Discounted Cash Flow (DCF) Analysis Unlevered

W.W. Grainger, Inc. (GWW)

$571.79

+6.86 (+1.21%)

All numbers are in Millions, Currency in USD

Stock DCF: 217.30 | 571.79 | overvalue

Operating Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	10,424.86	11,221	11,486	11,797	13,022	13,773.70	14,568.80	15,409.79	16,299.33	17,240.22
Revenue (%)
EBITDA	1,243.13	1,385	1,471	1,162	1,686	1,649.31	1,744.52	1,845.22	1,951.74	2,064.41
EBITDA (%)
EBIT	979.07	1,128	1,242	980	1,501	1,379.88	1,459.54	1,543.79	1,632.91	1,727.17
EBIT (%)
Depreciation	264.06	257	229	182	185	269.43	284.98	301.43	318.83	337.24
Depreciation (%)

Balance Sheet Data

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Total Cash	326.88	538	360	585	241	492.38	520.80	550.87	582.67	616.30
Total Cash (%)
Account Receivables	1,325.19	1,385	1,425	1,474	1,754	1,747.20	1,848.06	1,954.74	2,067.58	2,186.93
Account Receivables (%)
Inventories	1,429.20	1,541	1,655	1,733	1,870	1,953.17	2,065.92	2,185.17	2,311.31	2,444.73
Inventories (%)
Accounts Payable	731.58	678	719	779	816	886.73	937.92	992.06	1,049.33	1,109.90
Accounts Payable (%)
Capital Expenditure	-237.28	-239	-221	-197	-255	-274.32	-290.16	-306.91	-324.63	-343.37
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 571.79
Beta	1.210
Diluted Shares Outstanding	52.20
Cost of Debt
Tax Rate	29.76
After-tax Cost of Debt	2.21%
Risk-Free Rate
Market Risk Premium
Cost of Equity	9.231
Total Debt	2,762
Total Equity	29,847.44
Total Capital	32,609.44
Debt Weighting	8.47
Equity Weighting	91.53
Wacc

Build Up Free Cash

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	10,424.86	11,221	11,486	11,797	13,022	13,773.70	14,568.80	15,409.79	16,299.33	17,240.22
EBITDA	1,243.13	1,385	1,471	1,162	1,686	1,649.31	1,744.52	1,845.22	1,951.74	2,064.41
EBIT	979.07	1,128	1,242	980	1,501	1,379.88	1,459.54	1,543.79	1,632.91	1,727.17
Tax Rate	37.38%	27.66%	29.78%	26.61%	29.76%	30.24%	30.24%	30.24%	30.24%	30.24%
EBIAT	613.12	816	872.17	719.22	1,054.24	962.64	1,018.21	1,076.99	1,139.16	1,204.92
Depreciation	264.06	257	229	182	185	269.43	284.98	301.43	318.83	337.24
Accounts Receivable	-	-59.81	-40	-49	-280	6.80	-100.86	-106.68	-112.84	-119.35
Inventories	-	-111.80	-114	-78	-137	-83.17	-112.75	-119.26	-126.14	-133.42
Accounts Payable	-	-53.58	41	60	37	70.73	51.19	54.14	57.27	60.57
Capital Expenditure	-237.28	-239	-221	-197	-255	-274.32	-290.16	-306.91	-324.63	-343.37
UFCF	639.91	608.80	767.17	637.22	604.24	952.11	850.61	899.71	951.65	1,006.59
WACC
PV UFCF						876.39	720.70	701.67	683.15	665.12
SUM PV UFCF										3,647.04

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	8.64
Free cash flow (t + 1)	1,026.72
Terminal Value	15,462.61
Present Value of Terminal Value	10,217.25

Intrinsic Value

Enterprise Value	13,864.29
Net Debt	2,521
Equity Value	11,343.29
Shares Outstanding	52.20
Equity Value Per Share	217.30