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Booking Holdings (Booking Holdings) Intrinsic Value: DCF (FCF Based) : $2,192.25 (As of Apr. 25, 2024)


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What is Booking Holdings Intrinsic Value: DCF (FCF Based)?

As of today (2024-04-25), Booking Holdings's intrinsic value calculated from the Discounted Cash Flow model is $2,192.25.

Note: Discounted Cash Flow 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.

Booking Holdings's Predictability Rank is 2.5-Stars.

Margin of Safety (FCF Based) using Discounted Cash Flow model for Booking Holdings is -60.45%.

The industry rank for Booking Holdings's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

BKNG's Price-to-DCF (FCF Based) is ranked worse than
84.21% of 38 companies
in the Travel & Leisure industry
Industry Median: 0.89 vs BKNG: 1.60

Booking Holdings Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for Booking Holdings's Intrinsic Value: DCF (FCF 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.

Booking Holdings Intrinsic Value: DCF (FCF Based) Chart

Booking Holdings Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Intrinsic Value: DCF (FCF Based)
Get a 7-Day Free Trial Premium Member Only Premium Member Only 4,405.36 - - - 2,371.64

Booking Holdings Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
Intrinsic Value: DCF (FCF Based) Get a 7-Day Free Trial 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 - - - - 2,371.64

Competitive Comparison of Booking Holdings's Intrinsic Value: DCF (FCF Based)

For the Travel Services subindustry, Booking Holdings's Price-to-DCF (FCF Based), along with its competitors' market caps and Price-to-DCF (FCF Based) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Booking Holdings's Price-to-DCF (FCF Based) Distribution in the Travel & Leisure Industry

For the Travel & Leisure industry and Consumer Cyclical sector, Booking Holdings's Price-to-DCF (FCF Based) distribution charts can be found below:

* The bar in red indicates where Booking Holdings's Price-to-DCF (FCF Based) falls into.



Booking Holdings Intrinsic Value: DCF (FCF Based) Calculation

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 stock's 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 = 11%
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. GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate and rounded up to the nearest integer. It is updated daily. The current risk-free rate is 4.65%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default. Then we 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%
The Growth Rate in the growth stage is initially set as the default 10-Year FCF Growth Rate (Per Share). In cases where the 10-year growth rate is unavailable, it defaults to using the 5-Year FCF Growth Rate (Per Share). If both the 10-year and 5-year growth rates are unavailable, the system defaults to the 3-Year FCF Growth Rate (Per Share).
However, it's important to note that there is a growth rate range. If the calculated growth rate exceeds 20%, it will be capped at 20%. Conversely, if the calculated growth rate falls below 5%, it will be adjusted to 5% to maintain a reasonable range.
=> Booking Holdings's average Free Cash Flow Growth Rate in the past 3 years was 0.00%, which is 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 = $189.960.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the 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.

Booking Holdings's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[(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+0.11) = 0.94594594594595
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.11) = 0.93693693693694

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Free Cash Flow per Share*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=189.960*11.5406
=2,192.25

Margin of Safety (FCF Based)=(Intrinsic Value: DCF (FCF Based)-Current Price)/Intrinsic Value: DCF (FCF Based)
=(2192.25-3517.52)/2192.25
=-60.45 %

* 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.


Booking Holdings  (NAS:BKNG) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value 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 the DCF model:

1. The DCF 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 have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good 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.


Booking Holdings Intrinsic Value: DCF (FCF Based) Related Terms

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Booking Holdings (Booking Holdings) Business Description

Address
800 Connecticut Avenue, Norwalk, CT, USA, 06854
Booking is the world's largest online travel agency by sales, offering booking and payment services for hotel and alternative accommodation rooms, airline tickets, rental cars, restaurant reservations, cruises, experiences, and other vacation packages. The company operates a number of branded travel booking sites, including Booking.com, Agoda, OpenTable, and Rentalcars.com, and has expanded into travel media with the acquisitions of Kayak and Momondo. Transaction fees for online bookings account for the bulk of revenue and profits.
Executives
Glenn D Fogel officer: Hd Worldwide Strat & Planning PRICELINE.COM INCORPORATED, 800 CONNECTICUT AVENUE, NORWALK CT 06854
David I Goulden officer: Chief Financial Officer 176 SOUTH STREET, HOPKINTON MA 01748
Radakovich Lynn Vojvodich director C/O BOOKING HOLDINGS INC., 800 CONNECTICUT AVENUE, NORWALK CT 06854
Nicholas Read director C/O BOOKING HOLDINGS INC., 800 CONNECTICUT AVENUE, NORWALK CT 06854
Susana D'emic officer: SVP, CAO & Controller C/O TIME INC., 225 LIBERTY STREET, NEW YORK NY 10281
Paulo Pisano officer: Chief Human Resources Officer 800 CONNECTICUT AVENUE, NORWALK CT 06854
Larry Quinlan director 2225 LAWSON LANE, SANTA CLARA CA 95054
Mylod Robert J Jr officer: Vice Chairman
Sumit Singh director C/O CHEWY, INC., 7700 WEST SUNRISE BLVD, PLANTATION FL 33322
Peter J Millones officer: Executive VP, General Counsel
Jeffery H Boyd director C/O ASPEN GROVE CAPITAL, LLC, PO BOX 9389, AVON CO 81620
Dijk Bob Van director C/O BOOKING HOLDINGS INC., 800 CONNECTICUT AVENUE, NORWALK CT 06854
Gillian Tans officer: President & COO, Booking.com C/O THE PRICELINE GROUP INC., 800 CONNECTICUT AVENUE, NORWALK CT 06854
Vanessa Ames Wittman director C/O MARSH & MCLENNAN COMPANIES, INC., 1166 AVENUE OF THE AMERICAS, NEW YORK NY 10036
Wei Hopeman director C/O BOOKING HOLDINGS INC., 800 CONNECTICUT AVENUE, NORWALK CT 06854