - 8 years ago
  • SethWellbourne created a new valuation of $11.59 (undervalued by 22.13%) - over 8 years ago
  • GordonGekko created a new valuation of $9.21 (overvalued by 0.97%) - over 8 years ago
  • TheCrunchBlog created a new valuation of $19.24 (undervalued by 26.16%) - almost 9 years ago
  • GordonGekko created a new valuation of $19.09 (undervalued by 25.18%) - almost 9 years ago
  • KiwiEMH created a new valuation of $19.36 (undervalued by 14.35%) - almost 9 years ago
  • GordonGekko created a new valuation of $16.23 (overvalued by 2.41%) - almost 9 years ago
  • GordonGekko created a new valuation of $17.41 (overvalued by 3.22%) - almost 9 years ago
  • GordonGekko created a new valuation of $25.84 (undervalued by 0.82%) - almost 9 years ago
  • TheCrunchBlog created a new valuation of $23.94 (undervalued by 3.82%) - over 9 years ago
  • TheCrunchBlog created a new valuation of $24.24 (undervalued by 27.04%) - over 9 years ago
  • GordonGekko created a new valuation of $20.69 (undervalued by 8.44%) - over 9 years ago
  • BudFox1987 created a new valuation of $18.42 (overvalued by 3.31%) - over 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 0
Net Debt (Long-term borrowings less cash): -7,385
Equity Value: 38,966
Number of Shares Outstanding: 2,042,000,000
Calculated value per share: $24.24

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.