US$ in millions, except per share data, based on values on 09/06/2024
|
Year |
Value |
FCFE or Terminal Value |
Present Value at 15.70% |
|
0 |
FCFE0 |
4,545 |
|
|
1 |
FCFE1 |
5,098 = 4545 x (1+12.16%) |
4,406 |
|
2 |
FCFE2 |
5,725 = 5098 x (1+ 12.31%) |
4,277 |
|
3 |
FCFE3 |
6,439 = 5725 x (1+ 12.46%) |
4,157 |
|
4 |
FCFE4 |
7,251 = 6439 x (1+12.61%) |
4,046 |
|
5 |
FCFE5 |
8,177 = 7251 x (1+12.77%) |
3,944 |
|
5 |
Terminal Value (TV5) |
314,197 = 8177 x (1+12.77%) / (15.70% - 12.77%) |
151,540 |
|
Intrinsic value of Intuit Inc. |
172,370 |
|
Intrinsic value of Intuit Inc. common stock (per share) |
$614.96 |
|
Current share price on 09/06/2024 |
$623.10 |
Required rate of Return
Assumptions
|
Rate of return on LT Treasury Composite(Rf) |
4.10% |
|
Expected rate of return on market portfolio(E(RM) |
13.84% |
|
Systematic risk of Intuit Inc. Common stock (β) |
1.19 |
|
Required rate of return on Intuit Inc. Common Stock (r) Calculation : Rf + β(E(RM)- (Rf) = 4.10% +1.19[13.84% - 4.10%] |
15.70% |
FCFE Growth rate (G) Forecast
Intuit Inc. H-Model
|
Year |
Value |
g |
|
1 |
g1 (PRAT Model) |
12.16% |
|
2 |
g2 (Linear Interpolation) |
12.31% |
|
3 |
g3 (Linear Interpolation) |
12.46% |
|
4 |
g4 (Linear Interpolation) |
12.61% |
|
5 |
g5 (Single stage model) |
12.77% |
2024 Calculations
Retention rate = (Net income – Dividends and dividend rights declared) ÷ Net income
= (2,963 – 1,041) ÷ 2,963
= 0.65
Profit margin = 100 × Net income ÷ Net revenue
= 100 × 2,963 ÷ 16,285
= 18.19%
Asset turnover = Net revenue ÷ Total assets
= 16,285 ÷ 32,132
= 0.51
Financial leverage = Total assets ÷ Stockholders’ equity
= 32,132 ÷ 18,436
= 1.74
g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.66 × 19.86% × 0.56 × 1.66
= 12.16%
Source: https://www.stock-analysis-on.net
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