Intrinsic value of Dell Technologies Cl V - DVMT

Previous Close

$79.29

  Intrinsic Value

$208.69

stock screener

  Rating & Target

str. buy

+163%

Previous close

$79.29

 
Intrinsic value

$208.69

 
Up/down potential

+163%

 
Rating

str. buy

*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 16.1

 

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
  3,055
  4,189
  5,444
  6,819
  8,311
  9,918
  11,637
  13,467
  15,403
  17,445
  19,591
  21,838
  24,187
  26,638
  29,191
  31,849
  34,612
  37,485
  40,470
  43,572
  46,796
  50,147
  53,632
  57,257
  61,029
  64,956
  69,047
  73,310
  77,754
Earnings before tax, $m
  -5,356
  -2,079
  -2,207
  -2,487
  -2,806
  -3,164
  -3,561
  -3,997
  -4,471
  -4,981
  -5,527
  -2,216
  -2,831
  -3,478
  -4,158
  -4,870
  -5,613
  -6,388
  -7,195
  -8,034
  -8,906
  -9,812
  -10,753
  -11,731
  -12,747
  -13,802
  -14,899
  -16,040
  -17,227
  -18,462
  -19,749
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
  -2,207
  -2,487
  -2,806
  -3,164
  -3,561
  -3,997
  -4,471
  -4,981
  -5,527
  -2,216
  -2,831
  -3,478
  -4,158
  -4,870
  -5,613
  -6,388
  -7,195
  -8,034
  -8,906
  -9,812
  -10,753
  -11,731
  -12,747
  -13,802
  -14,899
  -16,040
  -17,227
  -18,462
  -19,749

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  11,449
  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
  129,373
  154,588
  182,478
  213,019
  246,171
  281,883
  320,096
  360,750
  403,789
  449,165
  496,838
  546,782
  598,983
  653,445
  710,185
  769,236
  830,647
  894,482
  960,822
  1,029,759
  1,101,404
  1,175,877
  1,253,314
  1,333,864
  1,417,687
  1,504,957
  1,595,860
  1,690,593
  1,789,368
  1,892,406
Adjusted assets (=assets-cash), $m
  106,757
  129,373
  154,588
  182,478
  213,019
  246,171
  281,883
  320,096
  360,750
  403,789
  449,165
  496,838
  546,782
  598,983
  653,445
  710,185
  769,236
  830,647
  894,482
  960,822
  1,029,759
  1,101,404
  1,175,877
  1,253,314
  1,333,864
  1,417,687
  1,504,957
  1,595,860
  1,690,593
  1,789,368
  1,892,406
Revenue / Adjusted assets
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
  0.577
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
  -15,079
  -18,018
  -21,268
  -24,828
  -28,692
  -32,855
  -37,308
  -42,047
  -47,063
  -52,352
  -57,908
  -63,730
  -69,814
  -76,162
  -82,775
  -89,658
  -96,815
  -104,255
  -111,988
  -120,023
  -128,373
  -137,053
  -146,079
  -155,467
  -165,237
  -175,409
  -186,004
  -197,045
  -208,558
  -220,567
Total debt, $m
  49,390
  61,094
  83,787
  108,888
  136,375
  166,212
  198,353
  232,744
  269,333
  308,068
  348,906
  391,812
  436,761
  483,743
  532,759
  583,825
  636,970
  692,240
  749,692
  809,398
  871,441
  935,921
  1,002,947
  1,072,641
  1,145,135
  1,220,576
  1,299,119
  1,380,932
  1,466,192
  1,555,089
  1,647,823
Total liabilities, $m
  104,732
  116,436
  139,129
  164,230
  191,717
  221,554
  253,695
  288,086
  324,675
  363,410
  404,248
  447,154
  492,103
  539,085
  588,101
  639,167
  692,312
  747,582
  805,034
  864,740
  926,783
  991,263
  1,058,289
  1,127,983
  1,200,477
  1,275,918
  1,354,461
  1,436,274
  1,521,534
  1,610,431
  1,703,165
Total equity, $m
  13,474
  12,937
  15,459
  18,248
  21,302
  24,617
  28,188
  32,010
  36,075
  40,379
  44,916
  49,684
  54,678
  59,898
  65,345
  71,019
  76,924
  83,065
  89,448
  96,082
  102,976
  110,140
  117,588
  125,331
  133,386
  141,769
  150,496
  159,586
  169,059
  178,937
  189,241
Total liabilities and equity, $m
  118,206
  129,373
  154,588
  182,478
  213,019
  246,171
  281,883
  320,096
  360,750
  403,789
  449,164
  496,838
  546,781
  598,983
  653,446
  710,186
  769,236
  830,647
  894,482
  960,822
  1,029,759
  1,101,403
  1,175,877
  1,253,314
  1,333,863
  1,417,687
  1,504,957
  1,595,860
  1,690,593
  1,789,368
  1,892,406
Debt-to-equity ratio
  3.666
  4.720
  5.420
  5.970
  6.400
  6.750
  7.040
  7.270
  7.470
  7.630
  7.770
  7.890
  7.990
  8.080
  8.150
  8.220
  8.280
  8.330
  8.380
  8.420
  8.460
  8.500
  8.530
  8.560
  8.590
  8.610
  8.630
  8.650
  8.670
  8.690
  8.710
Adjusted equity ratio
  0.019
  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
  -2,207
  -2,487
  -2,806
  -3,164
  -3,561
  -3,997
  -4,471
  -4,981
  -5,527
  -2,216
  -2,831
  -3,478
  -4,158
  -4,870
  -5,613
  -6,388
  -7,195
  -8,034
  -8,906
  -9,812
  -10,753
  -11,731
  -12,747
  -13,802
  -14,899
  -16,040
  -17,227
  -18,462
  -19,749
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
  5,405
  5,796
  6,213
  6,652
  7,115
  7,599
  8,104
  8,630
  9,176
  9,743
  10,331
  10,940
  11,571
  12,225
  12,903
  13,607
  14,336
  15,094
  15,881
  16,700
  17,551
  18,437
  19,360
  20,323
  21,326
  22,374
  23,467
  24,609
  25,803
Change in working capital, $m
  2,602
  -2,627
  -2,939
  -3,251
  -3,560
  -3,864
  -4,162
  -4,454
  -4,738
  -5,016
  -5,289
  -5,556
  -5,821
  -6,084
  -6,348
  -6,613
  -6,883
  -7,158
  -7,440
  -7,732
  -8,035
  -8,350
  -8,680
  -9,026
  -9,388
  -9,770
  -10,172
  -10,595
  -11,042
  -11,513
  -12,009
Cash from operations, $m
  2,222
  7,554
  8,344
  9,047
  9,772
  10,516
  11,277
  12,053
  12,842
  13,646
  14,465
  15,299
  16,152
  17,024
  17,919
  18,838
  19,786
  20,764
  21,777
  22,826
  23,916
  25,050
  26,231
  27,463
  28,749
  30,093
  31,498
  32,969
  34,509
  36,122
  37,812
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
  -382
  -779
  -1,320
  -1,898
  -2,511
  -3,159
  -3,839
  -4,551
  -5,294
  -6,068
  -6,873
  -7,709
  -8,577
  -9,478
  -10,412
  -11,381
  -12,386
  -13,430
  -14,514
  -15,640
  -16,810
  -18,028
  -19,295
  -20,615
  -21,990
  -23,424
  -24,919
  -26,480
  -28,110
  -29,813
Issuance/(repayment) of debt, $m
  29,933
  18,033
  22,693
  25,100
  27,487
  29,837
  32,141
  34,391
  36,589
  38,735
  40,838
  42,906
  44,949
  46,982
  49,016
  51,066
  53,146
  55,270
  57,452
  59,706
  62,044
  64,480
  67,026
  69,693
  72,495
  75,441
  78,543
  81,813
  85,260
  88,897
  92,734
Issuance/(repurchase) of shares, $m
  3,264
  6,662
  4,729
  5,276
  5,860
  6,479
  7,133
  7,818
  8,536
  9,285
  10,064
  6,984
  7,825
  8,698
  9,604
  10,544
  11,518
  12,529
  13,578
  14,668
  15,800
  16,977
  18,201
  19,475
  20,802
  22,185
  23,626
  25,130
  26,700
  28,340
  30,053
Cash from financing (excl. dividends), $m  
  31,908
  24,695
  27,422
  30,376
  33,347
  36,316
  39,274
  42,209
  45,125
  48,020
  50,902
  49,890
  52,774
  55,680
  58,620
  61,610
  64,664
  67,799
  71,030
  74,374
  77,844
  81,457
  85,227
  89,168
  93,297
  97,626
  102,169
  106,943
  111,960
  117,237
  122,787
Total cash flow (excl. dividends), $m
  2,898
  24,313
  26,643
  29,056
  31,449
  33,805
  36,115
  38,371
  40,574
  42,726
  44,835
  43,017
  45,066
  47,103
  49,142
  51,198
  53,283
  55,413
  57,600
  59,860
  62,204
  64,646
  67,199
  69,873
  72,682
  75,636
  78,746
  82,024
  85,480
  89,127
  92,973
Retained Cash Flow (-), $m
  -11,902
  -6,662
  -4,729
  -5,276
  -5,860
  -6,479
  -7,133
  -7,818
  -8,536
  -9,285
  -10,064
  -6,984
  -7,825
  -8,698
  -9,604
  -10,544
  -11,518
  -12,529
  -13,578
  -14,668
  -15,800
  -16,977
  -18,201
  -19,475
  -20,802
  -22,185
  -23,626
  -25,130
  -26,700
  -28,340
  -30,053
Prev. year cash balance distribution, $m
 
  5,120
  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
 
  22,771
  21,914
  23,780
  25,589
  27,326
  28,982
  30,553
  32,038
  33,442
  34,770
  36,033
  37,240
  38,405
  39,538
  40,654
  41,765
  42,884
  44,022
  45,192
  46,404
  47,670
  48,998
  50,399
  51,880
  53,451
  55,120
  56,893
  58,780
  60,787
  62,921
Discount rate, %
 
  10.90
  11.45
  12.02
  12.62
  13.25
  13.91
  14.61
  15.34
  16.10
  16.91
  17.75
  18.64
  19.57
  20.55
  21.58
  22.66
  23.79
  24.98
  26.23
  27.54
  28.92
  30.37
  31.89
  33.48
  35.15
  36.91
  38.76
  40.69
  42.73
  44.87
PV of cash for distribution, $m
 
  20,533
  17,644
  16,918
  15,908
  14,669
  13,266
  11,764
  10,231
  8,723
  7,290
  5,969
  4,788
  3,759
  2,887
  2,168
  1,591
  1,139
  795
  541
  358
  230
  143
  87
  51
  29
  16
  8
  4
  2
  1
Current shareholders' claim on cash, %
  100
  60.0
  45.9
  35.7
  28.2
  22.5
  18.1
  14.7
  12.0
  9.9
  8.2
  7.2
  6.4
  5.6
  5.0
  4.4
  3.9
  3.4
  3.0
  2.6
  2.3
  2.0
  1.8
  1.6
  1.4
  1.2
  1.1
  0.9
  0.8
  0.7
  0.6

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 -36.9
Price to Sales 1
Price to Book 4.6
Price to Tangible Book
Price to Cash Flow 27.8
Price to Free Cash Flow 46.9
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 10.9%, 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 -20.2%. 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 203.186 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 $16.1 billion.

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COMPANY NEWS

▶ Dell Technologies Shows Rising Price Performance With Jump To 82 RS Rating   [Dec-11-17 03:00AM  Investor's Business Daily]
▶ Dell Technologies Inc. Stock Ticks Higher on Q3 Earnings   [Dec-07-17 12:50PM  InvestorPlace]
▶ Dell Technologies reports 3Q loss   [07:23AM  Associated Press]
▶ Dell Technologies Meets 80-Plus Relative Strength Rating Benchmark   [Dec-04-17 03:00AM  Investor's Business Daily]
▶ VMware Earnings, Revenue Beat As Cloud Strategy Gains Traction   [Nov-30-17 04:24PM  Investor's Business Daily]
▶ Has The Server Been Commoditized?   [Nov-27-17 01:29PM  Forbes]
▶ [$$] A Super-Cheap Way to Buy VMware   [01:30PM  Barrons.com]
▶ Micron Technology, Inc. Stock Still Has Room to Run   [Nov-14-17 11:53AM  InvestorPlace]
▶ Dell Makes a Big Bet on IoT   [Oct-19-17 01:08PM  Forbes]
▶ Dell's $1 billion bet on IoT means new investments, products and R&D spending   [Oct-11-17 02:16PM  American City Business Journals]
▶ [$$] Dell Bets $1 Billion on Internet of Things   [03:01AM  The Wall Street Journal]
▶ [$$] Dell Bets $1 Billion on 'Internet of Things'   [Oct-10-17 11:26AM  The Wall Street Journal]
▶ Dell hires new chief diversity and inclusion officer from Silicon Valley software firm   [Sep-27-17 09:21AM  American City Business Journals]
▶ Final vote on Toshiba chip sale is now days away   [Sep-18-17 10:03AM  American City Business Journals]
▶ [$$] 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]
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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