Discounted Cash Flow (DCF) Analysis Levered

Electronic Arts Inc. (EA)

$114.89

+1.37 (+1.21%)

All numbers are in Millions, Currency in USD

Stock DCF: 184.38 | 114.89 | undervalue

Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	5,150	4,950	5,537	5,629	6,991	7,582.31	8,223.64	8,919.21	9,673.61	10,491.83
Revenue (%)
Operating Cash Flow	1,692	1,547	1,797	1,934	1,899	2,397.26	2,600.03	2,819.94	3,058.46	3,317.15
Operating Cash Flow (%)
Capital Expenditure	-107	-119	-140	-124	-188	-180.49	-195.76	-212.32	-230.27	-249.75
Capital Expenditure (%)
Free Cash Flow	1,585	1,428	1,657	1,810	1,711	2,216.77	2,404.27	2,607.63	2,828.18	3,067.40

Weighted Average Cost Of Capital

Share price	$ 114.89
Beta	0.854
Diluted Shares Outstanding	286
Cost of Debt
Tax Rate	27.01
After-tax Cost of Debt	2.16%
Risk-Free Rate
Market Risk Premium
Cost of Equity	7.612
Total Debt	1,959
Total Equity	32,858.54
Total Capital	34,817.54
Debt Weighting	5.63
Equity Weighting	94.37
Wacc

Build Up Free Cash Flow

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	5,150	4,950	5,537	5,629	6,991	7,582.31	8,223.64	8,919.21	9,673.61	10,491.83
Operating Cash Flow	1,692	1,547	1,797	1,934	1,899	2,397.26	2,600.03	2,819.94	3,058.46	3,317.15
Capital Expenditure	-107	-119	-140	-124	-188	-180.49	-195.76	-212.32	-230.27	-249.75
Free Cash Flow	1,585	1,428	1,657	1,810	1,711	2,216.77	2,404.27	2,607.63	2,828.18	3,067.40
WACC
PV LFCF						1,451.71	1,467.24	1,482.94	1,498.81	1,514.85
SUM PV LFCF										10,552.23

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.31
Free cash flow (t + 1)	3,128.75
Terminal Value	58,921.77
Present Value of Terminal Value	41,407.10

Intrinsic Value

Enterprise Value	51,959.33
Net Debt	-773
Equity Value	52,732.33
Shares Outstanding	286
Equity Value Per Share	184.38