Discounted Cash Flow (DCF) Analysis Levered

KB Home (KBH)

$29.65

+1.19 (+4.18%)

All numbers are in Millions, Currency in USD

Stock DCF: 56.66 | 29.65 | 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	4,368.53	4,547	4,552.75	4,183.17	5,724.93	6,196.53	6,706.97	7,259.46	7,857.47	8,504.73
Revenue (%)
Operating Cash Flow	513.22	221.51	251.04	310.68	-37.30	358.27	387.79	419.73	454.31	491.73
Operating Cash Flow (%)
Capital Expenditure	-8.09	-7.37	-40.46	-28.84	-39.40	-32.39	-35.06	-37.94	-41.07	-44.45
Capital Expenditure (%)
Free Cash Flow	505.13	214.14	210.58	281.84	-76.69	325.88	352.73	381.78	413.23	447.28

Weighted Average Cost Of Capital

Share price	$ 29.65
Beta	1.587
Diluted Shares Outstanding	93.59
Cost of Debt
Tax Rate	18.78
After-tax Cost of Debt	4.06%
Risk-Free Rate
Market Risk Premium
Cost of Equity	10.380
Total Debt	1,714.31
Total Equity	2,774.85
Total Capital	4,489.16
Debt Weighting	38.19
Equity Weighting	61.81
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	4,368.53	4,547	4,552.75	4,183.17	5,724.93	6,196.53	6,706.97	7,259.46	7,857.47	8,504.73
Operating Cash Flow	513.22	221.51	251.04	310.68	-37.30	358.27	387.79	419.73	454.31	491.73
Capital Expenditure	-8.09	-7.37	-40.46	-28.84	-39.40	-32.39	-35.06	-37.94	-41.07	-44.45
Free Cash Flow	505.13	214.14	210.58	281.84	-76.69	325.88	352.73	381.78	413.23	447.28
WACC
PV LFCF						301.83	302.58	303.33	304.08	304.83
SUM PV LFCF										1,516.64

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.97
Free cash flow (t + 1)	456.22
Terminal Value	7,641.89
Present Value of Terminal Value	5,208.17

Intrinsic Value

Enterprise Value	6,724.81
Net Debt	1,422.17
Equity Value	5,302.64
Shares Outstanding	93.59
Equity Value Per Share	56.66