Discounted Cash Flow (DCF) Analysis Unlevered

Diageo plc (DEO)

$175.09

-1.31 (-0.74%)

All numbers are in Millions, Currency in USD

Stock DCF: 211.30 | 175.09 | undervalue

Operating Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	12,163	12,867	11,752	12,733	15,452	16,488.21	17,593.91	18,773.75	20,032.72	21,376.11
Revenue (%)
EBITDA	4,520	4,938	4,408	4,510	5,628	6,097.01	6,505.87	6,942.15	7,407.69	7,904.45
EBITDA (%)
EBIT	4,027	4,564	2,569	4,063	4,800	5,058.99	5,398.25	5,760.25	6,146.54	6,558.72
EBIT (%)
Depreciation	493	374	1,839	447	828	1,038.01	1,107.62	1,181.90	1,261.16	1,345.73
Depreciation (%)

Balance Sheet Data

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Total Cash	899	1,056	3,396	2,795	2,536	2,732.38	2,915.61	3,111.13	3,319.76	3,542.38
Total Cash (%)
Account Receivables	-	-	-	-	-	-	-	-	-	-
Account Receivables (%)
Inventories	5,015	5,472	5,772	6,045	7,094	7,461.21	7,961.56	8,495.46	9,065.17	9,673.07
Inventories (%)
Accounts Payable	1,514	1,694	1,333	2,014	5,887	2,996.62	3,197.57	3,412	3,640.81	3,884.96
Accounts Payable (%)
Capital Expenditure	-584	-671	-700	-626	-1,097	-922.96	-984.86	-1,050.90	-1,121.37	-1,196.57
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 175.09
Beta	0.410
Diluted Shares Outstanding	581.25
Cost of Debt
Tax Rate	25.94
After-tax Cost of Debt	2.32%
Risk-Free Rate
Market Risk Premium
Cost of Equity	5.466
Total Debt	16,020
Total Equity	101,771.06
Total Capital	117,791.06
Debt Weighting	13.60
Equity Weighting	86.40
Wacc

Build Up Free Cash

Year A/P	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Actual	2023 Projected	2024 Projected	2025 Projected	2026 Projected	2027 Projected
Revenue	12,163	12,867	11,752	12,733	15,452	16,488.21	17,593.91	18,773.75	20,032.72	21,376.11
EBITDA	4,520	4,938	4,408	4,510	5,628	6,097.01	6,505.87	6,942.15	7,407.69	7,904.45
EBIT	4,027	4,564	2,569	4,063	4,800	5,058.99	5,398.25	5,760.25	6,146.54	6,558.72
Tax Rate	19.20%	25.38%	31.03%	28.22%	25.94%	25.96%	25.96%	25.96%	25.96%	25.96%
EBIAT	3,253.90	3,405.49	1,771.77	2,916.24	3,554.87	3,745.89	3,997.09	4,265.13	4,551.15	4,856.35
Depreciation	493	374	1,839	447	828	1,038.01	1,107.62	1,181.90	1,261.16	1,345.73
Accounts Receivable	-	-	-	-	-	-	-	-	-	-
Inventories	-	-457	-300	-273	-1,049	-367.21	-500.35	-533.90	-569.70	-607.91
Accounts Payable	-	180	-361	681	3,873	-2,890.38	200.95	214.43	228.81	244.15
Capital Expenditure	-584	-671	-700	-626	-1,097	-922.96	-984.86	-1,050.90	-1,121.37	-1,196.57
UFCF	3,162.90	2,831.49	2,249.77	3,145.24	6,109.87	603.35	3,820.46	4,076.66	4,350.04	4,641.75
WACC
PV UFCF						574.40	3,462.63	3,517.55	3,573.34	3,630.02
SUM PV UFCF										14,757.94

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	5.04
Free cash flow (t + 1)	4,734.59
Terminal Value	155,743.02
Present Value of Terminal Value	121,796.56

Intrinsic Value

Enterprise Value	136,554.50
Net Debt	13,735
Equity Value	122,819.50
Shares Outstanding	581.25
Equity Value Per Share	211.30