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.
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Estée Lauder Cos. Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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Intrinsic Stock Value (Valuation Summary)
Year | Value | DPSt or Terminal value (TVt) | Calculation | Present value at |
---|---|---|---|---|
0 | DPS01 | |||
1 | DPS1 | = × (1 + ) | ||
2 | DPS2 | = × (1 + ) | ||
3 | DPS3 | = × (1 + ) | ||
4 | DPS4 | = × (1 + ) | ||
5 | DPS5 | = × (1 + ) | ||
5 | Terminal value (TV5) | = × (1 + ) ÷ ( – ) | ||
Intrinsic value of Estée Lauder Cos. Inc. common stock (per share) | ||||
Current share price |
Based on: 10-K (reporting date: 2023-06-30).
1 DPS0 = Sum of the last year dividends per share of Estée Lauder Cos. 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)
Assumptions | ||
Rate of return on LT Treasury Composite1 | RF | |
Expected rate of return on market portfolio2 | E(RM) | |
Systematic risk of Estée Lauder Cos. Inc. common stock | βEL | |
Required rate of return on Estée Lauder Cos. Inc. common stock3 | rEL |
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).
3 rEL = RF + βEL [E(RM) – RF]
= + [ – ]
=
Dividend Growth Rate (g)
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30).
2023 Calculations
1 Retention rate = (Net earnings attributable to The Estée Lauder Companies Inc. – Common stock dividends) ÷ Net earnings attributable to The Estée Lauder Companies Inc.
= ( – ) ÷
=
2 Profit margin = 100 × Net earnings attributable to The Estée Lauder Companies Inc. ÷ Net sales
= 100 × ÷
=
3 Asset turnover = Net sales ÷ Total assets
= ÷
=
4 Financial leverage = Total assets ÷ Stockholders’ equity, The Estée Lauder Companies Inc.
= ÷
=
5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= × × ×
=
Dividend growth rate (g) implied by Gordon growth model
g = 100 × (P0 × r – D0) ÷ (P0 + D0)
= 100 × ( × – ) ÷ ( + )
=
where:
P0 = current price of share of Estée Lauder Cos. Inc. common stock
D0 = the last year dividends per share of Estée Lauder Cos. Inc. common stock
r = required rate of return on Estée Lauder Cos. Inc. common stock
Year | Value | gt |
---|---|---|
1 | g1 | |
2 | g2 | |
3 | g3 | |
4 | g4 | |
5 and thereafter | g5 |
where:
g1 is implied by PRAT model
g5 is implied by Gordon growth model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5
Calculations
g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= + ( – ) × (2 – 1) ÷ (5 – 1)
=
g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= + ( – ) × (3 – 1) ÷ (5 – 1)
=
g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= + ( – ) × (4 – 1) ÷ (5 – 1)
=