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Discounted Cash Flow (DCF) Analysis Unlevered


Kroger Company (The)

Kroger Company (The) (KR)

Consumer Defensive

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 96,619.0098,377.47108,470.99109,837.73115,340.60122,664.73121,168.22125,905.89130,828.81135,944.22141,259.64
Revenue (%)
EBITDA 4,405.834,417.155,065.605,656.645,790.104,538.597,100.466,018.306,253.626,498.136,752.21
EBITDA (%)
EBIT 2,753.642,715.223,113.123,569.733,448.682,097.574,640.743,651.273,794.043,942.384,096.53
EBIT (%)
Depreciation 1,652.181,701.931,952.482,086.922,341.412,441.032,459.712,367.032,459.582,555.752,655.68
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 241.55403.35271.18274.59322.95343.46424.09377.72392.49407.83423.78
Total Cash (%)
Account Receivables 1,053.151,111.671,269.111,735.441,649.371,631.441,587.301,624.191,687.691,753.681,822.25
Account Receivables (%)
Inventories 5,149.795,646.875,683.886,172.886,562.886,538.036,846.006,937.417,208.677,490.537,783.41
Inventories (%)
Accounts Payable 4,483.124,879.525,054.755,722.555,813.175,863.376,058.416,169.396,410.616,661.276,921.72
Accounts Payable (%)
Capital Expenditure -2,057.98-2,331.55-2,831.09-3,350.05-3,702.43-2,809.02-2,968.62-3,260.96-3,388.47-3,520.96-3,658.62
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 22.91
Diluted Shares Outstanding 818.00
Cost of Debt
Tax Rate 22.44
After-tax Cost of Debt -1.07
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.59
Total Debt 12,072.00
Total Equity 18,740.38
Total Capital 30,812.38
Debt Weighting 39.18
Equity Weighting 60.82
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Actual
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 96,619.0098,377.47108,470.99109,837.73115,340.60122,664.73121,168.22125,905.89130,828.81135,944.22141,259.64
EBITDA 4,405.834,417.155,065.605,656.645,790.104,538.597,100.466,018.306,253.626,498.136,752.21
EBIT 2,753.642,715.223,113.123,569.733,448.682,097.574,640.743,651.273,794.043,942.384,096.53
Tax Rate 34.66%33.08%34.30%33.88%32.64%-26.96%22.44%23.43%23.43%23.43%23.43%
EBIAT 1,799.301,816.922,045.422,360.142,323.042,663.163,599.182,795.612,904.923,018.503,136.53
Depreciation 1,652.181,701.931,952.482,086.922,341.412,441.032,459.712,367.032,459.582,555.752,655.68
Accounts Receivable --58.52-157.45-466.3386.0717.9344.14-36.88-63.51-65.99-68.57
Inventories --497.07-37.01-489.00-390.0024.85-307.97-91.41-271.25-281.86-292.88
Accounts Payable -396.40175.23667.8090.6250.21195.04110.98241.22250.65260.46
Capital Expenditure -273.56499.55518.96352.38-893.41159.60292.34127.50132.49137.67
UFCF 3,451.493,633.224,478.224,678.494,803.524,303.766,149.695,437.675,398.475,609.555,828.88
WACC
PV UFCF 4,827.664,516.024,421.564,329.07
SUM PV UFCF 37,208.21

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 6.13
Free cash flow (t + 1) 6,062.04
Terminal Value 284,602.78
Present Value of Terminal Value 211,372.42

Intrinsic Value

Enterprise Value 248,580.62
Net Debt 11,647.91
Equity Value 236,932.71
Shares Outstanding 818.00
Equity Value Per Share 289.65

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
8.13 (%) 99.98 Buy 110.43 Buy 124.30 Buy 143.57 Buy 172.18 Buy 219.06 Buy 309.97 Buy 561.78 Buy 4,687.57 Buy
7.63 (%) 94.46 Buy 103.49 Buy 115.24 Buy 131.17 Buy 153.98 Buy 189.36 Buy 251.64 Buy 390.34 Buy 969.34 Buy
7.13 (%) 89.59 Buy 97.45 Buy 107.51 Buy 120.86 Buy 139.41 Buy 166.94 Buy 212.07 Buy 299.57 Buy 541.93 Buy
6.63 (%) 85.27 Buy 92.15 Buy 100.85 Buy 112.16 Buy 127.49 Buy 149.45 Buy 183.51 Buy 243.46 Buy 376.98 Buy
6.13 (%) 81.40 Buy 87.47 Buy 95.04 Buy 104.73 Buy 117.58 Buy 135.44 Buy 161.95 Buy 205.40 Buy 289.65 Buy
5.63 (%) 77.93 Buy 83.32 Buy 89.95 Buy 98.32 Buy 109.22 Buy 123.98 Buy 145.13 Buy 177.93 Buy 235.66 Buy
5.13 (%) 74.80 Buy 79.60 Buy 85.45 Buy 92.74 Buy 102.07 Buy 114.45 Buy 131.65 Buy 157.19 Buy 199.04 Buy
4.63 (%) 71.97 Buy 76.27 Buy 81.45 Buy 87.84 Buy 95.91 Buy 106.40 Buy 120.63 Buy 141.00 Buy 172.60 Buy
4.13 (%) 69.40 Buy 73.26 Buy 77.88 Buy 83.52 Buy 90.54 Buy 99.53 Buy 111.46 Buy 128.04 Buy 152.64 Buy