Discounted Cash Flow (DCF) Analysis Unlevered

The Progressive Corporation (PGR)

$135.07

+0.16 (+0.12%)

All numbers are in Millions, Currency in USD

Stock DCF: 325.85 | 135.07 | 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	26,816.10	31,954.70	38,997.70	42,638.10	47,676.50	55,108.61	63,699.29	73,629.14	85,106.91	98,373.91
Revenue (%)
EBITDA	2,522.20	3,586.80	5,646.40	7,722	4,766	6,967.50	8,053.64	9,309.09	10,760.25	12,437.63
EBITDA (%)
EBIT	2,286.10	3,324.40	5,340.30	7,390.20	4,428.60	6,529.68	7,547.56	8,724.13	10,084.10	11,656.07
EBIT (%)
Depreciation	236.10	262.40	306.10	331.80	337.40	437.83	506.08	584.97	676.15	781.56
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	23,336.10	29,976.90	35,135.30	42,105.90	45,002.80	51,148.84	59,122.24	68,338.58	78,991.63	91,305.35
Total Cash (%)
Account Receivables	5,422.50	6,497.10	7,507.30	12,179.50	14,380	13,064.09	15,100.60	17,454.57	20,175.50	23,320.59
Account Receivables (%)
Inventories	-	-	-	-	-	-	-	-	-	-
Inventories (%)
Accounts Payable	2,825.90	5,046.50	5,962.70	4,955.80	6,010.60	7,257.87	8,389.27	9,697.05	11,208.68	12,955.96
Accounts Payable (%)
Capital Expenditure	-155.70	-266	-363.50	-223.50	-243.50	-372.54	-430.62	-497.74	-575.33	-665.02
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price	$ 135.07
Beta	0.481
Diluted Shares Outstanding	584.70
Cost of Debt
Tax Rate	20.41
After-tax Cost of Debt	3.55%
Risk-Free Rate
Market Risk Premium
Cost of Equity	5.790
Total Debt	4,898.80
Total Equity	78,975.43
Total Capital	83,874.23
Debt Weighting	5.84
Equity Weighting	94.16
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	26,816.10	31,954.70	38,997.70	42,638.10	47,676.50	55,108.61	63,699.29	73,629.14	85,106.91	98,373.91
EBITDA	2,522.20	3,586.80	5,646.40	7,722	4,766	6,967.50	8,053.64	9,309.09	10,760.25	12,437.63
EBIT	2,286.10	3,324.40	5,340.30	7,390.20	4,428.60	6,529.68	7,547.56	8,724.13	10,084.10	11,656.07
Tax Rate	25.56%	17.33%	23.06%	20.47%	20.41%	21.37%	21.37%	21.37%	21.37%	21.37%
EBIAT	1,701.78	2,748.23	4,108.79	5,877.17	3,524.89	5,134.52	5,934.93	6,860.10	7,929.50	9,165.59
Depreciation	236.10	262.40	306.10	331.80	337.40	437.83	506.08	584.97	676.15	781.56
Accounts Receivable	-	-1,074.60	-1,010.20	-4,672.20	-2,200.50	1,315.91	-2,036.51	-2,353.98	-2,720.93	-3,145.08
Inventories	-	-	-	-	-	-	-	-	-	-
Accounts Payable	-	2,220.60	916.20	-1,006.90	1,054.80	1,247.27	1,131.40	1,307.77	1,511.64	1,747.28
Capital Expenditure	-155.70	-266	-363.50	-223.50	-243.50	-372.54	-430.62	-497.74	-575.33	-665.02
UFCF	1,782.18	3,890.63	3,957.39	306.37	2,473.09	7,762.99	5,105.28	5,901.12	6,821.02	7,884.33
WACC
PV UFCF						7,347.14	4,572.97	5,002.68	5,472.77	5,987.03
SUM PV UFCF										28,382.59

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	5.66
Free cash flow (t + 1)	8,042.01
Terminal Value	219,727.16
Present Value of Terminal Value	166,851.73

Intrinsic Value

Enterprise Value	195,234.32
Net Debt	4,711.70
Equity Value	190,522.62
Shares Outstanding	584.70
Equity Value Per Share	325.85