Intrinsic value of Expedia Group - EXPE

Previous Close

$131.03

  Intrinsic Value

$245.49

stock screener

  Rating & Target

str. buy

+87%

Previous close

$131.03

 
Intrinsic value

$245.49

 
Up/down potential

+87%

 
Rating

str. buy

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.

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 19.9

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   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, %
  14.70
  13.73
  12.86
  12.07
  11.36
  10.73
  10.15
  9.64
  9.18
  8.76
  8.38
  8.04
  7.74
  7.47
  7.22
  7.00
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
Revenue, $m
  11,539
  13,123
  14,810
  16,598
  18,484
  20,467
  22,546
  24,719
  26,987
  29,351
  31,811
  34,370
  37,030
  39,794
  42,667
  45,653
  48,756
  51,982
  55,338
  58,830
  62,466
  66,252
  70,197
  74,311
  78,601
  83,079
  87,753
  92,636
  97,738
  103,071
Variable operating expenses, $m
  9,918
  11,136
  12,432
  13,805
  15,254
  16,778
  18,375
  20,044
  21,787
  23,603
  24,439
  26,405
  28,449
  30,572
  32,779
  35,073
  37,457
  39,936
  42,514
  45,197
  47,990
  50,899
  53,930
  57,090
  60,386
  63,826
  67,417
  71,168
  75,088
  79,185
Fixed operating expenses, $m
  682
  697
  712
  728
  744
  760
  777
  794
  811
  829
  847
  866
  885
  905
  924
  945
  966
  987
  1,009
  1,031
  1,053
  1,077
  1,100
  1,124
  1,149
  1,174
  1,200
  1,227
  1,254
  1,281
Total operating expenses, $m
  10,600
  11,833
  13,144
  14,533
  15,998
  17,538
  19,152
  20,838
  22,598
  24,432
  25,286
  27,271
  29,334
  31,477
  33,703
  36,018
  38,423
  40,923
  43,523
  46,228
  49,043
  51,976
  55,030
  58,214
  61,535
  65,000
  68,617
  72,395
  76,342
  80,466
Operating income, $m
  939
  1,291
  1,666
  2,065
  2,486
  2,929
  3,394
  3,881
  4,389
  4,919
  6,525
  7,099
  7,696
  8,317
  8,963
  9,635
  10,333
  11,060
  11,816
  12,603
  13,422
  14,277
  15,167
  16,096
  17,066
  18,078
  19,136
  20,241
  21,396
  22,605
EBITDA, $m
  3,363
  3,904
  4,480
  5,091
  5,736
  6,415
  7,126
  7,871
  8,649
  9,459
  10,304
  11,182
  12,095
  13,045
  14,032
  15,058
  16,125
  17,235
  18,390
  19,592
  20,843
  22,147
  23,507
  24,925
  26,404
  27,948
  29,561
  31,246
  33,007
  34,850
Interest expense (income), $m
  154
  229
  341
  460
  587
  722
  863
  1,013
  1,169
  1,332
  1,503
  1,680
  1,865
  2,058
  2,258
  2,466
  2,682
  2,906
  3,139
  3,382
  3,634
  3,897
  4,170
  4,455
  4,751
  5,061
  5,383
  5,720
  6,071
  6,438
  6,822
Earnings before tax, $m
  709
  949
  1,206
  1,478
  1,765
  2,066
  2,382
  2,712
  3,057
  3,416
  4,844
  5,233
  5,638
  6,060
  6,498
  6,953
  7,427
  7,920
  8,434
  8,968
  9,526
  10,107
  10,713
  11,345
  12,005
  12,695
  13,416
  14,170
  14,958
  15,783
Tax expense, $m
  191
  256
  326
  399
  476
  558
  643
  732
  825
  922
  1,308
  1,413
  1,522
  1,636
  1,754
  1,877
  2,005
  2,138
  2,277
  2,421
  2,572
  2,729
  2,892
  3,063
  3,241
  3,428
  3,622
  3,826
  4,039
  4,261
Net income, $m
  518
  693
  880
  1,079
  1,288
  1,508
  1,739
  1,980
  2,231
  2,494
  3,536
  3,820
  4,116
  4,424
  4,743
  5,076
  5,422
  5,782
  6,157
  6,547
  6,954
  7,378
  7,820
  8,282
  8,764
  9,267
  9,794
  10,344
  10,919
  11,521

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  21,250
  24,168
  27,275
  30,567
  34,041
  37,693
  41,521
  45,523
  49,700
  54,053
  58,584
  63,296
  68,195
  73,286
  78,577
  84,075
  89,790
  95,732
  101,912
  108,343
  115,038
  122,011
  129,277
  136,852
  144,754
  152,999
  161,608
  170,600
  179,996
  189,818
Adjusted assets (=assets-cash), $m
  21,250
  24,168
  27,275
  30,567
  34,041
  37,693
  41,521
  45,523
  49,700
  54,053
  58,584
  63,296
  68,195
  73,286
  78,577
  84,075
  89,790
  95,732
  101,912
  108,343
  115,038
  122,011
  129,277
  136,852
  144,754
  152,999
  161,608
  170,600
  179,996
  189,818
Revenue / Adjusted assets
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
  0.543
Average production assets, $m
  13,708
  15,590
  17,595
  19,719
  21,959
  24,315
  26,784
  29,366
  32,061
  34,869
  37,791
  40,831
  43,992
  47,276
  50,689
  54,235
  57,922
  61,755
  65,742
  69,890
  74,209
  78,707
  83,394
  88,281
  93,378
  98,697
  104,251
  110,051
  116,113
  122,449
Working capital, $m
  -2,908
  -3,307
  -3,732
  -4,183
  -4,658
  -5,158
  -5,682
  -6,229
  -6,801
  -7,396
  -8,016
  -8,661
  -9,332
  -10,028
  -10,752
  -11,504
  -12,286
  -13,100
  -13,945
  -14,825
  -15,741
  -16,695
  -17,690
  -18,726
  -19,808
  -20,936
  -22,114
  -23,344
  -24,630
  -25,974
Total debt, $m
  6,321
  8,526
  10,875
  13,364
  15,991
  18,751
  21,645
  24,671
  27,829
  31,119
  34,545
  38,107
  41,811
  45,660
  49,659
  53,816
  58,137
  62,629
  67,301
  72,163
  77,224
  82,496
  87,989
  93,716
  99,689
  105,923
  112,431
  119,229
  126,333
  133,758
Total liabilities, $m
  16,065
  18,271
  20,620
  23,109
  25,735
  28,496
  31,390
  34,416
  37,573
  40,864
  44,289
  47,852
  51,555
  55,404
  59,404
  63,561
  67,881
  72,373
  77,046
  81,907
  86,969
  92,240
  97,733
  103,460
  109,434
  115,668
  122,176
  128,974
  136,077
  143,503
Total equity, $m
  5,185
  5,897
  6,655
  7,458
  8,306
  9,197
  10,131
  11,108
  12,127
  13,189
  14,294
  15,444
  16,640
  17,882
  19,173
  20,514
  21,909
  23,359
  24,867
  26,436
  28,069
  29,771
  31,544
  33,392
  35,320
  37,332
  39,432
  41,626
  43,919
  46,316
Total liabilities and equity, $m
  21,250
  24,168
  27,275
  30,567
  34,041
  37,693
  41,521
  45,524
  49,700
  54,053
  58,583
  63,296
  68,195
  73,286
  78,577
  84,075
  89,790
  95,732
  101,913
  108,343
  115,038
  122,011
  129,277
  136,852
  144,754
  153,000
  161,608
  170,600
  179,996
  189,819
Debt-to-equity ratio
  1.220
  1.450
  1.630
  1.790
  1.930
  2.040
  2.140
  2.220
  2.290
  2.360
  2.420
  2.470
  2.510
  2.550
  2.590
  2.620
  2.650
  2.680
  2.710
  2.730
  2.750
  2.770
  2.790
  2.810
  2.820
  2.840
  2.850
  2.860
  2.880
  2.890
Adjusted equity ratio
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244
  0.244

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  518
  693
  880
  1,079
  1,288
  1,508
  1,739
  1,980
  2,231
  2,494
  3,536
  3,820
  4,116
  4,424
  4,743
  5,076
  5,422
  5,782
  6,157
  6,547
  6,954
  7,378
  7,820
  8,282
  8,764
  9,267
  9,794
  10,344
  10,919
  11,521
Depreciation, amort., depletion, $m
  2,425
  2,613
  2,813
  3,026
  3,250
  3,485
  3,732
  3,990
  4,260
  4,541
  3,779
  4,083
  4,399
  4,728
  5,069
  5,424
  5,792
  6,176
  6,574
  6,989
  7,421
  7,871
  8,339
  8,828
  9,338
  9,870
  10,425
  11,005
  11,611
  12,245
Funds from operations, $m
  2,942
  3,306
  3,694
  4,104
  4,538
  4,993
  5,471
  5,970
  6,491
  7,034
  7,315
  7,904
  8,515
  9,151
  9,812
  10,499
  11,214
  11,957
  12,731
  13,536
  14,375
  15,249
  16,160
  17,110
  18,102
  19,137
  20,219
  21,349
  22,530
  23,766
Change in working capital, $m
  -373
  -399
  -425
  -451
  -475
  -500
  -524
  -548
  -572
  -596
  -620
  -645
  -670
  -697
  -724
  -752
  -782
  -813
  -846
  -880
  -916
  -954
  -994
  -1,037
  -1,081
  -1,128
  -1,178
  -1,230
  -1,286
  -1,344
Cash from operations, $m
  3,315
  3,705
  4,119
  4,555
  5,013
  5,493
  5,995
  6,518
  7,063
  7,630
  7,935
  8,548
  9,186
  9,848
  10,536
  11,252
  11,996
  12,770
  13,576
  14,416
  15,291
  16,203
  17,154
  18,147
  19,183
  20,265
  21,397
  22,579
  23,816
  25,110
Maintenance CAPEX, $m
  -1,195
  -1,371
  -1,559
  -1,759
  -1,972
  -2,196
  -2,432
  -2,678
  -2,937
  -3,206
  -3,487
  -3,779
  -4,083
  -4,399
  -4,728
  -5,069
  -5,424
  -5,792
  -6,176
  -6,574
  -6,989
  -7,421
  -7,871
  -8,339
  -8,828
  -9,338
  -9,870
  -10,425
  -11,005
  -11,611
New CAPEX, $m
  -1,760
  -1,882
  -2,004
  -2,124
  -2,241
  -2,356
  -2,469
  -2,582
  -2,695
  -2,808
  -2,923
  -3,040
  -3,160
  -3,284
  -3,413
  -3,547
  -3,687
  -3,833
  -3,987
  -4,149
  -4,319
  -4,498
  -4,687
  -4,887
  -5,097
  -5,319
  -5,553
  -5,801
  -6,061
  -6,336
Cash from investing activities, $m
  -2,955
  -3,253
  -3,563
  -3,883
  -4,213
  -4,552
  -4,901
  -5,260
  -5,632
  -6,014
  -6,410
  -6,819
  -7,243
  -7,683
  -8,141
  -8,616
  -9,111
  -9,625
  -10,163
  -10,723
  -11,308
  -11,919
  -12,558
  -13,226
  -13,925
  -14,657
  -15,423
  -16,226
  -17,066
  -17,947
Free cash flow, $m
  360
  452
  555
  672
  800
  941
  1,094
  1,257
  1,432
  1,616
  1,526
  1,729
  1,942
  2,164
  2,396
  2,636
  2,886
  3,145
  3,414
  3,693
  3,983
  4,284
  4,596
  4,920
  5,258
  5,608
  5,974
  6,354
  6,750
  7,163
Issuance/(repayment) of debt, $m
  2,071
  2,206
  2,349
  2,489
  2,626
  2,761
  2,894
  3,026
  3,158
  3,291
  3,425
  3,563
  3,704
  3,849
  4,000
  4,157
  4,320
  4,492
  4,672
  4,862
  5,061
  5,271
  5,493
  5,727
  5,974
  6,234
  6,508
  6,798
  7,103
  7,426
Issuance/(repurchase) of shares, $m
  145
  19
  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  
  2,216
  2,225
  2,349
  2,489
  2,626
  2,761
  2,894
  3,026
  3,158
  3,291
  3,425
  3,563
  3,704
  3,849
  4,000
  4,157
  4,320
  4,492
  4,672
  4,862
  5,061
  5,271
  5,493
  5,727
  5,974
  6,234
  6,508
  6,798
  7,103
  7,426
Total cash flow (excl. dividends), $m
  2,577
  2,677
  2,904
  3,161
  3,427
  3,702
  3,988
  4,283
  4,589
  4,907
  4,951
  5,292
  5,646
  6,013
  6,395
  6,793
  7,206
  7,637
  8,086
  8,555
  9,044
  9,555
  10,089
  10,647
  11,231
  11,842
  12,482
  13,152
  13,853
  14,588
Retained Cash Flow (-), $m
  -663
  -712
  -758
  -803
  -848
  -891
  -934
  -977
  -1,019
  -1,062
  -1,106
  -1,150
  -1,195
  -1,242
  -1,291
  -1,342
  -1,394
  -1,450
  -1,508
  -1,569
  -1,634
  -1,701
  -1,773
  -1,848
  -1,928
  -2,012
  -2,101
  -2,194
  -2,293
  -2,397
Prev. year cash balance distribution, $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 flow adjustment, $m
  151
  173
  197
  222
  249
  277
  307
  338
  371
  405
  440
  477
  516
  555
  597
  640
  685
  731
  780
  830
  882
  937
  994
  1,053
  1,115
  1,179
  1,246
  1,316
  1,390
  1,466
Cash available for distribution, $m
  1,914
  1,965
  2,146
  2,357
  2,579
  2,811
  3,054
  3,307
  3,570
  3,845
  3,845
  4,142
  4,450
  4,771
  5,104
  5,451
  5,812
  6,187
  6,578
  6,986
  7,411
  7,854
  8,316
  8,799
  9,303
  9,830
  10,381
  10,958
  11,561
  12,192
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
  1,835
  1,799
  1,868
  1,941
  1,999
  2,040
  2,063
  2,067
  2,051
  2,016
  1,826
  1,768
  1,692
  1,602
  1,499
  1,385
  1,265
  1,139
  1,013
  888
  767
  652
  545
  448
  362
  287
  223
  170
  126
  92
Current shareholders' claim on cash, %
  99.3
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2
  99.2

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 Group (EXPE)

Valuation Ratios
P/E Ratio 69.7
Price to Sales 2.2
Price to Book 4.8
Price to Tangible Book
Price to Cash Flow 12.6
Price to Free Cash Flow 24.1
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 $10060 million for the last fiscal year's total revenue generated by Expedia Group. The default revenue input number comes from 2017 income statement of Expedia 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 EXPE stock valuation model: a) initial revenue growth rate of 14.7% 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 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 Expedia 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 EXPE stock the variable cost ratio is equal to 87.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $667 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 5.4% for Expedia Group.

Corporate tax rate of 27% is the nominal tax rate for Expedia 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 EXPE stock is equal to 1.5%.

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 118.8%.

Life of production assets of 10 years is the average useful life of capital assets used in Expedia 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 EXPE is equal to -25.2%. 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 - $4522 million for Expedia 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 152 million for Expedia 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 Expedia Group at the current share price and the inputted number of shares is $19.9 billion.

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