Discounted Cash Flow (DCF) Analysis Levered

KAR Auction Services, Inc. (KAR)

$16.25

+0.59 (+3.77%)

All numbers are in Millions, Currency in USD

Stock DCF: 25.12 | 16.25 | 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	3,458	3,769.60	2,781.90	2,187.70	2,251.60	2,051.04	1,868.35	1,701.93	1,550.33	1,412.24
Revenue (%)
Operating Cash Flow	588.80	749.80	542	384.40	413.20	378.72	344.98	314.26	286.26	260.77
Operating Cash Flow (%)
Capital Expenditure	-152.20	-198	-161.60	-101.40	-108.50	-102.21	-93.11	-84.81	-77.26	-70.38
Capital Expenditure (%)
Free Cash Flow	436.60	551.80	380.40	283	304.70	276.51	251.88	229.44	209.01	190.39

Weighted Average Cost Of Capital

Share price	$ 16.25
Beta	1.051
Diluted Shares Outstanding	121.16
Cost of Debt
Tax Rate	34.48
After-tax Cost of Debt	3.80%
Risk-Free Rate
Market Risk Premium
Cost of Equity	7.705
Total Debt	2,183.10
Total Equity	1,968.90
Total Capital	4,152
Debt Weighting	52.58
Equity Weighting	47.42
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	3,458	3,769.60	2,781.90	2,187.70	2,251.60	2,051.04	1,868.35	1,701.93	1,550.33	1,412.24
Operating Cash Flow	588.80	749.80	542	384.40	413.20	378.72	344.98	314.26	286.26	260.77
Capital Expenditure	-152.20	-198	-161.60	-101.40	-108.50	-102.21	-93.11	-84.81	-77.26	-70.38
Free Cash Flow	436.60	551.80	380.40	283	304.70	276.51	251.88	229.44	209.01	190.39
WACC
PV LFCF						261.72	225.66	194.57	167.76	144.64
SUM PV LFCF										994.34

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	5.65
Free cash flow (t + 1)	194.20
Terminal Value	5,320.45
Present Value of Terminal Value	4,042.04

Intrinsic Value

Enterprise Value	5,036.38
Net Debt	1,993.10
Equity Value	3,043.28
Shares Outstanding	121.16
Equity Value Per Share	25.12