Intrinsic value of Hilton Worldwide Holdings - HLT

Previous Close

$61.06

  Intrinsic Value

$166.52

stock screener

  Rating & Target

str. buy

+173%

  Value-price divergence*

+35%

Previous close

$61.06

 
Intrinsic value

$166.52

 
Up/down potential

+173%

 
Rating

str. buy

 
Value-price divergence*

+35%

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

We calculate the intrinsic value of HLT 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 19.9

 

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, %
  3.47
  25.20
  23.18
  21.36
  19.73
  18.25
  16.93
  15.74
  14.66
  13.70
  12.83
  12.04
  11.34
  10.71
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
  6.45
  6.31
  6.17
  6.06
  5.95
Revenue, $m
  11,663
  14,602
  17,987
  21,829
  26,135
  30,906
  36,137
  41,824
  47,956
  54,523
  61,516
  68,925
  76,740
  84,956
  93,565
  102,568
  111,962
  121,751
  131,940
  142,537
  153,553
  165,002
  176,899
  189,263
  202,114
  215,477
  229,375
  243,838
  258,894
  274,575
  290,917
Variable operating expenses, $m
 
  11,784
  14,394
  17,358
  20,679
  24,358
  28,393
  32,779
  37,508
  42,573
  47,967
  53,159
  59,187
  65,523
  72,163
  79,106
  86,352
  93,901
  101,760
  109,933
  118,429
  127,259
  136,435
  145,971
  155,883
  166,189
  176,908
  188,062
  199,675
  211,769
  224,372
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
  9,828
  11,784
  14,394
  17,358
  20,679
  24,358
  28,393
  32,779
  37,508
  42,573
  47,967
  53,159
  59,187
  65,523
  72,163
  79,106
  86,352
  93,901
  101,760
  109,933
  118,429
  127,259
  136,435
  145,971
  155,883
  166,189
  176,908
  188,062
  199,675
  211,769
  224,372
Operating income, $m
  1,835
  2,818
  3,593
  4,471
  5,456
  6,548
  7,744
  9,045
  10,448
  11,950
  13,549
  15,766
  17,554
  19,433
  21,402
  23,461
  25,610
  27,849
  30,180
  32,604
  35,124
  37,742
  40,464
  43,292
  46,232
  49,288
  52,467
  55,775
  59,219
  62,806
  66,544
EBITDA, $m
  2,521
  3,910
  4,816
  5,845
  6,998
  8,275
  9,676
  11,198
  12,840
  14,599
  16,471
  18,455
  20,547
  22,747
  25,052
  27,462
  29,978
  32,598
  35,327
  38,164
  41,114
  44,179
  47,364
  50,675
  54,116
  57,693
  61,415
  65,287
  69,318
  73,517
  77,892
Interest expense (income), $m
  478
  369
  653
  983
  1,356
  1,775
  2,239
  2,748
  3,301
  3,898
  4,537
  5,217
  5,938
  6,698
  7,497
  8,335
  9,210
  10,124
  11,076
  12,068
  13,098
  14,170
  15,284
  16,441
  17,644
  18,894
  20,194
  21,546
  22,953
  24,417
  25,943
Earnings before tax, $m
  1,255
  2,450
  2,939
  3,489
  4,100
  4,772
  5,505
  6,297
  7,146
  8,052
  9,013
  10,549
  11,616
  12,735
  13,905
  15,127
  16,400
  17,725
  19,103
  20,536
  22,025
  23,572
  25,180
  26,851
  28,588
  30,394
  32,274
  34,230
  36,267
  38,389
  40,602
Tax expense, $m
  891
  661
  794
  942
  1,107
  1,288
  1,486
  1,700
  1,929
  2,174
  2,433
  2,848
  3,136
  3,438
  3,754
  4,084
  4,428
  4,786
  5,158
  5,545
  5,947
  6,365
  6,799
  7,250
  7,719
  8,206
  8,714
  9,242
  9,792
  10,365
  10,962
Net income, $m
  348
  1,788
  2,146
  2,547
  2,993
  3,484
  4,019
  4,597
  5,217
  5,878
  6,579
  7,701
  8,480
  9,296
  10,151
  11,042
  11,972
  12,939
  13,946
  14,991
  16,078
  17,208
  18,381
  19,601
  20,869
  22,188
  23,560
  24,988
  26,475
  28,024
  29,639

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,062
  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
  26,211
  31,470
  38,765
  47,046
  56,326
  66,607
  77,882
  90,137
  103,353
  117,507
  132,579
  148,545
  165,389
  183,094
  201,650
  221,051
  241,297
  262,394
  284,353
  307,192
  330,934
  355,608
  381,248
  407,894
  435,591
  464,390
  494,343
  525,512
  557,961
  591,757
  626,976
Adjusted assets (=assets-cash), $m
  25,149
  31,470
  38,765
  47,046
  56,326
  66,607
  77,882
  90,137
  103,353
  117,507
  132,579
  148,545
  165,389
  183,094
  201,650
  221,051
  241,297
  262,394
  284,353
  307,192
  330,934
  355,608
  381,248
  407,894
  435,591
  464,390
  494,343
  525,512
  557,961
  591,757
  626,976
Revenue / Adjusted assets
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
  0.464
Average production assets, $m
  11,016
  13,784
  16,980
  20,607
  24,672
  29,175
  34,114
  39,481
  45,270
  51,470
  58,072
  65,065
  72,443
  80,198
  88,326
  96,824
  105,692
  114,933
  124,551
  134,555
  144,954
  155,762
  166,993
  178,664
  190,796
  203,410
  216,530
  230,183
  244,396
  259,199
  274,625
Working capital, $m
  873
  -190
  -234
  -284
  -340
  -402
  -470
  -544
  -623
  -709
  -800
  -896
  -998
  -1,104
  -1,216
  -1,333
  -1,456
  -1,583
  -1,715
  -1,853
  -1,996
  -2,145
  -2,300
  -2,460
  -2,627
  -2,801
  -2,982
  -3,170
  -3,366
  -3,569
  -3,782
Total debt, $m
  6,616
  11,669
  17,548
  24,223
  31,703
  39,989
  49,077
  58,954
  69,606
  81,015
  93,162
  106,032
  119,607
  133,878
  148,834
  164,471
  180,789
  197,793
  215,492
  233,900
  253,037
  272,924
  293,590
  315,067
  337,391
  360,602
  384,745
  409,867
  436,020
  463,261
  491,646
Total liabilities, $m
  20,312
  25,365
  31,244
  37,919
  45,399
  53,685
  62,773
  72,650
  83,302
  94,711
  106,858
  119,728
  133,303
  147,574
  162,530
  178,167
  194,485
  211,489
  229,188
  247,596
  266,733
  286,620
  307,286
  328,763
  351,087
  374,298
  398,441
  423,563
  449,716
  476,957
  505,342
Total equity, $m
  5,899
  6,105
  7,520
  9,127
  10,927
  12,922
  15,109
  17,487
  20,050
  22,796
  25,720
  28,818
  32,085
  35,520
  39,120
  42,884
  46,812
  50,904
  55,164
  59,595
  64,201
  68,988
  73,962
  79,131
  84,505
  90,092
  95,903
  101,949
  108,244
  114,801
  121,633
Total liabilities and equity, $m
  26,211
  31,470
  38,764
  47,046
  56,326
  66,607
  77,882
  90,137
  103,352
  117,507
  132,578
  148,546
  165,388
  183,094
  201,650
  221,051
  241,297
  262,393
  284,352
  307,191
  330,934
  355,608
  381,248
  407,894
  435,592
  464,390
  494,344
  525,512
  557,960
  591,758
  626,975
Debt-to-equity ratio
  1.122
  1.910
  2.330
  2.650
  2.900
  3.090
  3.250
  3.370
  3.470
  3.550
  3.620
  3.680
  3.730
  3.770
  3.800
  3.840
  3.860
  3.890
  3.910
  3.920
  3.940
  3.960
  3.970
  3.980
  3.990
  4.000
  4.010
  4.020
  4.030
  4.040
  4.040
Adjusted equity ratio
  0.192
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194
  0.194

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  348
  1,788
  2,146
  2,547
  2,993
  3,484
  4,019
  4,597
  5,217
  5,878
  6,579
  7,701
  8,480
  9,296
  10,151
  11,042
  11,972
  12,939
  13,946
  14,991
  16,078
  17,208
  18,381
  19,601
  20,869
  22,188
  23,560
  24,988
  26,475
  28,024
  29,639
Depreciation, amort., depletion, $m
  686
  1,091
  1,223
  1,373
  1,541
  1,727
  1,931
  2,153
  2,392
  2,649
  2,921
  2,689
  2,994
  3,314
  3,650
  4,001
  4,367
  4,749
  5,147
  5,560
  5,990
  6,436
  6,901
  7,383
  7,884
  8,405
  8,948
  9,512
  10,099
  10,711
  11,348
Funds from operations, $m
  1,814
  2,880
  3,369
  3,920
  4,534
  5,211
  5,950
  6,750
  7,609
  8,527
  9,501
  10,389
  11,473
  12,610
  13,800
  15,043
  16,339
  17,689
  19,092
  20,552
  22,068
  23,644
  25,282
  26,984
  28,753
  30,593
  32,507
  34,499
  36,574
  38,735
  40,987
Change in working capital, $m
  464
  -38
  -44
  -50
  -56
  -62
  -68
  -74
  -80
  -85
  -91
  -96
  -102
  -107
  -112
  -117
  -122
  -127
  -132
  -138
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -188
  -196
  -204
  -212
Cash from operations, $m
  1,350
  2,918
  3,413
  3,970
  4,590
  5,273
  6,018
  6,824
  7,689
  8,612
  9,592
  10,486
  11,575
  12,717
  13,912
  15,160
  16,461
  17,816
  19,225
  20,689
  22,212
  23,793
  25,437
  27,145
  28,920
  30,767
  32,688
  34,687
  36,769
  38,939
  41,200
Maintenance CAPEX, $m
  0
  -455
  -570
  -702
  -852
  -1,019
  -1,206
  -1,410
  -1,631
  -1,871
  -2,127
  -2,400
  -2,689
  -2,994
  -3,314
  -3,650
  -4,001
  -4,367
  -4,749
  -5,147
  -5,560
  -5,990
  -6,436
  -6,901
  -7,383
  -7,884
  -8,405
  -8,948
  -9,512
  -10,099
  -10,711
New CAPEX, $m
  -453
  -2,769
  -3,195
  -3,627
  -4,065
  -4,503
  -4,939
  -5,368
  -5,789
  -6,200
  -6,601
  -6,994
  -7,378
  -7,755
  -8,128
  -8,498
  -8,868
  -9,241
  -9,618
  -10,004
  -10,399
  -10,808
  -11,231
  -11,672
  -12,132
  -12,614
  -13,120
  -13,653
  -14,213
  -14,803
  -15,426
Cash from investing activities, $m
  -478
  -3,224
  -3,765
  -4,329
  -4,917
  -5,522
  -6,145
  -6,778
  -7,420
  -8,071
  -8,728
  -9,394
  -10,067
  -10,749
  -11,442
  -12,148
  -12,869
  -13,608
  -14,367
  -15,151
  -15,959
  -16,798
  -17,667
  -18,573
  -19,515
  -20,498
  -21,525
  -22,601
  -23,725
  -24,902
  -26,137
Free cash flow, $m
  872
  -306
  -352
  -359
  -326
  -250
  -126
  46
  269
  541
  863
  1,092
  1,508
  1,969
  2,471
  3,013
  3,592
  4,208
  4,857
  5,539
  6,252
  6,996
  7,769
  8,573
  9,406
  10,269
  11,162
  12,087
  13,045
  14,036
  15,063
Issuance/(repayment) of debt, $m
  356
  5,086
  5,880
  6,674
  7,480
  8,287
  9,088
  9,877
  10,652
  11,409
  12,148
  12,869
  13,576
  14,270
  14,956
  15,637
  16,318
  17,004
  17,699
  18,408
  19,136
  19,887
  20,666
  21,477
  22,324
  23,211
  24,143
  25,122
  26,153
  27,240
  28,386
Issuance/(repurchase) of shares, $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
  0
Cash from financing (excl. dividends), $m  
  248
  5,086
  5,880
  6,674
  7,480
  8,287
  9,088
  9,877
  10,652
  11,409
  12,148
  12,869
  13,576
  14,270
  14,956
  15,637
  16,318
  17,004
  17,699
  18,408
  19,136
  19,887
  20,666
  21,477
  22,324
  23,211
  24,143
  25,122
  26,153
  27,240
  28,386
Total cash flow (excl. dividends), $m
  1,105
  4,780
  5,528
  6,316
  7,154
  8,037
  8,962
  9,924
  10,920
  11,950
  13,011
  13,961
  15,084
  16,239
  17,427
  18,650
  19,911
  21,212
  22,556
  23,947
  25,388
  26,883
  28,435
  30,050
  31,730
  33,480
  35,305
  37,210
  39,198
  41,276
  43,449
Retained Cash Flow (-), $m
  86
  -1,235
  -1,415
  -1,606
  -1,800
  -1,995
  -2,187
  -2,377
  -2,564
  -2,746
  -2,924
  -3,098
  -3,268
  -3,435
  -3,600
  -3,764
  -3,928
  -4,093
  -4,260
  -4,431
  -4,606
  -4,787
  -4,974
  -5,169
  -5,373
  -5,587
  -5,811
  -6,047
  -6,295
  -6,557
  -6,832
Prev. year cash balance distribution, $m
 
  1,029
  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
 
  4,573
  4,113
  4,709
  5,353
  6,042
  6,774
  7,546
  8,357
  9,204
  10,087
  10,864
  11,817
  12,804
  13,827
  14,886
  15,983
  17,119
  18,296
  19,516
  20,782
  22,096
  23,461
  24,880
  26,356
  27,893
  29,494
  31,163
  32,903
  34,720
  36,616
Discount rate, %
 
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.42
  17.24
  18.11
  19.01
  19.96
  20.96
  22.01
  23.11
  24.27
  25.48
  26.75
  28.09
  29.49
  30.97
  32.52
PV of cash for distribution, $m
 
  4,239
  3,507
  3,666
  3,772
  3,820
  3,807
  3,731
  3,596
  3,408
  3,175
  2,869
  2,582
  2,282
  1,979
  1,683
  1,403
  1,145
  915
  715
  545
  406
  295
  209
  143
  96
  62
  39
  24
  14
  8
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

Hilton Worldwide Holdings Inc., a hospitality company, owns, leases, manages, develops, and franchises hotels, resorts, and timeshare properties worldwide. The company operates through three segments: Ownership, Management and Franchise, and Timeshare. It also licenses its brands to franchisees; provides hotel management services for third parties; and markets and sells timeshare interests owned by Hilton and third parties. In addition, the company provides consumer financing, which includes interest income generated from the origination of consumer loans to finance their purchase of timeshare intervals. It operates hotels under the Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Hilton Hotels & Resorts, Curio - A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton, Hilton Grand Vacations, and Tapestry Collection by Hilton brands. As of February 15, 2017, the company had 4,900 properties with approximately 800,000 rooms in 104 countries and territories. Hilton Worldwide Holdings Inc. was founded in 1919 and is headquartered in McLean, Virginia.

FINANCIAL RATIOS  of  Hilton Worldwide Holdings (HLT)

Valuation Ratios
P/E Ratio 57.8
Price to Sales 1.7
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow 14.9
Price to Free Cash Flow 22.4
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.8%
Cap. Spend. - 3 Yr. Gr. Rate 3.8%
Financial Strength
Quick Ratio 32
Current Ratio 0.6
LT Debt to Equity 111.6%
Total Debt to Equity 112.2%
Interest Coverage 4
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 2.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 5.9%
Return On Equity - 3 Yr. Avg. 15.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 61.9%
Gross Margin - 3 Yr. Avg. 63.4%
EBITDA Margin 20.7%
EBITDA Margin - 3 Yr. Avg. 22.1%
Operating Margin 15.7%
Oper. Margin - 3 Yr. Avg. 16.8%
Pre-Tax Margin 10.8%
Pre-Tax Margin - 3 Yr. Avg. 11.7%
Net Profit Margin 3%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 71%
Eff/ Tax Rate - 3 Yr. Avg. 39%
Payout Ratio 79.6%

HLT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HLT stock intrinsic value calculation we used $11663 million for the last fiscal year's total revenue generated by Hilton Worldwide Holdings. The default revenue input number comes from 2016 income statement of Hilton Worldwide Holdings. 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 HLT stock valuation model: a) initial revenue growth rate of 25.2% 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 7.9%, whose default value for HLT is calculated based on our internal credit rating of Hilton Worldwide Holdings, 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 Hilton Worldwide Holdings.
    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 HLT stock the variable cost ratio is equal to 81.6%.

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 HLT 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 5.6% for Hilton Worldwide Holdings.

Corporate tax rate of 27% is the nominal tax rate for Hilton Worldwide Holdings. 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 HLT 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 HLT are equal to 94.4%.

Life of production assets of 24.2 years is the average useful life of capital assets used in Hilton Worldwide Holdings 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 HLT is equal to -1.3%. 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 - $5899 million for Hilton Worldwide Holdings - 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 325.13 million for Hilton Worldwide Holdings 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 Hilton Worldwide Holdings at the current share price and the inputted number of shares is $19.9 billion.

RELATED COMPANIES Price Int.Val. Rating
MAR Marriott Inter 98.03 530.50  str.buy
H Hyatt Hotels 56.01 19.34  str.sell
PCLN Priceline Grou 1,810.00 1,469.07  sell
CHH Choice Hotels 60.40 5.61  str.sell
LQ La Quinta Hold 15.15 1.95  str.sell
IHG InterContinent 50.52 16.25  str.sell
WYN Wyndham Worldw 96.72 58.46  sell

COMPANY NEWS

▶ Bill Ackman Comments on Hilton Worldwide Holdings   [Aug-18-17 01:42PM  GuruFocus.com]
▶ Americas Best Companies to Work For   [Aug-11-17 06:14PM  24/7 Wall St.]
▶ Amazon, Hilton among top trusted brands   [12:12PM  American City Business Journals]
▶ Home2 Suites by Hilton Mishawaka South Bend Opens   [Aug-10-17 03:07PM  PR Newswire]
▶ Tru by Hilton Set to be Developed in Orlando, Florida   [Aug-09-17 05:42PM  PR Newswire]
▶ Marriott Internationals Valuation: What Is Priced In?   [Aug-08-17 08:07AM  Market Realist]
▶ Can Marriotts Dividend Payout Increase in 2017?   [Aug-07-17 10:38AM  Market Realist]
▶ What Analysts Expect for Marriott in 2Q17   [02:57PM  Market Realist]
▶ Hilton's Brand Advantage Gets Stronger   [07:00AM  Morningstar]
▶ How Hyatts Valuation Compares   [Jul-31-17 09:07AM  Market Realist]
▶ Hotel planned for Austin's Sixth Street   [09:15AM  American City Business Journals]
▶ Hilton beats Street 2Q forecasts   [Jul-26-17 09:58PM  Associated Press]
▶ Hilton's revenue rises 20.3 pct   [06:06AM  Reuters]
▶ The Best Stock in Virginia: Hilton Worldwide Holdings   [Jul-21-17 11:50PM  Kiplinger]
▶ [$$] Blackstone Posts Sharply Higher Profit   [Jul-20-17 12:52PM  The Wall Street Journal]
▶ Hey, Hilton customers: Your cancellation window is also getting shorter   [Jul-18-17 03:34PM  American City Business Journals]
▶ Hotels Are Paying Up for Your Loyalty   [Jul-07-17 02:01PM  Barrons.com]
▶ The 10 Biggest Ways Hotels as We Know Them Are Changing   [Jul-05-17 09:30PM  TheStreet.com]
▶ Why Blackstones Real Estate Division Is Targeting Europe   [Jul-04-17 05:05PM  Market Realist]
▶ How Has the Hotel Industry Performed in 2017?   [10:37AM  Market Realist]
▶ Hilton Unveils New Friendly Offerings for Family Travel   [Jul-02-17 10:30PM  PR Newswire]
▶ Introducing PBN's career achievement honoree for 2nd annual Pineapple Awards   [Jun-30-17 05:20PM  American City Business Journals]
▶ Hilton Announces Second Quarter 2017 Earnings Release Date   [Jun-29-17 04:30PM  Business Wire]
Stock chart of HLT Financial statements of HLT
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.

FREE DOWNLOAD
Follow us on:   twitter   twitter   twitter   twitter

VALUATION THEORY       ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2017. All rigths reserved.