How Was the Stock Price Calculated?

A modified discounted cash flow model was used to arrive at the above intrinsic value.

((
10

t=1
 FCFt x (1 + i)t-1  
(1 + r)t
)
+
 FCF10 x (1+g) 
(r - g)
)
÷
  Shares
Outstanding


Where t is the time period in years, FCF is the Free Cash Flow in a given year, i is the FCF growth rate, r is the discount rate, and g is the growth rate in the long term.

Step 1: Plugin values

The values that were entered into the Intrinsic Stock Value Calculator are the following:

Plugin in those values into the equation:

((
10

t=1
 1,700t x (1 + 0.03)t-1  
(1 + 0.105)t
)
+
 2,218.1110 x (1+0.03) 
(0.105 - 0.03)
)
÷
  230.44

Step 2: Calculate the discounted cashflows

(
1,7001
1.11
+
1,7512
1.22
+
1,803.533
1.35
+
1,857.644
1.49
+
1,913.365
1.65
+
1,970.776
1.82
+
2,029.897
2.01
+
2,090.798
2.22
+
2,153.519
2.46
+
2,218.1110
2.71
+
2,218.1110 x (1+0.03)
(0.105 - 0.03)
)
÷
230.44
 

Step 3: Add it all up

(1,538.46 + 1,434.04 + 1,336.71 + 1,245.98 + 1,161.41 + 1,082.58 + 1,009.1 + 940.61 + 876.77 + 817.26 + 11,223.73) ÷ 230.44
 

Step 4: Verify the result

Share price = $98.36

 

Frequently Asked Questions

Why do I get a slightly different answer when I add the numbers in step 2 and step 3?

In order to make this page more legible we round the numbers in those two steps to 2 decimal places to display them on this page. The formula that get's computed to determine the intrinsic share value on this website does not round any values until the share price has been determined. You can perform the same calculations manually by plugin in the values from step 1 into the formula to get the final share price displayed on this page.