NVIDIA Valuation: EPS-Based Intrinsic Value $147.81 Implies 21.95% Shortfall
NVIDIA Corp's EPS-based DCF model calculates an intrinsic value of $147.81 versus its $180.25 trading price, implying a –21.95% margin of safety. A free cash flow DCF model yields $123.28 per share, indicating a –46.21% margin of safety and modest overvaluation.
1. EPS-Based Discounted Earnings Valuation
The earnings-based DCF model uses NVIDIA’s EPS without NRI of $4.73, an 11% discount rate and a 54.2% growth rate for a 10-year growth stage to calculate a present value of $147.81 per share, reflecting current expansion expectations.
2. Model Assumptions and Parameters
Key assumptions include a 5% risk-free yield plus a 6% equity risk premium to reach an 11% discount rate, a 54.2% initial growth rate capped between 5% and 20% over ten years, and a 4% terminal growth rate for the subsequent decade.
3. Free Cash Flow DCF Comparison
A traditional free cash flow variant applies trailing twelve-month FCF per share and similar growth assumptions, yielding an intrinsic value of $123.28 per share and a –46.21% margin of safety, signaling more pronounced overvaluation under cash flow metrics.