Stock Analysis on Net
Stock Analysis on Net

Hilton Worldwide Holdings Inc. (NYSE:HLT)

This company has been moved to the archive! The financial data has not been updated since August 7, 2024.

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Hilton Worldwide Holdings Inc., free cash flow to equity (FCFE) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFEt or Terminal value (TVt) Calculation Present value at 16.35%
01 FCFE0 2,105
1 FCFE1 2,105 = 2,105 × (1 + 0.00%) 1,809
2 FCFE2 2,105 = 2,105 × (1 + 0.00%) 1,555
3 FCFE3 2,105 = 2,105 × (1 + 0.00%) 1,336
4 FCFE4 2,105 = 2,105 × (1 + 0.00%) 1,149
5 FCFE5 2,105 = 2,105 × (1 + 0.00%) 987
5 Terminal value (TV5) 12,875 = 2,105 × (1 + 0.00%) ÷ (16.35% – 0.00%) 6,039
Intrinsic value of Hilton Worldwide Holdings Inc. common stock 12,875
 
Intrinsic value of Hilton Worldwide Holdings Inc. common stock (per share) $52.25
Current share price $203.52

Based on: 10-K (reporting date: 2023-12-31).

1 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)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.30%
Expected rate of return on market portfolio2 E(RM) 13.81%
Systematic risk of Hilton Worldwide Holdings Inc. common stock βHLT 1.27
 
Required rate of return on Hilton Worldwide Holdings Inc. common stock3 rHLT 16.35%

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 rHLT = RF + βHLT [E(RM) – RF]
= 4.30% + 1.27 [13.81% – 4.30%]
= 16.35%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Hilton Worldwide Holdings Inc., PRAT model

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Average Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Dividends 158 123 — 42 173
Net income (loss) attributable to Hilton stockholders 1,141 1,255 410 (715) 881
Revenues 10,235 8,773 5,788 4,307 9,452
Total assets 15,401 15,512 15,441 16,755 14,957
Total Hilton stockholders’ deficit (2,360) (1,102) (821) (1,490) (482)
Financial Ratios
Retention rate1 0.86 0.90 1.00 — 0.80
Profit margin2 11.15% 14.31% 7.08% -16.60% 9.32%
Asset turnover3 0.66 0.57 0.37 0.26 0.63
Financial leverage4 — — — — —
Averages
Retention rate 0.89
Profit margin 5.05%
Asset turnover 0.50
Financial leverage —
 
FCFE growth rate (g)5 0.00%

Based on: 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), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Retention rate = (Net income (loss) attributable to Hilton stockholders – Dividends) ÷ Net income (loss) attributable to Hilton stockholders
= (1,141 – 158) ÷ 1,141
= 0.86

2 Profit margin = 100 × Net income (loss) attributable to Hilton stockholders ÷ Revenues
= 100 × 1,141 ÷ 10,235
= 11.15%

3 Asset turnover = Revenues ÷ Total assets
= 10,235 ÷ 15,401
= 0.66

4 Financial leverage = Total assets ÷ Total Hilton stockholders’ deficit
= 15,401 ÷ -2,360
= —

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.89 × 5.05% × 0.50 × —
= 0.00%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (50,153 × 16.35% – 2,105) ÷ (50,153 + 2,105)
= 0.00%

where:
Equity market value0 = current market value of Hilton Worldwide Holdings Inc. common stock (US$ in millions)
FCFE0 = the last year Hilton Worldwide Holdings Inc. free cash flow to equity (US$ in millions)
r = required rate of return on Hilton Worldwide Holdings Inc. common stock

FCFE growth rate (g) forecast

Hilton Worldwide Holdings Inc., H-model

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Year Value gt
1 g1 0.00%
2 g2 0.00%
3 g3 0.00%
4 g4 0.00%
5 and thereafter g5 0.00%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (2 – 1) ÷ (5 – 1)
= 0.00%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (3 – 1) ÷ (5 – 1)
= 0.00%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 0.00% + (0.00% – 0.00%) × (4 – 1) ÷ (5 – 1)
= 0.00%