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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 2,115.916,994.19-5,907.81-363.862,626.112,785.81609.24662.79721.05784.43853.38
EBITDA (%)
EBIT 550.655,249.25-7,395.71-1,222.881,793.091,513.75-1,005.92-1,094.34-1,190.53-1,295.18-1,409.03
EBIT (%)
Depreciation 1,565.261,744.941,487.90859.02833.021,272.051,615.161,757.131,911.582,079.612,262.41
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 2,565.80337.60271.05833.93718.841,058.26942.611,025.461,115.601,213.661,320.34
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 1,895.062,242.921,311.031,303.121,415.021,490.002,057.062,237.882,434.592,648.592,881.40
Accounts Payable (%)
Capital Expenditure -2,712.25-2,525.99-2,232.07-1,132.13-1,796.20-1,975.19-2,512.54-2,733.39-2,973.66-3,235.04-3,519.40
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 4.15
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 3,983.17
Total Capital 7,681.17
Debt Weighting 48.14
Equity Weighting 51.86
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 2,115.916,994.19-5,907.81-363.862,626.112,785.81609.24662.79721.05784.43853.38
EBIT 550.655,249.25-7,395.71-1,222.881,793.091,513.75-1,005.92-1,094.34-1,190.53-1,295.18-1,409.03
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 -10,829.493,874.96-4,768.89-712.591,036.981,391.412,716.562,955.353,215.123,497.733,805.18
Depreciation 1,565.261,744.941,487.90859.02833.021,272.051,615.161,757.131,911.582,079.612,262.41
Accounts Receivable --318.86661.98-17.82-110.99-15.32-300.02-95.75-104.16-113.32-123.28
Inventories -----------
Accounts Payable -347.86-931.89-7.91111.8974.98567.06180.82196.71214.00232.81
Capital Expenditure --186.26-293.92-1,099.93664.07178.98537.35220.85240.27261.38284.36
UFCF -9,264.235,462.64-3,844.83-979.232,534.982,902.115,136.115,018.405,459.515,939.416,461.48
WACC
PV UFCF 4,576.013,983.543,861.103,742.423,627.39
SUM PV UFCF 5,519.21

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 12.24
Free cash flow (t + 1) 6,719.94
Terminal Value 81,552.65
Present Value of Terminal Value 45,782.53

Intrinsic Value

Enterprise Value 51,301.74
Net Debt 2,639.74
Equity Value 48,662.00
Shares Outstanding 959.80
Equity Value Per Share 50.70

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
14.24 (%) 30.88 Buy 33.29 Buy 36.11 Buy 39.42 Buy 43.38 Buy 48.20 Buy 54.18 Buy 61.82 Buy 71.91 Buy
13.74 (%) 29.33 Buy 31.54 Buy 34.09 Buy 37.09 Buy 40.64 Buy 44.92 Buy 50.18 Buy 56.79 Buy 65.37 Buy
13.24 (%) 27.90 Buy 29.92 Buy 32.25 Buy 34.97 Buy 38.16 Buy 41.98 Buy 46.63 Buy 52.40 Buy 59.77 Buy
12.74 (%) 26.57 Buy 28.43 Buy 30.56 Buy 33.03 Buy 35.92 Buy 39.34 Buy 43.47 Buy 48.54 Buy 54.93 Buy
12.24 (%) 25.34 Buy 27.05 Buy 29.01 Buy 31.26 Buy 33.88 Buy 36.96 Buy 40.65 Buy 45.13 Buy 50.70 Buy
11.74 (%) 24.20 Buy 25.78 Buy 27.57 Buy 29.63 Buy 32.01 Buy 34.80 Buy 38.10 Buy 42.09 Buy 46.98 Buy
11.24 (%) 23.13 Buy 24.59 Buy 26.25 Buy 28.13 Buy 30.31 Buy 32.83 Buy 35.81 Buy 39.37 Buy 43.69 Buy
10.74 (%) 22.14 Buy 23.49 Buy 25.02 Buy 26.75 Buy 28.74 Buy 31.04 Buy 33.73 Buy 36.92 Buy 40.76 Buy
10.24 (%) 21.21 Buy 22.47 Buy 23.88 Buy 25.48 Buy 27.30 Buy 29.39 Buy 31.83 Buy 34.71 Buy 38.14 Buy