Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please provide me with Ford Motor Company DCF analysis and assumptions write - ups according to the Excel data image provided above. Sales growth assumptions

Please provide me with Ford Motor Company DCF analysis and assumptions write-ups according to the Excel data image provided above. Sales growth assumptions were 4% from year 2023-2026 and increased 0.5% from 2027-2030. What reasons the sales growth has been estimated for Ford Motor company? The long-term growth rate is 3%. The price per share is $23. WACC is 10.79%. Why the stock price per share is undervalued. for Ford Motor Company? An example of write-ups I have provided below. GoPro ended their 2021 calendar year resulting in $480 million Gross Income, primarily
comprised of their Unit driven sales ($1,107 million) and their subscription revenue ($54
million), partially offset by their Cost of Goods Sold, totaling $681 million. With a relatively new
sector of GoPro, in the effort to focus on subscription growth, we have set forth assumptions,
similar to what is commonly seen across other subscription focused companies, a hyper growth
stage in the next three years. In comparison with 2020, although a lower revenue year as a
result of Covid 19, GoPro has managed to grow their subscription base by 107% vs. PY with a
total of 1.6 million subscribers. As a result, weve proposed a 40% growth rate in 2022, and a
30% growth rate in 2023, with the growth rate slowly diminishing YOY, arriving at a 24% CAGR
by the end of 2026, totaling 4.7 million subscribers. We decided on this number based on
Managements target of a 40% growth rate for 2022 and fading that down in subsequent years.
According to the management team at GoPro, their 2022 outlook includes not only increasing
their camera products, but a fairly aggressive approach to expand their new cloud capabilities
corresponding with a new subscription-based application. Their current revenue projections
reported during their Q4 and Full Year 2021 Earnings Call on February 3rd,2022 assume a 40-
43% Gross Margin in 2022, where weve forecasted 42% and 43% in 2023. In order to achieve
these growth expectations, weve assumed that the revenue growth attributable to their units
(primarily camera devises), are anticipated to remain relatively in line with inflation
expectations (3%). With regard to their SGA and R&D expenses, historically GoPro has reflected
SGA to be approximately 23% of their revenue outcome with R&D at approximately 14% of
total revenue (both of which are averages over the last 5 years). Given the growth weve
applied to revenue, we believe keeping these metrics static, with respect to revenue growth,
was the best approach, as the costs associated to adding new personal and
developing/maintaining their cloud services would result in a similar growth in response to their
revenue.
In order to arrive at their annual cash flow, weve assumed a 30% tax rate (based on analyst
projections). Additionally, in order to arrive at the discounted cash flows, weve also assumed
depreciation and interest to be relatively flat, however the cost of these areas alone, have not
resulted in a significant increase as well, thus these implications are fairly immaterial. Overall,
the Terminal Value is suggested to be $1,404 million based on our 2026 CF of $93 million, a
WAAC of 6.8% and a long-term growth of 2%. Based on the total shares outstanding of 156,200,
total value of GoPro is suggested to be $1,711 million, with a share price of $11 PPS. As of
February 11th,2022, GoPros stock price is approximately $8.75. Based on our DCF analysis, this
stock price is slightly lower than where we envision GoPro heading, primarily driven by their
proposed revenue growth.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Nurse Managers

Authors: J. Michael Leger

5th Edition

1284230937, 9781284230932

More Books

Students also viewed these Finance questions

Question

How do you add two harmonic motions having different frequencies?

Answered: 1 week ago

Question

=+Identify the key components of a strategic plan

Answered: 1 week ago