Intrinsic value of Dell Technologies Cl V - DVMT

Previous Close

$76.83

  Intrinsic Value

$139.14

stock screener

  Rating & Target

str. buy

+81%

  Value-price divergence*

-124%

Previous close

$76.83

 
Intrinsic value

$139.14

 
Up/down potential

+81%

 
Rating

str. buy

 
Value-price divergence*

-124%

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

We calculate the intrinsic value of DVMT 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 2017), $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 16.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   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
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  21.08
  21.10
  19.49
  18.04
  16.74
  15.56
  14.51
  13.56
  12.70
  11.93
  11.24
  10.61
  10.05
  9.55
  9.09
  8.68
  8.31
  7.98
  7.69
  7.42
  7.17
  6.96
  6.76
  6.59
  6.43
  6.28
  6.16
  6.04
  5.94
  5.84
  5.76
Revenue, $m
  61,642
  74,648
  89,197
  105,290
  122,912
  142,041
  162,646
  184,695
  208,153
  232,986
  259,168
  286,675
  315,493
  345,613
  377,038
  409,777
  443,849
  479,283
  516,116
  554,394
  594,171
  635,510
  678,481
  723,162
  769,639
  818,005
  868,360
  920,811
  975,472
  1,032,465
  1,091,918
Variable operating expenses, $m
 
  74,574
  88,350
  103,587
  120,273
  138,386
  157,897
  178,775
  200,986
  224,500
  249,291
  271,446
  298,733
  327,254
  357,009
  388,008
  420,271
  453,822
  488,699
  524,943
  562,607
  601,750
  642,438
  684,746
  728,754
  774,551
  822,231
  871,895
  923,653
  977,618
  1,033,913
Fixed operating expenses, $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
Total operating expenses, $m
  65,231
  74,574
  88,350
  103,587
  120,273
  138,386
  157,897
  178,775
  200,986
  224,500
  249,291
  271,446
  298,733
  327,254
  357,009
  388,008
  420,271
  453,822
  488,699
  524,943
  562,607
  601,750
  642,438
  684,746
  728,754
  774,551
  822,231
  871,895
  923,653
  977,618
  1,033,913
Operating income, $m
  -3,589
  75
  847
  1,702
  2,638
  3,655
  4,749
  5,920
  7,167
  8,486
  9,877
  15,229
  16,760
  18,360
  20,029
  21,768
  23,578
  25,461
  27,417
  29,451
  31,564
  33,760
  36,043
  38,416
  40,885
  43,455
  46,130
  48,916
  51,820
  54,847
  58,005
EBITDA, $m
  1,349
  7,080
  8,459
  9,986
  11,657
  13,471
  15,425
  17,516
  19,741
  22,096
  24,579
  27,188
  29,921
  32,778
  35,758
  38,863
  42,095
  45,455
  48,948
  52,579
  56,351
  60,272
  64,347
  68,584
  72,992
  77,579
  82,355
  87,329
  92,514
  97,919
  103,557
Interest expense (income), $m
  1,575
  2,153
  2,879
  3,979
  5,196
  6,529
  7,975
  9,534
  11,201
  12,976
  14,854
  16,834
  18,914
  21,094
  23,372
  25,748
  28,224
  30,801
  33,481
  36,267
  39,162
  42,170
  45,297
  48,547
  51,926
  55,441
  59,099
  62,907
  66,874
  71,008
  75,319
Earnings before tax, $m
  -5,356
  -2,079
  -2,031
  -2,277
  -2,558
  -2,874
  -3,226
  -3,613
  -4,035
  -4,490
  -4,977
  -1,605
  -2,154
  -2,734
  -3,343
  -3,980
  -4,646
  -5,341
  -6,064
  -6,816
  -7,598
  -8,410
  -9,254
  -10,130
  -11,041
  -11,986
  -12,969
  -13,991
  -15,054
  -16,161
  -17,313
Tax expense, $m
  -1,619
  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
Net income, $m
  -1,672
  -2,079
  -2,031
  -2,277
  -2,558
  -2,874
  -3,226
  -3,613
  -4,035
  -4,490
  -4,977
  -1,605
  -2,154
  -2,734
  -3,343
  -3,980
  -4,646
  -5,341
  -6,064
  -6,816
  -7,598
  -8,410
  -9,254
  -10,130
  -11,041
  -11,986
  -12,969
  -13,991
  -15,054
  -16,161
  -17,313

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  14,671
  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
  118,206
  125,460
  149,912
  176,957
  206,574
  238,724
  273,355
  310,412
  349,836
  391,573
  435,576
  481,807
  530,240
  580,863
  633,677
  688,701
  745,965
  805,518
  867,422
  931,755
  998,607
  1,068,084
  1,140,304
  1,215,399
  1,293,511
  1,374,799
  1,459,429
  1,547,582
  1,639,449
  1,735,236
  1,835,156
Adjusted assets (=assets-cash), $m
  103,535
  125,460
  149,912
  176,957
  206,574
  238,724
  273,355
  310,412
  349,836
  391,573
  435,576
  481,807
  530,240
  580,863
  633,677
  688,701
  745,965
  805,518
  867,422
  931,755
  998,607
  1,068,084
  1,140,304
  1,215,399
  1,293,511
  1,374,799
  1,459,429
  1,547,582
  1,639,449
  1,735,236
  1,835,156
Revenue / Adjusted assets
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
  0.595
Average production assets, $m
  25,466
  30,830
  36,839
  43,485
  50,763
  58,663
  67,173
  76,279
  85,967
  96,223
  107,036
  118,397
  130,299
  142,738
  155,717
  169,238
  183,310
  197,944
  213,156
  228,965
  245,393
  262,466
  280,213
  298,666
  317,861
  337,836
  358,633
  380,295
  402,870
  426,408
  450,962
Working capital, $m
  -7,362
  -19,035
  -22,745
  -26,849
  -31,343
  -36,220
  -41,475
  -47,097
  -53,079
  -59,411
  -66,088
  -73,102
  -80,451
  -88,131
  -96,145
  -104,493
  -113,182
  -122,217
  -131,610
  -141,371
  -151,514
  -162,055
  -173,013
  -184,406
  -196,258
  -208,591
  -221,432
  -234,807
  -248,745
  -263,279
  -278,439
Total debt, $m
  49,390
  57,572
  79,579
  103,920
  130,575
  159,510
  190,678
  224,029
  259,511
  297,074
  336,677
  378,285
  421,874
  467,435
  514,968
  564,488
  616,026
  669,624
  725,338
  783,237
  843,404
  905,934
  970,932
  1,038,517
  1,108,818
  1,181,977
  1,258,144
  1,337,482
  1,420,163
  1,506,370
  1,596,299
Total liabilities, $m
  104,732
  112,914
  134,921
  159,262
  185,917
  214,852
  246,020
  279,371
  314,853
  352,416
  392,019
  433,627
  477,216
  522,777
  570,310
  619,830
  671,368
  724,966
  780,680
  838,579
  898,746
  961,276
  1,026,274
  1,093,859
  1,164,160
  1,237,319
  1,313,486
  1,392,824
  1,475,505
  1,561,712
  1,651,641
Total equity, $m
  13,474
  12,546
  14,991
  17,696
  20,657
  23,872
  27,336
  31,041
  34,984
  39,157
  43,558
  48,181
  53,024
  58,086
  63,368
  68,870
  74,596
  80,552
  86,742
  93,175
  99,861
  106,808
  114,030
  121,540
  129,351
  137,480
  145,943
  154,758
  163,945
  173,524
  183,516
Total liabilities and equity, $m
  118,206
  125,460
  149,912
  176,958
  206,574
  238,724
  273,356
  310,412
  349,837
  391,573
  435,577
  481,808
  530,240
  580,863
  633,678
  688,700
  745,964
  805,518
  867,422
  931,754
  998,607
  1,068,084
  1,140,304
  1,215,399
  1,293,511
  1,374,799
  1,459,429
  1,547,582
  1,639,450
  1,735,236
  1,835,157
Debt-to-equity ratio
  3.666
  4.590
  5.310
  5.870
  6.320
  6.680
  6.980
  7.220
  7.420
  7.590
  7.730
  7.850
  7.960
  8.050
  8.130
  8.200
  8.260
  8.310
  8.360
  8.410
  8.450
  8.480
  8.510
  8.540
  8.570
  8.600
  8.620
  8.640
  8.660
  8.680
  8.700
Adjusted equity ratio
  -0.012
  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
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -1,672
  -2,079
  -2,031
  -2,277
  -2,558
  -2,874
  -3,226
  -3,613
  -4,035
  -4,490
  -4,977
  -1,605
  -2,154
  -2,734
  -3,343
  -3,980
  -4,646
  -5,341
  -6,064
  -6,816
  -7,598
  -8,410
  -9,254
  -10,130
  -11,041
  -11,986
  -12,969
  -13,991
  -15,054
  -16,161
  -17,313
Depreciation, amort., depletion, $m
  4,938
  7,005
  7,612
  8,283
  9,019
  9,817
  10,676
  11,596
  12,575
  13,611
  14,703
  11,959
  13,161
  14,418
  15,729
  17,095
  18,516
  19,994
  21,531
  23,128
  24,787
  26,512
  28,304
  30,168
  32,107
  34,125
  36,226
  38,414
  40,694
  43,072
  45,552
Funds from operations, $m
  4,824
  4,927
  5,581
  6,007
  6,461
  6,942
  7,450
  7,983
  8,540
  9,121
  9,726
  10,354
  11,007
  11,684
  12,386
  13,115
  13,870
  14,654
  15,467
  16,312
  17,189
  18,101
  19,050
  20,038
  21,067
  22,138
  23,256
  24,422
  25,639
  26,911
  28,239
Change in working capital, $m
  2,602
  -3,317
  -3,710
  -4,103
  -4,494
  -4,878
  -5,254
  -5,622
  -5,982
  -6,333
  -6,676
  -7,014
  -7,348
  -7,681
  -8,013
  -8,348
  -8,688
  -9,036
  -9,392
  -9,761
  -10,143
  -10,541
  -10,958
  -11,394
  -11,852
  -12,333
  -12,840
  -13,375
  -13,939
  -14,533
  -15,160
Cash from operations, $m
  2,222
  8,243
  9,291
  10,110
  10,955
  11,820
  12,704
  13,605
  14,521
  15,453
  16,402
  17,369
  18,356
  19,365
  20,400
  21,463
  22,559
  23,689
  24,860
  26,073
  27,332
  28,643
  30,008
  31,432
  32,918
  34,472
  36,097
  37,797
  39,578
  41,444
  43,399
Maintenance CAPEX, $m
  0
  -2,572
  -3,114
  -3,721
  -4,392
  -5,128
  -5,926
  -6,785
  -7,705
  -8,684
  -9,720
  -10,812
  -11,959
  -13,161
  -14,418
  -15,729
  -17,095
  -18,516
  -19,994
  -21,531
  -23,128
  -24,787
  -26,512
  -28,304
  -30,168
  -32,107
  -34,125
  -36,226
  -38,414
  -40,694
  -43,072
New CAPEX, $m
  -906
  -5,364
  -6,009
  -6,646
  -7,278
  -7,900
  -8,510
  -9,106
  -9,688
  -10,256
  -10,813
  -11,361
  -11,902
  -12,440
  -12,978
  -13,521
  -14,072
  -14,634
  -15,212
  -15,809
  -16,428
  -17,073
  -17,747
  -18,453
  -19,195
  -19,975
  -20,797
  -21,662
  -22,575
  -23,538
  -24,554
Cash from investing activities, $m
  -31,256
  -7,936
  -9,123
  -10,367
  -11,670
  -13,028
  -14,436
  -15,891
  -17,393
  -18,940
  -20,533
  -22,173
  -23,861
  -25,601
  -27,396
  -29,250
  -31,167
  -33,150
  -35,206
  -37,340
  -39,556
  -41,860
  -44,259
  -46,757
  -49,363
  -52,082
  -54,922
  -57,888
  -60,989
  -64,232
  -67,626
Free cash flow, $m
  -29,034
  307
  168
  -257
  -716
  -1,208
  -1,731
  -2,286
  -2,872
  -3,486
  -4,131
  -4,804
  -5,505
  -6,236
  -6,997
  -7,787
  -8,608
  -9,461
  -10,347
  -11,267
  -12,223
  -13,217
  -14,251
  -15,326
  -16,445
  -17,611
  -18,825
  -20,091
  -21,411
  -22,788
  -24,226
Issuance/(repayment) of debt, $m
  29,933
  14,511
  22,007
  24,341
  26,655
  28,935
  31,168
  33,351
  35,482
  37,564
  39,603
  41,608
  43,590
  45,560
  47,533
  49,521
  51,538
  53,598
  55,714
  57,899
  60,167
  62,529
  64,998
  67,585
  70,302
  73,159
  76,167
  79,338
  82,681
  86,208
  89,929
Issuance/(repurchase) of shares, $m
  3,264
  9,492
  4,476
  4,981
  5,519
  6,089
  6,689
  7,319
  7,977
  8,663
  9,377
  6,228
  6,998
  7,796
  8,624
  9,482
  10,372
  11,296
  12,254
  13,249
  14,283
  15,358
  16,476
  17,640
  18,852
  20,115
  21,432
  22,807
  24,241
  25,740
  27,305
Cash from financing (excl. dividends), $m  
  31,908
  24,003
  26,483
  29,322
  32,174
  35,024
  37,857
  40,670
  43,459
  46,227
  48,980
  47,836
  50,588
  53,356
  56,157
  59,003
  61,910
  64,894
  67,968
  71,148
  74,450
  77,887
  81,474
  85,225
  89,154
  93,274
  97,599
  102,145
  106,922
  111,948
  117,234
Total cash flow (excl. dividends), $m
  2,898
  24,310
  26,651
  29,065
  31,459
  33,816
  36,126
  38,384
  40,587
  42,741
  44,849
  43,032
  45,082
  47,120
  49,160
  51,216
  53,302
  55,433
  57,621
  59,882
  62,227
  64,670
  67,223
  69,899
  72,708
  75,663
  78,775
  82,054
  85,512
  89,159
  93,007
Retained Cash Flow (-), $m
  -11,902
  -9,492
  -4,476
  -4,981
  -5,519
  -6,089
  -6,689
  -7,319
  -7,977
  -8,663
  -9,377
  -6,228
  -6,998
  -7,796
  -8,624
  -9,482
  -10,372
  -11,296
  -12,254
  -13,249
  -14,283
  -15,358
  -16,476
  -17,640
  -18,852
  -20,115
  -21,432
  -22,807
  -24,241
  -25,740
  -27,305
Prev. year cash balance distribution, $m
 
  8,342
  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
 
  23,160
  22,175
  24,084
  25,940
  27,727
  29,437
  31,065
  32,610
  34,077
  35,472
  36,804
  38,084
  39,324
  40,536
  41,734
  42,930
  44,137
  45,367
  46,632
  47,944
  49,312
  50,747
  52,259
  53,856
  55,548
  57,342
  59,247
  61,270
  63,419
  65,702
Discount rate, %
 
  10.40
  10.92
  11.47
  12.04
  12.64
  13.27
  13.94
  14.63
  15.37
  16.13
  16.94
  17.79
  18.68
  19.61
  20.59
  21.62
  22.70
  23.84
  25.03
  26.28
  27.59
  28.97
  30.42
  31.94
  33.54
  35.22
  36.98
  38.83
  40.77
  42.81
PV of cash for distribution, $m
 
  20,978
  18,024
  17,390
  16,462
  15,290
  13,936
  12,463
  10,936
  9,414
  7,949
  6,581
  5,340
  4,245
  3,304
  2,516
  1,873
  1,362
  967
  669
  451
  295
  188
  116
  69
  40
  22
  12
  6
  3
  1
Current shareholders' claim on cash, %
  100
  39.1
  30.1
  23.5
  18.6
  14.9
  12.1
  9.9
  8.1
  6.7
  5.6
  5.0
  4.4
  3.9
  3.5
  3.1
  2.8
  2.5
  2.2
  1.9
  1.7
  1.5
  1.3
  1.2
  1.0
  0.9
  0.8
  0.7
  0.6
  0.6
  0.5

Dell Technologies Inc., formerly Denali Holding Inc., is a provider of information technology solutions. The Company operates through two segments: Client Solutions and Enterprise Solutions Group (ESG). The Client Solutions segment includes sales to commercial and consumer customers of desktops, thin client products and notebooks, as well as services and third-party software and peripherals closely tied to the sale of Client Solutions hardware. Its offerings include hardware, such as desktop personal computers, notebooks and tablets, and peripherals, such as monitors, printers and projectors, as well as third-party software and peripherals. The ESG segment includes servers, networking and storage, as well as services and third-party software and peripherals that are closely tied to the sale of ESG hardware. It designs, develops, manufactures, markets, sells and supports a range of products and services.

FINANCIAL RATIOS  of  Dell Technologies Cl V (DVMT)

Valuation Ratios
P/E Ratio -35.7
Price to Sales 1
Price to Book 4.4
Price to Tangible Book
Price to Cash Flow 26.9
Price to Free Cash Flow 45.4
Growth Rates
Sales Growth Rate 21.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 88%
Cap. Spend. - 3 Yr. Gr. Rate 11.2%
Financial Strength
Quick Ratio 2
Current Ratio 0.1
LT Debt to Equity 319.6%
Total Debt to Equity 366.6%
Interest Coverage -2
Management Effectiveness
Return On Assets -0.7%
Ret/ On Assets - 3 Yr. Avg. -1.4%
Return On Total Capital -4.3%
Ret/ On T. Cap. - 3 Yr. Avg. -8.5%
Return On Equity -22.2%
Return On Equity - 3 Yr. Avg. -51.2%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 21%
Gross Margin - 3 Yr. Avg. 18%
EBITDA Margin 1.9%
EBITDA Margin - 3 Yr. Avg. 3.6%
Operating Margin -5.8%
Oper. Margin - 3 Yr. Avg. -2.5%
Pre-Tax Margin -8.7%
Pre-Tax Margin - 3 Yr. Avg. -4.5%
Net Profit Margin -2.7%
Net Profit Margin - 3 Yr. Avg. -2.4%
Effective Tax Rate 30.2%
Eff/ Tax Rate - 3 Yr. Avg. 16.1%
Payout Ratio 0%

DVMT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DVMT stock intrinsic value calculation we used $61642 million for the last fiscal year's total revenue generated by Dell Technologies Cl V. The default revenue input number comes from 2017 income statement of Dell Technologies Cl V. 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 DVMT stock valuation model: a) initial revenue growth rate of 21.1% 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 10.4%, whose default value for DVMT is calculated based on our internal credit rating of Dell Technologies Cl V, 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 Dell Technologies Cl V.
    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 DVMT stock the variable cost ratio is equal to 101%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for DVMT 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 5% for Dell Technologies Cl V.

Corporate tax rate of 27% is the nominal tax rate for Dell Technologies Cl V. 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 DVMT 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 DVMT are equal to 41.3%.

Life of production assets of 9.9 years is the average useful life of capital assets used in Dell Technologies Cl V 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 DVMT is equal to -25.5%. 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 - $13474 million for Dell Technologies Cl V - 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 208.391 million for Dell Technologies Cl V 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 Dell Technologies Cl V at the current share price and the inputted number of shares is $16.0 billion.

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COMPANY NEWS

▶ Final vote on Toshiba chip sale is now days away   [Sep-18-17 10:03AM  American City Business Journals]
▶ [$$] Group Including Apple, Dell Moves to Buy Toshibas Chip Business   [Sep-14-17 12:57AM  The Wall Street Journal]
▶ Dell Technologies reports 2Q loss   [Sep-07-17 10:24PM  Associated Press]
▶ Michael Dell Says EMC Combination Is Paying Off   [Aug-29-17 10:45PM  Bloomberg Video]
▶ Dell Just Within Buy Range, Gets Rating Upgrade   [10:40AM  Investor's Business Daily]
▶ Trump disbands manufacturing council after exec exodus   [Aug-16-17 01:27PM  Yahoo Finance Video]
▶ L.A. to launch cybersecurity threat partnership with businesses   [Aug-15-17 03:00PM  American City Business Journals]
▶ SIGGRAPH 2017: Bring VR Into The Next Phase   [Aug-09-17 07:33PM  Forbes]
▶ IBM Was the Worst Hit by the Decline in the Server Market   [Jul-18-17 09:06AM  Market Realist]
▶ Humans won't be displaced by technology: Dell EMC   [Jul-12-17 08:45PM  CNBC Videos]
▶ Key Takeaways From The Nutanix NEXT Conference   [Jul-05-17 03:11PM  Benzinga]
▶ VMware moving from Cambridge to Bostons Downtown Crossing   [Jun-27-17 10:35AM  American City Business Journals]
▶ Toshiba Agrees To Talk With Western Digital Over Disputed Chip Deal   [Jun-23-17 04:21PM  Investor's Business Daily]
▶ Former EMC chief Joe Tucci now a special advisor at venture capital firm   [Jun-19-17 02:10PM  American City Business Journals]
▶ A Look at VMwares Fiscal Calendar Adjustment   [Jun-13-17 09:07AM  Market Realist]
▶ Dell reports significant PC growth in Q1, but debt on rise   [Jun-08-17 04:35PM  American City Business Journals]
▶ Dell Technologies reports 1Q loss   [07:18AM  Associated Press]
▶ 3 Big Events, 2 China Plays, 1 Bitcoin Chip Stock: Investing Action Plan   [Jun-07-17 04:26PM  Investor's Business Daily]
▶ Stocks To Buy And Watch: Top IPOs, Big And Small Caps, Growth Stocks   [May-27-17 11:06AM  Investor's Business Daily]
▶ Salesforce, Dell Technologies Reach Strategic Agreement   [May-24-17 05:00PM  TheStreet.com]
▶ Michael Dell's salary, stock ownership detailed in SEC filings   [04:10PM  American City Business Journals]
▶ Huawei Tosses Hat Into PC Ring   [01:39PM  TheStreet.com]
▶ Australia a priority market for Michael Dell   [May-11-17 08:41PM  ZDNet]
▶ Where Brocades SAN Segment Is Headed in Fiscal 2Q17   [May-09-17 01:05PM  Market Realist]
▶ Red Hat OpenStack Platform 11 released   [May-08-17 05:12PM  ZDNet]
▶ Dell and Rackspace team up to sell private cloud   [04:58PM  American City Business Journals]
▶ Which Companies Are Now Outperforming 95% Of All Stocks?   [Apr-20-17 10:56AM  Investor's Business Daily]
Financial statements of DVMT
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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