NYSE:DYN Future Profit Feb 21st 18
The graph above shows how DYN’s earnings are expected to move going forward, which should give you some color on DYN’s outlook. Next, I determine the terminal value, which is the business’s cash flow after the first stage. I’ve decided to use the 10-year government bond rate of 2.8% as the perpetual growth rate, which is rightly below GDP growth, but more towards the conservative side. The present value of the terminal value after discounting it back five years is $460.7M.
The total value, or equity value, is then the sum of the present value of the cash flows, which in this case is $1,472.1M. To get the intrinsic value per share, we divide this by the total number of shares outstanding. This results in an intrinsic value of $11.21, which, compared to the current share price of $12.18, we find that Dynegy is fair value, maybe slightly overvalued at the time of writing.
Next Steps:
Although the valuation of a company is important, it shouldn’t be the only metric you look at when researching a company.
For DYN, there are three fundamental factors you should further research:
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To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.