Mastercard's intrinsic value is $719 per share using the discounted free cash flow method with projected growth of 15.65% for 5 years and 17% thereafter, but the Oracle value is more conservative at $561, and you can adjust projections to get different values like $67 with 12% growth.

It is Mastercard ticker symbol MA. So if you take a look at Mastercard for example, few things to understand is to look at the projected growth rate. You can see for the next 5 years it it is projected to grow at 15.65%.

And over the longer term it's projected to grow at 17%.

So, let's take a look at intrinsic value over here. If I go to intrinsic value, you can see again these are all the different methods of valuation which I showed you earlier on and stock oracle automatically values the stock based on all these methods which I mentioned earlier on which is the discounted free cash flow method, the discounted cash flow method, discounted net income, uh mean price to sales, mean price to earnings, mean price to book, price to sales growth ratio, they are all there, all pre-calculated. method for you.

Now again remember which is the method that I use 90% of the time. It is this method which is the discounted free cash flow method based on the business uh lasting for 20 years.

So if the business lasts for more than 20 years that is a bonus and the intrinsic value should be a lot higher.

Now remember before using this method to value a stock what is the condition? The condition is that the business must have a history of consistently growing free cash flow. If it doesn't, you cannot use this method.

So, let's double check. Does Mastercard meet that condition.

Very simple. Scroll up, click on financials over here. Uh, you can look at the line chart, you can look at a bar chart, up to you. I prefer a bar chart and look for this thing called free cash flow.

Yes. So this business must have a consistently increasing free cash flow in dark green. So is it pretty consistent? Does it go up pretty consistently? Yes. So you can use this method.

Now do bear in mind that uh remember that free cash flow is equal to the cash uh operating cash flow minus the capital expenditure.

So based on this method of projecting the free cash flow for the next 20 years and discounting it to present value, what is Mastercard worth? Mastercard is worth $719.

And if you want to know the exact calculation method, it is right here. Let me show you. Scroll down and there. So, intrinsic value calculation, select uh free cash flow method over here.

And it shows you the entire calculation that gets to $719 per share.

So bear in mind that this intrinsic value is based on the growth projection where the business grows at 15% for the next 5 years and then subsequently grows at 17% from year 6 to year 10 and for the last 10 years it grows only at 4%.

Now for those of you who are new to stock oracle you may be a bit confused and say okay so if the intrinsic value of 7 is 719 then what is oracle value why does oracle value show me that it is worth 561.

So Oracle value is a proprietary valuation method where it will select the best method for this particular company. So in the case of masterard the best method to use is the discounted free cash flow method.

So in other words, how does Oracle value get 561? Now again it's a proprietary algorithm but my guess is that what the algorithm does is that it uses a lower growth rate.

So in this case, my um my guess is that the AI algorithm probably adjusts the growth rate down to about let's say 9.5%. And then recalculates based on 9.5% growth for year 6 to year 10 and it comes up with the intrinsic value of about that about 559 or roughly about $560.

So in other words, the oracle value is an AI algorithm that does adjustments to be more conservative to come out with a figure if it doesn't agree on fact sets uh data projections.

Now some of you may say uh but can I put in my own projections? What if I don't agree with the oracle value? Sure, you can put in your own projections. That's the beauty of this whole model.

So let's say for example you are not as pessimistic as the Oracle value AI and you think no I think they can grow at 10% or they can grow at 12% for year 6 to year 10 then you can always put in your own projections which you're more comfortable with right so if you put in 12% here and calculate then you can see that the intrinsic value based on your projection will be $67

So I keep saying that intrinsic value is always based on projection. So it's up to you. Do you want to be optimistic of a higher projection? You want to be more pessimistic of a lower projection.

Now sometimes you can do both and say okay this is the best case scenario. That's the worst case scenario. And then you take a base case average. So there are many ways you can use this calculator.