CVB Financial (CVB Financial) Intrinsic Value: DCF (FCF Based)

: $29.88 (As of Today)

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As of today (2024-04-19), CVB Financial's intrinsic value calculated from the Discounted Cash Flow model is $29.88.

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.

CVB Financial's Predictability Rank is 3-Stars.

Margin of Safety (FCF Based) using Discounted Cash Flow model for CVB Financial is 44.34%.

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

CVBF's Price-to-DCF (FCF Based) is ranked worse than
57.53% of 485 companies
in the Banks industry
Industry Median: 0.44 vs CVBF: 0.56

CVB Financial Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for CVB Financial'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.

CVB Financial Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

Intrinsic Value: DCF (FCF Based)

20.78

23.76

32.47

CVB Financial 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)																23.76	23.66	27.13	26.08	32.47

Competitive Comparison

For the Banks - Regional subindustry, CVB Financial'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.

CVB Financial Price-to-DCF (FCF Based) Distribution

For the Banks industry and Financial Services sector, CVB Financial's Price-to-DCF (FCF Based) distribution charts can be found below:

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

CVB Financial 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 4.62%. 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 = 8.20%
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.
=> CVB Financial's average Free Cash Flow Growth Rate in the past 10 years was 8.20%, which is between 5% and 20%. => GuruFocus defaults => Growth Rate: 8.20%

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 = $2.101.
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.

CVB Financial'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+0.082)/(1+0.11) = 0.97477477477477
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^2

...

y^10]}

Free Cash Flow per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

2.101

14.2209

29.88

Margin of Safety (FCF Based)	=	(Intrinsic Value: DCF (FCF Based)	-	Current Price)	/	Intrinsic Value: DCF (FCF Based)
	=	(29.88	-	16.63)	/	29.88
	=	44.34 %

CVB Financial (NAS:CVBF) 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.

CVB Financial Intrinsic Value: DCF (FCF Based) Related Terms

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

CVB Financial (CVB Financial) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » CVB Financial Corp (NAS:CVBF) » Definitions » Intrinsic Value: DCF (FCF Based)

Comparable Companies

Traded in Other Exchanges

BCV:Germany

Address

701 N. Haven Avenue, Suite 350, Ontario, CA, USA, 91764

Website

https://www.cbbank.com

CVB Financial Corp is the holding company for Citizens Business Bank. Citizens Business Bank offers banking, lending, and investing services through approximately 58 banking centers and three trust office locations serving the Inland Empire, Los Angeles County, Orange County, San Diego County, Ventura County, Santa Barbara County, and the Central Valley area of California.

Executives

Borba George A Jr	director	701 N HAVEN AVE, ONTARIO CA 91764
Richard H Wohl	officer: EVP & General Counsel	888 EAST WALNUT ST., PASADENA CA 91101
Yamynn Deangelis	officer: EVP Chief Risk Officer	701 N. HAVEN AVE., ONTARIO CA 91764
David F Farnsworth	officer: EVP & CCO	701 N. HAVEN AVE., ONTARIO CA 91764
Anna Kan	director	701 N. HAVEN AVE., ONTARIO CA 91764
Kimberly H. Sheehy	director	C/O SWITCH, INC., 7135 SOUTH DECATUR BOULEVARD, LAS VEGAS NV 89118
Jane Olvera	director	701 N HAVEN AVE, ONTARIO CA 91764
O Brien Raymond V Iii	director	701 N HAVEN AVENUE, ONTARIO CA 91764
Del Guercio Stephen A	director	701 N HAVEN AVE, ONTARIO CA 91764
Hal W Oswalt	director	701 N HAVEN AVE, ONTARIO CA 91764
David C Harvey	officer: EVP Chief Operations Officer	701 N. HAVEN AVENUE #350, ONTARIO CA 91764
E Allen Nicholson	officer: EVP & CFO	701 N. HAVEN AVE., ONTARIO CA 91764
David A. Brager	officer: EVP Sales Division Manager	701 N. HAVEN AVE. #350, ONTARIO CA 91764
Kristina M Leslie	director	DREAMWORKS ANIMATION SKG, INC., 1000 FLOWER STREET, GLENDALE CA 91201
Francene Lapoint	officer: SVP Chief Accounting Officer	1551 NORTH TUSTIN AVENUE, SUITE 300, SANTA ANA CA 92705