Discounted Cash Flow (DCF) Analysis Unlevered

International Paper Company (IP)

$36.52

-0.58 (-1.56%)

All numbers are in Millions, Currency in USD

Stock DCF: 106.05 | 36.52 | undervalue

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	21,743	23,306	22,376	20,580	19,363	18,843.01	18,336.99	17,844.56	17,365.35	16,899.01
Revenue (%)
EBITDA	3,240	4,519	3,871	2,614	3,580	3,119.71	3,035.93	2,954.40	2,875.06	2,797.85
EBITDA (%)
EBIT	1,817	3,191	2,565	1,327	2,370	1,967.19	1,914.36	1,862.95	1,812.93	1,764.24
EBIT (%)
Depreciation	1,423	1,328	1,306	1,287	1,210	1,152.52	1,121.56	1,091.45	1,062.14	1,033.61
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	1,018	589	511	5,445	1,540	1,654.57	1,610.13	1,566.89	1,524.82	1,483.87
Total Cash (%)
Account Receivables	3,287	3,916	3,673	3,419	3,610	3,150.25	3,065.65	2,983.32	2,903.21	2,825.24
Account Receivables (%)
Inventories	2,313	2,241	2,208	2,050	1,814	1,863.60	1,813.55	1,764.85	1,717.46	1,671.34
Inventories (%)
Accounts Payable	2,458	2,413	2,423	2,320	2,606	2,156.34	2,098.44	2,042.08	1,987.24	1,933.88
Accounts Payable (%)
Capital Expenditure	-1,391	-1,572	-1,276	-751	-549	-954.57	-928.93	-903.99	-879.71	-856.09
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 36.52
Beta	0.989
Diluted Shares Outstanding	392.40
Cost of Debt
Tax Rate	-75.38
After-tax Cost of Debt	5.43%
Risk-Free Rate
Market Risk Premium
Cost of Equity	8.265
Total Debt	7,914
Total Equity	14,330.45
Total Capital	22,244.45
Debt Weighting	35.58
Equity Weighting	64.42
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	21,743	23,306	22,376	20,580	19,363	18,843.01	18,336.99	17,844.56	17,365.35	16,899.01
EBITDA	3,240	4,519	3,871	2,614	3,580	3,119.71	3,035.93	2,954.40	2,875.06	2,797.85
EBIT	1,817	3,191	2,565	1,327	2,370	1,967.19	1,914.36	1,862.95	1,812.93	1,764.24
Tax Rate	-152.83%	-12.97%	23.63%	25.85%	-75.38%	-38.34%	-38.34%	-38.34%	-38.34%	-38.34%
EBIAT	4,593.92	3,604.88	1,958.93	984.02	4,156.40	2,721.42	2,648.34	2,577.22	2,508.01	2,440.65
Depreciation	1,423	1,328	1,306	1,287	1,210	1,152.52	1,121.56	1,091.45	1,062.14	1,033.61
Accounts Receivable	-	-629	243	254	-191	459.75	84.60	82.33	80.12	77.96
Inventories	-	72	33	158	236	-49.60	50.05	48.70	47.39	46.12
Accounts Payable	-	-45	10	-103	286	-449.66	-57.91	-56.35	-54.84	-53.37
Capital Expenditure	-1,391	-1,572	-1,276	-751	-549	-954.57	-928.93	-903.99	-879.71	-856.09
UFCF	4,625.92	2,758.88	2,274.93	1,829.02	5,148.40	2,879.86	2,917.70	2,839.35	2,763.10	2,688.90
WACC
PV UFCF						2,684.93	2,536.09	2,300.94	2,087.59	1,894.02
SUM PV UFCF										11,503.58

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.26
Free cash flow (t + 1)	2,742.68
Terminal Value	52,142.12
Present Value of Terminal Value	36,728.20

Intrinsic Value

Enterprise Value	48,231.78
Net Debt	6,619
Equity Value	41,612.78
Shares Outstanding	392.40
Equity Value Per Share	106.05