Stock Analysis on Net
Stock Analysis on Net

Tesla Inc. (NASDAQ:TSLA)

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Present Value of Free Cash Flow to the Firm (FCFF)

Microsoft Excel LibreOffice Calc

In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.


Intrinsic Stock Value (Valuation Summary)

Tesla Inc., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel LibreOffice Calc
Year Value FCFFt or Terminal value (TVt) Calculation Present value at
01 FCFF0
1 FCFF1 = × (1 + )
2 FCFF2 = × (1 + )
3 FCFF3 = × (1 + )
4 FCFF4 = × (1 + )
5 FCFF5 = × (1 + )
5 Terminal value (TV5) = × (1 + ) ÷ ()
Intrinsic value of Tesla Inc.’s capital
Less: Debt and finance leases (fair value)
Intrinsic value of Tesla Inc.’s common stock
 
Intrinsic value of Tesla Inc.’s common stock (per share)
Current share price

Based on: 10-K (filing date: 2021-02-08).

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.


Weighted Average Cost of Capital (WACC)

Tesla Inc., cost of capital

Microsoft Excel LibreOffice Calc
Value1 Weight Required rate of return2 Calculation
Equity (fair value)
Debt and finance leases (fair value) = × (1 – )

Based on: 10-K (filing date: 2021-02-08).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= ×
=

   Debt and finance leases (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= ( + + + + ) ÷ 5
=

WACC =


FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

Tesla Inc., PRAT model

Microsoft Excel LibreOffice Calc
Average Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Interest expense
Net income (loss) attributable to common stockholders
 
Effective income tax rate (EITR)1
 
Interest expense, after tax2
Interest expense (after tax) and dividends
 
EBIT(1 – EITR)3
 
Current portion of debt and finance leases
Current portion of solar bonds and promissory notes issued to related parties
Debt and finance leases, net of current portion
Stockholders’ equity
Total capital
Financial Ratios
Retention rate (RR)4
Return on invested capital (ROIC)5
Averages
RR
ROIC
 
FCFF growth rate (g)6

Based on: 10-K (filing date: 2021-02-08), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-03-01).

1 See details »

2020 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= × (1 – )
=

3 EBIT(1 – EITR) = Net income (loss) attributable to common stockholders + Interest expense, after tax
= +
=

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [] ÷
=

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × ÷
=

6 g = RR × ROIC
= ×
=


FCFF growth rate (g) implied by single-stage model

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × ( × ) ÷ ( + )
=

where:

Total capital, fair value0 = current fair value of Tesla Inc.’s debt and equity (US$ in millions)
FCFF0 = the last year Tesla Inc.’s free cash flow to the firm (US$ in millions)
WACC = weighted average cost of Tesla Inc.’s capital


FCFF growth rate (g) forecast

Tesla Inc., H-model

Microsoft Excel LibreOffice Calc
Year Value gt
1 g1
2 g2
3 g3
4 g4
5 and thereafter g5

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5g1) × (2 – 1) ÷ (5 – 1)
= + () × (2 – 1) ÷ (5 – 1)
=

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= + () × (3 – 1) ÷ (5 – 1)
=

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= + () × (4 – 1) ÷ (5 – 1)
=