QUALCOMM, Inc. (QCOM)

Discount cash flow analysis

Sell Overvalued by 23.1%

5% margin of safety What's this?

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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.

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Values in $ millions
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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% $43.44 $42.72 $42.03
Terminal Growth% 0 $43.80 $43.07 $42.36
  +1% $44.17 $43.42 $42.70

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 $51.10 (overvalued by 8.72%) - 18 hours ago
  • RichC created a new valuation of $52.86 (overvalued by 3.82%) - 10 months ago
  • SethWellbourne created a new valuation of $27.45 (overvalued by 27.52%) - over 3 years ago
  • dweis created a new valuation of $14.90 (overvalued by 53.16%) - over 3 years ago
  • KiwiEMH created a new valuation of $43.07 (overvalued by 2.93%) - over 4 years ago
  • GordonGekko created a new valuation of $44.16 (undervalued by 0.14%) - over 4 years ago
  • TheCrunchBlog created a new valuation of $45.11 (undervalued by 0.65%) - over 4 years ago
  • monkeybrand created a new valuation of $49.32 (undervalued by 8.13%) - over 4 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 84,033
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: $43.07

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.