Discount cash flow analysis

Sell Overvalued by 29.0%

5% margin of safety What's this?


How does this work?

This is an interactive analyst report for QUALCOMM, 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.

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

Discount Rate %

  -1% $45.51 $44.75 $44.02
Terminal Growth% 0 $45.89 $45.11 $44.37
  +1% $46.27 $45.48 $44.73

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 $65.13 (undervalued by 2.45%) - over 1 year ago
  • RichC created a new valuation of $52.86 (overvalued by 3.82%) - over 6 years ago
  • SethWellbourne created a new valuation of $27.45 (overvalued by 27.52%) - almost 9 years ago
  • dweis created a new valuation of $14.90 (overvalued by 53.16%) - over 9 years ago
  • KiwiEMH created a new valuation of $43.07 (overvalued by 2.93%) - almost 10 years ago
  • GordonGekko created a new valuation of $44.16 (undervalued by 0.14%) - almost 10 years ago
  • TheCrunchBlog created a new valuation of $45.11 (undervalued by 0.65%) - almost 10 years ago
  • monkeybrand created a new valuation of $49.32 (undervalued by 8.13%) - almost 10 years ago


Qualcomm (QCOM) over US$50 a share – that looks rich

This valuation is part of this blog post:


QCOMM grew revenues from US$4.88 billion in 2004 to US$8.87 billion in 2007 – a 22% compound annual growth rate. Our assumptions of revenues for the next three years are US$10.5 billion in 2008 growing to US$13.5 billion in 2010 – a 15% compound annual growth rate. We have projected EBITDA margins to grow from 40.0% in 2008 to 45.0% in 2010. We have used a terminal growth rate of 5%. We calculated this terminal growth rate based on year three growth of 11% dropping to a 4.5% stable growth rate by year 10. We believe there is still considerable additional growth in mobile globally to come which QCOM is well positioned for. We used a terminal capital expenditure number of US$1.0 billion. We have used a WACC (discount rate) of 10%.

By TheCrunchBlog, over 9 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 96,319
Net Debt (Long-term borrowings less cash): -6,581
Equity Value: 71,821
Number of Shares Outstanding: 1,618,000,000
Calculated value per share: $45.11

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

Calcuation of EV


  • 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.



  • 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


  • 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.