Current Price: ~ $26/share
Projected Yield: ~ 3.09%
Projected Yield: ~ 3.09%
I estimated the firm's WACC today at 10.69% using the Capital Asset Pricing Model and the company's recent SEC filings.
Recent free cash flows and growth rates:
Average Annual Growth FCF: ~ 8%
Year | FCF $Millions |
2002 | 13739 |
2003 | 14906 |
2004 | 13517 |
2005 | 15793 |
2006 | 12826 |
2007 | 15532 |
2008 | 18430 |
2009 | 15918 |
2010 | 22096 |
2011 | 24639 |
Average Annual Growth FCF: ~ 8%
CAGR FCF: ~ 7%
Consensus Forecast Industry 5-Year Growth: ~ 20% per yearConsensus Forecast Company 5-Year Growth: ~ 10% per year
Average FCF over the past 3 years is $20,884 million. Starting at $20,884 million FCF, assuming the company achieves a 5-year growth rate in FCF of 10% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:
Discounted Cash Flow Valuation
The firm's future cash flows, discounted at a WACC of 10.69%, give a present value for the entire firm (Debt + Equity) of $310,778 million. If the firm's fair value of debt is estimated at $12,100 million, then the fair value of the firm's equity could be $298,678 million. $298,678 million / 8380 million outstanding shares is approximately $36 per share and a 20% margin of safety is $29/share.
Year | FCF $Millions |
0 | 20884 |
1 | 22972 |
2 | 25270 |
3 | 27797 |
4 | 30576 |
5 | 33634 |
Terminal Value | 346106 |
The firm's future cash flows, discounted at a WACC of 10.69%, give a present value for the entire firm (Debt + Equity) of $310,778 million. If the firm's fair value of debt is estimated at $12,100 million, then the fair value of the firm's equity could be $298,678 million. $298,678 million / 8380 million outstanding shares is approximately $36 per share and a 20% margin of safety is $29/share.
Sources
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
No comments:
Post a Comment