Discounted Cash Flow (DCF) Analysis Unlevered

Hewlett Packard Enterprise Company (HPE)

$14.43

-0.32 (-2.17%)

All numbers are in Millions, Currency in USD

Stock DCF: 31.46 | 14.43 | 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	30,852	29,135	26,982	27,784	28,496	27,967.40	27,448.60	26,939.42	26,439.70	25,949.24
Revenue (%)
EBITDA	2,740	4,088	2,183	6,395	3,544	3,717.24	3,648.28	3,580.61	3,514.18	3,449
EBITDA (%)
EBIT	164	1,553	-442	3,798	1,064	1,209.72	1,187.28	1,165.26	1,143.64	1,122.43
EBIT (%)
Depreciation	2,576	2,535	2,625	2,597	2,480	2,507.51	2,461	2,415.35	2,370.54	2,326.57
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	4,880	3,753	6,403	3,996	4,163	4,554.26	4,469.78	4,386.87	4,305.49	4,225.62
Total Cash (%)
Account Receivables	8,611	7,911	7,180	7,911	7,623	7,657.38	7,515.33	7,375.92	7,239.10	7,104.81
Account Receivables (%)
Inventories	2,447	2,387	2,674	4,511	5,161	3,377.45	3,314.80	3,253.31	3,192.96	3,133.73
Inventories (%)
Accounts Payable	6,092	5,595	5,383	7,004	8,717	6,415.66	6,296.65	6,179.85	6,065.21	5,952.70
Accounts Payable (%)
Capital Expenditure	-2,956	-2,856	-2,383	-2,502	-3,122	-2,694.76	-2,644.77	-2,595.71	-2,547.56	-2,500.30
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 14.43
Beta	1.249
Diluted Shares Outstanding	1,330
Cost of Debt
Tax Rate	0.91
After-tax Cost of Debt	1.38%
Risk-Free Rate
Market Risk Premium
Cost of Equity	9.397
Total Debt	13,484
Total Equity	19,191.90
Total Capital	32,675.90
Debt Weighting	41.27
Equity Weighting	58.73
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	30,852	29,135	26,982	27,784	28,496	27,967.40	27,448.60	26,939.42	26,439.70	25,949.24
EBITDA	2,740	4,088	2,183	6,395	3,544	3,717.24	3,648.28	3,580.61	3,514.18	3,449
EBIT	164	1,553	-442	3,798	1,064	1,209.72	1,187.28	1,165.26	1,143.64	1,122.43
Tax Rate	-611.94%	32.45%	27.15%	4.46%	0.91%	-109.39%	-109.39%	-109.39%	-109.39%	-109.39%
EBIAT	1,167.58	1,049	-322	3,628.59	1,054.28	2,533.07	2,486.09	2,439.97	2,394.71	2,350.28
Depreciation	2,576	2,535	2,625	2,597	2,480	2,507.51	2,461	2,415.35	2,370.54	2,326.57
Accounts Receivable	-	700	731	-731	288	-34.38	142.05	139.41	136.82	134.29
Inventories	-	60	-287	-1,837	-650	1,783.55	62.65	61.49	60.35	59.23
Accounts Payable	-	-497	-212	1,621	1,713	-2,301.34	-119.01	-116.80	-114.64	-112.51
Capital Expenditure	-2,956	-2,856	-2,383	-2,502	-3,122	-2,694.76	-2,644.77	-2,595.71	-2,547.56	-2,500.30
UFCF	787.58	991	152	2,776.59	1,763.28	1,793.67	2,388	2,343.70	2,300.22	2,257.56
WACC
PV UFCF						1,690.70	2,121.71	1,962.81	1,815.82	1,679.83
SUM PV UFCF										9,270.87

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	6.09
Free cash flow (t + 1)	2,302.71
Terminal Value	56,300.90
Present Value of Terminal Value	41,893.15

Intrinsic Value

Enterprise Value	51,164.03
Net Debt	9,321
Equity Value	41,843.03
Shares Outstanding	1,330
Equity Value Per Share	31.46