Intrinsic value of Priceline Group - PCLN

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$1,863.90

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$1,863.90

 
Intrinsic value

$1,540

 
Up/down potential

-17%

 
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 92.6

 

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
  12.60
  11.84
  11.16
  10.54
  9.99
  9.49
  9.04
  8.64
  8.27
  7.94
  7.65
  7.38
  7.15
  6.93
  6.74
  6.56
  6.41
  6.27
  6.14
  6.03
  5.92
  5.83
  5.75
  5.67
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
Revenue, $m
  10,743
  12,097
  13,529
  15,038
  16,623
  18,283
  20,018
  21,827
  23,712
  25,674
  27,713
  29,833
  32,036
  34,326
  36,705
  39,179
  41,751
  44,426
  47,211
  50,110
  53,130
  56,277
  59,559
  62,982
  66,556
  70,287
  74,185
  78,258
  82,517
  86,971
  91,631
Variable operating expenses, $m
 
  7,796
  8,691
  9,634
  10,624
  11,661
  12,745
  13,875
  15,052
  16,278
  17,552
  18,636
  20,013
  21,443
  22,929
  24,474
  26,081
  27,752
  29,492
  31,303
  33,189
  35,155
  37,206
  39,344
  41,577
  43,907
  46,342
  48,887
  51,547
  54,330
  57,241
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
  7,796
  8,691
  9,634
  10,624
  11,661
  12,745
  13,875
  15,052
  16,278
  17,552
  18,636
  20,013
  21,443
  22,929
  24,474
  26,081
  27,752
  29,492
  31,303
  33,189
  35,155
  37,206
  39,344
  41,577
  43,907
  46,342
  48,887
  51,547
  54,330
  57,241
Operating income, $m
  2,843
  4,300
  4,838
  5,404
  5,999
  6,622
  7,273
  7,952
  8,660
  9,396
  10,161
  11,197
  12,024
  12,883
  13,776
  14,704
  15,670
  16,674
  17,719
  18,807
  19,940
  21,121
  22,353
  23,638
  24,979
  26,380
  27,842
  29,371
  30,970
  32,641
  34,390
EBITDA, $m
  3,152
  4,698
  5,254
  5,840
  6,456
  7,100
  7,774
  8,477
  9,209
  9,970
  10,762
  11,586
  12,441
  13,331
  14,255
  15,215
  16,214
  17,253
  18,334
  19,460
  20,633
  21,855
  23,130
  24,459
  25,847
  27,296
  28,810
  30,392
  32,046
  33,776
  35,585
Interest expense (income), $m
  126
  217
  257
  299
  343
  390
  439
  490
  544
  599
  657
  717
  780
  845
  912
  982
  1,055
  1,131
  1,210
  1,292
  1,377
  1,466
  1,559
  1,656
  1,757
  1,862
  1,972
  2,087
  2,207
  2,333
  2,464
Earnings before tax, $m
  2,713
  4,083
  4,581
  5,105
  5,656
  6,232
  6,834
  7,462
  8,116
  8,797
  9,504
  10,480
  11,244
  12,038
  12,864
  13,722
  14,614
  15,543
  16,509
  17,515
  18,563
  19,655
  20,794
  21,982
  23,222
  24,517
  25,870
  27,284
  28,763
  30,309
  31,926
Tax expense, $m
  578
  1,103
  1,237
  1,378
  1,527
  1,683
  1,845
  2,015
  2,191
  2,375
  2,566
  2,829
  3,036
  3,250
  3,473
  3,705
  3,946
  4,197
  4,457
  4,729
  5,012
  5,307
  5,614
  5,935
  6,270
  6,620
  6,985
  7,367
  7,766
  8,183
  8,620
Net income, $m
  2,135
  2,981
  3,344
  3,727
  4,129
  4,549
  4,989
  5,447
  5,925
  6,422
  6,938
  7,650
  8,208
  8,788
  9,391
  10,017
  10,669
  11,346
  12,051
  12,786
  13,551
  14,348
  15,180
  16,047
  16,952
  17,898
  18,885
  19,918
  20,997
  22,125
  23,306

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
  17,506
  19,579
  21,763
  24,057
  26,459
  28,970
  31,588
  34,316
  37,154
  40,106
  43,174
  46,362
  49,676
  53,119
  56,698
  60,421
  64,292
  68,322
  72,517
  76,888
  81,443
  86,192
  91,147
  96,318
  101,718
  107,359
  113,254
  119,417
  125,863
  132,607
Adjusted assets (=assets-cash), $m
  15,539
  17,506
  19,579
  21,763
  24,057
  26,459
  28,970
  31,588
  34,316
  37,154
  40,106
  43,174
  46,362
  49,676
  53,119
  56,698
  60,421
  64,292
  68,322
  72,517
  76,888
  81,443
  86,192
  91,147
  96,318
  101,718
  107,359
  113,254
  119,417
  125,863
  132,607
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
  2,698
  3,017
  3,354
  3,707
  4,077
  4,464
  4,867
  5,288
  5,725
  6,180
  6,653
  7,144
  7,655
  8,185
  8,737
  9,310
  9,907
  10,528
  11,174
  11,848
  12,550
  13,282
  14,045
  14,842
  15,674
  16,543
  17,452
  18,401
  19,395
  20,434
Working capital, $m
  2,543
  -883
  -988
  -1,098
  -1,213
  -1,335
  -1,461
  -1,593
  -1,731
  -1,874
  -2,023
  -2,178
  -2,339
  -2,506
  -2,679
  -2,860
  -3,048
  -3,243
  -3,446
  -3,658
  -3,878
  -4,108
  -4,348
  -4,598
  -4,859
  -5,131
  -5,415
  -5,713
  -6,024
  -6,349
  -6,689
Total debt, $m
  7,167
  7,336
  8,543
  9,814
  11,149
  12,547
  14,008
  15,532
  17,120
  18,772
  20,490
  22,275
  24,131
  26,059
  28,063
  30,146
  32,313
  34,566
  36,911
  39,353
  41,897
  44,548
  47,312
  50,195
  53,205
  56,348
  59,631
  63,062
  66,649
  70,400
  74,325
Total liabilities, $m
  10,019
  10,188
  11,395
  12,666
  14,001
  15,399
  16,860
  18,384
  19,972
  21,624
  23,342
  25,127
  26,983
  28,911
  30,915
  32,998
  35,165
  37,418
  39,763
  42,205
  44,749
  47,400
  50,164
  53,047
  56,057
  59,200
  62,483
  65,914
  69,501
  73,252
  77,177
Total equity, $m
  9,820
  7,317
  8,184
  9,097
  10,056
  11,060
  12,109
  13,204
  14,344
  15,530
  16,764
  18,047
  19,379
  20,764
  22,204
  23,700
  25,256
  26,874
  28,559
  30,312
  32,139
  34,043
  36,028
  38,099
  40,261
  42,518
  44,876
  47,340
  49,916
  52,611
  55,430
Total liabilities and equity, $m
  19,839
  17,505
  19,579
  21,763
  24,057
  26,459
  28,969
  31,588
  34,316
  37,154
  40,106
  43,174
  46,362
  49,675
  53,119
  56,698
  60,421
  64,292
  68,322
  72,517
  76,888
  81,443
  86,192
  91,146
  96,318
  101,718
  107,359
  113,254
  119,417
  125,863
  132,607
Debt-to-equity ratio
  0.730
  1.000
  1.040
  1.080
  1.110
  1.130
  1.160
  1.180
  1.190
  1.210
  1.220
  1.230
  1.250
  1.250
  1.260
  1.270
  1.280
  1.290
  1.290
  1.300
  1.300
  1.310
  1.310
  1.320
  1.320
  1.330
  1.330
  1.330
  1.340
  1.340
  1.340
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
  2,981
  3,344
  3,727
  4,129
  4,549
  4,989
  5,447
  5,925
  6,422
  6,938
  7,650
  8,208
  8,788
  9,391
  10,017
  10,669
  11,346
  12,051
  12,786
  13,551
  14,348
  15,180
  16,047
  16,952
  17,898
  18,885
  19,918
  20,997
  22,125
  23,306
Depreciation, amort., depletion, $m
  309
  397
  416
  436
  456
  478
  501
  524
  549
  575
  601
  389
  418
  448
  479
  511
  544
  579
  616
  653
  693
  734
  777
  821
  868
  917
  967
  1,021
  1,076
  1,134
  1,195
Funds from operations, $m
  4,141
  3,378
  3,760
  4,163
  4,585
  5,028
  5,490
  5,972
  6,474
  6,996
  7,539
  8,039
  8,626
  9,236
  9,869
  10,528
  11,213
  11,926
  12,667
  13,439
  14,244
  15,082
  15,956
  16,868
  17,820
  18,814
  19,853
  20,938
  22,073
  23,260
  24,501
Change in working capital, $m
  216
  -99
  -105
  -110
  -116
  -121
  -127
  -132
  -138
  -143
  -149
  -155
  -161
  -167
  -174
  -181
  -188
  -195
  -203
  -212
  -220
  -230
  -240
  -250
  -261
  -272
  -285
  -297
  -311
  -325
  -340
Cash from operations, $m
  3,925
  3,426
  3,865
  4,273
  4,701
  5,149
  5,616
  6,104
  6,611
  7,139
  7,688
  8,194
  8,787
  9,403
  10,043
  10,709
  11,401
  12,121
  12,870
  13,651
  14,464
  15,312
  16,196
  17,118
  18,081
  19,087
  20,137
  21,235
  22,384
  23,585
  24,841
Maintenance CAPEX, $m
  0
  -140
  -158
  -176
  -196
  -217
  -238
  -261
  -285
  -309
  -335
  -361
  -389
  -418
  -448
  -479
  -511
  -544
  -579
  -616
  -653
  -693
  -734
  -777
  -821
  -868
  -917
  -967
  -1,021
  -1,076
  -1,134
New CAPEX, $m
  -268
  -306
  -319
  -337
  -353
  -370
  -387
  -403
  -420
  -437
  -455
  -473
  -491
  -511
  -531
  -552
  -574
  -597
  -621
  -646
  -673
  -702
  -732
  -763
  -797
  -832
  -869
  -908
  -950
  -993
  -1,039
Cash from investing activities, $m
  -3,333
  -446
  -477
  -513
  -549
  -587
  -625
  -664
  -705
  -746
  -790
  -834
  -880
  -929
  -979
  -1,031
  -1,085
  -1,141
  -1,200
  -1,262
  -1,326
  -1,395
  -1,466
  -1,540
  -1,618
  -1,700
  -1,786
  -1,875
  -1,971
  -2,069
  -2,173
Free cash flow, $m
  592
  2,981
  3,388
  3,760
  4,151
  4,562
  4,991
  5,439
  5,906
  6,393
  6,899
  7,360
  7,906
  8,474
  9,065
  9,678
  10,316
  10,980
  11,670
  12,389
  13,137
  13,917
  14,730
  15,578
  16,463
  17,387
  18,351
  19,360
  20,413
  21,515
  22,668
Issuance/(repayment) of debt, $m
  995
  1,137
  1,206
  1,271
  1,335
  1,398
  1,461
  1,524
  1,587
  1,652
  1,718
  1,786
  1,856
  1,928
  2,004
  2,083
  2,166
  2,253
  2,345
  2,442
  2,544
  2,651
  2,764
  2,884
  3,010
  3,143
  3,283
  3,431
  3,587
  3,751
  3,925
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
  1,137
  1,206
  1,271
  1,335
  1,398
  1,461
  1,524
  1,587
  1,652
  1,718
  1,786
  1,856
  1,928
  2,004
  2,083
  2,166
  2,253
  2,345
  2,442
  2,544
  2,651
  2,764
  2,884
  3,010
  3,143
  3,283
  3,431
  3,587
  3,751
  3,925
Total cash flow (excl. dividends), $m
  604
  4,118
  4,594
  5,031
  5,486
  5,960
  6,452
  6,963
  7,494
  8,045
  8,616
  9,145
  9,762
  10,403
  11,069
  11,762
  12,483
  13,233
  14,015
  14,831
  15,681
  16,568
  17,494
  18,462
  19,473
  20,529
  21,634
  22,791
  24,000
  25,267
  26,593
Retained Cash Flow (-), $m
  -1,025
  -829
  -866
  -913
  -959
  -1,004
  -1,049
  -1,095
  -1,140
  -1,186
  -1,234
  -1,282
  -1,333
  -1,385
  -1,439
  -1,496
  -1,556
  -1,618
  -1,684
  -1,754
  -1,827
  -1,904
  -1,985
  -2,071
  -2,162
  -2,257
  -2,358
  -2,464
  -2,576
  -2,694
  -2,819
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
 
  6,621
  3,728
  4,118
  4,527
  4,956
  5,403
  5,869
  6,354
  6,858
  7,383
  7,863
  8,429
  9,018
  9,629
  10,265
  10,927
  11,615
  12,331
  13,077
  13,854
  14,664
  15,509
  16,391
  17,311
  18,272
  19,277
  20,326
  21,424
  22,572
  23,774
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
 
  6,348
  3,413
  3,584
  3,728
  3,841
  3,921
  3,965
  3,971
  3,940
  3,870
  3,734
  3,597
  3,429
  3,233
  3,014
  2,777
  2,527
  2,271
  2,013
  1,760
  1,517
  1,287
  1,074
  882
  711
  562
  436
  331
  246
  179
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 42.9
Price to Sales 8.5
Price to Book 9.3
Price to Tangible Book
Price to Cash Flow 23.4
Price to Free Cash Flow 25.1
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 12.6% 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 49.704 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 $92.6 billion.


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Stock chart of PCLN Financial statements of PCLN Annual reports of PCLN
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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