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DTE Energy Company JR SUB DB 2017 E

Intrinsic Value Analysis (Discounted Cash Flow)Industry: Regulated ElectricSector: Utilities

Fair Value Summary

Current Price$21.55
5Y Range63.41 – 145.41
5Y Selected104.41
(-) Safety Margin73.00%
5Y Buy Price$28.19
Upside (to Buy Price)30.81%
10Y Range71.87 – 149.80
10Y Selected110.84
(-) Safety Margin73.00%
10Y Buy Price$29.93
Upside (to Buy Price)38.87%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.0001
Revenue R2 (10Y)0.2352
Net Income R2 (5Y)0.1555
Net Income R2 (10Y)0.5163
EBITDA R2 (5Y)0.7463
EBITDA R2 (10Y)0.7952
FCF R2 (5Y)0.2291
FCF R2 (10Y)0.6310
Safety Score0.2700

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth-0.18%0.28%0.75%1.21%1.68%2.14%2.61%3.07%3.54%4.00%
Revenue12,434.2812,469.3812,562.5212,714.7512,927.9013,204.7113,548.8013,964.8314,458.5315,036.87
EBITDA6,285.936,303.676,350.766,427.726,535.476,675.416,849.367,059.677,309.257,601.62
D&A-1,160.12-1,163.40-1,172.09-1,186.29-1,206.18-1,232.01-1,264.11-1,302.93-1,348.99-1,402.95
EBIT5,125.805,140.275,178.675,241.425,329.295,443.405,585.255,756.755,960.266,198.67
Pro forma Taxes-413.42-414.59-417.69-422.75-429.83-439.04-450.48-464.31-480.73-499.95
NOPAT4,712.384,725.684,760.994,818.684,899.465,004.365,134.775,292.445,479.545,698.72
Capital Expenditures-2,988.79-2,997.22-3,019.61-3,056.20-3,107.44-3,173.97-3,256.68-3,356.68-3,475.35-3,614.36
NWC Investment1.25-1.93-5.12-8.37-11.72-15.22-18.92-22.87-27.14-31.79
(+) D&A1,160.121,163.401,172.091,186.291,206.181,232.011,264.111,302.931,348.991,402.95
Free Cash Flow2,884.972,889.932,908.342,940.402,986.483,047.183,123.283,215.813,326.043,455.51
Diluted Shares Outstanding207,042,895.50207,042,895.50207,042,895.50207,042,895.50207,042,895.50207,042,895.50207,042,895.50207,042,895.50207,042,895.50207,042,895.50

Discounting Periods

MetricDec-25Dec-26Dec-27Dec-28Dec-29Dec-30Dec-31Dec-32Dec-33Dec-34
Period Start9/30/251/1/261/1/271/1/281/1/291/1/301/1/311/1/321/1/331/1/34
Period End12/31/2512/31/2612/31/2712/31/2812/31/2912/31/3012/31/3112/31/3212/31/3312/31/34
Mid-Point11/15/257/2/267/2/277/1/287/2/297/2/307/2/317/1/327/2/337/2/34
Time (t)0.100.451.452.463.464.465.466.467.468.46
Valuation Date1/17/26

Base Case Projected Flows

WACC: 9.10%Terminal Growth: 2.12%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.880.810.740.680.620.570.520.48
PV UFCF2,859.962,778.882,563.372,373.432,209.602,066.501,941.471,832.291,737.061,654.18
Raw: 43,689.81
30,947.50
Raw: 50,551.31
23,168.29

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value43,732.7445,185.02
(-) Net Debt23,936.5023,936.50
Equity Value19,796.2421,248.52
(/) Shares Out207.04207.04
Fair Value$95.61$102.63
(-) Safety Margin73.00%73.00%
Buy Price$25.82$27.71
Current Price$21.55$21.55
Upside (to Buy Price)19.80%28.58%

Conservative Projected Flows

WACC: 10.10%Terminal Growth: 1.62%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.870.790.720.650.590.540.490.44
PV UFCF2,857.352,767.492,529.682,320.752,140.931,984.091,847.121,727.411,622.751,531.29
Raw: 35,785.94
24,449.27
Raw: 41,406.14
17,487.23

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value37,065.4738,816.10
(-) Net Debt23,936.5023,936.50
Equity Value13,128.9714,879.60
(/) Shares Out207.04207.04
Fair Value$63.41$71.87
(-) Safety Margin73.00%73.00%
Buy Price$17.12$19.40
Current Price$21.55$21.55
Upside (to Buy Price)-20.55%-9.96%

Aggressive Projected Flows

WACC: 8.10%Terminal Growth: 2.62%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.970.890.830.760.710.650.600.560.52
PV UFCF2,862.592,790.422,597.822,427.812,281.132,153.132,041.581,944.591,860.581,788.19
Raw: 55,920.29
41,081.99
Raw: 64,702.60
32,204.42

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value54,041.7754,952.28
(-) Net Debt23,936.5023,936.50
Equity Value30,105.2731,015.78
(/) Shares Out207.04207.04
Fair Value$145.41$149.80
(-) Safety Margin73.00%73.00%
Buy Price$39.26$40.45
Current Price$21.55$21.55
Upside (to Buy Price)82.18%87.69%

Reverse DCF: Market Implied Growth

Current Price$21.55
WACC Used9.1%
IMPLIED REVENUE GROWTH121.50%
Metric2027202820292030203120322033203420352036
Implied Revenue32,830.2272,717.82161,067.49356,758.99790,208.971,750,285.853,876,823.348,587,031.1919,019,980.5842,128,606.88
Constant Implied Growth121.50%121.50%121.50%121.50%121.50%121.50%121.50%121.50%121.50%121.50%
Implied Free Cash Flow3.287.2716.1135.6879.02175.03387.68858.701,902.004,212.86
Discount Factor0.930.810.740.680.620.570.520.480.440.40
Present Value of Implied FCF3.055.8711.9224.1949.1299.73202.47411.07834.571,694.39

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$110.50-1.92%$-120.66-209.19%
20182018-12-31$93.853.88%$-81.54-186.89%
20172017-12-31$93.136.20%$-86.42-192.79%
20162016-12-31$83.82-0.90%$-62.16-174.16%
20152015-12-31$68.23-0.75%$-62.62-191.77%
20142014-12-31$73.495.40%$-73.24-199.67%
20132013-12-31$56.494.43%$-17.80-131.51%
20122012-12-31$51.093.30%$-7.26-114.20%
20112011-12-31$46.333.33%$6.29-86.42%
20102010-12-31$38.564.87%$32.20-16.49%
20092009-12-31$37.096.69%$45.4522.53%
20082008-12-31$30.352.53%$-34.55-213.85%
20072007-12-31$37.40-1.40%$-64.17-271.59%
20062006-12-31$41.19-0.27%$-44.51-208.06%
20052005-12-31$36.75-0.31%$-53.07-244.40%
20042004-12-31$36.700.09%$-39.33-207.16%
20032003-12-31$33.526.50%$-25.02-174.63%
20022002-12-31$39.485.87%$-54.92-239.11%
20012001-12-31$35.686.35%$-94.89-365.95%
20002000-12-31$33.13-0.37%$11.22-66.14%
19991999-12-31$26.91-1.35%$2.21-91.79%
19981998-12-31$36.645.52%$7.95-78.30%
19971997-12-31$29.5111.69%$29.48-0.10%
19961996-12-31$27.5516.97%$87.12216.22%
19951995-12-31$29.3511.14%$50.9173.46%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$106.04
Median
$101.52
10th Percentile
$70.07
90th Percentile
$147.97

Fair Value Distribution

$31.33 - $40.56
2
$40.56 - $49.79
11
$49.79 - $59.03
18
$59.03 - $68.26
52
$68.26 - $77.49
91
$77.49 - $86.73
115
$86.73 - $95.96
131
$95.96 - $105.19
124
$105.19 - $114.43
113
$114.43 - $123.66
100
$123.66 - $132.89
67
$132.89 - $142.13
55
$142.13 - $151.36
29
$151.36 - $160.59
23
$160.59 - $169.83
19
$169.83 - $179.06
23
$179.06 - $188.29
8
$188.29 - $197.53
8
$197.53 - $206.76
5
$206.76 - $215.99
6