Stock Analysis on Net

DuPont de Nemours Inc. (NYSE:DD)

This company has been moved to the archive! The financial data has not been updated since February 14, 2020.

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

Microsoft Excel

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)

DuPont de Nemours Inc., free cash flow to the firm (FCFF) forecast

US$ in millions, except per share data

Microsoft Excel
Year Value FCFFt or Terminal value (TVt) Calculation Present value at 19.31%
01 FCFF0 -322
1 FCFF1 = -322 × (1 + 0.00%)
2 FCFF2 = × (1 + 0.00%)
3 FCFF3 = × (1 + 0.00%)
4 FCFF4 = × (1 + 0.00%)
5 FCFF5 = × (1 + 0.00%)
5 Terminal value (TV5) = × (1 + 0.00%) ÷ (19.31%0.00%)
Intrinsic value of DuPont de Nemours Inc. capital
Less: Preferred stock, series A, $1.00 par (book value) 0
Less: Short-term borrowings and long-term debt (fair value) 19,050
Intrinsic value of DuPont de Nemours Inc. common stock
 
Intrinsic value of DuPont de Nemours Inc. common stock (per share) $—
Current share price $53.10

Based on: 10-K (reporting date: 2019-12-31).

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)

DuPont de Nemours Inc., cost of capital

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Value1 Weight Required rate of return2 Calculation
Equity (fair value) 39,262 0.67 27.18%
Preferred stock, series A, $1.00 par (book value) 0 0.00 0.00%
Short-term borrowings and long-term debt (fair value) 19,050 0.33 3.09% = 4.07% × (1 – 24.20%)

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in millions

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 739,388,462 × $53.10
= $39,261,527,332.20

   Short-term borrowings and long-term debt (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
= (21.00% + 27.20% + 51.00% + 0.20% + 21.60%) ÷ 5
= 24.20%

WACC = 19.31%


FCFF Growth Rate (g)

FCFF growth rate (g) implied by PRAT model

DuPont de Nemours Inc., PRAT model

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Average Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Interest expense 668 1,504 1,082 858 946
Income (loss) from discontinued operations, net of tax 1,214 (5) (77)
Net income attributable to DuPont 498 3,844 1,460 4,318 7,685
 
Effective income tax rate (EITR)1 21.00% 27.20% 51.00% 0.20% 21.60%
 
Interest expense, after tax2 528 1,095 530 856 742
Add: Preferred stock dividends 340 340
Add: Dividends declared on common stock 1,611 3,491 2,558 2,037 1,942
Interest expense (after tax) and dividends 2,139 4,586 3,088 3,233 3,024
 
EBIT(1 – EITR)3 (188) 4,944 2,067 5,174 8,427
 
Short-term borrowings and finance lease obligations 3,830 2,802 4,015 907 995
Long-term debt, excluding debt within one year 13,617 37,662 30,056 20,456 16,215
Total DuPont stockholders’ equity 40,987 94,571 100,330 25,987 25,374
Total capital 58,434 135,035 134,401 47,350 42,584
Financial Ratios
Retention rate (RR)4 0.07 -0.49 0.38 0.64
Return on invested capital (ROIC)5 -0.32% 3.66% 1.54% 10.93% 19.79%
Averages
RR 0.15
ROIC 7.12%
 
FCFF growth rate (g)6 0.00%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

1 See details »

2019 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 668 × (1 – 21.00%)
= 528

3 EBIT(1 – EITR) = Net income attributable to DuPont – Income (loss) from discontinued operations, net of tax + Interest expense, after tax
= 4981,214 + 528
= -188

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [-1882,139] ÷ -188
=

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × -188 ÷ 58,434
= -0.32%

6 g = RR × ROIC
= 0.15 × 7.12%
= 0.00%


FCFF growth rate (g) forecast

DuPont de Nemours Inc., H-model

Microsoft Excel
Year Value gt
1 g1 0.00%
2 g2 0.00%
3 g3 0.00%
4 g4 0.00%
5 and thereafter g5 0.00%

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)
= 0.00% + (0.00%0.00%) × (2 – 1) ÷ (5 – 1)
= 0.00%

g3 = g1 + (g5g1) × (3 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (3 – 1) ÷ (5 – 1)
= 0.00%

g4 = g1 + (g5g1) × (4 – 1) ÷ (5 – 1)
= 0.00% + (0.00%0.00%) × (4 – 1) ÷ (5 – 1)
= 0.00%