Discounted Cash Flow (DCF) Analysis Unlevered

The Hanover Insurance Group, Inc. (THG)

$128.14

-1.85 (-1.42%)
All numbers are in Millions, Currency in USD
Stock DCF: 218.99 | 128.14 | 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 5,184.404,494.304,890.704,827.305,227.805,260.595,293.595,326.805,360.225,393.84
Revenue (%)
EBITDA 363.30504.20577.30496.80570538.95542.33545.73549.15552.60
EBITDA (%)
EBIT 333.20479.60555.70478.60554515.25518.48521.73525528.30
EBIT (%)
Depreciation 30.1024.6021.6018.201623.7023.852424.1524.30
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 8,156.107,182.206,902.807,575230.906,518.986,559.876,601.026,642.436,684.10
Total Cash (%)
Account Receivables 4,624.602,825.303,074.403,213.603,376.803,641.313,664.153,687.143,710.273,733.54
Account Receivables (%)
Inventories ----------
Inventories (%)
Accounts Payable 344.8037.3053.4048.40125.14125.93126.72127.51128.31129.12
Accounts Payable (%)
Capital Expenditure -18.60-13.10-13.30-14.90-8-14.56-14.65-14.74-14.84-14.93
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 128.14
Beta 0.704
Diluted Shares Outstanding 38.10
Cost of Debt
Tax Rate 19.68
After-tax Cost of Debt 3.49%
Risk-Free Rate
Market Risk Premium
Cost of Equity 7.129
Total Debt 781.60
Total Equity 4,882.13
Total Capital 5,663.73
Debt Weighting 13.80
Equity Weighting 86.20
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 5,184.404,494.304,890.704,827.305,227.805,260.595,293.595,326.805,360.225,393.84
EBITDA 363.30504.20577.30496.80570538.95542.33545.73549.15552.60
EBIT 333.20479.60555.70478.60554515.25518.48521.73525528.30
Tax Rate 38.24%-38.41%18.58%19.36%19.68%11.49%11.49%11.49%11.49%11.49%
EBIAT 205.78663.80452.46385.96444.96456.04458.90461.78464.68467.59
Depreciation 30.1024.6021.6018.201623.7023.852424.1524.30
Accounts Receivable -1,799.30-249.10-139.20-163.20-264.51-22.84-22.99-23.13-23.27
Inventories ----------
Accounts Payable --307.5016.10-576.740.790.790.790.800.80
Capital Expenditure -18.60-13.10-13.30-14.90-8-14.56-14.65-14.74-14.84-14.93
UFCF 217.282,167.10227.76245.06366.51201.46446.05448.85451.66454.50
WACC
PV UFCF 188.93392.31370.22349.38329.71
SUM PV UFCF 1,630.55

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 6.63
Free cash flow (t + 1) 463.59
Terminal Value 10,012.66
Present Value of Terminal Value 7,263.61

Intrinsic Value

Enterprise Value 8,894.15
Net Debt 550.70
Equity Value 8,343.45
Shares Outstanding 38.10
Equity Value Per Share 218.99