Time Warner Inc. (TWX)
Discount cash flow analysis
Price history
Sensitivity matrix
-1% |
Discount Rate % 0% |
1% |
||
---|---|---|---|---|
-1% | $15.31 | $15.00 | $14.70 | |
Terminal Growth% | 0 | $15.38 | $15.07 | $14.77 |
+1% | $15.45 | $15.14 | $14.83 |
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 $88.00 (undervalued by 14.79%) - 4 months ago
- GordonGekko created a new valuation of $29.12 (undervalued by 7.06%) - almost 7 years ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - over 7 years ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - over 7 years ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - over 7 years ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - over 7 years ago
- dianekim227 created a new valuation of $15.07 (overvalued by 40.83%) - over 7 years ago
- GordonGekko created a new valuation of $17.25 (overvalued by 24.47%) - over 7 years ago
- SethWellbourne created a new valuation of $5.10 (overvalued by 72.02%) - almost 8 years ago
- GordonGekko created a new valuation of $8.15 (undervalued by 9.1%) - almost 8 years ago
- KiwiEMH created a new valuation of $14.57 (overvalued by 1.55%) - over 8 years ago
- contrarian created a new valuation of $18.93 (undervalued by 24.62%) - over 8 years ago
- TheCrunchBlog created a new valuation of $15.08 (overvalued by 0.72%) - over 8 years ago
Comments
The boring details
All amounts in millions | Figures |
Enterprise Value: | 309,929 |
Net Debt (Long-term borrowings less cash): | 35,614 |
Equity Value: | 54,354 |
Number of Shares Outstanding: | 3,578,000,000 |
Calculated value per share: | $15.07 |
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.