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VALUATION SCENARIOS - DISCOUNTED CASH FLOW (DCF) ANALYSIS
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Stock: VAL
Current Price: $54.72
Shares Outstanding: 0.07B (71,032,299 shares)

Base Year FCF (FY 2024): $0.3B (from financial statements)

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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) 
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1        $  304,715,200      0.8929 $  272,067,143
2        $  313,856,656      0.7972 $  250,204,605
3        $  323,272,356      0.7118 $  230,098,877
4        $  332,970,526      0.6355 $  211,608,789
5        $  342,959,642      0.5674 $  194,604,511
6        $  353,248,431      0.5066 $  178,966,649
7        $  363,845,884      0.4523 $  164,585,400
8        $  374,761,261      0.4039 $  151,359,788
9        $  386,004,099      0.3606 $  139,196,948
10       $  397,584,222      0.3220 $  128,011,479
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Total PV of 10-Year FCF:            $1,920,704,189

TERMINAL VALUE:
  • Year 11 FCF: $405,535,906
  • Terminal Value: $4,055,359,061
  • PV of Terminal Value: $1,305,717,082

VALUATION SUMMARY:
  • Enterprise Value: $3.2B
  • Shares Outstanding: 0.07B
  • Intrinsic Value per Share: $45.42
  • Current Price: $54.72
  • Upside/Downside: -17.0%
  • Margin of Safety: -20.5%
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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) 
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1        $  319,507,200      0.9091 $  290,461,091
2        $  345,067,776      0.8264 $  285,179,980
3        $  372,673,198      0.7513 $  279,994,890
4        $  402,487,054      0.6830 $  274,904,073
5        $  434,686,018      0.6209 $  269,905,818
6        $  469,460,900      0.5645 $  264,998,439
7        $  507,017,772      0.5132 $  260,180,286
8        $  547,579,193      0.4665 $  255,449,735
9        $  591,385,529      0.4241 $  250,805,194
10       $  638,696,371      0.3855 $  246,245,100
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Total PV of 10-Year FCF:            $2,678,124,606

TERMINAL VALUE:
  • Year 11 FCF: $654,663,780
  • Terminal Value: $8,728,850,406
  • PV of Terminal Value: $3,365,349,699

VALUATION SUMMARY:
  • Enterprise Value: $6.0B
  • Shares Outstanding: 0.07B
  • Intrinsic Value per Share: $85.08
  • Current Price: $54.72
  • Upside/Downside: +55.5%
  • Margin of Safety: 35.7%
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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) 
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1        $  337,257,600      0.9174 $  309,410,642
2        $  384,473,664      0.8417 $  323,603,791
3        $  438,299,977      0.7722 $  338,448,002
4        $  499,661,974      0.7084 $  353,973,139
5        $  569,614,650      0.6499 $  370,210,439
6        $  649,360,701      0.5963 $  387,192,569
7        $  740,271,199      0.5470 $  404,953,696
8        $  843,909,167      0.5019 $  423,529,554
9        $  962,056,450      0.4604 $  442,957,515
10       $1,096,744,354      0.4224 $  463,276,667
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Total PV of 10-Year FCF:            $3,817,556,016

TERMINAL VALUE:
  • Year 11 FCF: $1,129,646,684
  • Terminal Value: $18,827,444,736
  • PV of Terminal Value: $7,952,916,123

VALUATION SUMMARY:
  • Enterprise Value: $11.8B
  • Shares Outstanding: 0.07B
  • Intrinsic Value per Share: $165.71
  • Current Price: $54.72
  • Upside/Downside: +202.8%
  • Margin of Safety: 67.0%
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SENSITIVITY ANALYSIS - Intrinsic Value per Share
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How intrinsic value changes with different growth and discount rates:

Growth →           3%          5%          8%         10%         12%         15%   
WACC ↓      ------------------------------------------------------------------
   8%    $    81↑  $    94↑  $   119↑  $   139↑  $   163↑  $   205↑ 
   9%    $    68   $    79↑  $    99↑  $   116↑  $   135↑  $   169↑ 
  10%    $    59   $    68   $    85↑  $    99↑  $   114↑  $   142↑ 
  11%    $    52   $    60   $    74↑  $    86↑  $    99↑  $   122↑ 
  12%    $    46↓  $    53   $    66   $    75↑  $    87↑  $   107↑ 

Current Price: $54.72
Base FCF: $295,840,000M
Terminal Growth: 2.5% (constant)

Legend: ↑ = 30%+ upside  |  ↓ = 10%+ downside
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PROBABILITY-WEIGHTED VALUATION
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Bear Case (45.42) × 25%  = $11.36
Base Case (85.08) × 50%  = $42.54
Bull Case (165.71) × 25%  = $41.43

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Weighted Average Intrinsic Value: $95.32
Current Price: $54.72
Upside/Downside: +74.2%
Margin of Safety: 42.6%
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