Discounted Cash Flow (DCF) Analysis Levered

Heritage Insurance Holdings, Inc. (HRTG)

$3.1

-0.09 (-2.82%)

All numbers are in Millions, Currency in USD

Stock DCF: 114.76 | 3.1 | undervalue

Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	406.62	480.17	511.30	593.39	631.56	705.86	788.90	881.71	985.44	1,101.37
Revenue (%)
Operating Cash Flow	7.57	95.43	119.66	170.21	-0.27	104.15	116.41	130.10	145.41	162.52
Operating Cash Flow (%)
Capital Expenditure	-0.38	-2.28	-4.98	-0.75	-2.64	-2.95	-3.30	-3.68	-4.12	-4.60
Capital Expenditure (%)
Free Cash Flow	7.18	93.15	114.67	169.46	-2.91	101.20	113.11	126.42	141.29	157.91

Weighted Average Cost Of Capital

Share price	$ 3.1
Beta	0.889
Diluted Shares Outstanding	27.99
Cost of Debt
Tax Rate	1.72
After-tax Cost of Debt	6.49%
Risk-Free Rate
Market Risk Premium
Cost of Equity	7.086
Total Debt	120.76
Total Equity	86.77
Total Capital	207.52
Debt Weighting	58.19
Equity Weighting	41.81
Wacc

Build Up Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	406.62	480.17	511.30	593.39	631.56	705.86	788.90	881.71	985.44	1,101.37
Operating Cash Flow	7.57	95.43	119.66	170.21	-0.27	104.15	116.41	130.10	145.41	162.52
Capital Expenditure	-0.38	-2.28	-4.98	-0.75	-2.64	-2.95	-3.30	-3.68	-4.12	-4.60
Free Cash Flow	7.18	93.15	114.67	169.46	-2.91	101.20	113.11	126.42	141.29	157.91
WACC
PV LFCF						68.43	71.65	75.02	78.55	82.25
SUM PV LFCF										520.85

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.74
Free cash flow (t + 1)	161.07
Terminal Value	3,398.12
Present Value of Terminal Value	2,452.47

Intrinsic Value

Enterprise Value	2,973.32
Net Debt	-238.58
Equity Value	3,211.90
Shares Outstanding	27.99
Equity Value Per Share	114.76