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Discounted Cash Flow (DCF) Analysis Unlevered


Encana Corporation

Encana Corporation (ECA)

Energy

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 5,858.008,019.024,421.692,917.874,442.755,938.626,460.637,028.527,646.328,318.449,049.63
Revenue (%)
EBITDA 2,115.916,994.19-5,907.81-363.862,626.112,785.81896.74975.561,061.311,154.601,256.09
EBITDA (%)
EBIT 550.655,249.25-7,395.71-1,222.881,793.091,513.75-737.16-801.95-872.45-949.13-1,032.56
EBIT (%)
Depreciation 1,565.261,744.941,487.90859.02833.021,272.051,633.891,777.511,933.762,103.732,288.65
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 2,565.80337.60271.05833.93718.841,058.261,256.591,367.051,487.211,617.941,760.15
Total Cash (%)
Account Receivables 988.241,307.10645.12662.94773.93789.241,089.261,185.011,289.171,402.491,525.77
Account Receivables (%)
Inventories -----------
Inventories (%)
Accounts Payable 1,895.062,242.921,311.031,303.121,415.021,490.002,062.882,244.212,441.472,656.082,889.55
Accounts Payable (%)
Capital Expenditure -2,712.25-2,525.99-2,232.07-1,132.13-1,796.20-1,975.19-2,592.65-2,820.54-3,068.47-3,338.19-3,631.61
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 4.2
Diluted Shares Outstanding 959.80
Cost of Debt
Tax Rate 8.08
After-tax Cost of Debt -0.35
Risk-Free Rate
Market Risk Premium
Cost of Equity 19.33
Total Debt 3,698.00
Total Equity 4,031.16
Total Capital 7,729.16
Debt Weighting 47.84
Equity Weighting 52.16
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 5,858.008,019.024,421.692,917.874,442.755,938.626,460.637,028.527,646.328,318.449,049.63
EBITDA 2,115.916,994.19-5,907.81-363.862,626.112,785.81896.74975.561,061.311,154.601,256.09
EBIT 550.655,249.25-7,395.71-1,222.881,793.091,513.75-737.16-801.95-872.45-949.13-1,032.56
Tax Rate 2,066.67%26.18%35.52%41.73%42.17%8.08%370.06%370.06%370.06%370.06%370.06%
EBIAT -10,829.493,874.96-4,768.89-712.591,036.981,391.411,990.752,165.742,356.102,563.202,788.51
Depreciation 1,565.261,744.941,487.90859.02833.021,272.051,633.891,777.511,933.762,103.732,288.65
Accounts Receivable --318.86661.98-17.82-110.99-15.32-300.02-95.75-104.16-113.32-123.28
Inventories -----------
Accounts Payable -347.86-931.89-7.91111.8974.98572.88181.33197.27214.61233.47
Capital Expenditure --186.26-293.92-1,099.93664.07178.98617.46227.89247.93269.72293.43
UFCF -9,264.235,462.64-3,844.83-979.232,534.982,902.114,514.964,256.724,630.895,037.945,480.78
WACC
PV UFCF 4,021.173,376.533,271.583,169.893,071.36
SUM PV UFCF 4,058.70

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 12.28
Free cash flow (t + 1) 5,700.01
Terminal Value 68,840.69
Present Value of Terminal Value 38,577.42

Intrinsic Value

Enterprise Value 42,636.12
Net Debt 2,639.74
Equity Value 39,996.38
Shares Outstanding 959.80
Equity Value Per Share 41.67