Stock Analysis on Net

Walt Disney Co. (NYSE:DIS)

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Present Value of Free Cash Flow to Equity (FCFE)

Microsoft Excel LibreOffice Calc

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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Intrinsic Stock Value (Valuation Summary)

Walt Disney Co., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

Microsoft Excel LibreOffice Calc
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 Walt Disney Co. common stock
 
Intrinsic value of Walt Disney Co. common stock (per share)
Current share price

Based on: 10-K (reporting date: 2021-10-02).

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.


Required Rate of Return (r)

Microsoft Excel LibreOffice Calc
Assumptions
Rate of return on LT Treasury Composite1 RF
Expected rate of return on market portfolio2 E(RM)
Systematic risk of Walt Disney Co. common stock βDIS
 
Required rate of return on Walt Disney Co. common stock3 rDIS

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).

2 See details »

3 rDIS = RF + βDIS [E(RM) – RF]
= + []
=


FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Walt Disney Co., PRAT model

Microsoft Excel LibreOffice Calc
Average Oct 2, 2021 Oct 3, 2020 Sep 28, 2019 Sep 29, 2018 Sep 30, 2017 Oct 1, 2016
Selected Financial Data (US$ in millions)
Dividends
Net income (loss) attributable to The Walt Disney Company (Disney)
Revenues
Total assets
Total Disney Shareholder’s equity
Financial Ratios
Retention rate1
Profit margin2
Asset turnover3
Financial leverage4
Averages
Retention rate
Profit margin
Asset turnover
Financial leverage
 
FCFE growth rate (g)5

Based on: 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-10-01).

2021 Calculations

1 Retention rate = (Net income (loss) attributable to The Walt Disney Company (Disney) – Dividends) ÷ Net income (loss) attributable to The Walt Disney Company (Disney)
= () ÷
=

2 Profit margin = 100 × Net income (loss) attributable to The Walt Disney Company (Disney) ÷ Revenues
= 100 × ÷
=

3 Asset turnover = Revenues ÷ Total assets
= ÷
=

4 Financial leverage = Total assets ÷ Total Disney Shareholder’s equity
= ÷
=

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


FCFE growth rate (g) forecast

Walt Disney Co., H-model

Microsoft Excel LibreOffice Calc
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)
=