Discounted Cash Flow (DCF) Analysis Levered

TransAlta Corporation (TA.TO)

$12.97

+0.25 (+1.97%)

All numbers are in Millions, Currency in USD

Stock DCF: 22.18 | 12.97 | 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	2,307	2,249	2,347	2,101	2,721	2,862.98	3,012.37	3,169.55	3,334.94	3,508.95
Revenue (%)
Operating Cash Flow	626	820	849	702	1,001	973.24	1,024.02	1,077.46	1,133.68	1,192.83
Operating Cash Flow (%)
Capital Expenditure	-389	-297	-431	-500	-489	-516.49	-543.44	-571.79	-601.63	-633.02
Capital Expenditure (%)
Free Cash Flow	237	523	418	202	512	456.75	480.59	505.66	532.05	559.81

Weighted Average Cost Of Capital

Share price	$ 12.97
Beta	1.083
Diluted Shares Outstanding	271
Cost of Debt
Tax Rate	-41.32
After-tax Cost of Debt	7.56%
Risk-Free Rate
Market Risk Premium
Cost of Equity	8.631
Total Debt	3,267
Total Equity	3,514.87
Total Capital	6,781.87
Debt Weighting	48.17
Equity Weighting	51.83
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	2,307	2,249	2,347	2,101	2,721	2,862.98	3,012.37	3,169.55	3,334.94	3,508.95
Operating Cash Flow	626	820	849	702	1,001	973.24	1,024.02	1,077.46	1,133.68	1,192.83
Capital Expenditure	-389	-297	-431	-500	-489	-516.49	-543.44	-571.79	-601.63	-633.02
Free Cash Flow	237	523	418	202	512	456.75	480.59	505.66	532.05	559.81
WACC
PV LFCF						390.80	380.34	370.17	360.26	350.63
SUM PV LFCF										2,002.41

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	8.11
Free cash flow (t + 1)	571.01
Terminal Value	9,345.44
Present Value of Terminal Value	6,328.06

Intrinsic Value

Enterprise Value	8,330.47
Net Debt	2,320
Equity Value	6,010.47
Shares Outstanding	271
Equity Value Per Share	22.18