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Peloton Interactive (NAS:PTON) Intrinsic Value: DCF (Earnings Based)

: $-83.03 (As of Today)
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As of today (2023-06-03), Peloton Interactive's intrinsic value calculated from the Discounted Earnings model is $-83.03.

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.

Peloton Interactive'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 Peloton Interactive is N/A.

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

PTON's Price-to-DCF (Earnings Based) is not ranked *
in the Travel & Leisure industry.
Industry Median: 0.89
* Ranked among companies with meaningful Price-to-DCF (Earnings Based) only.

Peloton Interactive Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Peloton Interactive'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.

Peloton Interactive Annual Data
Trend Jun17 Jun18 Jun19 Jun20 Jun21 Jun22
Intrinsic Value: DCF (Earnings Based)
Premium Member Only - - - - -

Peloton Interactive 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 - - - - -

Peloton Interactive 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 = $-6.650.
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.

Peloton Interactive'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)]
=-6.650*12.485
=-83.03

Margin of Safety % (DCF Earnings Based)=(Intrinsic Value: DCF (Earnings Based)-Current Price)/Intrinsic Value: DCF (Earnings Based)
=(-83.03-8.37)/-83.03
=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.


Peloton Interactive  (NAS:PTON) 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.


Peloton Interactive Intrinsic Value: DCF (Earnings Based) Related Terms

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


Peloton Interactive (NAS:PTON) Business Description

Peloton Interactive logo
Traded in Other Exchanges
Address
441 Ninth Avenue, Sixth Floor, New York, NY, USA, 10001
Peloton Interactive Inc operates an interactive fitness platform. It operates its business in two reportable segments: Connected Fitness Products and Subscription. Connected Fitness Product revenue consists of sales of bike and tread and related accessories, associated fees for delivery and installation, and extended warranty agreements. Subscription revenue consists of revenue generated from monthly Connected Fitness Subscription and Digital Subscription. The company generates the majority of the revenue from the sale of Connected Fitness Products.
Executives
Saqib Baig officer: Chief Accounting Officer C/O PELOTON INTERACTIVE, INC., 441 NINTH AVENUE, SIXTH FLOOR, NEW YORK NY 10001
Jennifer Cunningham Cotter officer: Chief Content Officer C/O PELOTON INTERACTIVE, INC., 441 NINTH AVENUE, SIXTH FLOOR, NEW YORK NY 10001
Elizabeth F Coddington officer: Chief Financial Officer C/O PELOTON INTERACTIVE, INC., 441 NINTH AVENUE, SIXTH FLOOR, NEW YORK NY 10001
Andrew S Rendich officer: Chief Supply Chain Officer 100 WINCHESTER CIRCLE, LOS GATOS CA 95032
Barry Mccarthy director, officer: CEO and President 100 WINCHESTER CIRCLE, LOS GATOS CA 95032
Jonathan Mildenhall director C/O GRAUBARD MILLER, 405 LEXINGTON AVENUE, NEW YORK NY 10174
Angel L Mendez director C/O SLEEP NUMBER CORPORATION, 1001 THIRD AVENUE SOUTH, MINNEAPOLIS MN 55404
Jay C Hoag director 250 MIDDLEFIELD ROAD, MENLO PARK CA 94025
Kevin Cornils officer: Chief Commercial Officer C/O PELOTON INTERACTIVE, INC., 441 NINTH AVENUE, SIXTH FLOOR, NEW YORK NY 10001
Tcv Ix (a), L.p. other: May be part of 13(d) group 250 MIDDLEFIELD ROAD, MENLO PARK CA 94025
Tcv X (a), L.p. other: May be part of 13(d) group 250 MIDDLEFIELD ROAD, MENLO PARK CA 94025
Tcv X Cycle (mf), L.p. other: May be part of 13(d) group 250 MIDDLEFIELD ROAD, MENLO PARK CA 94025
Tcv Ix, L.p. 10 percent owner, other: May be part of 13(d) group 250 MIDDLEFIELD ROAD, MENLO PARK CA 94025
Tcv Ix Cycle, L.p. 10 percent owner, other: May be part of 13(d) group 250 MIDDLEFIELD ROAD, MENLO PARK CA 94025
Technology Crossover Management X, Ltd. other: May be part of 13(d) group C/O TECHNOLOGY CROSSOVER VENTURES, 250 MIDDLEFIELD ROAD, MENLO PARK CA 94025

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