Is EBay Inc. (NASDAQ:EBAY) Trading At A 49% Discount?
Is EBay Inc. (NASDAQ:EBAY) Trading At A 49% Discount?
Key Insights
- Using the 2 Stage Free Cash Flow to Equity, eBay fair value estimate is US$115
- Current share price of US$58.68 suggests eBay is potentially 49% undervalued
- The US$57.38 analyst price target for EBAY is 50% less than our estimate of fair value
In this article we are going to estimate the intrinsic value of eBay Inc. (NASDAQ:EBAY) by taking the expected future cash flows and discounting them to their present value. We will use the Discounted Cash Flow (DCF) model on this occasion. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.
We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.
The Calculation
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
10-year free cash flow (FCF) estimate
2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | |
Levered FCF ($, Millions) | US$2.28b | US$2.55b | US$2.60b | US$2.74b | US$2.86b | US$2.97b | US$3.07b | US$3.16b | US$3.26b | US$3.35b |
Growth Rate Estimate Source | Analyst x10 | Analyst x7 | Analyst x3 | Analyst x3 | Est @ 4.30% | Est @ 3.76% | Est @ 3.38% | Est @ 3.12% | Est @ 2.93% | Est @ 2.80% |
Present Value ($, Millions) Discounted @ 7.2% | US$2.1k | US$2.2k | US$2.1k | US$2.1k | US$2.0k | US$2.0k | US$1.9k | US$1.8k | US$1.7k | US$1.7k |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$20b
We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.5%. We discount the terminal cash flows to today's value at a cost of equity of 7.2%.
Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$3.3b× (1 + 2.5%) ÷ (7.2%– 2.5%) = US$73b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$73b÷ ( 1 + 7.2%)10= US$37b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$56b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of US$58.7, the company appears quite undervalued at a 49% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
Important Assumptions
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at eBay as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.2%, which is based on a levered beta of 1.134. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for eBay
- Earnings growth over the past year exceeded the industry.
- Debt is well covered by earnings and cashflows.
- Dividends are covered by earnings and cash flows.
- Dividend information for EBAY.
- Dividend is low compared to the top 25% of dividend payers in the Multiline Retail market.
- Good value based on P/E ratio and estimated fair value.
- Annual earnings are forecast to decline for the next 3 years.
- What else are analysts forecasting for EBAY?
Moving On:
Although the valuation of a company is important, it ideally won't be the sole piece of analysis you scrutinize for a company. DCF models are not the be-all and end-all of investment valuation. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Why is the intrinsic value higher than the current share price? For eBay, we've put together three essential items you should assess:
- Risks: As an example, we've found 4 warning signs for eBay (1 is a bit unpleasant!) that you need to consider before investing here.
- Future Earnings: How does EBAY'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 Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered!
PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
主要見解
- 使用二階段自由現金流向股本,ebay的公允價值估計爲115美元
- 當前的58.68美元股價表明ebay有可能被低估了49%
- 57.38美元的分析師目標價比我們的公允價值估計低了50%
在本文中,我們將通過預期未來現金流量並將其折現到現值來估算eBay Inc. (NASDAQ:EBAY)的內在價值。這次我們將使用折現現金流量(DCF)模型。像這樣的模型可能超出了 lay person 的理解範圍,但它們相當容易理解。
我們要警告的是,有許多方法可以對一個公司進行估值,並且與DCF一樣,每種技術在某些情況下都有優勢和劣勢。如果您仍然對這種類型的估值有一些燃燒的問題,請查看Simply Wall St的分析模型。
計算方法
我們使用所謂的2階段模型,這意味着我們有兩個不同的現金流增長期。一般來說,第一個階段是高增長,第二個階段是低增長。在第一個階段,我們需要估計未來10年業務的現金流。在可能的情況下,我們使用分析師的預測,但當這些不可用時,我們就會從上一個估計值或報告值推斷出上一個自由現金流(FCF)。我們假設自由現金流下降的公司將減緩縮小速度,而增長的自由現金流的公司在此期間增長率將放緩。我們這樣做是爲了反映增長傾向於在早期比在後期更爲緩慢。
普遍認爲今天的一美元比將來的一美元更有價值,因此我們需要貼現這些未來的現金流總和來得出現值估計:
10年自由現金流 (FCF) 預估值
2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | |
槓桿自由現金流 ($, 百萬) | 22.8億美元 | 25.5億美元 | 26億美元 | 27.4億美元 | 28.6億美元 | 29.7億美元 | 30.7億美元 | 31.6億美元 | 32.6億美元 | 33.5億美元 |
增長率估計來源 | 分析師共有10位 | 共計7位分析師。 | 分析師x3 | 分析師x3 | 4.30% | 估值約爲3.76% | Est @ 3.38% | 以3.12%的速度估算 | 按照2.93%的估算 | 估計 @ 2.80% |
現值($,百萬)按7.2%折現 | 2.1k美元 | 2.2k美元 | 2.1k美元 | 2.1k美元 | 2千美元 | 2千美元 | 1.9千美元 | 1.8千美元 | 1700美元 | 1700美元 |
("Est" = Simply Wall St 估計的自由現金流增長率)
十年現金流的現值 (PVCF) = 200億美元
重要假設
- 過去一年的收益增長超過了行業板塊。
- 債務得到充分覆蓋,收入和現金流決定了債務水平。
- 分紅派息由收入和現金流決定。
- 相比多元化零售市場前25%的股息支付者,其股息相對偏低。
- 基於市盈率和預估公平價值,出現良好的價值。
- 未來3年的年度收益預計將下降。
接下來:
- 其他優秀企業:低負債,高股本回報率和良好的過去業績是構建強大企業基礎的基礎。爲什麼不探索我們交互式的股票列表,其中包括具有堅實業務基礎的其他公司?
PS. Simply Wall St每天都會更新其對每隻美國股票的折現現金流計算,因此,如果你想找到其他股票的內在價值,只需在此搜索即可。
對本文有任何反饋?對內容有任何疑慮?請直接與我們聯繫。或者,發送電子郵件至editorial-team@simplywallst.com。
這篇文章是Simply Wall St的一般性文章。我們根據歷史數據和分析師預測提供評論,只使用公正的方法論,我們的文章並不意味着提供任何金融建議。文章不構成買賣任何股票的建議,也不考慮您的目標或您的財務狀況。我們的目標是帶給您基本數據驅動的長期關注分析。請注意,我們的分析可能不考慮最新的價格敏感公司公告或定性材料。Simply Wall St沒有任何股票頭寸。
moomoo是Moomoo Technologies Inc.公司提供的金融資訊和交易應用程式。
在美國,moomoo上的投資產品和服務由Moomoo Financial Inc.提供,一家受美國證券交易委員會(SEC)監管的持牌主體。 Moomoo Financial Inc.是金融業監管局(FINRA)和證券投資者保護公司(SIPC)的成員。
在新加坡,moomoo上的投資產品和服務是通過Moomoo Financial Singapore Pte. Ltd.提供,該公司受新加坡金融管理局(MAS)監管(牌照號碼︰CMS101000) ,持有資本市場服務牌照 (CMS) ,持有財務顧問豁免(Exempt Financial Adviser)資質。本內容未經新加坡金融管理局的審查。
在澳大利亞,moomoo上的金融產品和服務是通過Moomoo Securities Australia Limited提供,該公司是受澳大利亞證券和投資委員會(ASIC)監管的澳大利亞金融服務許可機構(AFSL No. 224663)。請閱讀並理解我們的《金融服務指南》、《條款與條件》、《隱私政策》和其他披露文件,這些文件可在我們的網站 https://www.moomoo.com/au中獲取。
在加拿大,透過moomoo應用程式提供的僅限訂單執行的券商服務由Moomoo Financial Canada Inc.提供,並受加拿大投資監管機構(CIRO)監管。
在馬來西亞,moomoo上的投資產品和服務是透過Moomoo Securities Malaysia Sdn. Bhd. 提供,該公司受馬來西亞證券監督委員會(SC)監管(牌照號碼︰eCMSL/A0397/2024) ,持有資本市場服務牌照 (CMSL) 。本內容未經馬來西亞證券監督委員會的審查。
Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd.,Moomoo Securities Australia Limited, Moomoo Financial Canada Inc和Moomoo Securities Malaysia Sdn. Bhd., 是關聯公司。
風險及免責聲明
moomoo是Moomoo Technologies Inc.公司提供的金融資訊和交易應用程式。
在美國,moomoo上的投資產品和服務由Moomoo Financial Inc.提供,一家受美國證券交易委員會(SEC)監管的持牌主體。 Moomoo Financial Inc.是金融業監管局(FINRA)和證券投資者保護公司(SIPC)的成員。
在新加坡,moomoo上的投資產品和服務是通過Moomoo Financial Singapore Pte. Ltd.提供,該公司受新加坡金融管理局(MAS)監管(牌照號碼︰CMS101000) ,持有資本市場服務牌照 (CMS) ,持有財務顧問豁免(Exempt Financial Adviser)資質。本內容未經新加坡金融管理局的審查。
在澳大利亞,moomoo上的金融產品和服務是通過Moomoo Securities Australia Limited提供,該公司是受澳大利亞證券和投資委員會(ASIC)監管的澳大利亞金融服務許可機構(AFSL No. 224663)。請閱讀並理解我們的《金融服務指南》、《條款與條件》、《隱私政策》和其他披露文件,這些文件可在我們的網站 https://www.moomoo.com/au中獲取。
在加拿大,透過moomoo應用程式提供的僅限訂單執行的券商服務由Moomoo Financial Canada Inc.提供,並受加拿大投資監管機構(CIRO)監管。
在馬來西亞,moomoo上的投資產品和服務是透過Moomoo Securities Malaysia Sdn. Bhd. 提供,該公司受馬來西亞證券監督委員會(SC)監管(牌照號碼︰eCMSL/A0397/2024) ,持有資本市場服務牌照 (CMSL) 。本內容未經馬來西亞證券監督委員會的審查。
Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd.,Moomoo Securities Australia Limited, Moomoo Financial Canada Inc和Moomoo Securities Malaysia Sdn. Bhd., 是關聯公司。
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