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Discounted Cash Flow (DCF) Analysis Unlevered


HP Inc.

HP Inc. (HPQ)

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 112,298.0056,654.3451,464.8048,237.9652,053.5858,471.7953,238.5648,473.7144,135.3240,185.2036,588.63
Revenue (%)
EBITDA 11,746.3710,679.348,815.923,709.503,872.794,590.046,159.705,608.415,106.464,649.434,233.30
EBITDA (%)
EBIT 7,130.926,345.294,755.353,376.663,518.824,063.794,216.493,839.123,495.523,182.672,897.82
EBIT (%)
Depreciation 4,615.454,334.064,060.57332.84353.96526.251,943.211,769.291,610.941,466.761,335.48
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 12,161.8715,132.377,585.916,290.236,996.005,168.917,772.837,077.166,443.765,867.045,341.94
Total Cash (%)
Account Receivables 28,579.8425,233.844,827.404,114.704,414.145,110.439,327.408,492.597,732.517,040.456,410.33
Account Receivables (%)
Inventories 6,041.636,413.274,287.024,486.135,788.366,063.524,951.194,508.064,104.583,737.223,402.74
Inventories (%)
Accounts Payable 14,014.7915,902.8710,195.1811,104.3813,278.8714,816.7511,909.4710,843.579,873.078,989.438,184.88
Accounts Payable (%)
Capital Expenditure -2,549.16-3,008.35-3,180.52-429.32-333.14-374.22-1,410.82-1,284.55-1,169.59-1,064.91-969.60
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 19.06
Diluted Shares Outstanding 1,634.00
Cost of Debt
Tax Rate -76.80
After-tax Cost of Debt 3.89
Risk-Free Rate
Market Risk Premium
Cost of Equity 14.19
Total Debt 4,524.00
Total Equity 31,144.04
Total Capital 35,668.04
Debt Weighting 12.68
Equity Weighting 87.32
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 112,298.0056,654.3451,464.8048,237.9652,053.5858,471.7953,238.5648,473.7144,135.3240,185.2036,588.63
EBITDA 11,746.3710,679.348,815.923,709.503,872.794,590.046,159.705,608.415,106.464,649.434,233.30
EBIT 7,130.926,345.294,755.353,376.663,518.824,063.794,216.493,839.123,495.523,182.672,897.82
Tax Rate 21.46%15.78%-4.26%30.49%22.89%-76.80%1.59%1.59%1.59%1.59%1.59%
EBIAT 5,600.685,344.244,957.842,347.022,713.237,184.804,149.293,777.933,439.803,131.942,851.63
Depreciation 4,615.454,334.064,060.57332.84353.96526.251,943.211,769.291,610.941,466.761,335.48
Accounts Receivable -3,346.0020,406.44712.70-299.45-696.29-4,216.96834.80760.09692.06630.12
Inventories --371.642,126.25-199.11-1,302.23-275.171,112.34443.13403.47367.36334.48
Accounts Payable -1,888.08-5,707.70909.202,174.491,537.88-2,907.28-1,065.90-970.50-883.64-804.55
Capital Expenditure -459.18172.18-2,751.21-96.1741.081,036.60-126.27-114.97-104.68-95.31
UFCF 10,216.1314,999.9226,015.601,351.443,543.848,318.551,117.195,632.985,128.834,669.804,251.85
WACC
PV UFCF 984.224,371.903,506.842,812.952,256.36
SUM PV UFCF 51,527.47

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 13.51
Free cash flow (t + 1) 4,421.93
Terminal Value 46,497.67
Present Value of Terminal Value 24,675.19

Intrinsic Value

Enterprise Value 76,202.67
Net Debt -644.91
Equity Value 76,847.57
Shares Outstanding 1,634.00
Equity Value Per Share 47.03

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
15.51 (%) 41.27 Buy 42.02 Buy 42.88 Buy 43.87 Buy 45.04 Buy 46.43 Buy 48.12 Buy 50.20 Buy 52.83 Buy
15.01 (%) 40.78 Buy 41.47 Buy 42.25 Buy 43.16 Buy 44.22 Buy 45.47 Buy 46.97 Buy 48.80 Buy 51.09 Buy
14.51 (%) 40.32 Buy 40.96 Buy 41.68 Buy 42.51 Buy 43.47 Buy 44.59 Buy 45.94 Buy 47.56 Buy 49.57 Buy
14.01 (%) 39.90 Buy 40.48 Buy 41.15 Buy 41.90 Buy 42.78 Buy 43.80 Buy 45.01 Buy 46.46 Buy 48.22 Buy
13.51 (%) 39.50 Buy 40.04 Buy 40.65 Buy 41.35 Buy 42.15 Buy 43.08 Buy 44.17 Buy 45.46 Buy 47.03 Buy
13.01 (%) 39.13 Buy 39.63 Buy 40.20 Buy 40.84 Buy 41.57 Buy 42.42 Buy 43.40 Buy 44.57 Buy 45.96 Buy
12.51 (%) 38.78 Buy 39.25 Buy 39.77 Buy 40.37 Buy 41.04 Buy 41.81 Buy 42.71 Buy 43.76 Buy 45.01 Buy
12.01 (%) 38.46 Buy 38.89 Buy 39.38 Buy 39.93 Buy 40.54 Buy 41.25 Buy 42.07 Buy 43.02 Buy 44.14 Buy
11.51 (%) 38.16 Buy 38.56 Buy 39.01 Buy 39.52 Buy 40.09 Buy 40.74 Buy 41.48 Buy 42.35 Buy 43.36 Buy