Harbor & Pine is a fast-growing regional coffee roaster that sells to cafés and grocery chains. Growth is slowing as it matures, and a client wants to know whether the stock is fairly priced.
- Last year's revenue
- $420.0M
- EBIT margin
- 15.0%
- D&A / capex
- 4.0% / 5.0% of revenue
- Net working capital
- 10% of revenue
- Tax rate
- 25%
- Risk-free rate / beta / ERP
- 4.2% / 1.10 / 5.5%
- Pre-tax cost of debt
- 6.5%
- Target capital structure
- 75% equity / 25% debt
- Terminal growth
- 2.50%
- Debt / cash
- $180M / $40M
- Diluted shares
- 30M
- Share price today
- $19.75
Your assignment
Your MD wants an implied share price by the end of the day, and a view on whether the stock is cheap or expensive. Build the DCF one piece at a time.