Intrinsic value of Hilton Worldwide Holdings Inc. - HLT

Previous Close

$93.74

  Intrinsic Value

$78.64

stock screener

  Rating & Target

hold

-16%

Previous close

$93.74

 
Intrinsic value

$78.64

 
Up/down potential

-16%

 
Rating

hold

We calculate the intrinsic value of HLT 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 0001), $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 27.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
Revenue, $m
  9,850
  10,839
  11,873
  12,951
  14,074
  15,243
  16,459
  17,723
  19,036
  20,401
  21,820
  23,294
  24,827
  26,422
  28,082
  29,809
  31,609
  33,485
  35,441
  37,481
  39,610
  41,833
  44,156
  46,582
  49,120
  51,773
  54,549
  57,454
  60,495
  63,680
Variable operating expenses, $m
  5,918
  6,399
  6,901
  7,425
  7,971
  8,539
  9,130
  9,744
  10,382
  11,045
  10,603
  11,320
  12,065
  12,839
  13,646
  14,486
  15,360
  16,272
  17,222
  18,213
  19,248
  20,328
  21,457
  22,636
  23,869
  25,159
  26,508
  27,919
  29,397
  30,944
Fixed operating expenses, $m
  2,104
  2,151
  2,198
  2,246
  2,296
  2,346
  2,398
  2,451
  2,504
  2,560
  2,616
  2,673
  2,732
  2,792
  2,854
  2,917
  2,981
  3,046
  3,113
  3,182
  3,252
  3,323
  3,396
  3,471
  3,548
  3,626
  3,705
  3,787
  3,870
  3,955
Total operating expenses, $m
  8,022
  8,550
  9,099
  9,671
  10,267
  10,885
  11,528
  12,195
  12,886
  13,605
  13,219
  13,993
  14,797
  15,631
  16,500
  17,403
  18,341
  19,318
  20,335
  21,395
  22,500
  23,651
  24,853
  26,107
  27,417
  28,785
  30,213
  31,706
  33,267
  34,899
Operating income, $m
  1,828
  2,290
  2,774
  3,280
  3,808
  4,358
  4,932
  5,529
  6,150
  6,796
  8,601
  9,301
  10,030
  10,790
  11,582
  12,407
  13,268
  14,167
  15,105
  16,086
  17,110
  18,181
  19,302
  20,475
  21,703
  22,989
  24,336
  25,748
  27,228
  28,780
EBITDA, $m
  3,182
  3,667
  4,174
  4,705
  5,258
  5,835
  6,436
  7,062
  7,713
  8,390
  9,095
  9,829
  10,593
  11,389
  12,218
  13,083
  13,985
  14,926
  15,909
  16,935
  18,008
  19,130
  20,303
  21,531
  22,816
  24,162
  25,573
  27,050
  28,599
  30,223
Interest expense (income), $m
  478
  393
  420
  496
  574
  657
  743
  832
  925
  1,022
  1,122
  1,226
  1,335
  1,447
  1,564
  1,686
  1,813
  1,945
  2,083
  2,226
  2,375
  2,531
  2,694
  2,864
  3,041
  3,227
  3,421
  3,623
  3,836
  4,058
  4,290
Earnings before tax, $m
  1,434
  1,870
  2,278
  2,705
  3,151
  3,616
  4,100
  4,604
  5,128
  5,674
  7,375
  7,967
  8,583
  9,226
  9,896
  10,594
  11,323
  12,084
  12,879
  13,710
  14,579
  15,487
  16,438
  17,434
  18,476
  19,568
  20,713
  21,912
  23,170
  24,490
Tax expense, $m
  387
  505
  615
  730
  851
  976
  1,107
  1,243
  1,385
  1,532
  1,991
  2,151
  2,317
  2,491
  2,672
  2,860
  3,057
  3,263
  3,477
  3,702
  3,936
  4,182
  4,438
  4,707
  4,989
  5,283
  5,592
  5,916
  6,256
  6,612
Net income, $m
  1,047
  1,365
  1,663
  1,975
  2,300
  2,639
  2,993
  3,361
  3,744
  4,142
  5,383
  5,816
  6,266
  6,735
  7,224
  7,734
  8,266
  8,822
  9,402
  10,008
  10,642
  11,306
  12,000
  12,727
  13,488
  14,285
  15,120
  15,996
  16,914
  17,878

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
  15,487
  17,042
  18,668
  20,363
  22,129
  23,968
  25,879
  27,866
  29,931
  32,077
  34,308
  36,626
  39,037
  41,544
  44,153
  46,870
  49,700
  52,649
  55,724
  58,932
  62,280
  65,775
  69,427
  73,243
  77,232
  81,404
  85,769
  90,337
  95,118
  100,125
Adjusted assets (=assets-cash), $m
  15,487
  17,042
  18,668
  20,363
  22,129
  23,968
  25,879
  27,866
  29,931
  32,077
  34,308
  36,626
  39,037
  41,544
  44,153
  46,870
  49,700
  52,649
  55,724
  58,932
  62,280
  65,775
  69,427
  73,243
  77,232
  81,404
  85,769
  90,337
  95,118
  100,125
Revenue / Adjusted assets
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
  0.636
Average production assets, $m
  6,698
  7,371
  8,073
  8,807
  9,571
  10,366
  11,192
  12,052
  12,945
  13,873
  14,837
  15,840
  16,883
  17,967
  19,095
  20,270
  21,494
  22,770
  24,100
  25,487
  26,935
  28,447
  30,026
  31,676
  33,401
  35,206
  37,093
  39,069
  41,137
  43,302
Working capital, $m
  -1,221
  -1,344
  -1,472
  -1,606
  -1,745
  -1,890
  -2,041
  -2,198
  -2,361
  -2,530
  -2,706
  -2,888
  -3,079
  -3,276
  -3,482
  -3,696
  -3,920
  -4,152
  -4,395
  -4,648
  -4,912
  -5,187
  -5,475
  -5,776
  -6,091
  -6,420
  -6,764
  -7,124
  -7,501
  -7,896
Total debt, $m
  7,777
  9,176
  10,639
  12,165
  13,754
  15,409
  17,129
  18,918
  20,776
  22,708
  24,715
  26,801
  28,971
  31,228
  33,576
  36,021
  38,568
  41,222
  43,990
  46,877
  49,890
  53,036
  56,322
  59,757
  63,347
  67,102
  71,030
  75,141
  79,444
  83,951
Total liabilities, $m
  13,939
  15,338
  16,801
  18,327
  19,916
  21,571
  23,291
  25,080
  26,938
  28,870
  30,877
  32,963
  35,133
  37,390
  39,738
  42,183
  44,730
  47,384
  50,152
  53,039
  56,052
  59,198
  62,484
  65,919
  69,509
  73,264
  77,192
  81,303
  85,606
  90,113
Total equity, $m
  1,549
  1,704
  1,867
  2,036
  2,213
  2,397
  2,588
  2,787
  2,993
  3,208
  3,431
  3,663
  3,904
  4,154
  4,415
  4,687
  4,970
  5,265
  5,572
  5,893
  6,228
  6,578
  6,943
  7,324
  7,723
  8,140
  8,577
  9,034
  9,512
  10,013
Total liabilities and equity, $m
  15,488
  17,042
  18,668
  20,363
  22,129
  23,968
  25,879
  27,867
  29,931
  32,078
  34,308
  36,626
  39,037
  41,544
  44,153
  46,870
  49,700
  52,649
  55,724
  58,932
  62,280
  65,776
  69,427
  73,243
  77,232
  81,404
  85,769
  90,337
  95,118
  100,126
Debt-to-equity ratio
  5.020
  5.380
  5.700
  5.970
  6.220
  6.430
  6.620
  6.790
  6.940
  7.080
  7.200
  7.320
  7.420
  7.520
  7.600
  7.690
  7.760
  7.830
  7.890
  7.950
  8.010
  8.060
  8.110
  8.160
  8.200
  8.240
  8.280
  8.320
  8.350
  8.380
Adjusted equity ratio
  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
  1,047
  1,365
  1,663
  1,975
  2,300
  2,639
  2,993
  3,361
  3,744
  4,142
  5,383
  5,816
  6,266
  6,735
  7,224
  7,734
  8,266
  8,822
  9,402
  10,008
  10,642
  11,306
  12,000
  12,727
  13,488
  14,285
  15,120
  15,996
  16,914
  17,878
Depreciation, amort., depletion, $m
  1,355
  1,377
  1,401
  1,425
  1,451
  1,477
  1,505
  1,533
  1,563
  1,594
  495
  528
  563
  599
  637
  676
  716
  759
  803
  850
  898
  948
  1,001
  1,056
  1,113
  1,174
  1,236
  1,302
  1,371
  1,443
Funds from operations, $m
  2,402
  2,742
  3,064
  3,400
  3,751
  4,116
  4,497
  4,894
  5,307
  5,736
  5,878
  6,344
  6,828
  7,334
  7,860
  8,409
  8,982
  9,581
  10,205
  10,858
  11,540
  12,254
  13,001
  13,782
  14,601
  15,458
  16,357
  17,298
  18,286
  19,321
Change in working capital, $m
  -117
  -123
  -128
  -134
  -139
  -145
  -151
  -157
  -163
  -169
  -176
  -183
  -190
  -198
  -206
  -214
  -223
  -233
  -243
  -253
  -264
  -276
  -288
  -301
  -315
  -329
  -344
  -360
  -377
  -395
Cash from operations, $m
  2,519
  2,865
  3,192
  3,534
  3,890
  4,261
  4,648
  5,051
  5,470
  5,906
  6,054
  6,526
  7,019
  7,531
  8,066
  8,624
  9,206
  9,813
  10,448
  11,111
  11,804
  12,530
  13,289
  14,083
  14,916
  15,787
  16,701
  17,659
  18,663
  19,716
Maintenance CAPEX, $m
  -202
  -223
  -246
  -269
  -294
  -319
  -346
  -373
  -402
  -431
  -462
  -495
  -528
  -563
  -599
  -637
  -676
  -716
  -759
  -803
  -850
  -898
  -948
  -1,001
  -1,056
  -1,113
  -1,174
  -1,236
  -1,302
  -1,371
New CAPEX, $m
  -643
  -672
  -703
  -733
  -764
  -795
  -827
  -859
  -893
  -928
  -965
  -1,003
  -1,043
  -1,084
  -1,129
  -1,175
  -1,224
  -1,275
  -1,330
  -1,387
  -1,448
  -1,512
  -1,579
  -1,650
  -1,725
  -1,804
  -1,888
  -1,975
  -2,068
  -2,165
Cash from investing activities, $m
  -845
  -895
  -949
  -1,002
  -1,058
  -1,114
  -1,173
  -1,232
  -1,295
  -1,359
  -1,427
  -1,498
  -1,571
  -1,647
  -1,728
  -1,812
  -1,900
  -1,991
  -2,089
  -2,190
  -2,298
  -2,410
  -2,527
  -2,651
  -2,781
  -2,917
  -3,062
  -3,211
  -3,370
  -3,536
Free cash flow, $m
  1,675
  1,969
  2,243
  2,531
  2,833
  3,147
  3,476
  3,818
  4,175
  4,546
  4,627
  5,029
  5,448
  5,884
  6,339
  6,812
  7,306
  7,821
  8,359
  8,920
  9,507
  10,120
  10,761
  11,432
  12,134
  12,870
  13,640
  14,447
  15,292
  16,179
Issuance/(repayment) of debt, $m
  495
  1,399
  1,463
  1,526
  1,590
  1,654
  1,721
  1,788
  1,859
  1,931
  2,007
  2,086
  2,170
  2,257
  2,348
  2,445
  2,547
  2,654
  2,767
  2,887
  3,013
  3,146
  3,286
  3,434
  3,590
  3,755
  3,928
  4,111
  4,303
  4,506
Issuance/(repurchase) of shares, $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 from financing (excl. dividends), $m  
  495
  1,399
  1,463
  1,526
  1,590
  1,654
  1,721
  1,788
  1,859
  1,931
  2,007
  2,086
  2,170
  2,257
  2,348
  2,445
  2,547
  2,654
  2,767
  2,887
  3,013
  3,146
  3,286
  3,434
  3,590
  3,755
  3,928
  4,111
  4,303
  4,506
Total cash flow (excl. dividends), $m
  2,169
  3,369
  3,706
  4,057
  4,422
  4,802
  5,196
  5,607
  6,033
  6,477
  6,634
  7,116
  7,618
  8,141
  8,687
  9,257
  9,853
  10,475
  11,126
  11,807
  12,520
  13,266
  14,048
  14,866
  15,725
  16,624
  17,568
  18,558
  19,596
  20,685
Retained Cash Flow (-), $m
  -998
  -155
  -163
  -170
  -177
  -184
  -191
  -199
  -207
  -215
  -223
  -232
  -241
  -251
  -261
  -272
  -283
  -295
  -307
  -321
  -335
  -350
  -365
  -382
  -399
  -417
  -436
  -457
  -478
  -501
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
  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
  1,172
  3,213
  3,544
  3,888
  4,246
  4,618
  5,005
  5,408
  5,827
  6,263
  6,411
  6,884
  7,377
  7,890
  8,426
  8,986
  9,570
  10,181
  10,819
  11,487
  12,185
  12,917
  13,682
  14,485
  15,326
  16,207
  17,132
  18,101
  19,118
  20,185
Discount rate, %
  11.50
  12.08
  12.68
  13.31
  13.98
  14.68
  15.41
  16.18
  16.99
  17.84
  18.73
  19.67
  20.65
  21.68
  22.77
  23.91
  25.10
  26.36
  27.68
  29.06
  30.51
  32.04
  33.64
  35.32
  37.09
  38.94
  40.89
  42.93
  45.08
  47.34
PV of cash for distribution, $m
  1,051
  2,558
  2,477
  2,358
  2,207
  2,030
  1,835
  1,629
  1,419
  1,213
  970
  798
  643
  506
  388
  291
  212
  151
  104
  70
  45
  29
  17
  10
  6
  3
  2
  1
  0
  0
Current shareholders' claim on cash, %
  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

Hilton Worldwide Holdings Inc. is a hospitality company. The Company is engaged in owning, leasing, managing and franchising hotels and resorts. The Company's segments include ownership, and management and franchise. Its global portfolio of owned and leased properties includes a range of hotels in gateway cities, such as New York City, London, San Francisco, Chicago, Sao Paolo and Tokyo. The Company's management and franchise segment manages hotels and licenses its brands to franchisees. Its brand portfolio includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio-A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton. As of December 31, 2016, the Company owned, leased, managed or franchised 4,875 hotel and resort properties, totaling 796,440 rooms in 104 countries and territories.

FINANCIAL RATIOS  of  Hilton Worldwide Holdings Inc. (HLT)

Valuation Ratios
P/E Ratio 88.7
Price to Sales 2.6
Price to Book 5.2
Price to Tangible Book
Price to Cash Flow 22.9
Price to Free Cash Flow 34.4
Growth Rates
Sales Growth Rate 3.5%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.8%
Cap. Spend. - 3 Yr. Gr. Rate 3.8%
Financial Strength
Quick Ratio 32
Current Ratio 0.6
LT Debt to Equity 111.6%
Total Debt to Equity 112.2%
Interest Coverage 4
Management Effectiveness
Return On Assets 1.9%
Ret/ On Assets - 3 Yr. Avg. 4.3%
Return On Total Capital 2.4%
Ret/ On T. Cap. - 3 Yr. Avg. 5%
Return On Equity 5.9%
Return On Equity - 3 Yr. Avg. 15.6%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 61.9%
Gross Margin - 3 Yr. Avg. 63.4%
EBITDA Margin 20.7%
EBITDA Margin - 3 Yr. Avg. 22.1%
Operating Margin 15.7%
Oper. Margin - 3 Yr. Avg. 16.8%
Pre-Tax Margin 10.8%
Pre-Tax Margin - 3 Yr. Avg. 11.7%
Net Profit Margin 3%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 71%
Eff/ Tax Rate - 3 Yr. Avg. 39%
Payout Ratio 79.6%

HLT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the HLT stock intrinsic value calculation we used $8906 million for the last fiscal year's total revenue generated by Hilton Worldwide Holdings Inc.. The default revenue input number comes from 0001 income statement of Hilton Worldwide Holdings Inc.. 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 HLT stock valuation model: a) initial revenue growth rate of 10.6% 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 11.5%, whose default value for HLT is calculated based on our internal credit rating of Hilton Worldwide Holdings Inc., 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 Hilton Worldwide Holdings Inc..
    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 HLT stock the variable cost ratio is equal to 61.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $2059 million in the base year in the intrinsic value calculation for HLT 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 Hilton Worldwide Holdings Inc..

Corporate tax rate of 27% is the nominal tax rate for Hilton Worldwide Holdings Inc.. 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 HLT 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 HLT are equal to 68%.

Life of production assets of 36.2 years is the average useful life of capital assets used in Hilton Worldwide Holdings Inc. 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 HLT is equal to -12.4%. 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 - $551 million for Hilton Worldwide Holdings Inc. - 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 292.794 million for Hilton Worldwide Holdings Inc. 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 Hilton Worldwide Holdings Inc. at the current share price and the inputted number of shares is $27.4 billion.

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