Market Cap | 2.2 B | P/E(ttm) | 33.19 |
---|---|---|---|
Enterprise Value | 2.57 B | P/B | 1.67 |
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As of today, Capital Bank Financial Corp's intrinsic value calculated from the Discounted Cash Flow model is $7.68.
Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). Result may not be accurate due to the low predictability of business.
Margin of Safety (FCF Based) using Discounted Cash Flow model for Capital Bank Financial Corp is -451.81%.
This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.
Usually a two-stage model is used when calculating a stocks intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.
GuruFocus DCF calculator is a two-stage model. The default values are defined as:
1. Discount Rate: d=12%
2. Growth Rate in the growth stage: g1=5%
Growth Rate in the growth stage = average free cash flow growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Free Cash Flow Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%
3. Years of Growth Stage: y1=10
4. Terminal Growth Rate: g2=4%
5. Years of Terminal Growth: y2=10
6. Free Cash Flow Per Share: fcf=$0.718.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the Earnings Per Share without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.
All of the default settings can be changed and the results are calculated automatically.
Capital Bank Financial Corp's Intrinsic Value: DCF (FCF Based) for today is calculated as
DCF (FCF Based) | = | fcf | * | {[(1+g1)/(1+d) | + | (1+g1)^2/(1+d)^2 | + | ... | + | (1+g1)^10/(1+d)^10] |
+ | (1+g1)^10/(1+d)^10 | * | [(1+g2)/(1+d) | + | (1+g2)^2/(1+d)^2 | + | ... | + | (1+g2)^10/(1+d)^10]} |
set x = (1+g1)/(1+d) = (1+0.05)/(1+0.12) = 0.9375
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.12) = 0.928571428571
DCF (FCF Based) | = | fcf | * | {[x | + | x^2 | + | ... | + | x^10] | + | x^10 | * | [y | + | y^2 | + | ... | + | y^10]} |
= | fcf | * | [x | * | (1-x^10) | / | (1-x) | + | x^10 | * | y | * | (1-y^10) | / | (1-y)] | |||||
= | 0.718 | * | 10.7016 | |||||||||||||||||
= | 7.68 |
Margin of Safety (FCF Based) | = | (DCF (FCF Based) | - | Current Price) | / | DCF (FCF Based) |
= | (7.6837488 | - | 42.40) | / | 7.6837488 | |
= | -451.81 % |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.
What you need to know about the DCF model:
1. The DCF model evaluates a company based on its future earnings powerYou can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.
Intrinsic Value: Projected FCF, Intrinsic Value: DCF (Earnings Based), Free Cash Flow, Free Cash Flow Per Share