How do you find the intrinsic value of a stock?
To get the intrinsic value per share, we divide this by the total number of shares outstanding. This results in an intrinsic value estimate of $80.11. Relative to the current share price of $78.87, the company appears about fair value at a 1.5% discount to where the stock price trades currently.
What is fair value&intrinsic value of a stock?
Detailed Lesson on How to Calculate the Fair Value & Intrinsic Value of a Stock & Formula + Download Our Free Intrinsic Value Excel Calculator The Intrinsic Value or Fair Value of a stock estimates a stock’s value without regard for the stock market’s valuation.
How do you determine the value of Nike Inc?
To determine the intrinsic value of Nike we’ll begin by looking at the company’s history of free cash flow. A company’s free cash flow is the true earnings which management can either reinvest for growth or distribute back to shareholders in the form of dividends and share buybacks.
What is the current price of Nike stock?
The company’s common stock has fluctuated between a low of $49 and a high of $60 over the past 52 weeks and currently stands at $53. Is Nike undervalued at the current price?
What is a company's 10k?
What Is a 10-K? A 10-K is a comprehensive report filed annually by a publicly-traded company about its financial performance and is required by the U.S. Securities and Exchange Commission (SEC).
What depreciation method does Nike use?
Nike uses FIFO. Nike reports property, plant, and equipment on its balance sheet and discloses the amount of depreciation for each year in its statement of cash flows.
What was Nike's return on total assets for 2021?
Compare NKE With Other StocksNIKE ROA - Return on Assets Historical DataDateTTM Net IncomeReturn on Assets2021-11-30$6.17B16.37%2021-08-31$6.08B16.59%2021-05-31$5.73B16.13%48 more rows
How does Nike define cash equivalents?
Cash Equivalents are balance sheet items that are typically reported using currency printed on notes.
What type of inventory method does Nike use?
Inventories are valued on a Ñrst-in, Ñrst-out (FIFO) basis. During the year ended May 31, 1999, the Company changed its method of determining cost for substantially all of its U.S. inventories from last-in, Ñrst-out (LIFO) to FIFO.
How does Nike manage its finances?
Nike shows the ability to generate revenue at healthy rates while keeping debt to a minimum and maximizing shareholder wealth. They pay their shareholders well through a Stable Dividend Policy as well as reinvesting capital back towards the company to expand its assets.
What was NIKE's return on equity ROE for 2021?
Compare NKE With Other StocksNIKE ROE - Return on Equity Historical DataDateTTM Net IncomeReturn on Equity2021-11-30$6.17B45.73%2021-08-31$6.08B48.98%2021-05-31$5.73B51.41%48 more rows
What is NIKE's current ratio?
NIKE's latest twelve months current ratio is 2.6x. NIKE's current ratio for fiscal years ending May 2018 to 2022 averaged 2.5x. NIKE's operated at median current ratio of 2.5x from fiscal years ending May 2018 to 2022. Looking back at the last five years, NIKE's current ratio peaked in May 2021 at 2.7x.
What is NIKE current financial situation?
BEAVERTON, Ore. --(BUSINESS WIRE)-- NIKE, Inc. (NYSE:NKE) today reported fiscal 2022 financial results for its third quarter ended February 28, 2022. NIKE Direct sales were $4.6 billion, up 15 percent on a reported basis and up 17 percent on a currency-neutral basis.
What are NIKE's total assets?
31.34 billion USD (2020)Nike / Total assets
How much does NIKE have in cash?
NIKE cash on hand for the quarter ending May 31, 2022 was $13.467B, a 7.5% increase year-over-year. NIKE cash on hand for 2021 was $13.476B, a 53.36% increase from 2020. NIKE cash on hand for 2020 was $8.787B, a 88.44% increase from 2019.
Where does most of NIKE's cash come from?
Most of Nike's sales are generated by selling footwear to wholesale customers in North America.
What are Nike's intangible assets?
NIKE goodwill and intangible assets for 2021 were $0.511B, a 2.82% increase from 2020. NIKE goodwill and intangible assets for 2020 were $0.497B, a 13.73% increase from 2019....Compare NKE With Other Stocks.NIKE Annual Goodwill and Intangible Assets (Millions of US $)2019$4372018$4392017$4222016$4129 more rows
What are Nike's tangible assets?
Nike's average total tangible assets for the quarter that ended in Feb. 2022 was $38,206 Mil. Therefore, Nike's annualized Return-on-Tangible-Asset for the quarter that ended in Feb. 2022 was 14.62%.
What assets does Nike have?
NIKE total assets for the quarter ending May 31, 2022 were $38.577B, a 6.61% increase year-over-year. NIKE total assets for 2021 were $37.74B, a 20.41% increase from 2020....Compare NKE With Other Stocks.NIKE Annual Total Assets (Millions of US $)2021$37,7402020$31,3422019$23,7172018$22,5369 more rows
What is straight line depreciation?
Straight line depreciation is a common method of depreciation where the value of a fixed asset is reduced over its useful life. It's used to reduce the carrying amount of a fixed asset over its useful life. With straight line depreciation, an asset's cost is depreciated the same amount for each accounting period.
Nike Intrinsic Value: Projected FCF Calculation
Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.
Nike Intrinsic Value: Projected FCF Related Terms
Thank you for viewing the detailed overview of Nike's Intrinsic Value: Projected FCF provided by GuruFocus.com. Please click on the following links to see related term pages.
Nike Business Description
Nike is the largest athletic footwear and apparel brand in the world. It designs, develops, and markets athletic apparel, footwear, equipment, and accessories in six major categories: running, basketball, soccer, training, sportswear, and Jordan. Footwear generates about two thirds of its sales.
What is WACC in Nike?
The WACC is the required return on the firm’s assets. It’s important to note that the WACC is the appropriate discount rate to use because this analysis calculates the free cash flow available to Nike’s bondholders and common shareholders.
What is equity waterfall?
An equity waterfall is a term often used by valuation firms, referring to the trickle-down process of computing a company’s equity value from its enterprise value. Note that in the event of a bankruptcy, debt holders will be paid in full before anything is distributed to common shareholders.
Does Nike need to tie up working capital?
As a company grows, it typically needs to tie up more cash in working capital to manage its day-to-day operations effectively . The model accounts for the impact of this investment by first estimating Nike’s net working capital (NWC) as a percentage of revenue and then deducting year-over-year increases from free cash flow.
What is enterprise value?
The enterprise value previously calculated is a measure of the company’s total value. An equity waterfall is a term often used by valuation firms, referring to the trickle-down process of computing a company’s equity value from its enterprise value. Note that in the event of a bankruptcy, debt holders will be paid in full before anything is distributed to common shareholders. Therefore, we must subtract debt and other financial obligations to determine a firm’s equity value. The general formula for calculating equity value is illustrated in the figure below.
Does Nike need to tie up working capital?
As a company grows, it typically needs to tie up more cash in working capital to manage its day-to-day operations effectively . The model accounts for the impact of this investment by first estimating Nike’s net working capital (NWC) as a percentage of revenue and then deducting year-over-year increases from free cash flow.
Why does Nike charge a premium?
Whilst alternative products are available from competing firms Nike can charge a premium for its products due to its powerful brand and celebrity/sports star endorsements which create a relationship of loyalty between the company and its customers.
How much is Nike worth?
According to the latest report from Brand Finance, a leading valuation and strategy consultancy firm, the current value of Nike's brand is estimated to be approximately $32 Billion.
How does Nike's reputation affect the future?
A failure to maintain Nike's reputation and brand image could materially impact the firm’s economic performance in the future. The emergence of scandals or bad publicity associated with the company’s brand or products would certainly be detrimental. In addition, any adverse publicity related to legal or regulatory action could tarnish the image of the company leading to a weakening of the firm’s brand and future prospects of growth.
What would happen if Nike didn't get endorsements?
A failure to continue to secure high-quality endorsements from athletes, sports stars and celebrities could weaken the perception of prestige and quality associated with Nike’s products. This, in turn, would weaken brand loyalty and the firm’s pricing power which may impact revenues and earnings.
What is Nike?
Nike is an American multinational company engaged in the design, manufacture, marketing, and sale of footwear, apparel, equipment, accessories, and services.
Is Nike a competitor to Under Armour?
Under Armour has been a fierce competitor and continues to take more market share from Nike. This is especially true with younger generations and areas where future growth is important.
Does Nike have bargaining power?
Since Nike contracts the manufacture of its products to low wage countries within Asia it can easily switch between suppliers, this grants the company huge bargaining power. This is evident in the fact that, in the last 10 years, the firm’s average gross margin has been 45%. Pricing power.
How to calculate intrinsic value of a stock?
The calculation of the intrinsic value formula of the stock is done by dividing the value of the business by the number of outstanding shares of the company in the market. The value of stock derived in this way is then compared with the market price#N#Market Price Market price refers to the current price prevailing in the market at which goods, services, or assets are purchased or sold. The price point at which the supply of a commodity matches its demand in the market becomes its market price. read more#N#of the stock to check if the stock is trading above / at par / below its intrinsic value.
What is intrinsic value?
The formula for Intrinsic value basically represents the net present value of all the future free cash flows to equity (FCFE) Future Free Cash Flows To Equity (FCFE) FCFE (Free Cash Flow to Equity) determines the remaining cash with the company's investors or equity shareholders after extending funds for debt repayment, interest payment and reinvestment. It is an indicator of the company's equity capital management read more of a company during the entire course of its existence. It is the reflection of the actual worth of the business underlying the stock, i.e., the amount of money that can be received if the whole business and all of its assets are sold off today.
How to calculate terminal value?
Next, the terminal value is computed by multiplying the FCFE of the last projected year by a factor in the range of 10 to 20 ( required rate of return Required Rate Of Return Required Rate of Return (RRR), also known as Hurdle Rate, is the minimum capital amount or return that an investor expects to receive from an investment. It is determined by, Required Rate of Return = (Expected Dividend Payment/Existing Stock Price) + Dividend Growth Rate read more ). The terminal value represents the value of the business beyond the projected period until the business is shut down.
How is discount rate determined?
Now, the discount rate is determined based on the current market return from an investment with a similar risk profile. The discount rate is denoted by r.
Why does the stock market return to its fair value?
It happens due to various reasons such as declining macro-economic factors, intense pessimism across the economy, securities specific factors, over-inflation in the markets, and so on. read more will happen such that the stock price on an average will return to the fair value.
Is it advisable to buy a stock at present?
Therefore, the stock is trading below its fair value, and as such, it is advisable to purchase the stock at present as it is likely to increase in the future to attain the fair value.
How to calculate intrinsic value?
2. Discounted Cash Flow Model – How Warren Buffett calculates Intrinsic Value. 1 Project the cash flows ten years into the future, and repeat steps one and two for all those years. 2 Add up all the NPV’s of the free cash flows. 3 Multiply the 10th year with 12 to get the sell-off value. 4 Add up the values from steps four, five, and Cash & short-term investments to arrive at the intrinsic value for the entire company. 5 Divide this number with the number of shares outstanding to arrive at the intrinsic value per share.
What is intrinsic value?
The Intrinsic Value or Fair Value of a stock estimates a stock’s value without regard for the stock market’s valuation. We will firstly uncover how Warren Buffet calculates Intrinsic Value using the Discounted Cash Flow Model, then I will show you the most effective way to automatically calculate the intrinsic value for all the stocks in the USA.
How to calculate dividend discount?
A simple means of calculating the Dividend Discount is to use the Time Value of Money method. To calculate the Time Value add the number of future dividends to the present stock price.
Why are there so many formulas for intrainsic value?
There are many formulas for calculating Intrinsic Value because Intrinsic Value is a matter of opinion.
Why do you need to pay attention to the P/E ratio?
You must pay attention to the P/E Ratio because it is the most popular stock analysis formula. However, the P/E Ratio is a short-term analysis tool that has little effect on Intrinsic Value. On the other hand, speculators watch the P/E Ratio because it can affect short-term market prices.
What does 30% mean in stock price?
If, for example, the intrinsic value of a stock is 30% higher than the current market stock price, that essentially means a share of the company has a margin of safety of 30%.
Why is the P/E ratio important?
On the other hand, speculators watch the P/E Ratio because it can affect short-term market prices. Hence, the P/E Ratio can be an indicator of a stock’s future market performance.