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Pinterest (NYSE:PINS) Intrinsic Value: DCF (Earnings Based)

: $-5.62 (As of Today)
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As of today (2023-06-03), Pinterest's intrinsic value calculated from the Discounted Earnings model is $-5.62.

Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Pinterest's Predictability Rank is Not Rated. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (Earnings Based) using Discounted Earnings model for Pinterest is N/A.

The historical rank and industry rank for Pinterest's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:

PINS's Price-to-DCF (Earnings Based) is not ranked *
in the Interactive Media industry.
Industry Median: 1.03
* Ranked among companies with meaningful Price-to-DCF (Earnings Based) only.

Pinterest Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Pinterest's Intrinsic Value: DCF (Earnings Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Pinterest Annual Data
Trend Dec17 Dec18 Dec19 Dec20 Dec21 Dec22
Intrinsic Value: DCF (Earnings Based)
Premium Member Only - - - - -

Pinterest Quarterly Data
Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23
Intrinsic Value: DCF (Earnings Based) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - - - - -

Pinterest Intrinsic Value: DCF (Earnings Based) Calculation

This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called 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 = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average earnings 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 Earnings 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. EPS without NRI: eps without nri = $-0.450.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, EPS 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.

Pinterest's Intrinsic Value: DCF (Earnings Based) for today is calculated as:

Intrinsic Value: DCF (Earnings Based)=EPS without NRI*{[(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+0.1) = 0.95454545454545
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.1) = 0.94545454545455

Intrinsic Value: DCF (Earnings Based)=EPS without NRI*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=EPS without NRI*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=-0.450*12.485
=-5.62

Margin of Safety % (DCF Earnings Based)=(Intrinsic Value: DCF (Earnings Based)-Current Price)/Intrinsic Value: DCF (Earnings Based)
=(-5.62-23.47)/-5.62
=N/A

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Pinterest  (NYSE:PINS) Intrinsic Value: DCF (Earnings Based) Explanation

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.


Be Aware

What you need to know about Discounted Earnings model:

1. The Discounted Earnings model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that are relatively consistent performers.
4. The Discounted Earnings model works poorly for inconsistent performers like cyclicals.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You 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.


Pinterest Intrinsic Value: DCF (Earnings Based) Related Terms

Thank you for viewing the detailed overview of Pinterest's Intrinsic Value: DCF (Earnings Based) provided by GuruFocus.com. Please click on the following links to see related term pages.


Pinterest (NYSE:PINS) Business Description

Pinterest logo
Industry
Traded in Other Exchanges
Address
505 Brannan Street, San Francisco, CA, USA, 94107
Pinterest is an online product and idea discovery platform that helps users gather ideas on everything from recipes to cook to destinations to travel to. Founded in 2010, the platform consists of a largely female audience, at roughly two thirds of its more than 365 million monthly active users. The company generates revenue by selling digital ads and is now rolling out more in-platform e-commerce features.
Executives
Marc Steinberg director 600 STEAMBOAT ROAD, 3RD FLOOR, GREENWICH CT 06830
Wanjiku Juanita Walcott officer: Chief Legal Officer 2500 LAKE COOK ROAD, RIVERWOODS IL 60015
William J Ready director, officer: Chief Executive Officer C/O PAYPAL HOLDINGS, INC., 2211 NORTH FIRST STREET, SAN JOSE CA 95131
Andrea Acosta officer: Chief Accounting Officer C/O BIOMARIN PHARMACEUTICAL INC., 770 LINDARO ST, SAN RAFAEL CA 94901
Naveen Gavini officer: SVP, Products 505 BRANNAN ST., SAN FRANCISCO CA 94107
Salaam Coleman director 505 BRANNAN ST., SAN FRANCISCO CA 94701
Andrea M Wishom director 651 BRANNAN ST., SAN FRANCISCO CA 94107
L Michelle Wilson director PO BOX 81226, SEATTLE WA 98108-1226
Jeremy S. Levine director C/O BESSEMER VENTURE PARTNERS, 1865 PALMER AVENUE, LARCHMONT NY 10538
Fredric G Reynolds director CBS CORPORATION, 51 WEST 52ND STREET, NEW YORK NY 10019
Leslie J Kilgore director 121 ALBRIGHT WAY, LOS GATOS CA 95032
Gokul Rajaram director 301 CONGRESS AVENUE, SUITE 700, AUSTIN TX 78701
Jeffrey D Jordan director 2865 SAND HILL ROAD #101, MENLO PARK CA 94025
Evan Sharp director, officer: Co-Founder & Chief Design & Cr 505 BRANNAN STREET, SAN FRANCISCO CA 94107
Benjamin Silbermann director, 10 percent owner, officer: Chairman, President, CEO, Co-F 505 BRANNAN STREET, SAN FRANCISCO CA 94107

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