Discounted Cash Flow Calculation for DB:5FB using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:5FB DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Fitbit's share price is below the future cash flow value, and at a moderate discount (> 20%).
Fitbit's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Fitbit's earnings available for a low price, and how does
this compare to other companies in the same industry?
Fitbit is not considered high growth as it is expected to be loss making for the next 1-3 years.
Fitbit's revenue is expected to grow by 2.7% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Fitbit's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. James Park is Co-Founder of Fitbit Inc. and has been its Chief Executive Officer and President since September 2007. Mr. Park served as Director of Product Development at CNET Networks, where he led product management, engineering and design for Webshots. He was the Founder of Wind-Up Labs, Inc. and served as its President. He was a Co-Founder of Epesi Technologies and served as its Chief Technology Officer, where he directed technology strategy and implemented the networking protocols for Epesi's distributed datastore product. He served as a Technologist at Morgan Stanley, developing financial analytical applications for quantitative trading. He also served development positions at KPMG in their datamining consulting group and at BCL Computers, developing software for intelligent document routing systems. He has been the Chairman of the Board at Fitbit Inc. since May 2015 and has been its Director since March 2007. He is a serial entrepreneur with a passion for creating great products and companies. Mr. Park holds A.B. in Computer Science at Harvard College.
James's compensation has been consistent with company performance over the past year.
James's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Fitbit management team is about average.
Executive Vice President of Operations
Chief Financial Officer
Vice President of Investor Relations
Chief Marketing Officer
Senior Vice President of People
Senior Vice President of Americas Sales
Senior VP & MD of International
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Fitbit board of directors is less than 3 years, this suggests a new board.
Fitbit, Inc., a technology company, provides health solutions in the United States and internationally. The company offers a line of devices, including Fitbit Charge 3, Fitbit Surge, Fitbit Blaze, Fitbit Charge 2, Alta HR, Alta, Fitbit Ace, Fitbit Flex 2, Fitbit One, and Fitbit Zip activity trackers; Fitbit Ionic and Fitbit Versa smartwatches; Fitbit Aria 2 Wi-Fi smart scales; and a range of accessories, such as bands and frames for its devices, as well as Fitbit Flyer, a wireless headphone designed for fitness. It also offers Fitbit online dashboard and mobile apps that sync automatically with and display real-time data from its wearable devices; Fitbit Coach that offers exercise programs through personal trainer and yoga apps; and Fitbit Care, a connected health platform for health plans, employers, and health systems. The company sells its products through consumer electronics and specialty, e-commerce, mass merchant, department store, club, and sporting goods and outdoors retailers; wireless carriers; distributor; and Fitbit.com, an online store, as well as directly to consumers. The company was formerly known as Healthy Metrics Research, Inc. and changed its name to Fitbit, Inc. in October 2007. Fitbit, Inc. was founded in 2007 and is headquartered in San Francisco, California.
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