Discounted Cash Flow (DCF) Analysis Levered

Electronic Arts Inc. (EA)

$125.94

-1.17 (-0.92%)

All numbers are in Millions, Currency in USD

Stock DCF: 198.21 | 125.94 | undervalue

Free Cash Flow

Year A/P	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Actual	2024 Projected	2025 Projected	2026 Projected	2027 Projected	2028 Projected
Revenue	4,950	5,537	5,629	6,991	7,426	8,241.72	9,147.04	10,151.81	11,266.95	12,504.58
Revenue (%)
Operating Cash Flow	1,547	1,797	1,934	1,899	1,550	2,408.24	2,672.78	2,966.38	3,292.22	3,653.86
Operating Cash Flow (%)
Capital Expenditure	-119	-140	-124	-188	-207	-207.89	-230.73	-256.07	-284.20	-315.42
Capital Expenditure (%)
Free Cash Flow	1,428	1,657	1,810	1,711	1,343	2,200.35	2,442.05	2,710.31	3,008.02	3,338.44

Weighted Average Cost Of Capital

Share price	$ 125.94
Beta	0.867
Diluted Shares Outstanding	278
Cost of Debt
Tax Rate	39.52
After-tax Cost of Debt	0.19%
Risk-Free Rate
Market Risk Premium
Cost of Equity	7.836
Total Debt	1,880
Total Equity	35,011.32
Total Capital	36,891.32
Debt Weighting	5.10
Equity Weighting	94.90
Wacc

Build Up Free Cash Flow

Year A/P	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Actual	2024 Projected	2025 Projected	2026 Projected	2027 Projected	2028 Projected
Revenue	4,950	5,537	5,629	6,991	7,426	8,241.72	9,147.04	10,151.81	11,266.95	12,504.58
Operating Cash Flow	1,547	1,797	1,934	1,899	1,550	2,408.24	2,672.78	2,966.38	3,292.22	3,653.86
Capital Expenditure	-119	-140	-124	-188	-207	-207.89	-230.73	-256.07	-284.20	-315.42
Free Cash Flow	1,428	1,657	1,810	1,711	1,343	2,200.35	2,442.05	2,710.31	3,008.02	3,338.44
WACC
PV LFCF						1,773.67	1,832.02	1,892.28	1,954.53	2,018.83
SUM PV LFCF										10,935.13

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.45
Free cash flow (t + 1)	3,405.21
Terminal Value	62,480.96
Present Value of Terminal Value	43,623.01

Intrinsic Value

Enterprise Value	54,558.14
Net Debt	-544
Equity Value	55,102.14
Shares Outstanding	278
Equity Value Per Share	198.21