Keurig Green Mountain (Keurig Green Mountain) Intrinsic Value: DCF (FCF Based) : $43.18 (As of May. 06, 2024)

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What is Keurig Green Mountain Intrinsic Value: DCF (FCF Based)?

As of today (2024-05-06), Keurig Green Mountain's intrinsic value calculated from the Discounted Cash Flow model is $43.18.

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.

Keurig Green Mountain's Predictability Rank is Not Rated. Thus, this page is only used for demonstration purposes and the DCF related results in the screener and portfolio will appear as zero.

Margin of Safety (FCF Based) using Discounted Cash Flow model for Keurig Green Mountain is -112.30%.

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

GMCR's Price-to-DCF (FCF Based) is not ranked ^*
in the Consumer Packaged Goods industry.
Industry Median: 0.995
* Ranked among companies with meaningful Price-to-DCF (FCF Based) only.

Keurig Green Mountain Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for Keurig Green Mountain'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.

Keurig Green Mountain Intrinsic Value: DCF (FCF Based) Chart

Keurig Green Mountain Annual Data

Trend

Sep06

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Sep15

Intrinsic Value: DCF (FCF Based)

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Keurig Green Mountain Quarterly Data
	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15
Intrinsic Value: DCF (FCF Based)	Get a 7-Day Free Trial															-	-	-	-	-

Competitive Comparison of Keurig Green Mountain's Intrinsic Value: DCF (FCF Based)

For the Packaged Foods subindustry, Keurig Green Mountain'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.

Keurig Green Mountain's Price-to-DCF (FCF Based) Distribution in the Consumer Packaged Goods Industry

For the Consumer Packaged Goods industry and Consumer Defensive sector, Keurig Green Mountain's Price-to-DCF (FCF Based) distribution charts can be found below:

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

Keurig Green Mountain 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 4.48%. 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.
=> Keurig Green Mountain'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 = $3.742.
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.

Keurig Green Mountain'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^2

...

y^10]}

Free Cash Flow per Share

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

3.742

11.5406

43.18

Margin of Safety (FCF Based)	=	(Intrinsic Value: DCF (FCF Based)	-	Current Price)	/	Intrinsic Value: DCF (FCF Based)
	=	(43.18	-	91.67)	/	43.18
	=	-112.30 %

Keurig Green Mountain (NAS:GMCR) 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.

Keurig Green Mountain Intrinsic Value: DCF (FCF Based) Related Terms

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Keurig Green Mountain (Keurig Green Mountain) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » Keurig Green Mountain Inc (NAS:GMCR) » Definitions » Intrinsic Value: DCF (FCF Based)

Comparable Companies

Traded in Other Exchanges

N/A

Address

Website

http://www.keuriggreenmountain.com

Keurig Green Mountain Inc is a Delaware Corporation formed in July 1993. The Company is engaged in the coffee and coffeemaker businesses in the United States and Canada. It sells Keurig Single Cup brewers and roast high-quality Arabica bean coffees including single-origin, Fair Trade Certified, certified organic, flavored, limited edition and proprietary blends offered in K-Cup and Vue packs for use with its Keurig Single Cup brewers. The Company also offers traditional whole bean and ground coffee in other package types including bags, fractional packages and cans. In addition, it produces and sells other specialty beverages in portion packs including hot apple cider, hot and iced teas, iced coffees, iced fruit brews, hot cocoa and other dairy-based beverages. The Company manages its operations through three business segments, the Specialty Coffee business unit (SCBU), the Keurig business unit (KBU) and the Canadian business unit (CBU). Due to this combination, the results of U.S. operations, formerly reported in the SCBU and KBU segments, are reported in the Domestic segment and the results of Canadian operations are in the "Canada" segment. The Domestic segment sells single cup brewers and accessories, and sources, produces and sells coffee, hot cocoa, teas and other beverages in portion packs and coffee in more traditional packaging including bags and fractional packs to retailers including supermarkets, department stores, mass merchandisers, club stores, and convenience stores; to restaurants, hospitality accounts, office coffee distributors, and partner brand owners; and to consumers through Company websites. The Canada segment sells single cup brewers, accessories, and sources, produces and sells coffee, teas and other beverages in portion packs and coffee in more traditional packaging including bags, cans and fractional packs under a variety of brands to retailers including supermarkets, department stores, mass merchandisers, club stores, through office coffee services to offices, convenience stores, restaurants, hospitality accounts, and to consumers through its website. The Company's competitors in the coffee marketplace include large national and international companies and numerous local and regional companies.

Executives

Coca Cola Co	10 percent owner	ONE COCA COLA PLAZA, ATLANTA GA 30313
John D Hayes	director	AMERICAN EXPRESS COMPANY, 200 VESEY STREET, NEW YORK NY 10285
Mackay A D David	director
Robert Allan Steele	director	1 PROCTER & GAMBLE PLAZA, CINCINNATI OH 45202
Jose Octavio Reyes	director
Stephen L Gibbs	officer: VP, Chief Accounting Officer	C/O SCIENTIFIC GAMES CORPORATION, 1500 BLUEGRASS LAKES PARKWAY, ALPHARETTA, GA 30004
Susan S Kilsby	director	33 COFFEE LANE, WATERBURY VT 05676
Norman H Wesley	director	225 W WESTMINSTER, LAKE FOREST IL 60045
Brian P Kelley	director, officer: CEO and President	P.O. BOX 90608, AUSTIN TX 78709
Barbara D Carlini	director	C/O GREEN MOUNTAIN COFFEE ROASTERS INC 33 COFFEE LANE WATERBURY VT 05676
Robert Paul Ostryniec	officer: Chief Product Supply Officer	33 COFFEE LANE, WATERBURY VT 05676
Peter G Leemputte	officer: Chief Financial Officer	CHICAGO TITLE CORP, 171 N CLARK ST, CHICAGO IL 80601
Michael J Mardy	director
Frances G Rathke	officer: Chief Financial Officer	C/O GREEN MOUNTAIN COFFEE ROASTERS, INC., 33 COFFEE LANE, WATERBURY VT 05676
Sonia Galindo	officer: Corporate Secretary	C/O ROSETTA STONE, 1621 NORTH KENT STREET, SUITE 1200, ARLINGTON VA 22209