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Discounted Cash Flow (DCF) Analysis Unlevered


Verizon Communications Inc.

Verizon Communications Inc. (VZ)

Communication Services

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 120,550.00127,083.81131,620.70125,974.17126,024.56130,851.30133,101.95135,391.30137,720.03140,088.82142,498.34
Revenue (%)
EBITDA 36,502.5434,388.8848,686.5040,803.0341,827.5541,349.0142,486.1443,216.9043,960.2344,716.3545,485.47
EBITDA (%)
EBIT 19,890.7517,855.2832,668.2624,879.9024,877.2523,945.7925,103.0325,534.8025,974.0026,420.7526,875.19
EBIT (%)
Depreciation 16,611.7916,533.6016,018.2415,923.1416,950.3017,403.2217,383.1117,682.1017,986.2418,295.6018,610.28
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 54,126.9511,157.964,817.322,884.812,079.412,747.8814,055.5714,297.3214,543.2414,793.3815,047.82
Total Cash (%)
Account Receivables 12,440.7613,991.9313,451.6417,510.4123,490.9825,097.2818,474.5518,792.3119,115.5419,444.3319,778.77
Account Receivables (%)
Inventories 1,024.681,156.461,250.401,196.751,033.401,334.681,224.541,245.601,267.021,288.821,310.98
Inventories (%)
Accounts Payable 16,455.0816,686.1019,361.4119,588.9821,235.1422,506.4220,204.8820,552.4020,905.9021,265.4821,631.25
Accounts Payable (%)
Capital Expenditure -16,599.73-17,194.44-17,768.79-17,056.90-17,252.76-16,657.37-17,915.52-18,223.67-18,537.12-18,855.95-19,180.28
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 60.59
Diluted Shares Outstanding 4,128.00
Cost of Debt
Tax Rate 18.75
After-tax Cost of Debt -0.89
Risk-Free Rate
Market Risk Premium
Cost of Equity 6.49
Total Debt 105,873.00
Total Equity 250,115.52
Total Capital 355,988.52
Debt Weighting 29.74
Equity Weighting 70.26
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 120,550.00127,083.81131,620.70125,974.17126,024.56130,851.30133,101.95135,391.30137,720.03140,088.82142,498.34
EBITDA 36,502.5434,388.8848,686.5040,803.0341,827.5541,349.0142,486.1443,216.9043,960.2344,716.3545,485.47
EBIT 19,890.7517,855.2832,668.2624,879.9024,877.2523,945.7925,103.0325,534.8025,974.0026,420.7526,875.19
Tax Rate 33.26%25.61%35.56%35.98%-49.42%18.75%16.62%16.62%16.62%16.62%16.62%
EBIAT 13,274.7413,282.0921,052.3315,927.7537,172.0119,455.3320,929.9121,289.9021,656.0922,028.5722,407.46
Depreciation 16,611.7916,533.6016,018.2415,923.1416,950.3017,403.2217,383.1117,682.1017,986.2418,295.6018,610.28
Accounts Receivable --1,551.17540.29-4,058.77-5,980.57-1,606.306,622.73-317.76-323.23-328.79-334.44
Inventories --131.79-93.9353.64163.35-301.28110.15-21.06-21.42-21.79-22.17
Accounts Payable -231.032,675.30227.581,646.151,271.29-2,301.55347.52353.50359.58365.77
Capital Expenditure -594.70574.36-711.89195.86-595.391,258.15308.15313.45318.84324.32
UFCF 29,886.5328,958.4840,766.5827,361.4450,147.1135,626.8644,002.5039,288.8539,964.6240,652.0141,351.22
WACC
PV UFCF 41,602.0635,119.1833,774.4432,481.2031,237.47
SUM PV UFCF 298,207.83

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 5.77
Free cash flow (t + 1) 43,005.27
Terminal Value 2,429,676.49
Present Value of Terminal Value 1,835,421.98

Intrinsic Value

Enterprise Value 2,133,629.82
Net Debt 103,125.12
Equity Value 2,030,504.70
Shares Outstanding 4,128.00
Equity Value Per Share 491.89