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    Intuit Valuation

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    corvettejrw
    This document contains an exhibit summarizing Intuit Co.'s stock valuation using discounted cash flow analyses with different assumptions for the terminal value and discount rates. Three DCF analyses were performed using perpetuity growth rates, EBITDA multiples, and sales multiples to estimate the terminal value. Across the various scenarios, the implied value of the enterprise ranges from approximately $1.1 billion to $4.8 billion.

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    Intuit Valuation

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    corvettejrw
    320 views4 pages
    This document contains an exhibit summarizing Intuit Co.'s stock valuation using discounted cash flow analyses with different assumptions for the terminal value and discount rates. Three DCF analyses were performed using perpetuity growth rates, EBITDA multiples, and sales multiples to estimate the terminal value. Across the various scenarios, the implied value of the enterprise ranges from approximately $1.1 billion to $4.8 billion.

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    This document contains an exhibit summarizing Intuit Co.'s stock valuation using discounted cash flow analyses with different assumptions for the terminal value and discount rates. Three DCF analyses were performed using perpetuity growth rates, EBITDA multiples, and sales multiples to estimate the terminal value. Across the various scenarios, the implied value of the enterprise ranges from approximately $1.1 billion to $4.8 billion.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    320 views4 pages

    Intuit Valuation

    Uploaded by

    corvettejrw
    This document contains an exhibit summarizing Intuit Co.'s stock valuation using discounted cash flow analyses with different assumptions for the terminal value and discount rates. Three DCF analyses were performed using perpetuity growth rates, EBITDA multiples, and sales multiples to estimate the terminal value. Across the various scenarios, the implied value of the enterprise ranges from approximately $1.1 billion to $4.8 billion.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 4
    At a glance
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    The exhibits provide financial projections and valuation of Intuit using different methods such as discounted cash flow valuation and multiples valuation. Key financial metrics such as revenues, earnings and cash flows are forecasted.

    The company was valued using discounted cash flow method with perpetual growth and multiples valuation using EBITDA and sales multiples. Terminal value was calculated under different assumptions for growth rates and multiples.

    The cost of equity was calculated to be 15.81% using CAPM. The cost of debt was estimated to be 6% based on tax rate. The WACC was calculated to be 15% using debt to value ratio of 7%.

    Exhibit A - Intuit Co.

    Stock valuation
    ($ in thousands) -0.05 35% growth
    Actual Projected
    Fiscal Year Ended FY1992 FY1993 FY1994 FY1995E FY1996E FY1997E FY1998E
    Revenues 83,793 121,372 194,126 262,070 353,795 477,623 644,791
    Direct Operating Exp (29,085) (39,160) (50,941) (68,138) (91,987) (124,182) (167,646)
    SG&A (2,923) (5,304) (10,544) (15,724) (21,228) (28,657) (38,687)
    EBITDA 51,785 76,908 132,641 178,208 240,580 324,783 438,458
    Depreciation & Amort. (4,190) (6,069) (9,706) (13,104) (17,690) (23,881) (32,240)
    EBIT 47,595 70,839 122,935 165,104 222,891 300,902 406,218
    Taxes (~35%) (2,866) (5,344) (7,000) (44,578) (60,180) (81,244) (109,679)
    Debt Free Earnings 44,729 65,495 115,935 120,526 162,710 219,659 296,539

    Plus: Depreciation & Amort. 4,190 6,069 9,706 13,104 17,690 23,881 32,240
    Less: CAPEX (5,028) (7,282) (11,648) (15,724) (21,228) (28,657) (38,687)
    (Increase) in Working Capital 0 0 0 0 0 0 0
    Unlevered Free Cash Flow 43,891 64,282 113,993 117,905 159,172 214,882 290,091

    PV of FCF
    Discount Factor 7% 110,192 139,027 175,408 221,309 645,936
    Discount Factor 8% 109,172 136,465 170,581 213,226 629,443
    Discount Factor 9% 108,170 133,972 165,929 205,508 613,579
    Exhibit B - Industry Beta Comparison
    Company Ticker Debt to Equity Tax Rate Levered Beta Unlevered Beta
    Intuit None 0.2 35% 1.07 1.37
    American Standard ASD 0.87 40% 0.82 0.73
    American Woodmark AMWD 0.16 40% 0.76 1.09
    masco MAS 0.2 40% 1.28 1.78
    Briggs & Stratton BGG 0.21 40% 0.66 0.91
    Cummins Diesel CUM 0.61 40% 1.09 1.13
    Detroit Diesel DDC 0.21 40% 1.30 1.79
    Industry Average 0.99 1.26
    Relever Industry Average for Kohler 0.2 40% Err:522 Err:522

    Bl = Bu x [1 + (1 – tax rate) x (D / E)], or


    0.2 Bu = Bl / [1 + (1 – tax rate) x (D / E)]
    Exhibit C - MSFT. - Cost of Capital

    Cost of Equity (Ke)


    Risk Free Rate (Rf) 10yr Treasury 04/1998 5.64
    Mkt Risk Premium 8.5
    Size Premium - 1
    Beta 1.07
    Ke =5.64% + 1.07(8.5% +1%)
    Ke = 15.81%

    Cost of Debt (Kd)


    Estimated All-In Cost for Company 8.50%
    Effective Tax Rate 35%
    Kd = 6.5% * (1-40%)
    Kd= 6%

    Cost of Preferred (Kp)


    Balance Sheet does not show any Preferred Stock
    Kp= 0%

    Equity: $54*581M shares 841,575,000 93%


    Debt: 58,759,000 7%
    Total Value: 900,334,000

    WACC = Kd (1-T)(D/V) + Ke(E/V)


    WACC = 15.0%
    Exhibit D - DCF Analysis: Using Perpetuity Growth Rate for Terminal Value (in $ thousands)

    Discount Rate 10% 11% 12%


    Perpetuity Growth Rate 2% 3% 4% 2% 3% 4% 2% 3% 4%
    2001E Unlevered FCF 290,091 290,091 290,091 290,091 290,091 290,091 290,091 290,091 290,091
    Terminal Value 3,698,665 4,268,487 5,028,250 3,287,702 3,734,926 4,309,929 2,958,932 3,319,934 3,771,187

    PV of Terminal Value 2,526,238 2,915,434 3,434,362 2,165,711 2,460,311 2,839,083 1,880,455 2,109,878 2,396,658
    PV of Free Cash Flow 645,936 645,936 645,936 629,443 629,443 629,443 613,579 613,579 613,579
    (Add Back)Cash and Cash Equivalents 70,978 70,978 70,978 70,978 70,978 70,978 70,978 70,978 70,978
    Implied Value of Enterprise 3,243,152 3,632,349 4,151,277 2,866,132 3,160,732 3,539,504 2,565,011 2,794,435 3,081,215

    Average Value 3,226


    DCF Analysis: Using EBITDA Multiple for Terminal Value (in $ thousands)

    Discount Rate 10% 11% 12%


    EBITDA Multiple 5 8 12 5 8 12 5 8 12
    2001E EBITDA 438,458 438,458 438,458 438,458 438,458 438,458 1,405,350 1,405,350 1,405,350
    Terminal Value 2,192,288 3,507,662 5,261,492 2,192,288 3,507,662 5,261,492 7,026,749 11,242,799 16,864,198

    PV of Terminal Value 1,497,363 2,395,780 3,593,670 1,444,128 2,310,605 3,465,908 4,465,626 7,145,002 10,717,503
    PV of Free Cash Flow 645,936 645,936 645,936 629,443 629,443 629,443 613,579 613,579 613,579
    (Add Back)Cash and Cash Equivalents 70,978 70,978 70,978 70,978 70,978 70,978 70,978 70,978 70,978
    Implied Value of Enterprise 2,214,277 3,112,695 4,310,585 2,144,549 3,011,026 4,166,329 5,150,183 7,829,559 11,402,060

    Average Value 4,816


    DCF Analysis: Using Sales Multiple for Terminal Value (in $ thousands)

    Discount Rate 10% 11% 12%


    Sales Multiple 1 2 3 1 2 3 1 2 3
    2001E Sales 644,791 644,791 644,791 644,791 644,791 644,791 644,791 644,791 644,791
    Terminal Value 644,791 1,289,581 1,934,372 644,791 1,289,581 1,934,372 644,791 1,289,581 1,934,372

    PV of Terminal Value 440,401 880,801 1,321,202 424,744 849,487 1,274,231 409,776 819,552 1,229,328
    PV of Free Cash Flow 645,936 645,936 645,936 629,443 629,443 629,443 613,579 613,579 613,579
    (Add Back)Cash and Cash Equivalents 70,978 70,978 70,978 70,978 70,978 70,978 70,978 70,978 70,978
    Implied Value of Enterprise 1,157,315 1,597,716 2,038,117 1,125,164 1,549,908 1,974,651 1,094,333 1,504,109 1,913,885

    Average Value 1,551

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