In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.
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Advanced Micro Devices Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Operating Profit Margin since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Intrinsic Stock Value (Valuation Summary)
Advanced Micro Devices Inc., free cash flow to equity (FCFE) forecast
US$ in millions, except per share data
|Year||Value||FCFEt or Terminal value (TVt)||Calculation||Present value at|
|1||FCFE1||= × (1 + )|
|2||FCFE2||= × (1 + )|
|3||FCFE3||= × (1 + )|
|4||FCFE4||= × (1 + )|
|5||FCFE5||= × (1 + )|
|5||Terminal value (TV5)||= × (1 + ) ÷ ( – )|
|Intrinsic value of Advanced Micro Devices Inc. common stock|
|Intrinsic value of Advanced Micro Devices Inc. common stock (per share)|
|Current share price|
Based on: 10-K (reporting date: 2022-12-31).
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.
Required Rate of Return (r)
|Rate of return on LT Treasury Composite1||RF|
|Expected rate of return on market portfolio2||E(RM)|
|Systematic risk of Advanced Micro Devices Inc. common stock||βAMD|
|Required rate of return on Advanced Micro Devices Inc. common stock3||rAMD|
1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).
3 rAMD = RF + βAMD [E(RM) – RF]
= + [ – ]
FCFE Growth Rate (g)
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29).
1 Company does not pay dividends
2 Profit margin = 100 × Net income ÷ Net revenue
= 100 × ÷
3 Asset turnover = Net revenue ÷ Total assets
4 Financial leverage = Total assets ÷ Stockholders’ equity
5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= × × ×
FCFE growth rate (g) implied by single-stage model
g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × ( × – ) ÷ ( + )
Equity market value0 = current market value of Advanced Micro Devices Inc. common stock (US$ in millions)
FCFE0 = the last year Advanced Micro Devices Inc. free cash flow to equity (US$ in millions)
r = required rate of return on Advanced Micro Devices Inc. common stock
|5 and thereafter||g5|
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5
g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= + ( – ) × (2 – 1) ÷ (5 – 1)
g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= + ( – ) × (3 – 1) ÷ (5 – 1)
g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= + ( – ) × (4 – 1) ÷ (5 – 1)