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Discounted Cash Flow (DCF) Analysis Unlevered


Discovery Communications Inc. Series A Common Stock

Discovery Communications Inc. Series A Common Stock (DISCA)

Consumer Cyclical

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 5,535.006,265.076,394.136,497.076,873.2510,553.1912,161.5014,014.9116,150.7818,612.1621,448.66
Revenue (%)
EBITDA 2,315.842,405.792,204.692,322.05644.023,061.483,828.444,411.895,084.275,859.116,752.04
EBITDA (%)
EBIT 2,039.652,076.871,874.761,999.80314.111,663.183,050.103,514.944,050.624,667.935,379.32
EBIT (%)
Depreciation 276.20328.92329.94322.25329.921,398.30778.34896.951,033.651,191.181,372.71
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 407.93367.13390.04300.167,309.02985.672,829.983,261.273,758.294,331.054,991.10
Total Cash (%)
Account Receivables 1,371.021,432.821,478.961,494.981,837.912,620.362,946.733,395.813,913.334,509.735,197.01
Account Receivables (%)
Inventories -----------
Inventories (%)
Accounts Payable 141.14224.92281.98241.04276.99325.04432.95498.93574.97662.59763.57
Accounts Payable (%)
Capital Expenditure -115.13-120.29-102.95-87.71-134.72-146.69-209.18-241.06-277.79-320.13-368.92
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 28.3
Diluted Shares Outstanding 688.00
Cost of Debt
Tax Rate 36.47
After-tax Cost of Debt -1.77
Risk-Free Rate
Market Risk Premium
Cost of Equity 11.74
Total Debt 14,974.00
Total Equity 19,470.40
Total Capital 34,444.40
Debt Weighting 43.47
Equity Weighting 56.53
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 5,535.006,265.076,394.136,497.076,873.2510,553.1912,161.5014,014.9116,150.7818,612.1621,448.66
EBITDA 2,315.842,405.792,204.692,322.05644.023,061.483,828.444,411.895,084.275,859.116,752.04
EBIT 2,039.652,076.871,874.761,999.80314.111,663.183,050.103,514.944,050.624,667.935,379.32
Tax Rate 38.00%34.88%33.07%27.50%-109.32%36.47%10.10%10.10%10.10%10.10%10.10%
EBIAT 1,264.491,352.521,254.691,449.76657.481,056.612,741.973,159.853,641.414,196.364,835.88
Depreciation 276.20328.92329.94322.25329.921,398.30778.34896.951,033.651,191.181,372.71
Accounts Receivable --61.80-46.14-16.01-342.93-782.45-326.37-449.08-517.52-596.39-687.28
Inventories -----------
Accounts Payable -83.7757.07-40.9435.9548.05107.9165.9876.0487.63100.98
Capital Expenditure -5.16-17.34-15.2347.0111.9762.4931.8836.7442.3448.79
UFCF 1,540.681,708.571,578.211,699.83727.421,732.483,364.333,705.584,270.314,921.105,671.08
WACC
PV UFCF 3,114.553,175.763,388.033,614.483,856.07
SUM PV UFCF 17,771.07

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 8.02
Free cash flow (t + 1) 5,897.92
Terminal Value 146,714.51
Present Value of Terminal Value 99,759.03

Intrinsic Value

Enterprise Value 117,530.10
Net Debt 13,988.33
Equity Value 103,541.77
Shares Outstanding 688.00
Equity Value Per Share 150.50

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
10.02 (%) 64.46 Buy 71.67 Buy 80.69 Buy 92.28 Buy 107.72 Buy 129.31 Buy 161.64 Buy 215.38 Buy 322.32 Buy
9.52 (%) 60.35 Buy 66.74 Buy 74.63 Buy 84.63 Buy 97.69 Buy 115.48 Buy 141.14 Buy 181.38 Buy 253.56 Buy
9.02 (%) 56.65 Buy 62.34 Buy 69.29 Buy 77.98 Buy 89.14 Buy 104.01 Buy 124.80 Buy 155.94 Buy 207.70 Buy
8.52 (%) 53.30 Buy 58.39 Buy 64.55 Buy 72.15 Buy 81.78 Buy 94.36 Buy 111.49 Buy 136.21 Buy 174.98 Buy
8.02 (%) 50.26 Buy 54.83 Buy 60.32 Buy 67.01 Buy 75.38 Buy 86.14 Buy 100.46 Buy 120.50 Buy 150.50 Buy
7.52 (%) 47.49 Buy 51.61 Buy 56.52 Buy 62.45 Buy 69.78 Buy 79.06 Buy 91.18 Buy 107.69 Buy 131.51 Buy
7.02 (%) 44.96 Buy 48.69 Buy 53.10 Buy 58.38 Buy 64.84 Buy 72.90 Buy 83.27 Buy 97.08 Buy 116.38 Buy
6.52 (%) 42.64 Buy 46.03 Buy 50.00 Buy 54.73 Buy 60.45 Buy 67.51 Buy 76.45 Buy 88.14 Buy 104.06 Buy
6.02 (%) 40.51 Buy 43.59 Buy 47.19 Buy 51.44 Buy 56.53 Buy 62.76 Buy 70.53 Buy 80.53 Buy 93.84 Buy