Intrinsic value of Expedia - EXPE

Previous Close

$104.53

  Intrinsic Value

$409.22

stock screener

  Rating & Target

str. buy

+291%

Previous close

$104.53

 
Intrinsic value

$409.22

 
Up/down potential

+291%

 
Rating

str. buy

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

We calculate the intrinsic value of EXPE 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.

Please visit our new site that uses elements of artificial intelligence for stock valuation: artificial intelligence value of Expedia (EXPE) stock.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  31.50
  14.90
  13.91
  13.02
  12.22
  11.50
  10.85
  10.26
  9.74
  9.26
  8.84
  8.45
  8.11
  7.80
  7.52
  7.26
  7.04
  6.83
  6.65
  6.49
  6.34
  6.20
  6.08
  5.97
  5.88
  5.79
  5.71
  5.64
  5.58
  5.52
  5.47
Revenue, $m
  8,774
  10,081
  11,484
  12,979
  14,564
  16,239
  18,000
  19,847
  21,779
  23,796
  25,898
  28,087
  30,364
  32,732
  35,192
  37,748
  40,405
  43,167
  46,038
  49,024
  52,131
  55,364
  58,732
  62,242
  65,900
  69,715
  73,697
  77,853
  82,194
  86,729
  91,470
Variable operating expenses, $m
 
  8,572
  9,654
  10,807
  12,030
  13,322
  14,681
  16,106
  17,596
  19,152
  20,774
  21,669
  23,426
  25,252
  27,150
  29,122
  31,172
  33,302
  35,517
  37,821
  40,218
  42,713
  45,311
  48,018
  50,841
  53,784
  56,856
  60,062
  63,411
  66,910
  70,567
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
  8,324
  8,572
  9,654
  10,807
  12,030
  13,322
  14,681
  16,106
  17,596
  19,152
  20,774
  21,669
  23,426
  25,252
  27,150
  29,122
  31,172
  33,302
  35,517
  37,821
  40,218
  42,713
  45,311
  48,018
  50,841
  53,784
  56,856
  60,062
  63,411
  66,910
  70,567
Operating income, $m
  450
  1,510
  1,830
  2,172
  2,534
  2,917
  3,319
  3,741
  4,183
  4,644
  5,124
  6,418
  6,939
  7,480
  8,042
  8,626
  9,233
  9,864
  10,520
  11,203
  11,913
  12,652
  13,421
  14,223
  15,059
  15,931
  16,841
  17,791
  18,783
  19,819
  20,902
EBITDA, $m
  1,244
  2,601
  2,963
  3,348
  3,757
  4,189
  4,644
  5,120
  5,619
  6,139
  6,681
  7,246
  7,833
  8,444
  9,079
  9,738
  10,424
  11,136
  11,877
  12,647
  13,449
  14,283
  15,152
  16,057
  17,001
  17,985
  19,012
  20,084
  21,204
  22,374
  23,597
Interest expense (income), $m
  154
  155
  239
  331
  428
  531
  640
  754
  874
  1,000
  1,131
  1,268
  1,410
  1,558
  1,712
  1,872
  2,038
  2,210
  2,390
  2,576
  2,771
  2,973
  3,183
  3,402
  3,630
  3,867
  4,115
  4,374
  4,644
  4,927
  5,221
Earnings before tax, $m
  277
  1,355
  1,591
  1,841
  2,106
  2,386
  2,679
  2,987
  3,308
  3,644
  3,993
  5,151
  5,529
  5,922
  6,330
  6,755
  7,196
  7,654
  8,131
  8,626
  9,142
  9,679
  10,239
  10,822
  11,430
  12,064
  12,725
  13,416
  14,138
  14,893
  15,681
Tax expense, $m
  16
  366
  429
  497
  569
  644
  723
  806
  893
  984
  1,078
  1,391
  1,493
  1,599
  1,709
  1,824
  1,943
  2,067
  2,195
  2,329
  2,468
  2,613
  2,764
  2,922
  3,086
  3,257
  3,436
  3,622
  3,817
  4,021
  4,234
Net income, $m
  282
  989
  1,161
  1,344
  1,538
  1,742
  1,956
  2,181
  2,415
  2,660
  2,915
  3,760
  4,036
  4,323
  4,621
  4,931
  5,253
  5,587
  5,935
  6,297
  6,674
  7,066
  7,474
  7,900
  8,344
  8,806
  9,290
  9,794
  10,321
  10,872
  11,447

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,869
  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
  15,778
  15,977
  18,199
  20,568
  23,081
  25,735
  28,526
  31,453
  34,515
  37,711
  41,043
  44,512
  48,121
  51,872
  55,771
  59,823
  64,034
  68,410
  72,960
  77,692
  82,616
  87,741
  93,078
  98,640
  104,437
  110,484
  116,793
  123,380
  130,259
  137,447
  144,960
Adjusted assets (=assets-cash), $m
  13,909
  15,977
  18,199
  20,568
  23,081
  25,735
  28,526
  31,453
  34,515
  37,711
  41,043
  44,512
  48,121
  51,872
  55,771
  59,823
  64,034
  68,410
  72,960
  77,692
  82,616
  87,741
  93,078
  98,640
  104,437
  110,484
  116,793
  123,380
  130,259
  137,447
  144,960
Revenue / Adjusted assets
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
  0.631
Average production assets, $m
  3,850
  4,426
  5,041
  5,698
  6,394
  7,129
  7,902
  8,713
  9,561
  10,446
  11,369
  12,330
  13,330
  14,369
  15,449
  16,572
  17,738
  18,950
  20,211
  21,521
  22,885
  24,305
  25,784
  27,324
  28,930
  30,605
  32,353
  34,177
  36,083
  38,074
  40,155
Working capital, $m
  -2,677
  -5,222
  -5,949
  -6,723
  -7,544
  -8,412
  -9,324
  -10,281
  -11,281
  -12,326
  -13,415
  -14,549
  -15,729
  -16,955
  -18,229
  -19,554
  -20,930
  -22,360
  -23,848
  -25,394
  -27,004
  -28,679
  -30,423
  -32,241
  -34,136
  -36,113
  -38,175
  -40,328
  -42,576
  -44,926
  -47,381
Total debt, $m
  3,160
  4,887
  6,747
  8,730
  10,833
  13,054
  15,390
  17,840
  20,403
  23,078
  25,867
  28,771
  31,791
  34,931
  38,195
  41,586
  45,110
  48,773
  52,581
  56,542
  60,663
  64,953
  69,421
  74,075
  78,928
  83,989
  89,270
  94,783
  100,541
  106,557
  112,846
Total liabilities, $m
  11,645
  13,373
  15,233
  17,216
  19,319
  21,540
  23,876
  26,326
  28,889
  31,564
  34,353
  37,257
  40,277
  43,417
  46,681
  50,072
  53,596
  57,259
  61,067
  65,028
  69,149
  73,439
  77,907
  82,561
  87,414
  92,475
  97,756
  103,269
  109,027
  115,043
  121,332
Total equity, $m
  4,132
  2,604
  2,966
  3,353
  3,762
  4,195
  4,650
  5,127
  5,626
  6,147
  6,690
  7,256
  7,844
  8,455
  9,091
  9,751
  10,437
  11,151
  11,892
  12,664
  13,466
  14,302
  15,172
  16,078
  17,023
  18,009
  19,037
  20,111
  21,232
  22,404
  23,629
Total liabilities and equity, $m
  15,777
  15,977
  18,199
  20,569
  23,081
  25,735
  28,526
  31,453
  34,515
  37,711
  41,043
  44,513
  48,121
  51,872
  55,772
  59,823
  64,033
  68,410
  72,959
  77,692
  82,615
  87,741
  93,079
  98,639
  104,437
  110,484
  116,793
  123,380
  130,259
  137,447
  144,961
Debt-to-equity ratio
  0.765
  1.880
  2.270
  2.600
  2.880
  3.110
  3.310
  3.480
  3.630
  3.750
  3.870
  3.970
  4.050
  4.130
  4.200
  4.260
  4.320
  4.370
  4.420
  4.460
  4.500
  4.540
  4.580
  4.610
  4.640
  4.660
  4.690
  4.710
  4.740
  4.760
  4.780
Adjusted equity ratio
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163
  0.163

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  282
  989
  1,161
  1,344
  1,538
  1,742
  1,956
  2,181
  2,415
  2,660
  2,915
  3,760
  4,036
  4,323
  4,621
  4,931
  5,253
  5,587
  5,935
  6,297
  6,674
  7,066
  7,474
  7,900
  8,344
  8,806
  9,290
  9,794
  10,321
  10,872
  11,447
Depreciation, amort., depletion, $m
  794
  1,091
  1,133
  1,177
  1,223
  1,273
  1,325
  1,379
  1,436
  1,495
  1,557
  828
  895
  964
  1,037
  1,112
  1,190
  1,272
  1,356
  1,444
  1,536
  1,631
  1,730
  1,834
  1,942
  2,054
  2,171
  2,294
  2,422
  2,555
  2,695
Funds from operations, $m
  1,733
  2,080
  2,294
  2,521
  2,761
  3,014
  3,281
  3,559
  3,851
  4,155
  4,472
  4,588
  4,931
  5,287
  5,658
  6,043
  6,443
  6,859
  7,292
  7,742
  8,210
  8,697
  9,205
  9,734
  10,285
  10,861
  11,461
  12,088
  12,743
  13,427
  14,142
Change in working capital, $m
  169
  -677
  -726
  -774
  -821
  -867
  -912
  -957
  -1,001
  -1,045
  -1,089
  -1,134
  -1,179
  -1,226
  -1,274
  -1,324
  -1,376
  -1,430
  -1,487
  -1,547
  -1,609
  -1,675
  -1,745
  -1,818
  -1,895
  -1,976
  -2,062
  -2,153
  -2,249
  -2,349
  -2,456
Cash from operations, $m
  1,564
  2,757
  3,020
  3,295
  3,582
  3,881
  4,193
  4,516
  4,852
  5,200
  5,561
  5,722
  6,110
  6,514
  6,932
  7,367
  7,819
  8,290
  8,779
  9,288
  9,819
  10,372
  10,949
  11,551
  12,180
  12,837
  13,523
  14,241
  14,991
  15,776
  16,598
Maintenance CAPEX, $m
  0
  -258
  -297
  -338
  -382
  -429
  -478
  -530
  -585
  -642
  -701
  -763
  -828
  -895
  -964
  -1,037
  -1,112
  -1,190
  -1,272
  -1,356
  -1,444
  -1,536
  -1,631
  -1,730
  -1,834
  -1,942
  -2,054
  -2,171
  -2,294
  -2,422
  -2,555
New CAPEX, $m
  -749
  -576
  -616
  -656
  -696
  -735
  -773
  -811
  -848
  -885
  -923
  -961
  -1,000
  -1,039
  -1,080
  -1,122
  -1,166
  -1,212
  -1,260
  -1,311
  -1,364
  -1,420
  -1,479
  -1,541
  -1,606
  -1,675
  -1,748
  -1,825
  -1,906
  -1,991
  -2,081
Cash from investing activities, $m
  -718
  -834
  -913
  -994
  -1,078
  -1,164
  -1,251
  -1,341
  -1,433
  -1,527
  -1,624
  -1,724
  -1,828
  -1,934
  -2,044
  -2,159
  -2,278
  -2,402
  -2,532
  -2,667
  -2,808
  -2,956
  -3,110
  -3,271
  -3,440
  -3,617
  -3,802
  -3,996
  -4,200
  -4,413
  -4,636
Free cash flow, $m
  846
  1,923
  2,107
  2,300
  2,504
  2,717
  2,941
  3,175
  3,419
  3,673
  3,937
  3,998
  4,283
  4,580
  4,888
  5,208
  5,541
  5,887
  6,247
  6,621
  7,011
  7,417
  7,840
  8,280
  8,740
  9,220
  9,721
  10,245
  10,792
  11,364
  11,961
Issuance/(repayment) of debt, $m
  -404
  1,727
  1,860
  1,983
  2,103
  2,221
  2,336
  2,450
  2,563
  2,676
  2,789
  2,904
  3,020
  3,140
  3,263
  3,391
  3,524
  3,663
  3,808
  3,961
  4,121
  4,290
  4,467
  4,655
  4,852
  5,061
  5,281
  5,513
  5,758
  6,016
  6,289
Issuance/(repurchase) of shares, $m
  -315
  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  
  -541
  1,727
  1,860
  1,983
  2,103
  2,221
  2,336
  2,450
  2,563
  2,676
  2,789
  2,904
  3,020
  3,140
  3,263
  3,391
  3,524
  3,663
  3,808
  3,961
  4,121
  4,290
  4,467
  4,655
  4,852
  5,061
  5,281
  5,513
  5,758
  6,016
  6,289
Total cash flow (excl. dividends), $m
  271
  3,650
  3,968
  4,283
  4,607
  4,938
  5,277
  5,625
  5,982
  6,349
  6,726
  6,901
  7,303
  7,720
  8,151
  8,599
  9,065
  9,550
  10,055
  10,582
  11,132
  11,706
  12,307
  12,935
  13,593
  14,281
  15,002
  15,758
  16,550
  17,380
  18,250
Retained Cash Flow (-), $m
  732
  -341
  -362
  -386
  -410
  -432
  -455
  -477
  -499
  -521
  -543
  -565
  -588
  -611
  -636
  -660
  -686
  -713
  -742
  -771
  -803
  -835
  -870
  -907
  -945
  -986
  -1,028
  -1,074
  -1,121
  -1,172
  -1,225
Prev. year cash balance distribution, $m
 
  1,869
  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
 
  5,178
  3,605
  3,897
  4,197
  4,506
  4,822
  5,148
  5,483
  5,828
  6,183
  6,336
  6,715
  7,108
  7,516
  7,939
  8,379
  8,837
  9,313
  9,811
  10,329
  10,871
  11,437
  12,029
  12,648
  13,296
  13,974
  14,684
  15,428
  16,208
  17,025
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
 
  4,964
  3,301
  3,392
  3,456
  3,492
  3,500
  3,478
  3,427
  3,348
  3,242
  3,009
  2,866
  2,703
  2,523
  2,331
  2,129
  1,923
  1,715
  1,511
  1,313
  1,124
  949
  788
  644
  517
  408
  315
  239
  177
  128
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

Expedia, Inc. is an online travel company. The Company operates through four segments: Core Online Travel Agencies (Core OTA), trivago, Egencia and HomeAway. The Company's Core OTA segment provides a range of travel and advertising services to its customers across the world, through a range of brands, including Expedia.com and Hotels.com in the United States, and localized Expedia and Hotels.com Websites throughout the world, Orbitz.com, Expedia Affiliate Network, Hotwire.com, Travelocity, Wotif Group, CarRentals.com and Classic Vacations. The Company's trivago segment sends referrals to online travel companies and travel service providers from its hotel metasearch Websites. Its Egencia segment, which also includes Orbitz Worldwide (Orbitz) for Business, provides managed travel services to corporate customers across the world. The Company's HomeAway segment operates an online marketplace for the vacation rental industry.

FINANCIAL RATIOS  of  Expedia (EXPE)

Valuation Ratios
P/E Ratio 55.6
Price to Sales 1.8
Price to Book 3.8
Price to Tangible Book
Price to Cash Flow 10
Price to Free Cash Flow 19.2
Growth Rates
Sales Growth Rate 31.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -4.8%
Cap. Spend. - 3 Yr. Gr. Rate 19.4%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 76.5%
Total Debt to Equity 76.5%
Interest Coverage 3
Management Effectiveness
Return On Assets 2.7%
Ret/ On Assets - 3 Yr. Avg. 5.1%
Return On Total Capital 3.7%
Ret/ On T. Cap. - 3 Yr. Avg. 9.5%
Return On Equity 6.3%
Return On Equity - 3 Yr. Avg. 16.5%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 81.8%
Gross Margin - 3 Yr. Avg. 80.6%
EBITDA Margin 14%
EBITDA Margin - 3 Yr. Avg. 17.5%
Operating Margin 5.1%
Oper. Margin - 3 Yr. Avg. 9.3%
Pre-Tax Margin 3.2%
Pre-Tax Margin - 3 Yr. Avg. 8.4%
Net Profit Margin 3.2%
Net Profit Margin - 3 Yr. Avg. 7.2%
Effective Tax Rate 5.8%
Eff/ Tax Rate - 3 Yr. Avg. 15.8%
Payout Ratio 53.2%

EXPE stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EXPE stock intrinsic value calculation we used $8774 million for the last fiscal year's total revenue generated by Expedia. The default revenue input number comes from 2016 income statement of Expedia. 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 EXPE stock valuation model: a) initial revenue growth rate of 14.9% 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 EXPE is calculated based on our internal credit rating of Expedia, 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 Expedia.
    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 EXPE stock the variable cost ratio is equal to 86.2%.

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 EXPE 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 4.9% for Expedia.

Corporate tax rate of 27% is the nominal tax rate for Expedia. 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 EXPE 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 EXPE are equal to 43.9%.

Life of production assets of 14.9 years is the average useful life of capital assets used in Expedia 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 EXPE is equal to -51.8%. 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 - $4132 million for Expedia - 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 154.379 million for Expedia 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 Expedia at the current share price and the inputted number of shares is $16.1 billion.

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▶ ETFs with exposure to Expedia, Inc. : December 27, 2017   [Dec-27-17 11:14AM  Capital Cube]
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Financial statements of EXPE
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