Discounted Cash Flow (DCF) Analysis Levered

Mercury General Corporation (MCY)

$29.11

-0.47 (-1.59%)

All numbers are in Millions, Currency in USD

Stock DCF: 268.79 | 29.11 | 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	3,415.96	3,380	3,972.52	3,784.51	3,993.36	4,165.70	4,345.48	4,533.02	4,728.66	4,932.74
Revenue (%)
Operating Cash Flow	341.41	383.43	519.68	605.62	501.58	524.74	547.39	571.01	595.65	621.36
Operating Cash Flow (%)
Capital Expenditure	-19.44	-27.96	-40.09	-39.95	-41.44	-37.48	-39.10	-40.79	-42.55	-44.38
Capital Expenditure (%)
Free Cash Flow	321.96	355.48	479.59	565.66	460.14	487.26	508.29	530.22	553.11	576.98

Weighted Average Cost Of Capital

Share price	$ 29.11
Beta	0.487
Diluted Shares Outstanding	55.36
Cost of Debt
Tax Rate	17.16
After-tax Cost of Debt	3.48%
Risk-Free Rate
Market Risk Premium
Cost of Equity	6.062
Total Debt	407.51
Total Equity	1,611.47
Total Capital	2,018.98
Debt Weighting	20.18
Equity Weighting	79.82
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	3,415.96	3,380	3,972.52	3,784.51	3,993.36	4,165.70	4,345.48	4,533.02	4,728.66	4,932.74
Operating Cash Flow	341.41	383.43	519.68	605.62	501.58	524.74	547.39	571.01	595.65	621.36
Capital Expenditure	-19.44	-27.96	-40.09	-39.95	-41.44	-37.48	-39.10	-40.79	-42.55	-44.38
Free Cash Flow	321.96	355.48	479.59	565.66	460.14	487.26	508.29	530.22	553.11	576.98
WACC
PV LFCF						461.68	456.32	451.03	445.80	440.63
SUM PV LFCF										2,255.46

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	5.54
Free cash flow (t + 1)	588.52
Terminal Value	16,624.74
Present Value of Terminal Value	12,696.07

Intrinsic Value

Enterprise Value	14,951.54
Net Debt	71.95
Equity Value	14,879.59
Shares Outstanding	55.36
Equity Value Per Share	268.79