内容摘要：In this article I am going to calculate the intrinsic value of Stamps.com Inc. (NASDAQ:STMP) by taki big pot for pozole

In this big pot for pozolearticle I am going to calculate the intrinsic value of Stamps.com Inc. (

NASDAQ:STMP

) by taking the expected future cash flows and discounting them to their present value. I will be using the discounted cash flows (DCF) model. It may sound complicated, but actually it is quite simple! If you want to learn more about discounted cash flow, the basis for my calcs can be read in detail in the

Simply Wall St analysis model

. If you are reading this and its not January 2019 then I highly recommend you check out the latest calculation for Stamps.com by following the link below.

Check out our latest analysis for Stamps.com

Crunching the numbers

I’m using the 2-stage growth model, which simply means we take in account two stages of company’s growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have perpetual stable growth rate. In the first stage we need to estimate the cash flows to the business over the next five years. For this I used the consensus of the analysts covering the stock, as you can see below. I then discount the sum of these cash flows to arrive at a present value estimate.

5-year cash flow forecast

2019

2020

2021

2022

2023

Levered FCF ($, Millions)

$233.12

$263.44

$310.85

$363.70

$421.89

Source

Analyst x1

Analyst x1

Est @ 18%, capped from 32.7%

Est @ 17%, capped from 32.7%

Est @ 16%, capped from 32.7%

Present Value Discounted @ 15.5%

$201.84

$197.47

$201.75

$204.37

$205.25

Present Value of 5-year Cash Flow (PVCF)

= US$1.0b

After calculating the present value of future cash flows in the intial 5-year period we need to calculate the Terminal Value, which accounts for all the future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of the GDP. In this case I have used the 10-year government bond rate (2.9%). In the same way as with the 5-year ‘growth’ period, we discount this to today’s value at a cost of equity of 15.5%.

Terminal Value (TV)

= FCF

2023

× (1 + g) ÷ (r – g) = US$422m × (1 + 2.9%) ÷ (15.5% – 2.9%) = US$3.5b

Present Value of Terminal Value (PVTV)

= TV / (1 + r)

5

= US$3.5b ÷ ( 1 + 15.5%)

5

= US$1.7b

The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is US$2.7b. The last step is to then divide the equity value by the number of shares outstanding. If the stock is an depositary receipt (represents a specified number of shares in a foreign corporation) then we use the equivalent number.

This results in an intrinsic value of $148.85

. Relative to the current share price of $155.32, the stock is fair value, maybe slightly overvalued and not available at a discount at this time.

Story continues

NasdaqGS:STMP Intrinsic Value Export January 1st 19

Important assumptions

I’d like to point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. You don’t have to agree with my inputs, I recommend redoing the calculations yourself and playing with them. Because we are looking at Stamps.com as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighed average cost of capital, WACC) which accounts for debt. In this calculation I’ve used 15.5%, which is based on a levered beta of 1.78. This is derived from the Bottom-Up Beta method based on comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

Next Steps:

Whilst important, DCF calculation shouldn’t be the only metric you look at when researching a company. For STMP, there are three key factors you should further examine:

Financial Health

: Does STMP have a healthy balance sheet? Take a look at our

free balance sheet analysis with six simple checks

on key factors like leverage and risk.

Future Earnings

: How does STMP’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our

free analyst growth expectation chart

.

Other High Quality Alternatives

: Are there other high quality stocks you could be holding instead of STMP? Explore

our interactive list of high quality stocks

to get an idea of what else is out there you may be missing!

PS. The Simply Wall St app conducts a discounted cash flow for every stock on the NASDAQ every 6 hours. If you want to find the calculation for other stocks just

search here

.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

[email protected]

.

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