XII
Detailed Valuation Scenarios
================================================================================ VALUATION SCENARIOS - DISCOUNTED CASH FLOW (DCF) ANALYSIS ================================================================================ Stock: PG Current Price: $138.04 Shares Outstanding: 2.34B (2,342,371,488 shares) Base Year FCF (FY 2025): $14.0B (from financial statements) -------------------------------------------------------------------------------- BEAR CASE (Probability: 25%) Conservative: Below-trend growth, elevated risk premium, modest recession impact ASSUMPTIONS: • FCF Growth Rate (Years 1-10): 3.0% • Discount Rate (WACC): 12.0% • Terminal Growth Rate: 2.0% 10-YEAR FCF PROJECTION: Year FCF ($M) PV Factor PV of FCF ($M) ------------------------------------------------------------ 1 $14,418,970,000 0.8929 $12,874,080,357 2 $14,851,539,100 0.7972 $11,839,556,043 3 $15,297,085,273 0.7118 $10,888,163,146 4 $15,755,997,831 0.6355 $10,013,221,465 5 $16,228,677,766 0.5674 $9,208,587,597 6 $16,715,538,099 0.5066 $8,468,611,808 7 $17,217,004,242 0.4523 $7,788,098,359 8 $17,733,514,369 0.4039 $7,162,269,027 9 $18,265,519,800 0.3606 $6,586,729,552 10 $18,813,485,394 0.3220 $6,057,438,784 ------------------------------------------------------------ Total PV of 10-Year FCF: $90,886,756,139 TERMINAL VALUE: • Year 11 FCF: $19,189,755,102 • Terminal Value: $191,897,551,023 • PV of Terminal Value: $61,785,875,597 VALUATION SUMMARY: • Enterprise Value: $152.7B • Shares Outstanding: 2.34B • Intrinsic Value per Share: $65.18 • Current Price: $138.04 • Upside/Downside: -52.8% • Margin of Safety: -111.8% -------------------------------------------------------------------------------- BASE CASE (Probability: 50%) Balanced: Sustainable growth trajectory, market-appropriate discount rate, realistic perpetuity assumptions ASSUMPTIONS: • FCF Growth Rate (Years 1-10): 8.0% • Discount Rate (WACC): 10.0% • Terminal Growth Rate: 2.5% 10-YEAR FCF PROJECTION: Year FCF ($M) PV Factor PV of FCF ($M) ------------------------------------------------------------ 1 $15,118,920,000 0.9091 $13,744,472,727 2 $16,328,433,600 0.8264 $13,494,573,223 3 $17,634,708,288 0.7513 $13,249,217,346 4 $19,045,484,951 0.6830 $13,008,322,486 5 $20,569,123,747 0.6209 $12,771,807,531 6 $22,214,653,647 0.5645 $12,539,592,849 7 $23,991,825,939 0.5132 $12,311,600,252 8 $25,911,172,014 0.4665 $12,087,752,974 9 $27,984,065,775 0.4241 $11,867,975,647 10 $30,222,791,037 0.3855 $11,652,194,272 ------------------------------------------------------------ Total PV of 10-Year FCF: $126,727,509,308 TERMINAL VALUE: • Year 11 FCF: $30,978,360,813 • Terminal Value: $413,044,810,837 • PV of Terminal Value: $159,246,655,052 VALUATION SUMMARY: • Enterprise Value: $286.0B • Shares Outstanding: 2.34B • Intrinsic Value per Share: $122.09 • Current Price: $138.04 • Upside/Downside: -11.6% • Margin of Safety: -13.1% -------------------------------------------------------------------------------- BULL CASE (Probability: 25%) Optimistic: Strong execution, market share gains, operating leverage, sustained competitive advantages ASSUMPTIONS: • FCF Growth Rate (Years 1-10): 14.0% • Discount Rate (WACC): 9.0% • Terminal Growth Rate: 3.0% 10-YEAR FCF PROJECTION: Year FCF ($M) PV Factor PV of FCF ($M) ------------------------------------------------------------ 1 $15,958,860,000 0.9174 $14,641,155,963 2 $18,193,100,400 0.8417 $15,312,768,622 3 $20,740,134,456 0.7722 $16,015,189,201 4 $23,643,753,280 0.7084 $16,749,830,908 5 $26,953,878,739 0.6499 $17,518,171,775 6 $30,727,421,762 0.5963 $18,321,757,636 7 $35,029,260,809 0.5470 $19,162,205,234 8 $39,933,357,323 0.5019 $20,041,205,474 9 $45,524,027,348 0.4604 $20,960,526,826 10 $51,897,391,176 0.4224 $21,922,018,883 ------------------------------------------------------------ Total PV of 10-Year FCF: $180,644,830,523 TERMINAL VALUE: • Year 11 FCF: $53,454,312,912 • Terminal Value: $890,905,215,194 • PV of Terminal Value: $376,327,990,818 VALUATION SUMMARY: • Enterprise Value: $557.0B • Shares Outstanding: 2.34B • Intrinsic Value per Share: $237.78 • Current Price: $138.04 • Upside/Downside: +72.3% • Margin of Safety: 41.9% -------------------------------------------------------------------------------- ================================================================================ SENSITIVITY ANALYSIS - Intrinsic Value per Share ================================================================================ How intrinsic value changes with different growth and discount rates: Growth → 3% 5% 8% 10% 12% 15% WACC ↓ ------------------------------------------------------------------ 8% $ 116↓ $ 135 $ 171 $ 200↑ $ 234↑ $ 295↑ 9% $ 98↓ $ 114↓ $ 143 $ 166 $ 193↑ $ 242↑ 10% $ 85↓ $ 98↓ $ 122↓ $ 141 $ 164 $ 204↑ 11% $ 75↓ $ 86↓ $ 106↓ $ 123↓ $ 142 $ 176 12% $ 67↓ $ 76↓ $ 94↓ $ 108↓ $ 124 $ 153 Current Price: $138.04 Base FCF: $13,999,000,000M Terminal Growth: 2.5% (constant) Legend: ↑ = 30%+ upside | ↓ = 10%+ downside ================================================================================ ================================================================================ PROBABILITY-WEIGHTED VALUATION ================================================================================ Bear Case (65.18) × 25% = $16.30 Base Case (122.09) × 50% = $61.05 Bull Case (237.78) × 25% = $59.45 ======================================== Weighted Average Intrinsic Value: $136.78 Current Price: $138.04 Upside/Downside: -0.9% Margin of Safety: -0.9% ================================================================================