Business, Common Shareholders & Debtors Free Cash Flow Power Value : Case Studies — PDD, MercadoLibre, NVR, Walmart & Shopify
(A)
Business Free Cash Flow Per Share
(Generated by Business & thus belongs to both Common Shareholders and Debtors)
= ( Net cash generated from operating activities - Purchase of property, plant, equipment, software and intangible assets ) Per Share
.
(B)
Common Shareholders Free Cash Flow Per Share
(Belongs to Common Shareholders Only)
= 1 ÷ (1 + D/E) × Business Free Cash Flow Per Share
.
(C)
Debtors Free Cash Flow Per Share
(Belongs to Debtors Only)
= D/E ÷ (1 + D/E) × Business Free Cash Flow Per Share
.
Intrinsic value can be defined simply It is the discounted value of the cash that can be taken out of the business during its remaining life.
— Warrent Buffett
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“Intrinsic value is the number, that if you were all knowing about the future and you could predict all the cash a business would give you between now and judgement day, discounted at the proper discount rate, that number is what the intrinsic value of the business is.”
— Warren Buffett
.
Judgement day means infinity, perpetual.
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The summation must be convergent, therefore future growth could not be larger than the discount rate.
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First of all the nature of Future Growth is unpredictable.
.
Resetting the Future Growth to zero as a common ground of valuation to all stocks, we have:
.
(A)
Business Free Cash Flow Power Value Per Share
= Business Free Cash Flow Per Share ÷ CICC Ratio
.
(B)
Common Shareholders Free Cash Flow Power Value Per Share
= Common Shareholders Free Cash Flow Per Share ÷ CICC Ratio
= 1 ÷ (1 + D/E) × Business Free Cash Flow Power Value Per Share
.
(C)
Debtors Free Cash Flow Power Value Per Share
= Debtors Free Cash Flow Per Share ÷ CICC Ratio
= D/E ÷ (1 + D/E) × Business Free Cash Flow Power Value Per Share
.
Notes :
Clean Invested Capital Cost Ratio (CICC Ratio) is opted for the Discount Ratio.
.
CICC Factor
= Clean Invested Capital Cost Factor
= 30Y Government Bond Yield Factor × (1 + D/E × (1 + Prime Ratio + Spread Ratio) ÷ (1 + D/E)
.
CICC Ratio
= CICC Factor - 1
.
Case Study:
Assume 30Y Bond Yield = 5%, Prime Rate + Spread Rate = 10%
.
(1)
PDD
(Fin.2025.Sep.Q3.TTM)
D/E = 0.03 (by Tradingview)
FCFPS = USD 10.52 (by Gurufocus)
.
CICC Ratio
= 1.05×(1+0.03×1.10)÷(1+0.03)-1
= 0.0530582524
.
(A)
Business FCF Power Value Per Share
= 10.52÷0.0530582524
= USD 198.2726440988
.
(B)
Common Shareholders FCF Power Value Per Share
= 1÷(1+0.03)×198.2726440988
= USD 192.4977127173
.
(C)
Debtors FCF Power Value Per Share
= 0.03÷(1+0.03)×198.2726440988
= USD 5.7749313815
.
(D)
PDD Stock Price on 18.Mar.2026
= USD 100.72
.
(2)
MercadoLibre
(Fin.2025.Dec.Q4.TTM)
D/E = 2.25 (by Tradingview)
FCFPS = USD 212.50 (by Gurufocus)
.
CICC Ratio
= 1.05×(1+2.25×1.10)÷(1+2.25)-1
= 0.1226923077
.
(A)
Business FCF Power Value Per Share
= 212.50÷0.1226923077
= USD 1,731.9749216301
.
(B)
Common Shareholders FCF Power Value Per Share
= 1÷(1+2.25)×1,731.9749216301
= USD 532.9153605016
.
(C)
Debtors FCF Power Value Per Share
= 2.25÷(1+2.25)×1,731.9749216301
= USD 1,199.0595611285
.
(D)
MercadoLibre Stock Price on 18.Mar.2026
= USD 1,690.26
≈ Business FCF Power Value Per Share
.
(3)
NVR
(Fin.2025.Dec.Q4.TTM)
D/E = 0.27 (by Tradingview)
FCFPS = USD 360.04 (by Gurufocus)
.
CICC Ratio
= 1.05×(1+0.27×1.10)÷(1+0.27)-1
= 0.0723228346
.
(A)
Business FCF Power Value Per Share
= 360.04÷0.0723228346
= USD 4,978.2340772999
.
(B)
Common Shareholders FCF Power Value Per Share
= 1÷(1+0.27)×4,978.2340772999
= USD 3,919.8693522047
.
(C)
Debtors FCF Power Value Per Share
= 0.27÷(1+0.27)×4,978.2340772999
= USD 1,058.3647250953
.
(D)
NVR Stock Price on 18.Mar.2026
= USD 6,482.82
> Business FCF Power Value Per Share
.
(4)
Walmart
(Fin.2025.Dec.Q4.TTM)
D/E = 0.67 (by Tradingview)
FCFPS = USD 1.86 (by Gurufocus)
.
CICC Ratio
= 1.05×(1+0.67×1.10)÷(1+0.67)-1
= 0.0921257485
.
(A)
Business FCF Power Value Per Share
= 1.86÷0.0921257485
= USD 20.1897952558
.
(B)
Common Shareholders FCF Power Value Per Share
= 1÷(1+0.67)×20.1897952558
= USD 12.089697758
.
(C)
Debtors Power Value Per Share
= 0.67÷(1+0.67)×20.1897952558
= USD 8.1000974978
.
(D)
Walmart Stock Price on 18.Mar.2026
= USD 121.98
> Business FCF Power Value Per Share
.
(5)
Shopify
(Fin.2025.Dec.Q4.TTM)
D/E = 0.01 (by Tradingview)
FCFPS = USD 1.54 (by Gurufocus)
.
CICC Ratio
= 1.05×(1+0.01×1.10)÷(1+0.01)-1
= 0.051039604
.
(A)
Business FCF Power Value Per Share
= 1.54÷0.051039604
= USD 30.1726479146
.
(B)
Common Shareholders FCF Power Value Per Share
= 1÷(1+0.01)×30.1726479146
= USD 29.8739088264
.
(C)
Debtors Power Value Per Share
= 0.01÷(1+0.01)×30.1726479146
= USD 0.2987390883
.
(D)
Shopify Stock Price on 18.Mar.2026
= USD 123.75
> Business FCF Power Value Per Share
.
Conclusion:
With zero growth assumption, PDD is worth USD 192.4977127173 to Common Shareholders or USD 198.2726440988 to Business.
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With positive growth, PDD is worth more than USD 192.4977127173 to Common Shareholders or USD 198.2726440988 to Business.
.
PDD is terribly mispriced and undervalued.