NIKE, Inc.is an Americanmultinational corporationthat is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. The company is headquartered nearBeaverton,Oregon, in thePortland metropolitan area. It is the world's largest supplier ofathletic shoesandappareland a major manufacturer ofsports equipment, with revenue in excess of US$ 24.95billion in its fiscal year 2019 (ending May 31, 2019). Using the data provided in Value Line sheet (use the forecasted data for 2020 and the data in the last column as data for 2024 only), answer the following questions:
1.What is the average annual expected growth rate in Sales between 2020 and 2024?
A.6.0%
B.9.5%
C.8.3%
D.7.4%
2.Sales in 2023 is expected to be:
A.$72,489 million
B.$34,637 million
C.$52, 543 million
D.$67, 904 million
3.What is the average annual expected growth rate in Net Income between 2020 and 2024?
A.16.03%
B.22.64%
C.28.37%
D.17.45%
4.Net Income in 2022 are expected to be:
A.$3,134 million
B.$4,372 million
C.$6,084 million
D.$5,904 million
5.The change in Net Working Capital in year 2022 is closes to:
A. $340 million
B. $497 million
C. $6,439 million
D. $3,259 million
6.Total capital expenditures for 2023 is closes to:
A.$402 million
B.$3,425 million
C. $1,402 million
D. $734 million
7.Assuming that NIKE has $3.4 billion in long term debt.
Issue Amount $(Mil) Maturity Date Yield To Maturity
NIKE 4.375% 750 1/15/2025 4.25%
NIKE 5.7% 800 1/15/2035 6.45%
NIKE 5.4% 800 1/15/2033 5.93%
NIKE 3.875% 500 12/1/2040 3.47%
NIKE 6.7% 550 12/1/2036 6.96%
What is the weighted average cost of debt (average pre-tax cost of debt)?
A.2.13%
B.3.72%
C.4.23%
D.5.49%
CATERPILLAR INC. NYSE-CAT TIMELINESS SAFETY TECHNICAL 3 2 3 Raised 12/13/19 Raised 11/21/14 Raised 5/1/20 BETA 1.10 (1.00 = Market) High: Low: 61.3 21.7 94.9 50.5 RECENT PRICE 116.6 67.5 11.1 RELATIVE DIV'D Median: 15.0) P/E RATIO 1.18 YLD 3.8% 107.72 P/ERATIO 19.6(Trailing: 116.9 78.3 99.7 79.5 111.5 85.9 92.4 63.0 97.4 56.4 158.6 90.3 173.2 112.1 148.9 111.8 150.5 87.5 VALUE LINE Target Price Range 2023 2024 2025 LEGENDS 11.0 x Cash Flow p sh . . . . Relative Price Strength Options: Yes Shaded area indicates recession 400 320 18-Month Target Price Range Low-High $85-$184 200 160 120 100 80 60 Midpoint (% to Mid) $135 (25%) 2023-25 PROJECTIONS Ann'l Total Price Gain Return High 240 (+125%) 24% Low 175 (+60%) 16% Institutional Decisions 2Q2019 3Q2019 4Q2019 655 598 752 to Buy to Sell 719 772 672 Hld's(000) 371527 364583 368663 40 % TOT. RETURN 4/20 Percent shares traded 45 30 15 1 yr. 3 yr. 5 yr. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 44.11 54.17 64.29 73.22 85.32 51.86 66.67 92.87 100.57 87.26 91.04 80.73 65.71 76.07 5.00 6.46 8.03 8.64 9.25 5.17 7.82 11.93 13.87 10.82 11.82 10.00 8.60 11.68 2.88 4.04 5.25 5.32 5.71 1.43 4.15 7.81 9.36 5.79 6.37 4.62 3.44 6.88 .80 .96 1.15 1.38 1.62 1.68 1.74 1.82 2.02 2.32 2.70 3.01 3.08 3.11 3.08 3.60 4.14 4.95 6.67 3.71 4.05 6.06 7.75 6.97 5.57 5.60 4.99 3.91 10.89 12.57 10.62 14.47 10.12 14.12 16.94 19.97 26.84 32.73 27.76 25.56 22.53 23.03 685.87 670.87 645.81 613.99 601.53 624.72 638.82 647.53 655.05 637.82 606.17 582.32 586.49 597.63 13.9 12.6 13.1 13.7 11.4 29.4 16.6 12.4 10.0 15.1 15.8 17.1 22.8 16.4 .73 .67 .71 .73 .69 1.96 1.06 .78 .64 .85 .83 .86 1.20 .82 2.0% 1.9% 1.7% 1.9% 2.5% 4.0% 2.5% 1.9% 2.2% 2.7% 2.7% 3.8% 3.9% 2.8% THIS STOCK VL ARITH.* INDEX -14.5 22.3 55.5 -15.6 -2.4 12.2 VALUE LINE PUB. LLC 23-25 95.08 97.80 76.35 82.35 16.48 16.06 10.30 12.55 11.20 11.06 5.50 7.50 3.36 3.95 4.12 4.12 5.07 4.85 3.65 3.65 24.48 26.59 24.50 26.25 575.54 550.08 550.00 550.00 12.9 12.0 Bold figures are Value Line .70 .65 estimates 2.3% 3.0% Sales per sh ''Cash Flow'' per sh Earnings per sh A Div'ds Decl'd per sh B Cap'l Spending per sh C Book Value per sh D Common Shs Outst'g E Avg Ann'l P/E Ratio Relative P/E Ratio Avg Ann'l Div'd Yield 109.70 18.20 12.20 4.74 4.80 32.35 520.00 17.0 .95 2.0% 42588 60138 65875 55656 55184 47011 38537 45462 16.8% 19.3% 20.1% 18.7% 19.5% 19.0% 17.2% 22.5% 2296.0 2527.0 2813.0 3087.0 3163.0 3046.0 3034.0 2877.0 2700.0 5201.0 6270.0 3815.0 4003.0 2778.0 2010.0 4104.0 25.8% 24.6% 28.6% 25.6% 25.6% 21.0% 8.7% 26.3% 6.3% 8.6% 9.5% 6.9% 7.3% 5.9% 5.2% 9.0% 9790.0 9567.0 12769 11038 10990 8115.0 5835.0 9313.0 20437 24944 27752 26719 27784 25247 22818 23847 10824 12929 17582 20878 16826 14885 13213 13766 10.1% 14.8% 14.7% 8.8% 9.7% 7.7% 6.4% 12.2% 24.9% 40.2% 35.7% 18.3% 23.8% 18.7% 15.2% 29.8% 14.9% 31.3% 26.5% 13.0% 14.2% 6.9% 1.6% 16.5% 40% 22% 26% 29% 40% 63% 90% 45% 54722 53800 24.1% 24.0% 2766.0 2577.0 6718.0 6260.0 20.2% 21.9% 12.3% 11.6% 10385 12572 25000 26281 14090 14629 18.6% 16.7% 47.7% 42.8% 33.8% 28.2% 29% 34% Sales ($mill) Operating Margin Depreciation ($mill) F Net Profit ($mill) Income Tax Rate Net Profit Margin Working Cap'l ($mill) Long-Term Debt ($mill) Shr. Equity ($mill) Return on Total Cap'l Return on Shr. Equity Retained to Com Eq All Div'ds to Net Prof 57050 22.0% 2950 6525 22.0% 11.4% 14605 23000 16830 17.5% 39.0% 24.0% 38% BUSINESS: Caterpillar Incorporated is the world's largest producer of earthmoving equipment. Major global markets include road building, mining, logging, agriculture, petroleum, and general construction. Products include tractors, scrapers, compactors, loaders, offhighway truck engines, and pipelayers. Also makes diesel & turbine engines and lift trucks. Foreign sales 58% of total; R&D: 3.1% of sales. 2019 depreciation rate: 8.8%. Has about 102,300 employees. Officers & directors own less than 1.0% of common stock; The Vanguard Group, 8.9%; State Street, 8.1% (4/20 proxy). Chairman & Chief Executive Officer: Jim Umpleby. Incorporated: DE. Address: 510 Lake Cook Road, Suite 100, Deerfield, IL 60015. Tel.: 309-675-1000. Web: www.caterpillar.com. Caterpillar reported dismal firstquarter results. Sales of $10.64 billion ANNUAL RATES Past Past Est'd '17-'19 plunged 21% over the year-earlier period, of change (per sh) 10 Yrs. 5 Yrs. to '23-'25 as lower end-user demand and the negaSales 2.5% -.5% 3.5% tive impact of changes in dealer inven''Cash Flow'' 6.5% 4.0% 3.5% Earnings 9.0% 6.5% 4.0% tories hurt volume. Weakness was more Dividends 8.5% 8.0% 5.5% pronounced in the Construction Industries Book Value 6.5% -3.0% 4.5% division (sales plummeted 27% to $4.30 QUARTERLY SALES ($ mill.) CalFull billion) and in the Resource Industries segendar Mar.31 Jun.30 Sep.30 Dec.31 Year ment (decreased 24% to $2.75 billion.) Op2017 9822 11331 11413 12896 45462 erating profit of $1.40 billion dropped 36% 2018 12859 14011 13510 14342 54722 over the same period last year due to 2019 13466 14432 12758 13144 53800 depressed utilization rates and the unfa2020 10635 9800 10400 11165 42000 2021 10300 12000 11000 12000 45300 vorable currency impact. In all, the company registered a 46% decline in share net, EARNINGS PER SHARE A CalFull to $1.60, excluding a $0.38 gain resulting endar Mar.31 Jun.30 Sep.30 Dec.31 Year from the settlement of non-U.S. pension 2017 1.28 1.49 1.95 2.16 6.88 obligations. 2018 2.82 2.97 2.86 2.55 11.20 The company is operating 75% of its 2019 2.94 2.83 2.66 2.63 11.06 2020 1.60 .70 1.40 1.80 5.50 facilities, but could shutter more 2021 1.90 2.00 1.90 1.70 7.50 plants, pending business conditions. Caterpillar has taken actions to support B QUARTERLY DIVIDENDS PAID CalFull business, including reducing discretionary endar Mar.31 Jun.30 Sep.30 Dec.31 Year expenses and suspending 2020 base salary 2016 .77 .77 .77 .77 3.08 increases and short-term incentive com2017 .77 .77 .78 .78 3.10 pensation plans for all employees. Con2018 .78 .78 .86 .86 3.28 versely, it will continue to prioritize spend2019 .86 .86 1.03 1.03 3.78 ing on services and expanding offerings. In 2020 1.03 order to protect operations from the lingering impact of COVID-19, the company recently beefed up liquidity with a credit facility of up to $3.875 billion. Management expects financial results during the remainder of 2020 to be impacted by the COVID-19 pandemic, leading it to withdraw earnings guidance for the year. We look for sales to slip even further in the June quarter, to just under $10.0 billion, and for a 2020 top line of approximately $42.0 billion, or a 22% year-over-year drop. Top-line weakness should cast a large shadow over operations, leading us to sharply revise downward our profit call, to $5.50 a share, or a roughly 50% dive from the $11.06 posted in 2019. Caterpillar shares have recovered some ground since they fell to a 52week low price of $87.50. At the recent quotation, the stock holds impressive recovery potential over the 3- to 5-year time frame. As for income accounts, we note that Caterpillar previously said that it would maintain its $1.03 quarterly cash dividend. Dominic B. Silva May 15, 2020 CAPITAL STRUCTURE as of 12/31/19 Total Debt $32.5 bill. Due in 5 Yrs $26.0 bill. LT Debt $26.3 bill. LT Interest $970 mill. Incl. $25.0 bill. in debt held by CAT Financial. (LT interest earned: 7.8x; Total interest coverage: 7.8x) (64% of Cap'l) Leases, Uncapitalized Annual rentals $289.0 mill. Pension Assets-12/19 $20.5 bill. Oblig. $22.4 bill. Pfd Stock None Common Stock 550,082,520 shs. MARKET CAP: $59.3 billion (Large Cap) CURRENT POSITION 2017 2018 12/31/19 ($MILL.) Cash Assets 8261 7857 8284 Receivables 7436 8802 8568 Inventory (LIFO) 10018 11529 11266 Other 10529 10415 11075 Current Assets 36244 38603 39193 Accts Payable 6487 7051 5957 Debt Due 6194 5830 6210 Other 14250 15337 14454 Current Liab. 26931 28218 26621 (A) Diluted earnings. Excl. net nonrecurring gain (losses): '07, 5; '08, (5); '11, (41); '12, (88); '13, (4); '14, (49); '15, ($1.12); '16, ($3.55); '17, ($5.62); '18, (94); '19, (32). In- cludes 75 of restructuring costs in '09; est'd Health Care Reform chg of 11 in 1Q, '10. Next egs report late July. (B) Div'ds historically paid mid-May, July, August, November. Div'd 42000 18.5% 2550 3120 22.0% 7.4% 11975 26000 13485 9.5% 23.0% 6.5% 73% reinvestment plan avail. (C) Incl. equip. purch. for leasing. (D) Incl. intang. In '19: $7.8 bill., $14.11/sh. (E) In mill., adjusted for split. (F) Accelerated basis. 2020 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber's own, non-commercial, internal use. No part of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product. 45300 20.5% 2650 4250 22.0% 9.4% 13610 25000 14450 12.0% 29.5% 13.5% 53% Company's Financial Strength Stock's Price Stability Price Growth Persistence Earnings Predictability A+ 70 35 45 To subscribe call 1-800-VALUELINE NIKE, INC. 'B' NYSE-NKE TIMELINESS SAFETY TECHNICAL 1 1 2 High: Low: Raised 3/27/20 Raised 8/11/06 Raised 4/3/20 BETA 1.00 (1.00 = Market) 18-Month Target Price Range Low-High $61-$143 Midpoint (% to Mid) $102 (20%) 28.5 RELATIVE DIV'D Median: 23.0) P/E RATIO 2.32 YLD 1.2% 84.46 P/ERATIO 33.9(Trailing: RECENT PRICE 16.7 9.6 23.1 15.2 24.6 17.4 28.7 21.3 40.1 25.7 49.9 34.9 LEGENDS 16.0 x Cash Flow p sh . . . . Relative Price Strength 2-for-1 split 4/07 2-for-1 split 12/12 2-for-1 split 12/15 Options: Yes Shaded area indicates recession 68.2 45.3 65.4 49.0 65.2 50.3 86.0 62.1 101.8 71.2 105.6 60.0 VALUE LINE Target Price Range 2023 2024 2025 160 120 100 80 60 50 40 30 2-for-1 2-for-1 2023-25 PROJECTIONS Ann'l Total Price Gain Return High 130 (+55%) 13% Low 110 (+30%) 8% Institutional Decisions 2Q2019 3Q2019 4Q2019 716 797 967 to Buy to Sell 724 694 664 Hld's(000)103429710329461024905 % TOT. RETURN 3/20 Percent shares traded 30 20 10 1 yr. 3 yr. 5 yr. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Leases, Uncapitalized Annual rentals $553 mill. No Defined Benefit Pension Plan Preferred Stock None Common Stock 1,557,372,768 shares Class A shares: 315,017,252 Class B shares: 1,242,355,515 MARKET CAP: $131.5 billion (Large Cap) CURRENT POSITION 2018 2019 2/29/20 ($MILL.) Cash Assets 5245 4663 3182 Receivables 3498 4272 4473 Inventory (LIFO) 5261 5622 5807 Other 1130 1968 2282 Current Assets 15134 16525 15744 Accts Payable 2279 2612 2221 Debt Due 342 15 435 Other 3419 5239 5624 Current Liab. 6040 7866 8280 ANNUAL RATES Past of change (per sh) 10 Yrs. Sales 9.5% ''Cash Flow'' 11.5% Earnings 11.5% Dividends 14.0% Book Value 5.0% Fiscal Year Ends 2017 2018 2019 2020 2021 Fiscal Year Ends 2017 2018 2019 2020 2021 Calendar 2016 2017 2018 2019 2020 Past Est'd '17-'19 5 Yrs. to '23-'25 9.5% 8.5% 13.0% 14.0% 13.0% 16.0% 14.0% 10.0% 1.5% 5.5% QUARTERLY SALES ($ mill.) A Aug.31 Nov.30 Feb.28 May 31 9061 8180 8432 8677 9070 8554 8984 9789 9948 9374 9611 10184 10660 10326 10104 8210 10300 10200 10500 11350 EARNINGS PER SHARE AB Aug.31 Nov.30 Feb.28 May 31 .73 .50 .68 .60 .57 .46 .68 .69 .67 .52 .68 .62 .86 .70 .78 .26 .75 .70 .85 .80 QUARTERLY DIVIDENDS PAID C Mar.31 Jun.30 Sep.30 Dec.31 .16 .16 .16 .16 .18 .18 .18 .18 .20 .20 .20 .20 .22 .22 .22 .22 .245 .245 (A) Fiscal years end May 31st. (B) Diluted earnings. Excludes nonrecurring: '07, 2; '08, 8; '09, (13); '13, 1; '18, ($1.23) due to tax law change. Next egs. report due last week of Full Fiscal Year 34350 36397 39117 39300 42350 Full Fiscal Year 2.51 2.40 2.49 2.60 3.10 Full Year .64 .72 .80 .88 VL ARITH.* INDEX -0.7 53.7 74.6 -26.1 -16.7 -5.7 VALUE LINE PUB. LLC 23-25 22.73 24.95 25.25 27.30 2.95 3.02 3.05 3.55 2.40 2.49 2.60 3.10 .78 .86 .93 1.00 .64 .71 .70 .75 6.13 5.77 6.10 6.40 1601.0 1568.0 1555.0 1550.0 25.3 32.0 Bold figures are Value Line 1.37 1.75 estimates 1.3% 1.1% Sales per sh A 37.05 ''Cash Flow'' per sh 7.00 AB Earnings per sh 6.00 Div'ds Decl'd per sh CD 1.40 Cap'l Spending per sh 1.00 Book Value per sh 8.85 Common Shs Outst'g EF 1525.0 Avg Ann'l P/E Ratio 20.0 Relative P/E Ratio 1.10 Avg Ann'l Div'd Yield 1.2% 19014 20862 24128 25313 27799 30601 32376 34350 14.7% 15.1% 14.1% 14.6% 15.1% 15.6% 15.9% 15.9% 323.7 335.0 373.0 438.0 518.0 606.0 649.0 706.0 1906.7 2133.0 2223.0 2464.0 2693.0 3273.0 3760.0 4240.0 24.2% 25.0% 25.5% 24.7% 24.0% 22.2% 18.7% 13.2% 10.0% 10.2% 9.2% 9.7% 9.7% 10.7% 11.6% 12.3% 7595.0 7339.0 7666.0 9700.0 8669.0 9642.0 9667.0 10587 445.8 276.0 228.0 1210.0 1199.0 1079.0 2010.0 3471.0 9753.7 9843.0 10381 11156 10824 12707 12258 12407 18.7% 21.1% 21.0% 20.0% 22.6% 23.8% 26.5% 26.9% 19.5% 21.7% 21.4% 22.1% 24.9% 25.8% 30.7% 34.2% 14.4% 16.0% 15.5% 15.8% 17.5% 18.7% 22.3% 25.0% 27% 26% 28% 29% 30% 27% 27% 27% 36397 14.3% 747.0 3974.0 8.1% 10.9% 9094.0 3468.0 9812.0 30.3% 40.5% 27.8% 31% Sales ($mill) A Operating Margin Depreciation ($mill) Net Profit ($mill) Income Tax Rate Net Profit Margin Working Cap'l ($mill) Long-Term Debt ($mill) Shr. Equity ($mill) Return on Total Cap'l Return on Shr. Equity Retained to Com Eq All Div'ds to Net Prof BUSINESS: NIKE designs, develops, and markets footwear, apparel, equipment, and accessories. Sells products to retail accounts, through NIKE-owned stores and the Internet, and through a mix of independent distributors and licensees in numerous countries. Offerings are focused in six categories: running, basketball, the Jordan brand, football (soccer), training, and sportswear. There is another product line for kids. Has about 76,700 employees (including part-timers). Swoosh, LLC, owns 77.7% Cl. A shares, 16.3% Cl. B; offs./dirs., 3.8% of Cl. B; Vanguard, 8.2%; BlackRock, 6.8% (8/19 proxy). Chairman: Mark G. Parker. CEO: John Donahoe. Inc.: Oregon. Addr.: One Bowerman Drive, Beaverton, OR 97005. Tel.: 503-671-6453. Internet: www.nikeinc.com. NIKE stock has been on an upward trajectory since announcing February-period results. (Years end May 31st). The reported numbers for the fiscal third quarter bested reduced expectations, and leadership struck an upbeat tone on the pandemic situation, particularly with regard to Chinese operations bouncing back sooner than most had anticipated. Digital sales remained stout, as the swoosh's online presence continues to grow. This avenue should be especially valuable in the coming weeks, as store closures around the globe are likely to remain rampant. Elsewhere, sales in other parts of the world perked up in the penultimate quarter of the campaign; Europe, the Middle East, and Africa rose 11%, while Latin America saw its receipts climb 8%. It is worth noting that in the vital North America market where troubles have now fully arrived, the top line was up 4% year over year. Management believes it learned from the Chinese situation and now has a playbook for the current domestic shutdown. Chinese sales were obviously down when stores were shuttered, but upon reopening showed immediate signs of life from a traffic standpoint. Leadership sees no reason this will not occur in the rest of its markets, with the United States at the top of the list. The question is just how long will it be until these doors open. Still, we are leaning toward the consensus expectation for the balance of fiscal 2020. The company has not offered guidance for the fiscal fourth quarter, but the broader economic woes brought about by the necessary social distancing practices lead us to believe that both the top and bottom lines are going to decline sharply in the May quarter. Yes, the swoosh's online business should be on top of its game and those with discretionary income should continue to spend on these various brands, but there will be belt tightening at many households. For this reason, we now think sales will come in below the $40 billion mark and earnings will only climb to around $2.60 a share. We think this high-quality, timely selection has room to run over the coming six to 12 months. However, longerterm accounts should look elsewhere. Erik M. Manning April 24, 2020 5.82 6.54 7.22 8.10 9.48 9.87 9.82 10.97 13.17 14.16 15.98 17.85 19.25 20.91 .59 .66 .80 .86 1.04 1.06 1.15 1.30 1.42 1.62 1.85 2.26 2.62 3.01 .44 .56 .66 .72 .86 .88 .97 1.10 1.18 1.35 1.49 1.85 2.16 2.51 .09 .12 .15 .18 .22 .25 .27 .30 .35 .41 .47 .54 .62 .70 .10 .12 .16 .16 .23 .23 .17 .23 .33 .36 .51 .56 .68 .67 2.27 2.69 3.03 3.49 3.98 4.48 5.04 5.18 5.67 6.24 6.22 7.41 7.29 7.55 2104.8 2100.8 2072.0 2015.2 1964.4 1942.0 1936.0 1902.0 1832.0 1788.0 1740.0 1714.0 1682.0 1643.0 18.4 17.9 16.0 16.5 17.8 15.3 16.4 18.2 20.4 19.4 24.2 24.4 27.5 21.6 .97 .95 .86 .88 1.07 1.02 1.04 1.14 1.30 1.09 1.27 1.23 1.44 1.09 1.1% 1.2% 1.4% 1.5% 1.4% 1.8% 1.7% 1.5% 1.4% 1.5% 1.3% 1.2% 1.0% 1.3% CAPITAL STRUCTURE as of 2/29/20 Total Debt $3898 mill. Due in 5 Yrs $520 mill. LT Debt $3463 mill. LT Interest $190 mill. (27% of Capital) THIS STOCK 20 15 June. (C) Dividends historically paid in early January, April, July, and October. Reinvestment plan available. 39117 14.0% 705.0 4029.0 16.1% 10.3% 8659.0 3464.0 9040.0 32.7% 44.6% 29.8% 33% 39300 14.8% 685 4045 19.0% 10.3% 8200 3400 9500 32.0% 42.5% 27.5% 36% (D) Includes 21 dividend paid December 2012. (E) In millions, adjusted for splits. (F) Each share of Class A is convertible to one share of Class B. 2020 Value Line, Inc. All rights reserved. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber's own, non-commercial, internal use. No part of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or marketing any printed or electronic publication, service or product. 42350 15.4% 725 4805 21.0% 11.3% 8700 3200 9900 37.5% 48.5% 33.0% 32% Company's Financial Strength Stock's Price Stability Price Growth Persistence Earnings Predictability 56500 19.5% 880 9150 21.0% 16.2% 10250 2850 13500 56.5% 67.5% 52.0% 23% A++ 80 95 95 To subscribe call 1-800-VALUELINE CAT Calculations Sheet 1. Cost of Capital Cost Of Debt Tax Rate After Tx Cost Assumptions: Rf ERP Beta Cost Of Equity Capital Structure Debt Equity 3.73% 22% 2.9% 3.0% 5.0% 1.10 8.50% 64.0% 36.0% WACC 4.92% Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 42,000 50,507 60,738 73,041 57,050 3. Net Income Net Income 3,120 3,752 4,512 5,426 6,525 20.26% 4. Depreciation 2,550 2,645 2,743 2,844 2,950 5. Capital Expenditures Capex per share Sh. Outstanding (in millions) Tot Cap Ex 3.65 550 2,008 2,120 2,238 2,364 4.8 520 2,496 5.596% 2. Sales Sales 7.96% 3.71% 6. Working Capital Change in WC 12,572 11,975 (597) 12,584 609 13,225 640 13,898 673 14,605 707 5.1% 7. Long-term Debt Net Borrowings 26,000 25,000 -1,000 24,484 -516 23,979 -505 23,484 -495 23,000 -484 -2.1% 4.12 4.12 4.12 4.12 4.74 3.57% 8. Dividend Dividend CAT Business Valuation FCFF $ in millions Hist 2013 Net Income Plus: Depreciation Plus: Interest Expense(1-Tx) Less: CAPEX Dec-20 #REF! 256,600 #REF! Less: Change In WC FCFF Discount Period Discount Factor @ Dec-24 3,120 2,550 757 2,008 3,752 2,645 757 2,120 4,512 2,743 757 2,238 5,426 2,844 757 2,364 6,525 2,950 757 2,496 (597) 609 640 673 707 5,016 1 4,424 2 5,132 3 5,990 4 7,028 5 4,781 4,019 4,443 4,943 5,527 4.92% Present Value Total PV Discrete Period 23,713 Terminal Value Cash Flow Long Term Growth Rate Terminal Value Discount Factor PV of Terminal Value 7,169 2.0% 245,342 0.786 192,947 Company Value 216,661 Less: interest bearing liability 26,000 Equity Value 190,661 Shares Outstanding Common Stock Value All numbers in millions Dec-21 Dec-22 Dec-23 550 $ 346.66 Business Valuation FCFE $ in millions Dec-20 FCFF Minus: Interest Expense(1-Tx) Plus: Net Borrowings FCFE Discount Period Discount Factor @ 8.5% Present Value Total PV Discrete Period Common Stock Value 5,990 757 (495) 4,739 4 7,028 757 (484) 5,787 5 3,004 2,677 3,030 3,420 3,849 550 $ Dec-24 5,132 757 (505) 3,871 3 88,058 Shares Outstanding Dec-23 4,424 757 (516) 3,152 2 5,787 3.0% 108,380 0.665 72,078 Equity Value Dec-22 5,016 757 (1,000) 3,260 1 15,980 Terminal Value Cash Flow Long Term Growth Rate Terminal Value Discount Factor PV of Terminal Value Dec-21 160.11 Business Valuation DDM Dec-20 Dividend Discount Period Discount Factor @ Present Value Dec-21 Dec-22 Dec-23 Dec-24 4.12 1 4.27 2 4.42 3 4.58 4 4.74 5 3.80 3.62 3.46 3.30 3.15 8.50% Total PV Discrete Period 17.34 Terminal Value Cash Flow Long Term Growth Rate Terminal Value Discount Factor PV of Terminal Value 4.74 3.0% 88.77 0.665 59.03 Common Stock Value 76.37 3.57%
