Intrinsic value of Walt Disney - DIS

Previous Close

$100.70

  Intrinsic Value

$105.74

stock screener

  Rating & Target

hold

+5%

  Value-price divergence*

-22%

Previous close

$100.70

 
Intrinsic value

$105.74

 
Up/down potential

+5%

 
Rating

hold

 
Value-price divergence*

-22%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DIS stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 159.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.04
  2.80
  3.02
  3.22
  3.40
  3.56
  3.70
  3.83
  3.95
  4.05
  4.15
  4.23
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.63
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.82
  4.84
  4.86
  4.87
  4.88
  4.90
Revenue, $m
  55,632
  57,190
  58,917
  60,813
  62,878
  65,114
  67,524
  70,111
  72,879
  75,833
  78,978
  82,321
  85,869
  89,628
  93,609
  97,818
  102,266
  106,962
  111,918
  117,144
  122,653
  128,458
  134,572
  141,009
  147,784
  154,914
  162,415
  170,305
  178,602
  187,327
  196,499
Variable operating expenses, $m
 
  38,468
  39,546
  40,729
  42,018
  43,413
  44,917
  46,531
  48,258
  50,101
  52,064
  51,369
  53,583
  55,929
  58,413
  61,039
  63,815
  66,746
  69,838
  73,099
  76,537
  80,159
  83,974
  87,991
  92,219
  96,668
  101,349
  106,272
  111,450
  116,894
  122,617
Fixed operating expenses, $m
 
  4,107
  4,210
  4,315
  4,423
  4,534
  4,647
  4,763
  4,882
  5,004
  5,129
  5,258
  5,389
  5,524
  5,662
  5,803
  5,948
  6,097
  6,250
  6,406
  6,566
  6,730
  6,898
  7,071
  7,248
  7,429
  7,614
  7,805
  8,000
  8,200
  8,405
Total operating expenses, $m
  41,430
  42,575
  43,756
  45,044
  46,441
  47,947
  49,564
  51,294
  53,140
  55,105
  57,193
  56,627
  58,972
  61,453
  64,075
  66,842
  69,763
  72,843
  76,088
  79,505
  83,103
  86,889
  90,872
  95,062
  99,467
  104,097
  108,963
  114,077
  119,450
  125,094
  131,022
Operating income, $m
  14,202
  14,615
  15,161
  15,769
  16,438
  17,168
  17,960
  18,817
  19,738
  20,727
  21,785
  25,694
  26,897
  28,176
  29,534
  30,975
  32,502
  34,120
  35,830
  37,639
  39,550
  41,569
  43,699
  45,947
  48,318
  50,817
  53,452
  56,228
  59,153
  62,233
  65,477
EBITDA, $m
  16,729
  18,921
  19,513
  20,172
  20,895
  21,685
  22,542
  23,468
  24,463
  25,530
  26,672
  27,889
  29,187
  30,566
  32,030
  33,584
  35,230
  36,972
  38,815
  40,763
  42,821
  44,994
  47,288
  49,707
  52,259
  54,948
  57,783
  60,769
  63,915
  67,228
  70,716
Interest expense (income), $m
  395
  577
  623
  672
  726
  785
  848
  917
  990
  1,069
  1,152
  1,242
  1,337
  1,437
  1,544
  1,657
  1,777
  1,903
  2,036
  2,177
  2,326
  2,482
  2,647
  2,820
  3,003
  3,196
  3,398
  3,611
  3,835
  4,071
  4,318
Earnings before tax, $m
  14,868
  14,038
  14,538
  15,097
  15,712
  16,383
  17,112
  17,900
  18,749
  19,658
  20,632
  24,452
  25,560
  26,738
  27,990
  29,318
  30,726
  32,216
  33,794
  35,462
  37,225
  39,087
  41,052
  43,127
  45,314
  47,622
  50,054
  52,617
  55,317
  58,162
  61,158
Tax expense, $m
  5,078
  3,790
  3,925
  4,076
  4,242
  4,423
  4,620
  4,833
  5,062
  5,308
  5,571
  6,602
  6,901
  7,219
  7,557
  7,916
  8,296
  8,698
  9,124
  9,575
  10,051
  10,553
  11,084
  11,644
  12,235
  12,858
  13,515
  14,207
  14,936
  15,704
  16,513
Net income, $m
  9,391
  10,247
  10,613
  11,021
  11,469
  11,960
  12,492
  13,067
  13,686
  14,351
  15,061
  17,850
  18,659
  19,519
  20,433
  21,402
  22,430
  23,518
  24,670
  25,887
  27,174
  28,533
  29,968
  31,482
  33,080
  34,764
  36,539
  38,410
  40,382
  42,458
  44,645

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,610
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  92,033
  89,921
  92,637
  95,618
  98,865
  102,381
  106,170
  110,237
  114,589
  119,234
  124,179
  129,435
  135,014
  140,925
  147,183
  153,802
  160,795
  168,180
  175,972
  184,189
  192,851
  201,978
  211,591
  221,712
  232,365
  243,575
  255,369
  267,775
  280,821
  294,539
  308,961
Adjusted assets (=assets-cash), $m
  87,423
  89,921
  92,637
  95,618
  98,865
  102,381
  106,170
  110,237
  114,589
  119,234
  124,179
  129,435
  135,014
  140,925
  147,183
  153,802
  160,795
  168,180
  175,972
  184,189
  192,851
  201,978
  211,591
  221,712
  232,365
  243,575
  255,369
  267,775
  280,821
  294,539
  308,961
Revenue / Adjusted assets
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
Average production assets, $m
  39,586
  40,719
  41,949
  43,299
  44,769
  46,361
  48,077
  49,919
  51,890
  53,993
  56,232
  58,612
  61,138
  63,815
  66,649
  69,646
  72,813
  76,157
  79,686
  83,407
  87,329
  91,462
  95,815
  100,398
  105,222
  110,299
  115,639
  121,257
  127,165
  133,377
  139,907
Working capital, $m
  124
  -801
  -825
  -851
  -880
  -912
  -945
  -982
  -1,020
  -1,062
  -1,106
  -1,152
  -1,202
  -1,255
  -1,311
  -1,369
  -1,432
  -1,497
  -1,567
  -1,640
  -1,717
  -1,798
  -1,884
  -1,974
  -2,069
  -2,169
  -2,274
  -2,384
  -2,500
  -2,623
  -2,751
Total debt, $m
  20,170
  17,801
  19,202
  20,741
  22,416
  24,231
  26,186
  28,284
  30,530
  32,927
  35,478
  38,191
  41,069
  44,119
  47,349
  50,764
  54,372
  58,183
  62,203
  66,444
  70,913
  75,623
  80,583
  85,805
  91,302
  97,087
  103,173
  109,574
  116,306
  123,384
  130,826
Total liabilities, $m
  48,768
  46,399
  47,800
  49,339
  51,014
  52,829
  54,784
  56,882
  59,128
  61,525
  64,076
  66,789
  69,667
  72,717
  75,947
  79,362
  82,970
  86,781
  90,801
  95,042
  99,511
  104,221
  109,181
  114,403
  119,900
  125,685
  131,771
  138,172
  144,904
  151,982
  159,424
Total equity, $m
  43,265
  43,522
  44,836
  46,279
  47,851
  49,552
  51,386
  53,355
  55,461
  57,709
  60,103
  62,647
  65,347
  68,208
  71,237
  74,440
  77,825
  81,399
  85,170
  89,147
  93,340
  97,757
  102,410
  107,308
  112,465
  117,890
  123,599
  129,603
  135,917
  142,557
  149,537
Total liabilities and equity, $m
  92,033
  89,921
  92,636
  95,618
  98,865
  102,381
  106,170
  110,237
  114,589
  119,234
  124,179
  129,436
  135,014
  140,925
  147,184
  153,802
  160,795
  168,180
  175,971
  184,189
  192,851
  201,978
  211,591
  221,711
  232,365
  243,575
  255,370
  267,775
  280,821
  294,539
  308,961
Debt-to-equity ratio
  0.466
  0.410
  0.430
  0.450
  0.470
  0.490
  0.510
  0.530
  0.550
  0.570
  0.590
  0.610
  0.630
  0.650
  0.660
  0.680
  0.700
  0.710
  0.730
  0.750
  0.760
  0.770
  0.790
  0.800
  0.810
  0.820
  0.830
  0.850
  0.860
  0.870
  0.870
Adjusted equity ratio
  0.442
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484
  0.484

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9,391
  10,247
  10,613
  11,021
  11,469
  11,960
  12,492
  13,067
  13,686
  14,351
  15,061
  17,850
  18,659
  19,519
  20,433
  21,402
  22,430
  23,518
  24,670
  25,887
  27,174
  28,533
  29,968
  31,482
  33,080
  34,764
  36,539
  38,410
  40,382
  42,458
  44,645
Depreciation, amort., depletion, $m
  2,527
  4,306
  4,352
  4,403
  4,458
  4,517
  4,582
  4,651
  4,724
  4,803
  4,887
  2,195
  2,290
  2,390
  2,496
  2,608
  2,727
  2,852
  2,984
  3,124
  3,271
  3,426
  3,589
  3,760
  3,941
  4,131
  4,331
  4,541
  4,763
  4,995
  5,240
Funds from operations, $m
  12,311
  14,554
  14,965
  15,423
  15,927
  16,477
  17,074
  17,718
  18,411
  19,154
  19,948
  20,046
  20,949
  21,909
  22,929
  24,011
  25,157
  26,370
  27,654
  29,011
  30,445
  31,959
  33,557
  35,243
  37,020
  38,895
  40,870
  42,952
  45,144
  47,454
  49,885
Change in working capital, $m
  -902
  -22
  -24
  -27
  -29
  -31
  -34
  -36
  -39
  -41
  -44
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -69
  -73
  -77
  -81
  -86
  -90
  -95
  -100
  -105
  -110
  -116
  -122
  -128
Cash from operations, $m
  13,213
  14,575
  14,989
  15,450
  15,956
  16,508
  17,107
  17,754
  18,450
  19,195
  19,993
  20,092
  20,998
  21,962
  22,985
  24,070
  25,219
  26,436
  27,723
  29,084
  30,522
  32,040
  33,642
  35,333
  37,115
  38,995
  40,975
  43,062
  45,261
  47,576
  50,014
Maintenance CAPEX, $m
  0
  -1,483
  -1,525
  -1,571
  -1,622
  -1,677
  -1,736
  -1,801
  -1,870
  -1,943
  -2,022
  -2,106
  -2,195
  -2,290
  -2,390
  -2,496
  -2,608
  -2,727
  -2,852
  -2,984
  -3,124
  -3,271
  -3,426
  -3,589
  -3,760
  -3,941
  -4,131
  -4,331
  -4,541
  -4,763
  -4,995
New CAPEX, $m
  -4,773
  -1,134
  -1,230
  -1,350
  -1,471
  -1,592
  -1,716
  -1,842
  -1,971
  -2,103
  -2,239
  -2,380
  -2,526
  -2,677
  -2,834
  -2,997
  -3,167
  -3,344
  -3,528
  -3,721
  -3,922
  -4,133
  -4,353
  -4,583
  -4,824
  -5,076
  -5,341
  -5,618
  -5,908
  -6,212
  -6,531
Cash from investing activities, $m
  -5,758
  -2,617
  -2,755
  -2,921
  -3,093
  -3,269
  -3,452
  -3,643
  -3,841
  -4,046
  -4,261
  -4,486
  -4,721
  -4,967
  -5,224
  -5,493
  -5,775
  -6,071
  -6,380
  -6,705
  -7,046
  -7,404
  -7,779
  -8,172
  -8,584
  -9,017
  -9,472
  -9,949
  -10,449
  -10,975
  -11,526
Free cash flow, $m
  7,455
  11,959
  12,234
  12,529
  12,864
  13,239
  13,655
  14,112
  14,609
  15,149
  15,731
  15,606
  16,277
  16,995
  17,761
  18,576
  19,444
  20,365
  21,343
  22,379
  23,476
  24,636
  25,864
  27,161
  28,531
  29,977
  31,504
  33,114
  34,811
  36,601
  38,488
Issuance/(repayment) of debt, $m
  2,940
  1,318
  1,401
  1,538
  1,676
  1,814
  1,955
  2,099
  2,246
  2,396
  2,552
  2,712
  2,878
  3,050
  3,229
  3,415
  3,609
  3,810
  4,021
  4,240
  4,470
  4,709
  4,960
  5,222
  5,497
  5,785
  6,086
  6,401
  6,732
  7,078
  7,442
Issuance/(repurchase) of shares, $m
  -7,240
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -4,678
  1,318
  1,401
  1,538
  1,676
  1,814
  1,955
  2,099
  2,246
  2,396
  2,552
  2,712
  2,878
  3,050
  3,229
  3,415
  3,609
  3,810
  4,021
  4,240
  4,470
  4,709
  4,960
  5,222
  5,497
  5,785
  6,086
  6,401
  6,732
  7,078
  7,442
Total cash flow (excl. dividends), $m
  2,654
  13,277
  13,636
  14,067
  14,540
  15,054
  15,610
  16,210
  16,855
  17,545
  18,283
  18,318
  19,155
  20,045
  20,990
  21,991
  23,052
  24,175
  25,363
  26,619
  27,945
  29,346
  30,824
  32,383
  34,028
  35,762
  37,589
  39,515
  41,543
  43,680
  45,929
Retained Cash Flow (-), $m
  1,260
  -1,180
  -1,314
  -1,443
  -1,572
  -1,702
  -1,834
  -1,969
  -2,106
  -2,248
  -2,394
  -2,544
  -2,700
  -2,861
  -3,029
  -3,203
  -3,385
  -3,574
  -3,771
  -3,977
  -4,192
  -4,417
  -4,653
  -4,899
  -5,156
  -5,426
  -5,708
  -6,004
  -6,314
  -6,639
  -6,980
Prev. year cash balance distribution, $m
 
  923
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  13,021
  12,321
  12,624
  12,968
  13,352
  13,777
  14,242
  14,749
  15,297
  15,889
  15,774
  16,456
  17,184
  17,961
  18,788
  19,668
  20,601
  21,592
  22,642
  23,753
  24,929
  26,171
  27,485
  28,872
  30,336
  31,881
  33,511
  35,229
  37,040
  38,949
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  12,484
  11,280
  10,986
  10,678
  10,349
  9,998
  9,622
  9,218
  8,788
  8,330
  7,491
  7,022
  6,534
  6,030
  5,516
  4,998
  4,483
  3,976
  3,486
  3,018
  2,578
  2,172
  1,801
  1,471
  1,180
  930
  719
  545
  404
  293
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

The Walt Disney Company, together with its subsidiaries, operates as an entertainment company worldwide. The company’s Media Networks segment operates cable programming services, including the ESPN, Disney channels, and Freeform networks; broadcast businesses, which include the ABC TV Network and eight owned television stations; radio businesses consisting of the ESPN Radio Network; and the Radio Disney network. It also produces and sells original live-action and animated television programming to first-run syndication and other television markets, as well as subscription video on demand services and in home entertainment formats, such as DVD, Blu-Ray, and iTunes. Its Parks and Resorts segment owns and operates the Walt Disney World Resort in Florida and the Disneyland Resort in California. This segment also operates Disney Resort & Spa in Hawaii, Disney Vacation Club, Disney Cruise Line, and Adventures by Disney; and manages Disneyland Paris, Hong Kong Disneyland Resort, and Shanghai Disney Resort, as well as licenses its intellectual property to a third party for the operations of the Tokyo Disney Resort in Japan. The company’s Studio Entertainment segment produces and acquires live-action and animated motion pictures for distribution in the theatrical, home entertainment, and television markets primarily under the Walt Disney Pictures, Pixar, Marvel, Lucasfilm, and Touchstone banners. This segment also produces stage plays and musical recordings; licenses and produces live entertainment events; and provides visual and audio effects, and other post-production services. Its Consumer Products & Interactive Media segment licenses its trade names, characters, and visual and literary properties; develops and publishes games for mobile platforms; and sells its products through The Disney Store, DisneyStore.com, and MarvelStore.com, as well as directly to retailers. The company was founded in 1923 and is based in Burbank, California.

FINANCIAL RATIOS  of  Walt Disney (DIS)

Valuation Ratios
P/E Ratio 17.2
Price to Sales 2.9
Price to Book 3.7
Price to Tangible Book
Price to Cash Flow 12.2
Price to Free Cash Flow 19.1
Growth Rates
Sales Growth Rate 6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 11.9%
Cap. Spend. - 3 Yr. Gr. Rate 11.3%
Financial Strength
Quick Ratio 1
Current Ratio 0.1
LT Debt to Equity 38.1%
Total Debt to Equity 46.6%
Interest Coverage 39
Management Effectiveness
Return On Assets 10.7%
Ret/ On Assets - 3 Yr. Avg. 10%
Return On Total Capital 15%
Ret/ On T. Cap. - 3 Yr. Avg. 13.8%
Return On Equity 21.4%
Return On Equity - 3 Yr. Avg. 18.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 46.1%
Gross Margin - 3 Yr. Avg. 46%
EBITDA Margin 32%
EBITDA Margin - 3 Yr. Avg. 31.3%
Operating Margin 25.5%
Oper. Margin - 3 Yr. Avg. 24.7%
Pre-Tax Margin 26.7%
Pre-Tax Margin - 3 Yr. Avg. 26.1%
Net Profit Margin 16.9%
Net Profit Margin - 3 Yr. Avg. 16.1%
Effective Tax Rate 34.2%
Eff/ Tax Rate - 3 Yr. Avg. 35%
Payout Ratio 24.6%

DIS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DIS stock intrinsic value calculation we used $55632 million for the last fiscal year's total revenue generated by Walt Disney. The default revenue input number comes from 2016 income statement of Walt Disney. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DIS stock valuation model: a) initial revenue growth rate of 2.8% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for DIS is calculated based on our internal credit rating of Walt Disney, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Walt Disney.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DIS stock the variable cost ratio is equal to 67.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $4007 million in the base year in the intrinsic value calculation for DIS stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Walt Disney.

Corporate tax rate of 27% is the nominal tax rate for Walt Disney. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DIS stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DIS are equal to 71.2%.

Life of production assets of 26.7 years is the average useful life of capital assets used in Walt Disney operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DIS is equal to -1.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $43265 million for Walt Disney - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1579.25 million for Walt Disney is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Walt Disney at the current share price and the inputted number of shares is $159.0 billion.

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Stock chart of DIS Financial statements of DIS
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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