Meta Platforms Earnings-Based DCF Values Company at $804 with 19% Safety Margin
Meta Platforms' earnings-based DCF model estimates intrinsic value at $804.43, implying a 19.4% margin of safety. The traditional free cash flow DCF model yields a $616.73 intrinsic value, indicating a -5.1% safety margin and fair valuation.
1. Earnings-Based DCF Valuation
Meta Platforms' earnings-based DCF model calculates an intrinsic value of $804.43 and indicates a 19.42% margin of safety against market value, signaling modest undervaluation.
2. Key Assumptions and Inputs
The model uses EPS without NRI of $23.38, a 10% discount rate (4% risk-free plus 6% premium), a 22.70% growth rate over 10 years for the growth stage, and a 4% terminal growth rate over the following decade.
3. Growth and Terminal Stage Calculations
Present value of the growth stage cash flows sums to 447.68, while the terminal stage adds 518.77, combining to the $804.43 intrinsic value under the earnings-based approach.
4. Free Cash Flow DCF Outcome
Using trailing twelve-month free cash flow per share, the traditional DCF model derives an intrinsic value of $616.73 and a -5.1% margin of safety, suggesting fair valuation.