Paying users zone. Data is covered by .

  • Get to Broadcom Inc. for $17.99, or

  • get to whole website for at least 3 months from $49.99.

 

$17.99

Present Value of Free Cash Flow to Equity (FCFE)

Difficulty: Intermediate

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's asset base.


Intrinsic Stock Value (Valuation Summary)

Broadcom Inc., free cash flow to equity (FCFE) forecast

USD $ in millions, except per share data

 
Year Value FCFEt or Terminal value (TVt) Calculation Present value at %
01 FCFE0
1 FCFE1 = × (1 + %)
2 FCFE2 = × (1 + %)
3 FCFE3 = × (1 + %)
4 FCFE4 = × (1 + %)
5 FCFE5 = × (1 + %)
5 Terminal value (TV5) = × (1 + %) ÷ (% – %)
Intrinsic value of Broadcom's common stock
Intrinsic value of Broadcom's common stock (per share) $
Current share price $

Disclaimer!
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.

Top


Required Rate of Return (r)

 
Assumptions
Rate of return on LT Treasury Composite1 RF %
Expected rate of return on market portfolio2 E(RM) %
Systematic risk (β) of Broadcom's common stock βAVGO
Required rate of return on Broadcom's common stock3 rAVGO %

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).

Calculations

2 See Details »

3 rAVGO = RF + βAVGO [E(RM) – RF]
= % + [% – %]
= %

Top


FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Broadcom Inc., PRAT model

 
Average Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013 Oct 28, 2012
Selected Financial Data (USD $ in millions)
Cash dividends declared and paid to ordinary shareholders
Net income (loss) attributable to ordinary shares
Net revenue
Total assets
Total Broadcom Inc. stockholders’ equity
Ratios
Retention rate1
Profit margin2 % % % % % %
Asset turnover3
Financial leverage4
Averages
Retention rate
Profit margin %
Asset turnover
Financial leverage
Growth rate of FCFE (g)5 %

2017 Calculations

1 Retention rate = (Net income (loss) attributable to ordinary shares – Cash dividends declared and paid to ordinary shareholders) ÷ Net income (loss) attributable to ordinary shares
= () ÷ =

2 Profit margin = 100 × Net income (loss) attributable to ordinary shares ÷ Net revenue
= 100 × ÷ = %

3 Asset turnover = Net revenue ÷ Total assets
= ÷ =

4 Financial leverage = Total assets ÷ Total Broadcom Inc. stockholders’ equity
= ÷ =

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= × % × × = %

Top


FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × ( × % – ) ÷ ( + ) = %

where:
Equity market value0 = current market value of Broadcom's common stock (USD $ in millions)
FCFE0 = last year Broadcom's free cash flow to equity (USD $ in millions)
r = required rate of return on Broadcom's common stock

Top


FCFE growth rate (g) forecast

Broadcom Inc., H-model

 
Year Value gt
1 g1 %
2 g2 %
3 g3 %
4 g4 %
5 and thereafter g5 %

where:
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

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= % + (% – %) × (2 – 1) ÷ (5 – 1) = %

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= % + (% – %) × (3 – 1) ÷ (5 – 1) = %

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= % + (% – %) × (4 – 1) ÷ (5 – 1) = %

Top