Stock Analysis on Net

Booking Holdings Inc. (NASDAQ:BKNG)

Dividend Discount Model (DDM)

Microsoft Excel

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Dividends are the cleanest and most straightforward measure of cash flow because these are clearly cash flows that go directly to the investor.


Intrinsic Stock Value (Valuation Summary)

Booking Holdings Inc., dividends per share (DPS) forecast

US$

Microsoft Excel
Year Value DPSt or Terminal value (TVt) Calculation Present value at 19.08%
0 DPS01 35.00
1 DPS1 53.43 = 35.00 × (1 + 52.65%) 44.87
2 DPS2 76.95 = 53.43 × (1 + 44.03%) 54.27
3 DPS3 104.20 = 76.95 × (1 + 35.42%) 61.72
4 DPS4 132.13 = 104.20 × (1 + 26.80%) 65.72
5 DPS5 156.15 = 132.13 × (1 + 18.18%) 65.23
5 Terminal value (TV5) 20,675.89 = 156.15 × (1 + 18.18%) ÷ (19.08%18.18%) 8,636.49
Intrinsic value of Booking Holdings Inc. common stock (per share) $8,928.29
Current share price $4,634.24

Based on: 10-K (reporting date: 2024-12-31).

1 DPS0 = Sum of the last year dividends per share of Booking Holdings Inc. common stock. See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.


Required Rate of Return (r)

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.64%
Expected rate of return on market portfolio2 E(RM) 14.89%
Systematic risk of Booking Holdings Inc. common stock βBKNG 1.41
 
Required rate of return on Booking Holdings Inc. common stock3 rBKNG 19.08%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rBKNG = RF + βBKNG [E(RM) – RF]
= 4.64% + 1.41 [14.89%4.64%]
= 19.08%


Dividend Growth Rate (g)

Dividend growth rate (g) implied by PRAT model

Booking Holdings Inc., PRAT model

Microsoft Excel
Average Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Dividends 1,187
Net income 5,882 4,289 3,058 1,165 59
Revenues 23,739 21,365 17,090 10,958 6,796
Total assets 27,708 24,342 25,361 23,641 21,874
Stockholders’ equity (deficit) (4,020) (2,744) 2,782 6,178 4,893
Financial Ratios
Retention rate1 0.80 1.00 1.00 1.00 1.00
Profit margin2 24.78% 20.07% 17.89% 10.63% 0.87%
Asset turnover3 0.86 0.88 0.67 0.46 0.31
Financial leverage4 9.12 3.83 4.47
Averages
Retention rate 0.96
Profit margin 14.85%
Asset turnover 0.64
Financial leverage 5.80
 
Dividend growth rate (g)5 52.65%

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

2024 Calculations

1 Retention rate = (Net income – Dividends) ÷ Net income
= (5,8821,187) ÷ 5,882
= 0.80

2 Profit margin = 100 × Net income ÷ Revenues
= 100 × 5,882 ÷ 23,739
= 24.78%

3 Asset turnover = Revenues ÷ Total assets
= 23,739 ÷ 27,708
= 0.86

4 Financial leverage = Total assets ÷ Stockholders’ equity (deficit)
= 27,708 ÷ -4,020
=

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.96 × 14.85% × 0.64 × 5.80
= 52.65%


Dividend growth rate (g) implied by Gordon growth model

g = 100 × (P0 × rD0) ÷ (P0 + D0)
= 100 × ($4,634.24 × 19.08%$35.00) ÷ ($4,634.24 + $35.00)
= 18.18%

where:
P0 = current price of share of Booking Holdings Inc. common stock
D0 = the last year dividends per share of Booking Holdings Inc. common stock
r = required rate of return on Booking Holdings Inc. common stock


Dividend growth rate (g) forecast

Booking Holdings Inc., H-model

Microsoft Excel
Year Value gt
1 g1 52.65%
2 g2 44.03%
3 g3 35.42%
4 g4 26.80%
5 and thereafter g5 18.18%

where:
g1 is implied by PRAT model
g5 is implied by Gordon growth model
g2, g3 and g4 are calculated using linear interpolation between g1 and g5

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= 52.65% + (18.18%52.65%) × (2 – 1) ÷ (5 – 1)
= 44.03%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 52.65% + (18.18%52.65%) × (3 – 1) ÷ (5 – 1)
= 35.42%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 52.65% + (18.18%52.65%) × (4 – 1) ÷ (5 – 1)
= 26.80%