Discounted Cash Flow (DCF) Analysis Unlevered

Electronic Arts Inc. (EA)

$114.94

+1.42 (+1.25%)
All numbers are in Millions, Currency in USD
Stock DCF: 155.65 | 114.94 | 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 5,1504,9505,5375,6296,9917,582.318,223.648,919.219,673.6110,491.83
Revenue (%)
EBITDA 1,6271,2671,7001,2411,6252,019.652,190.472,375.752,576.692,794.63
EBITDA (%)
EBIT 1,4911,1221,5501,0601,1391,739.911,887.082,046.692,219.812,407.56
EBIT (%)
Depreciation 136145150181486279.73303.39329.05356.89387.07
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 5,3315,4455,7356,3663,0627,187.777,795.728,455.109,170.259,945.89
Total Cash (%)
Account Receivables 385623461521650711.84772.05837.35908.17984.99
Account Receivables (%)
Inventories ----------
Inventories (%)
Accounts Payable 481136896101115.15124.89135.45146.91159.33
Accounts Payable (%)
Capital Expenditure -107-119-140-124-188-180.49-195.76-212.32-230.27-249.75
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 114.94
Beta 0.854
Diluted Shares Outstanding 286
Cost of Debt
Tax Rate 27.01
After-tax Cost of Debt 2.16%
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.639
Total Debt 1,959
Total Equity 32,872.84
Total Capital 34,831.84
Debt Weighting 5.62
Equity Weighting 94.38
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 5,1504,9505,5375,6296,9917,582.318,223.648,919.219,673.6110,491.83
EBITDA 1,6271,2671,7001,2411,6252,019.652,190.472,375.752,576.692,794.63
EBIT 1,4911,1221,5501,0601,1391,739.911,887.082,046.692,219.812,407.56
Tax Rate 28.02%5.56%-101.53%17.70%27.01%-4.65%-4.65%-4.65%-4.65%-4.65%
EBIAT 1,073.231,059.613,123.64872.39831.331,820.761,974.772,141.802,322.962,519.44
Depreciation 136145150181486279.73303.39329.05356.89387.07
Accounts Receivable --238162-60-129-61.84-60.21-65.30-70.82-76.81
Inventories ----------
Accounts Payable -65-4528514.159.7410.5611.4612.43
Capital Expenditure -107-119-140-124-188-180.49-195.76-212.32-230.27-249.75
UFCF 1,102.23912.613,250.64897.391,005.331,872.312,031.932,203.802,390.202,592.37
WACC
PV UFCF 1,744.451,763.871,782.411,801.151,820.08
SUM PV UFCF 8,911.96

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 7.33
Free cash flow (t + 1) 2,644.21
Terminal Value 49,610.03
Present Value of Terminal Value 34,830.83

Intrinsic Value

Enterprise Value 43,742.79
Net Debt -773
Equity Value 44,515.79
Shares Outstanding 286
Equity Value Per Share 155.65