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Discounted Cash Flow (DCF) Analysis Unlevered


Hewlett Packard Enterprise Company

Hewlett Packard Enterprise Company (HPE)

Technology

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 57,371.0055,122.0631,077.8230,282.2228,874.1030,854.8627,898.9725,226.2522,809.5720,624.4218,648.60
Revenue (%)
EBITDA 7,659.036,757.965,951.408,091.413,822.933,292.214,578.224,139.633,743.053,384.473,060.23
EBITDA (%)
EBIT 3,264.412,612.792,004.524,315.22770.94715.831,699.051,536.281,389.101,256.031,135.70
EBIT (%)
Depreciation 4,394.624,145.183,946.883,776.193,051.992,576.382,879.172,603.352,353.952,128.441,924.54
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 2,180.102,320.649,842.3412,988.059,580.434,881.247,128.196,445.315,827.855,269.544,764.72
Total Cash (%)
Account Receivables 19,632.3617,898.1322,332.5216,988.3319,051.1318,019.2415,891.2514,368.8712,992.3311,747.6710,622.24
Account Receivables (%)
Inventories 2,076.831,885.172,197.201,720.032,315.702,446.791,791.111,619.531,464.371,324.091,197.24
Inventories (%)
Accounts Payable 4,337.254,889.335,827.094,945.096,072.226,090.754,728.874,275.853,866.223,495.843,160.94
Accounts Payable (%)
Capital Expenditure -2,128.46-3,015.18-2,964.82-2,831.39-2,457.19-1,860.55-2,170.54-1,962.60-1,774.58-1,604.58-1,450.86
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 12.7
Diluted Shares Outstanding 1,553.00
Cost of Debt
Tax Rate -1,063.41
After-tax Cost of Debt 53.22
Risk-Free Rate
Market Risk Premium
Cost of Equity 15.14
Total Debt 10,136.00
Total Equity 19,723.10
Total Capital 29,859.10
Debt Weighting 33.95
Equity Weighting 66.05
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 57,371.0055,122.0631,077.8230,282.2228,874.1030,854.8627,898.9725,226.2522,809.5720,624.4218,648.60
EBITDA 7,659.036,757.965,951.408,091.413,822.933,292.214,578.224,139.633,743.053,384.473,060.23
EBIT 3,264.412,612.792,004.524,315.22770.94715.831,699.051,536.281,389.101,256.031,135.70
Tax Rate 28.56%26.56%-40.15%16.46%-91.11%-1,063.41%-187.18%-187.18%-187.18%-187.18%-187.18%
EBIAT 2,332.051,918.842,809.293,604.761,473.358,328.104,879.354,411.913,989.253,607.083,261.52
Depreciation 4,394.624,145.183,946.883,776.193,051.992,576.382,879.172,603.352,353.952,128.441,924.54
Accounts Receivable -1,734.22-4,434.395,344.19-2,062.801,031.892,127.991,522.381,376.541,244.671,125.43
Inventories -191.66-312.03477.17-595.67-131.09655.68171.59155.15140.29126.85
Accounts Payable -552.08937.76-882.001,127.1418.53-1,361.88-453.03-409.63-370.38-334.90
Capital Expenditure -886.71-50.35-133.44-374.20-596.64309.99-207.94-188.02-170.01-153.72
UFCF 6,726.669,428.692,897.1712,186.872,619.8011,227.189,490.308,048.267,277.246,580.085,949.71
WACC
PV UFCF 7,314.304,780.653,331.542,321.681,617.93
SUM PV UFCF 23,535.47

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 29.75
Free cash flow (t + 1) 6,187.70
Terminal Value 24,029.89
Present Value of Terminal Value 6,534.54

Intrinsic Value

Enterprise Value 30,070.00
Net Debt 5,254.76
Equity Value 24,815.24
Shares Outstanding 1,553.00
Equity Value Per Share 15.98

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
31.75 (%) 15.18 Buy 15.32 Buy 15.48 Buy 15.65 Buy 15.83 Buy 16.02 Buy 16.23 Buy 16.46 Buy 16.70 Buy
31.25 (%) 15.06 Buy 15.20 Buy 15.35 Buy 15.51 Buy 15.68 Buy 15.86 Buy 16.06 Buy 16.28 Buy 16.51 Buy
30.75 (%) 14.95 Buy 15.08 Buy 15.22 Buy 15.37 Buy 15.54 Buy 15.71 Buy 15.90 Buy 16.10 Buy 16.32 Buy
30.25 (%) 14.84 Buy 14.97 Buy 15.10 Buy 15.25 Buy 15.40 Buy 15.57 Buy 15.75 Buy 15.94 Buy 16.15 Buy
29.75 (%) 14.73 Buy 14.86 Buy 14.99 Buy 15.13 Buy 15.27 Buy 15.43 Buy 15.60 Buy 15.78 Buy 15.98 Buy
29.25 (%) 14.64 Buy 14.75 Buy 14.88 Buy 15.01 Buy 15.15 Buy 15.30 Buy 15.46 Buy 15.63 Buy 15.82 Buy
28.75 (%) 14.54 Buy 14.65 Buy 14.77 Buy 14.90 Buy 15.03 Buy 15.17 Buy 15.33 Buy 15.49 Buy 15.67 Buy
28.25 (%) 14.45 Buy 14.56 Buy 14.67 Buy 14.79 Buy 14.92 Buy 15.06 Buy 15.20 Buy 15.36 Buy 15.53 Buy
27.75 (%) 14.36 Buy 14.47 Buy 14.57 Buy 14.69 Buy 14.81 Buy 14.94 Buy 15.08 Buy 15.23 Buy 15.39 Buy