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Pacific Gas and Electric Company PFD 1ST 5%

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

Fair Value Summary

Current Price$18.37
5Y Range-23.18 – -21.82
5Y Selected-22.50
(-) Safety Margin84.29%
5Y Buy Price$-3.53
Upside (to Buy Price)-119.24%
10Y Range-23.91 – -23.22
10Y Selected-23.57
(-) Safety Margin84.29%
10Y Buy Price$-3.70
Upside (to Buy Price)-120.16%

Company Predictability & Safety

MetricValue
Revenue R2 (5Y)0.9415
Revenue R2 (10Y)0.8182
Net Income R2 (5Y)0.9038
Net Income R2 (10Y)0.0560
EBITDA R2 (5Y)0.9579
EBITDA R2 (10Y)0.1598
FCF R2 (5Y)0.6096
FCF R2 (10Y)0.0555
Safety Score0.1571

DA 10-Year Projection

Metric2025202620272028202920302031203220332034
% Growth-14.22%-12.19%-10.17%-8.14%-6.12%-4.10%-2.07%-0.05%1.98%4.00%
Revenue20,947.4218,393.3916,523.0515,177.3314,248.4213,664.7613,381.6013,375.1513,639.4314,185.01
EBITDA9,769.888,578.687,706.357,078.716,645.476,373.256,241.186,238.176,361.436,615.89
D&A-3,810.59-3,345.98-3,005.74-2,760.94-2,591.96-2,485.79-2,434.28-2,433.10-2,481.18-2,580.43
EBIT5,959.295,232.694,700.614,317.774,053.503,887.463,806.903,805.073,880.254,035.46
Pro forma Taxes-1,251.45-1,098.87-987.13-906.73-851.24-816.37-799.45-799.06-814.85-847.45
NOPAT4,707.844,133.833,713.483,411.043,202.273,071.093,007.453,006.003,065.403,188.02
Capital Expenditures-7,985.27-7,011.65-6,298.67-5,785.68-5,431.57-5,209.08-5,101.13-5,098.68-5,199.42-5,407.40
NWC Investment451.06331.85243.01174.85120.6975.8436.790.84-34.34-70.89
(+) D&A3,810.593,345.983,005.742,760.942,591.962,485.792,434.282,433.102,481.182,580.43
Free Cash Flow984.23800.01663.57561.15483.35423.64377.39341.27312.82290.16
Diluted Shares Outstanding2,207,750,000.002,207,750,000.002,207,750,000.002,207,750,000.002,207,750,000.002,207,750,000.002,207,750,000.002,207,750,000.002,207,750,000.002,207,750,000.00

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)0.100.461.462.463.464.465.466.467.468.46
Valuation Date1/16/26

Base Case Projected Flows

WACC: 9.10%Terminal Growth: 2.41%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.880.810.740.680.620.570.520.48
PV UFCF975.69768.59584.35452.95357.62287.30234.59194.45163.37138.90
Raw: 7,400.27
5,241.95
Raw: 4,442.39
2,036.00

Base Case Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value8,381.156,193.81
(-) Net Debt58,387.5058,387.50
Equity Value-50,006.35-52,193.69
(/) Shares Out2,207.752,207.75
Fair Value$-22.65$-23.64
(-) Safety Margin84.29%84.29%
Buy Price$-3.56$-3.71
Current Price$18.37$18.37
Upside (to Buy Price)-119.37%-120.22%

Conservative Projected Flows

WACC: 10.10%Terminal Growth: 1.91%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.870.790.720.650.590.540.490.44
PV UFCF974.80765.38576.62442.90346.50275.84223.19183.32152.62128.58
Raw: 6,015.21
4,109.65
Raw: 3,610.94
1,525.03

Conservative Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value7,215.845,594.77
(-) Net Debt58,387.5058,387.50
Equity Value-51,171.66-52,792.73
(/) Shares Out2,207.752,207.75
Fair Value$-23.18$-23.91
(-) Safety Margin84.29%84.29%
Buy Price$-3.64$-3.76
Current Price$18.37$18.37
Upside (to Buy Price)-119.82%-120.45%

Aggressive Projected Flows

WACC: 8.10%Terminal Growth: 2.91%
Metric2025202620272028202920302031203220332034TV (5y)TV (10y)
Discount Factor0.990.960.890.830.760.710.650.600.560.52
PV UFCF976.59771.86592.26463.33369.19299.34246.68206.36174.99150.15
Raw: 9,586.10
7,042.45
Raw: 5,754.56
2,864.21

Aggressive Valuation

5-Year Horizon10-Year Horizon
UFCFUFCF
Enterprise Value10,215.687,114.98
(-) Net Debt58,387.5058,387.50
Equity Value-48,171.82-51,272.52
(/) Shares Out2,207.752,207.75
Fair Value$-21.82$-23.22
(-) Safety Margin84.29%84.29%
Buy Price$-3.43$-3.65
Current Price$18.37$18.37
Upside (to Buy Price)-118.66%-119.86%

Reverse DCF: Market Implied Growth

Current Price$18.37
WACC Used9.1%
IMPLIED REVENUE GROWTH138.42%
Metric2027202820292030203120322033203420352036
Implied Revenue59,036.45140,752.07335,574.79800,062.411,907,473.014,547,711.8310,842,451.1525,850,087.0861,630,621.42146,936,971.07
Constant Implied Growth138.42%138.42%138.42%138.42%138.42%138.42%138.42%138.42%138.42%138.42%
Implied Free Cash Flow5.9014.0833.5680.01190.75454.771,084.252,585.016,163.0614,693.70
Discount Factor0.930.810.740.680.620.570.520.480.440.40
Present Value of Implied FCF5.4911.3624.8354.26118.57259.12566.261,237.462,704.275,909.73

Rolling Historical DCF (Backtest)

Valuation based on actual realized growth.
YearValuation DateActual PriceRealized Growth (5Y)Calculated Fair ValueValuation Delta
20192019-12-31$10.87-3.77%$-40.20-469.86%
20182018-12-31$23.75-23.14%$-56.24-336.81%
20172017-12-31$44.83-33.15%$-34.56-177.08%
20162016-12-31$60.77-31.29%$-45.04-174.12%
20152015-12-31$53.19-17.90%$-53.72-200.99%
20142014-12-31$53.24-2.27%$-66.76-225.40%
20132013-12-31$40.28-2.77%$-85.91-313.28%
20122012-12-31$40.18-1.28%$-22.03-154.83%
20112011-12-31$41.22-0.14%$-44.50-207.96%
20102010-12-31$47.84-1.11%$-56.65-218.41%
20092009-12-31$44.65-0.44%$-70.11-257.02%
20082008-12-31$38.71-0.93%$-67.96-275.57%
20072007-12-31$43.09-2.64%$-33.28-177.22%
20062006-12-31$47.33-1.45%$-15.74-133.26%
20052005-12-31$37.12-0.36%$-1.98-105.33%
20042004-12-31$33.284.15%$14.37-56.81%
20032003-12-31$27.7710.48%$22.15-20.25%
20022002-12-31$13.909.66%$-50.17-460.94%
20012001-12-31$19.246.40%$126.50557.48%
20002000-12-31$20.00-13.11%$-71.97-459.84%
19991999-12-31$20.50-28.19%$-23.35-213.93%
19981998-12-31$31.50-24.27%$-17.19-154.58%
19971997-12-31$30.31-12.98%$-4.27-114.09%
19961996-12-31$21.0011.82%$62.70198.56%
19951995-12-31$28.3827.19%$236.73734.16%

Monte Carlo Simulation (1,000 Iterations)

Mean Fair Value
$-23.59
Median
$-23.63
10th Percentile
$-23.91
90th Percentile
$-23.21

Fair Value Distribution

$-24.23 - $-24.13
4
$-24.13 - $-24.03
18
$-24.03 - $-23.92
67
$-23.92 - $-23.82
112
$-23.82 - $-23.72
164
$-23.72 - $-23.62
154
$-23.62 - $-23.52
138
$-23.52 - $-23.41
113
$-23.41 - $-23.31
70
$-23.31 - $-23.21
63
$-23.21 - $-23.11
34
$-23.11 - $-23.00
21
$-23.00 - $-22.90
11
$-22.90 - $-22.80
7
$-22.80 - $-22.70
11
$-22.70 - $-22.60
5
$-22.60 - $-22.49
0
$-22.49 - $-22.39
4
$-22.39 - $-22.29
3
$-22.29 - $-22.19
1