DCF Studio

    EXPE · NMS · Consumer Cyclical

    Expedia Group, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 191.85

    Market price

    USD 279.35

    Implied upside

    -31.3%

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

    Value Per Share

    Perpetuity growth
    USD 191.85-31.3%
    Exit multiple
    USD 293.09+4.9%
    Market price
    USD 279.35

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 15.9bnUSD 17.2bnUSD 18.6bnUSD 20.1bnUSD 21.7bn+8.1%
    EBITUSD 2.0bnUSD 2.1bnUSD 2.3bnUSD 2.5bnUSD 2.7bn+8.1%
    NOPATUSD 1.5bnUSD 1.7bnUSD 1.8bnUSD 1.9bnUSD 2.1bn+8.1%
    Add depreciation & amortisationUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.4bn+8.1%
    Less capital expenditureUSD -916.1mUSD -990.2mUSD -1.1bnUSD -1.2bnUSD -1.3bn+8.1%
    Less increase in working capitalUSD 586.0mUSD 633.4mUSD 684.6mUSD 740.0mUSD 799.9m-8.1%
    Free cashflow to firmUSD 2.2bnUSD 2.4bnUSD 2.6bnUSD 2.8bnUSD 3.0bn+8.1%
    Discount factor0.95250.86420.78410.71140.6454-
    Present valueUSD 2.1bnUSD 2.1bnUSD 2.0bnUSD 2.0bnUSD 2.0bn-1.9%
    Present Value Of The ForecastUSD 10.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.167Reported 1.250, pulled toward 1.0 (Blume)
    Cost of equity11.42%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 33.5bn83.9% of capital
    Total debtUSD 6.4bn16.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.22%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 191.85

    61% of EV

    Forecast FCFF, final year
    USD 3.0bn
    Capex at depreciation, working capital in reinvestment
    USD 2.2bn
    Less reinvestment at g/ROIC (15.4% of NOPAT)
    USD -337.1m
    Capitalised
    USD 1.8bn
    ROIC (reported)
    16.2%
    Terminal value, undiscounted
    USD 24.5bn
    Terminal value, discounted
    USD 15.8bn
    Enterprise value
    USD 26.0bn
    Less net debt
    USD 682.0m
    Equity value
    USD 25.3bn

    Exit at 11.2x EBITDA

    Value per shareUSD 293.09

    74% of EV

    Terminal value, undiscounted
    USD 45.2bn
    Terminal value, discounted
    USD 29.2bn
    Enterprise value
    USD 39.4bn
    Less net debt
    USD 682.0m
    Equity value
    USD 38.7bn

    Spread between methods: 42%.

    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%
    8.22%234.50242.27251.34262.07275.01
    9.22%206.44211.50217.25223.87231.60
    10.22%184.72188.09191.85196.09200.91
    11.22%167.38169.66172.16174.93178.02
    12.22%153.19154.74156.42158.25160.24

    Outlined: this model. Green text: above today's price of 279.35. 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 year8.1%15.8%+7.7pp
    EBIT margin12.3%18.6%+6.3pp
    Discount rate10.2%7.6%-2.6pp
    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.