Intrinsic value of Priceline Group - PCLN

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$1,798.62

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$1,798.62

 
Intrinsic value

$2,036

 
Up/down potential

+13%

 
Rating

hold

 
Value-price divergence* premium content

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

We calculate the intrinsic value of PCLN 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 88.0

 

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, %
  16.47
  17.40
  16.16
  15.04
  14.04
  13.14
  12.32
  11.59
  10.93
  10.34
  9.80
  9.32
  8.89
  8.50
  8.15
  7.84
  7.55
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
Revenue, $m
  10,743
  12,612
  14,650
  16,854
  19,221
  21,745
  24,425
  27,256
  30,235
  33,361
  36,631
  40,047
  43,608
  47,315
  51,172
  55,182
  59,350
  63,682
  68,183
  72,861
  77,724
  82,782
  88,044
  93,522
  99,226
  105,168
  111,363
  117,823
  124,564
  131,601
  138,949
Variable operating expenses, $m
 
  8,118
  9,392
  10,768
  12,247
  13,824
  15,498
  17,266
  19,127
  21,080
  23,123
  25,017
  27,241
  29,557
  31,967
  34,472
  37,075
  39,781
  42,593
  45,515
  48,553
  51,713
  55,000
  58,422
  61,985
  65,697
  69,567
  73,603
  77,814
  82,209
  86,800
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
  7,900
  8,118
  9,392
  10,768
  12,247
  13,824
  15,498
  17,266
  19,127
  21,080
  23,123
  25,017
  27,241
  29,557
  31,967
  34,472
  37,075
  39,781
  42,593
  45,515
  48,553
  51,713
  55,000
  58,422
  61,985
  65,697
  69,567
  73,603
  77,814
  82,209
  86,800
Operating income, $m
  2,843
  4,494
  5,259
  6,086
  6,974
  7,922
  8,927
  9,990
  11,108
  12,281
  13,509
  15,030
  16,366
  17,758
  19,206
  20,711
  22,275
  23,900
  25,590
  27,345
  29,171
  31,069
  33,044
  35,100
  37,241
  39,471
  41,796
  44,221
  46,750
  49,391
  52,149
EBITDA, $m
  3,152
  4,898
  5,690
  6,545
  7,464
  8,445
  9,486
  10,585
  11,742
  12,956
  14,226
  15,552
  16,935
  18,375
  19,873
  21,430
  23,049
  24,731
  26,479
  28,296
  30,184
  32,149
  34,192
  36,319
  38,535
  40,842
  43,248
  45,757
  48,375
  51,108
  53,961
Interest expense (income), $m
  126
  217
  272
  332
  397
  467
  541
  620
  704
  791
  884
  980
  1,081
  1,186
  1,295
  1,409
  1,527
  1,650
  1,777
  1,910
  2,048
  2,191
  2,341
  2,496
  2,657
  2,825
  3,000
  3,183
  3,373
  3,572
  3,780
Earnings before tax, $m
  2,713
  4,277
  4,987
  5,754
  6,577
  7,455
  8,386
  9,370
  10,404
  11,490
  12,625
  14,050
  15,286
  16,572
  17,911
  19,302
  20,748
  22,251
  23,812
  25,435
  27,123
  28,878
  30,704
  32,604
  34,583
  36,646
  38,795
  41,037
  43,377
  45,819
  48,370
Tax expense, $m
  578
  1,155
  1,346
  1,554
  1,776
  2,013
  2,264
  2,530
  2,809
  3,102
  3,409
  3,794
  4,127
  4,475
  4,836
  5,212
  5,602
  6,008
  6,429
  6,868
  7,323
  7,797
  8,290
  8,803
  9,338
  9,894
  10,475
  11,080
  11,712
  12,371
  13,060
Net income, $m
  2,135
  3,122
  3,640
  4,200
  4,801
  5,442
  6,122
  6,840
  7,595
  8,387
  9,216
  10,257
  11,159
  12,098
  13,075
  14,090
  15,146
  16,243
  17,383
  18,568
  19,800
  21,081
  22,414
  23,801
  25,246
  26,751
  28,321
  29,957
  31,665
  33,448
  35,310

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  4,300
  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
  19,839
  18,252
  21,202
  24,391
  27,816
  31,470
  35,347
  39,444
  43,756
  48,279
  53,012
  57,955
  63,108
  68,473
  74,055
  79,859
  85,890
  92,159
  98,672
  105,442
  112,481
  119,800
  127,416
  135,343
  143,597
  152,197
  161,162
  170,511
  180,266
  190,450
  201,084
Adjusted assets (=assets-cash), $m
  15,539
  18,252
  21,202
  24,391
  27,816
  31,470
  35,347
  39,444
  43,756
  48,279
  53,012
  57,955
  63,108
  68,473
  74,055
  79,859
  85,890
  92,159
  98,672
  105,442
  112,481
  119,800
  127,416
  135,343
  143,597
  152,197
  161,162
  170,511
  180,266
  190,450
  201,084
Revenue / Adjusted assets
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
  0.691
Average production assets, $m
  2,392
  2,813
  3,267
  3,759
  4,286
  4,849
  5,447
  6,078
  6,742
  7,439
  8,169
  8,930
  9,724
  10,551
  11,411
  12,306
  13,235
  14,201
  15,205
  16,248
  17,332
  18,460
  19,634
  20,855
  22,127
  23,453
  24,834
  26,275
  27,778
  29,347
  30,986
Working capital, $m
  2,543
  -921
  -1,069
  -1,230
  -1,403
  -1,587
  -1,783
  -1,990
  -2,207
  -2,435
  -2,674
  -2,923
  -3,183
  -3,454
  -3,736
  -4,028
  -4,333
  -4,649
  -4,977
  -5,319
  -5,674
  -6,043
  -6,427
  -6,827
  -7,243
  -7,677
  -8,129
  -8,601
  -9,093
  -9,607
  -10,143
Total debt, $m
  7,167
  7,771
  9,487
  11,344
  13,337
  15,463
  17,720
  20,104
  22,614
  25,246
  28,001
  30,878
  33,877
  36,999
  40,248
  43,626
  47,136
  50,784
  54,575
  58,515
  62,612
  66,872
  71,304
  75,917
  80,722
  85,727
  90,944
  96,386
  102,063
  107,990
  114,179
Total liabilities, $m
  10,019
  10,623
  12,339
  14,196
  16,189
  18,315
  20,572
  22,956
  25,466
  28,098
  30,853
  33,730
  36,729
  39,851
  43,100
  46,478
  49,988
  53,636
  57,427
  61,367
  65,464
  69,724
  74,156
  78,769
  83,574
  88,579
  93,796
  99,238
  104,915
  110,842
  117,031
Total equity, $m
  9,820
  7,629
  8,862
  10,196
  11,627
  13,154
  14,775
  16,488
  18,290
  20,181
  22,159
  24,225
  26,379
  28,622
  30,955
  33,381
  35,902
  38,522
  41,245
  44,075
  47,017
  50,077
  53,260
  56,573
  60,024
  63,618
  67,366
  71,274
  75,351
  79,608
  84,053
Total liabilities and equity, $m
  19,839
  18,252
  21,201
  24,392
  27,816
  31,469
  35,347
  39,444
  43,756
  48,279
  53,012
  57,955
  63,108
  68,473
  74,055
  79,859
  85,890
  92,158
  98,672
  105,442
  112,481
  119,801
  127,416
  135,342
  143,598
  152,197
  161,162
  170,512
  180,266
  190,450
  201,084
Debt-to-equity ratio
  0.730
  1.020
  1.070
  1.110
  1.150
  1.180
  1.200
  1.220
  1.240
  1.250
  1.260
  1.270
  1.280
  1.290
  1.300
  1.310
  1.310
  1.320
  1.320
  1.330
  1.330
  1.340
  1.340
  1.340
  1.340
  1.350
  1.350
  1.350
  1.350
  1.360
  1.360
Adjusted equity ratio
  0.355
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418
  0.418

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,135
  3,122
  3,640
  4,200
  4,801
  5,442
  6,122
  6,840
  7,595
  8,387
  9,216
  10,257
  11,159
  12,098
  13,075
  14,090
  15,146
  16,243
  17,383
  18,568
  19,800
  21,081
  22,414
  23,801
  25,246
  26,751
  28,321
  29,957
  31,665
  33,448
  35,310
Depreciation, amort., depletion, $m
  309
  404
  431
  459
  490
  523
  558
  595
  634
  675
  717
  522
  569
  617
  667
  720
  774
  830
  889
  950
  1,014
  1,080
  1,148
  1,220
  1,294
  1,371
  1,452
  1,537
  1,624
  1,716
  1,812
Funds from operations, $m
  4,141
  3,526
  4,071
  4,660
  5,292
  5,965
  6,680
  7,435
  8,229
  9,062
  9,934
  10,779
  11,727
  12,715
  13,742
  14,810
  15,920
  17,073
  18,272
  19,518
  20,813
  22,160
  23,562
  25,021
  26,540
  28,123
  29,773
  31,494
  33,290
  35,164
  37,122
Change in working capital, $m
  216
  -136
  -149
  -161
  -173
  -184
  -196
  -207
  -217
  -228
  -239
  -249
  -260
  -271
  -282
  -293
  -304
  -316
  -329
  -342
  -355
  -369
  -384
  -400
  -416
  -434
  -452
  -472
  -492
  -514
  -536
Cash from operations, $m
  3,925
  3,612
  4,220
  4,821
  5,464
  6,150
  6,876
  7,642
  8,447
  9,290
  10,172
  11,028
  11,987
  12,985
  14,024
  15,103
  16,224
  17,390
  18,601
  19,859
  21,168
  22,530
  23,946
  25,421
  26,956
  28,557
  30,225
  31,965
  33,782
  35,678
  37,658
Maintenance CAPEX, $m
  0
  -140
  -164
  -191
  -220
  -251
  -284
  -319
  -355
  -394
  -435
  -478
  -522
  -569
  -617
  -667
  -720
  -774
  -830
  -889
  -950
  -1,014
  -1,080
  -1,148
  -1,220
  -1,294
  -1,371
  -1,452
  -1,537
  -1,624
  -1,716
New CAPEX, $m
  -268
  -421
  -455
  -491
  -528
  -563
  -598
  -631
  -664
  -697
  -729
  -762
  -794
  -827
  -860
  -894
  -929
  -966
  -1,004
  -1,043
  -1,085
  -1,128
  -1,173
  -1,221
  -1,272
  -1,325
  -1,381
  -1,441
  -1,503
  -1,569
  -1,639
Cash from investing activities, $m
  -3,333
  -561
  -619
  -682
  -748
  -814
  -882
  -950
  -1,019
  -1,091
  -1,164
  -1,240
  -1,316
  -1,396
  -1,477
  -1,561
  -1,649
  -1,740
  -1,834
  -1,932
  -2,035
  -2,142
  -2,253
  -2,369
  -2,492
  -2,619
  -2,752
  -2,893
  -3,040
  -3,193
  -3,355
Free cash flow, $m
  592
  3,051
  3,601
  4,138
  4,717
  5,336
  5,995
  6,692
  7,427
  8,199
  9,008
  9,789
  10,671
  11,590
  12,546
  13,541
  14,575
  15,650
  16,767
  17,927
  19,134
  20,388
  21,693
  23,051
  24,465
  25,937
  27,472
  29,073
  30,742
  32,484
  34,303
Issuance/(repayment) of debt, $m
  995
  1,572
  1,717
  1,856
  1,993
  2,127
  2,257
  2,384
  2,509
  2,633
  2,755
  2,877
  2,999
  3,123
  3,249
  3,378
  3,510
  3,648
  3,791
  3,940
  4,096
  4,260
  4,432
  4,613
  4,804
  5,005
  5,217
  5,441
  5,677
  5,927
  6,189
Issuance/(repurchase) of shares, $m
  -998
  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  
  58
  1,572
  1,717
  1,856
  1,993
  2,127
  2,257
  2,384
  2,509
  2,633
  2,755
  2,877
  2,999
  3,123
  3,249
  3,378
  3,510
  3,648
  3,791
  3,940
  4,096
  4,260
  4,432
  4,613
  4,804
  5,005
  5,217
  5,441
  5,677
  5,927
  6,189
Total cash flow (excl. dividends), $m
  604
  4,623
  5,318
  5,995
  6,710
  7,462
  8,251
  9,076
  9,936
  10,832
  11,763
  12,665
  13,670
  14,713
  15,795
  16,919
  18,086
  19,298
  20,558
  21,867
  23,230
  24,648
  26,125
  27,664
  29,269
  30,943
  32,690
  34,514
  36,419
  38,411
  40,493
Retained Cash Flow (-), $m
  -1,025
  -1,141
  -1,233
  -1,333
  -1,431
  -1,527
  -1,621
  -1,712
  -1,802
  -1,891
  -1,979
  -2,066
  -2,154
  -2,243
  -2,333
  -2,426
  -2,521
  -2,620
  -2,723
  -2,830
  -2,942
  -3,060
  -3,183
  -3,313
  -3,450
  -3,595
  -3,747
  -3,908
  -4,078
  -4,257
  -4,445
Prev. year cash balance distribution, $m
 
  3,332
  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
 
  6,814
  4,085
  4,661
  5,278
  5,935
  6,631
  7,364
  8,134
  8,941
  9,784
  10,599
  11,516
  12,470
  13,462
  14,493
  15,564
  16,678
  17,835
  19,037
  20,288
  21,588
  22,942
  24,351
  25,818
  27,348
  28,942
  30,606
  32,342
  34,154
  36,048
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
 
  6,533
  3,739
  4,057
  4,346
  4,600
  4,812
  4,975
  5,084
  5,136
  5,129
  5,033
  4,914
  4,741
  4,519
  4,255
  3,955
  3,629
  3,284
  2,931
  2,578
  2,233
  1,904
  1,596
  1,315
  1,064
  844
  657
  500
  373
  271
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 Priceline Group Inc. provides online travel and restaurant reservation, and related services. The company operates Booking.com, which offers online accommodation reservations services; and priceline.com that provides hotel, rental car, airline ticket, and vacation package reservation services. It also operates KAYAK, an online price comparison service that allows consumers to search and compare travel itineraries and prices, including airline ticket, accommodation reservation, and rental car reservation information from various travel Websites at once; and agoda.com, an online accommodation reservation service primarily for consumers in the Asia-Pacific region. In addition, the company offers Rentalcars.com that offers car rental reservation services; and OpenTable, which provides online restaurant reservation services to consumers and reservation management services to restaurants. Further, it provides global distribution system reservation booking and travel insurance services. The company was formerly known as priceline.com Incorporated and changed its name to The Priceline Group Inc. in April 2014. The Priceline Group Inc. was founded in 1997 and is headquartered in Norwalk, Connecticut.

FINANCIAL RATIOS  of  Priceline Group (PCLN)

Valuation Ratios
P/E Ratio 41.4
Price to Sales 8.2
Price to Book 9
Price to Tangible Book
Price to Cash Flow 22.5
Price to Free Cash Flow 24.2
Growth Rates
Sales Growth Rate 16.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 54%
Cap. Spend. - 3 Yr. Gr. Rate 26.1%
Financial Strength
Quick Ratio 4
Current Ratio 0
LT Debt to Equity 63.1%
Total Debt to Equity 73%
Interest Coverage 23
Management Effectiveness
Return On Assets 12%
Ret/ On Assets - 3 Yr. Avg. 15.8%
Return On Total Capital 13.4%
Ret/ On T. Cap. - 3 Yr. Avg. 18.3%
Return On Equity 22.9%
Return On Equity - 3 Yr. Avg. 27.9%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 96%
Gross Margin - 3 Yr. Avg. 93%
EBITDA Margin 29.3%
EBITDA Margin - 3 Yr. Avg. 34.9%
Operating Margin 26.5%
Oper. Margin - 3 Yr. Avg. 32.7%
Pre-Tax Margin 25.3%
Pre-Tax Margin - 3 Yr. Avg. 31.5%
Net Profit Margin 19.9%
Net Profit Margin - 3 Yr. Avg. 25.4%
Effective Tax Rate 21.3%
Eff/ Tax Rate - 3 Yr. Avg. 19.6%
Payout Ratio 0%

PCLN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PCLN stock intrinsic value calculation we used $10743 million for the last fiscal year's total revenue generated by Priceline Group. The default revenue input number comes from 2016 income statement of Priceline Group. 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 PCLN stock valuation model: a) initial revenue growth rate of 17.4% 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 PCLN is calculated based on our internal credit rating of Priceline Group, 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 Priceline Group.
    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 PCLN stock the variable cost ratio is equal to 64.7%.

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 PCLN 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 Priceline Group.

Corporate tax rate of 27% is the nominal tax rate for Priceline Group. 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 PCLN 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 PCLN are equal to 22.3%.

Life of production assets of 17.1 years is the average useful life of capital assets used in Priceline Group 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 PCLN is equal to -7.3%. 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 - $9820 million for Priceline Group - 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 48.917 million for Priceline Group 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 Priceline Group at the current share price and the inputted number of shares is $88.0 billion.


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Stock chart of PCLN Financial statements of PCLN
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