DCF Studio

    BKNG · NMS · Consumer Cyclical

    Booking Holdings Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 197.35

    Market price

    USD 167.90

    Implied upside

    +17.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 197.35+17.5%
    Exit multiple
    USD 251.95+50.1%
    Market price
    USD 167.90

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn8bn16bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 31.3bnUSD 36.4bnUSD 42.4bnUSD 49.3bnUSD 57.4bn+16.3%
    EBITUSD 9.7bnUSD 11.2bnUSD 13.1bnUSD 15.2bnUSD 17.7bn+16.3%
    NOPATUSD 7.6bnUSD 8.9bnUSD 10.3bnUSD 12.0bnUSD 14.0bn+16.3%
    Add depreciation & amortisationUSD 992.9mUSD 1.2bnUSD 1.3bnUSD 1.6bnUSD 1.8bn+16.3%
    Less capital expenditureUSD -530.2mUSD -616.8mUSD -717.7mUSD -835.0mUSD -971.5m+16.3%
    Less increase in working capitalUSD 740.8mUSD 861.9mUSD 1.0bnUSD 1.2bnUSD 1.4bn-16.3%
    Free cashflow to firmUSD 8.8bnUSD 10.3bnUSD 12.0bnUSD 13.9bnUSD 16.2bn+16.3%
    Discount factor0.95240.86380.78340.71060.6445-
    Present valueUSD 8.4bnUSD 8.9bnUSD 9.4bnUSD 9.9bnUSD 10.4bn+5.5%
    Present Value Of The ForecastUSD 47.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.046Reported 1.068, pulled toward 1.0 (Blume)
    Cost of equity10.75%Risk-free + beta x equity risk premium
    Cost of debt8.89%Interest expense / average total debt
    Market capitalisationUSD 126.2bn86.7% of capital
    Total debtUSD 19.3bn13.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.25%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 197.35

    71% of EV

    Forecast FCFF, final year
    USD 16.2bn
    Capex at depreciation, working capital in reinvestment
    USD 14.5bn
    Less reinvestment at g/ROIC (5.7% of NOPAT)
    USD -823.6m
    Capitalised
    USD 13.6bn
    ROIC (reported)
    43.9%
    Terminal value, undiscounted
    USD 180.2bn
    Terminal value, discounted
    USD 116.1bn
    Enterprise value
    USD 163.1bn
    Less net debt
    USD 2.1bn
    Equity value
    USD 161.0bn

    Exit at 12.8x EBITDA

    Value per shareUSD 251.95

    77% of EV

    Terminal value, undiscounted
    USD 249.3bn
    Terminal value, discounted
    USD 160.7bn
    Enterprise value
    USD 207.7bn
    Less net debt
    USD 2.1bn
    Equity value
    USD 205.6bn

    Spread between methods: 24%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.25%237.80250.83266.11284.26306.21
    9.25%206.80216.05226.64238.91253.29
    10.25%182.88189.69197.35206.05216.02
    11.25%163.88169.02174.74181.14188.35
    12.25%148.40152.39156.76161.60166.98

    Outlined: this model. Green text: above today's price of 167.90. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year16.3%12.4%-4.0pp
    EBIT margin30.9%26.0%-4.8pp
    Discount rate10.3%11.6%+1.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.