3M Company (MMM)

Discount cash flow analysis

Sell Overvalued by 59.6%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for 3M Company, 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
2008 2009 2010 2011 2012 2013 2014 2015
 
                 
               
 

What will the revenues be in the future?

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

Price history

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $73.34 $72.37 $71.42
Terminal Growth% 0 $73.58 $72.60 $71.65
  +1% $73.82 $72.83 $71.87

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 $98.00 (overvalued by 45.43%) - 11 months ago
  • sloanwalker created a new valuation of $92.46 (undervalued by 14.63%) - almost 7 years ago
  • sloanwalker created a new valuation of $88.12 (undervalued by 9.25%) - almost 7 years ago
  • sloanwalker created a new valuation of $88.32 (undervalued by 9.5%) - almost 7 years ago
  • sloanwalker created a new valuation of $89.13 (undervalued by 10.5%) - almost 7 years ago
  • sloanwalker created a new valuation of $97.29 (undervalued by 20.62%) - almost 7 years ago
  • sloanwalker created a new valuation of $107.06 (undervalued by 32.73%) - almost 7 years ago
  • jman created a new valuation of $81.91 (overvalued by 2.5%) - 7 years ago
  • SethWellbourne created a new valuation of $99.22 (undervalued by 18.84%) - over 7 years ago
  • GordonGekko created a new valuation of $85.61 (undervalued by 8.12%) - over 7 years ago
  • jim1023 created a new valuation of $76.95 (overvalued by 2.82%) - over 7 years ago
  • tinmanvc created a new valuation of $78.55 (overvalued by 4.56%) - over 7 years ago
  • tinmanvc created a new valuation of $78.55 (overvalued by 4.56%) - over 7 years ago
  • GordonGekko created a new valuation of $72.60 (overvalued by 10.34%) - over 7 years ago
  • GordonGekko created a new valuation of $53.45 (undervalued by 0.6%) - over 8 years ago
  • SethWellbourne created a new valuation of $38.77 (overvalued by 20.31%) - over 8 years ago
  • afi created a new valuation of $46.23 (overvalued by 3.69%) - over 8 years ago
  • dlk61494 created a new valuation of $77.47 (undervalued by 39.91%) - over 8 years ago
  • rrfield created a new valuation of $43.04 (overvalued by 26.77%) - over 8 years ago
  • dweis created a new valuation of $60.90 (overvalued by 3.43%) - almost 9 years ago
  • TheCrunchBlog created a new valuation of $85.16 (undervalued by 16.72%) - over 9 years ago
  • GordonGekko created a new valuation of $89.74 (undervalued by 22.9%) - over 9 years ago
  • acoy created a new valuation of $70.37 (overvalued by 7.19%) - over 9 years ago
  • GordonGekko created a new valuation of $79.32 (undervalued by 2.12%) - over 9 years ago
  • tiger created a new valuation of $85.84 (undervalued by 12.47%) - over 9 years ago
  • Sam created a new valuation of $0.00 (overvalued by 100.0%) - over 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 131,638
Net Debt (Long-term borrowings less cash): 4,496
Equity Value: 57,323
Number of Shares Outstanding: 707,000,000
Calculated value per share: $72.60

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.