NVIDIA Corp’s intrinsic value was calculated using the Discounted Earnings model, resulting in a value of $545.31 as of May 27, 2024. However, the current trading price of the company stands at $1,064.69, indicating a safety margin of -95.24% and suggesting that the company is modestly overvalued.
The GuruFocus DCF calculator employs a two-stage model consisting of the Growth Stage and the Terminal Stage. In the Growth Stage, the company experiences higher growth rates, while in the Terminal Stage, a lower growth rate is applied to reflect the sustainability of long-term growth.
Key assumptions used in the calculation include an EPS without INI of $17.45, a discount rate of 11%, and growth rates of 41.80% for the Growth Stage and 4% for the Terminal Stage. These assumptions are essential in determining the intrinsic value of NVIDIA Corp.
Additionally, the article delves into the Discounted Free Cash Flow Model, which uses the free cash flow per share as a parameter to calculate the intrinsic value based on free cash flow. The model estimates NVIDIA Corp’s intrinsic value at $493.10, indicating that the company is significantly overvalued with a safety margin of -115.92%.
It is important to note that while the DCF model is a reliable valuation methodology, it is based on various assumptions and projections that may impact the accuracy of the final intrinsic value calculation. Factors such as future earning potential, growth rates, predictability of performance, and selecting an appropriate discount rate should be considered when using the DCF model.
The article emphasizes the importance of conducting thorough research and analysis when evaluating stocks, using tools like GuruFocus’ All-in-One Analyzer to identify undervalued predictable companies trading below their intrinsic value. It also reminds readers that the information presented is not personalized financial advice and does not recommend specific investment actions.
Overall, the article provides insights into NVIDIA Corp’s valuation using the DCF model and highlights key considerations for investors when using this methodology.
Article Source
https://finance.yahoo.com/news/art-valuation-discovering-nvidia-corps-120014918.html
