Rockwell Collins, Inc. designs, produces & supports communications & aviation electronics for commercial & military customers. Its products & services include cabin management systems, radar & surveillance, field support, spares & parts, among others.

Estimated WACC for the firm today is 9.76% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and noted growth rates:

(click to enlarge)

Average Annual Growth FCF: ~ 5%

CAGR FCF: ~ 3%
Consensus Forecast Industry 5-Year Growth: ~ 11% per year

Consensus Forecast Company 5-Year Growth: ~ 10% per year

Internal Growth Rate: ~ 8%

Sustainable Growth Rate: ~ 41%

Scenario 1
Average FCF (past 5 years) is $481 million

• Start at $481 million FCF
• Assume a 5-year growth rate in FCF of 9% per year, then no growth or 0% growth in FCF per year forever:

Discounted Cash Flow Valuation

The firm's future free cash flows, discounted at a WACC of 9.76%, give a present value for the entire firm (Debt + Equity) of $7546 million. If the firm's fair value of debt is estimated at $837 million, then the fair value of the firm's equity could be $6709 million. $6709 million / 137 million outstanding shares is approximately $49 per share and a 20% margin of safety is $39/share.

Scenario 2
All else being equal,

• Assume a 5-year growth rate in FCF of 9% per year, then 2% growth in FCF per year forever:

Discounted Cash Flow Valuation

• Present Value of the entire firm (Debt + Equity): $8884 million
• Value of Equity: $8047 million or $59/share
• 20% margin of safety is $47/share

Sources

Morningstar.com

Yahoo! Finance

Rockwellcollins.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Becton, Dickinson & Co., is engaged in manufacturing and sale of medical supplies, devices, laboratory equipment and diagnostic products used by healthcare institutions, life science researchers, clinical laboratories, industry and the general public.

Estimated WACC for the firm today is 7.93% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and noted growth rates:

(click to enlarge)

Average Annual Growth FCF: ~ 10%

CAGR FCF: ~ 7%
Consensus Forecast Industry 5-Year Growth: ~ 16% per year

Consensus Forecast Company 5-Year Growth: ~ 7% per year

Internal Growth Rate: ~ 8%

Sustainable Growth Rate: ~ 22%

Scenario 1
Average FCF (2012, 2011, 2010) is $1143 million

• Start at $1143 million FCF
• Assume a 5-year growth rate in FCF of 7% per year, then no growth or 0% growth in FCF per year forever:

Discounted Cash Flow Valuation

The firm's future free cash flows, discounted at a WACC of 7.93%, give a present value for the entire firm (Debt + Equity) of $20342 million. If the firm's fair value of debt is estimated at $4317 million, then the fair value of the firm's equity could be $16025 million. $16025 million / 197 million outstanding shares is approximately $81 per share and a 20% margin of safety is $65/share.

Scenario 2
All else being equal,

• Assume a 5-year growth rate in FCF of 7% per year, then 2% growth in FCF per year forever:

Discounted Cash Flow Valuation

• Present Value of the entire firm (Debt + Equity): $25326 million
• Value of Equity: $21009 million or $107/share
• 20% margin of safety is $86/share

Sources

Morningstar.com

Yahoo! Finance

BD.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

AmerisourceBergen Corporation is a pharmaceutical services company providing drug distribution and related healthcare services and solutions to pharmacy, physician, and manufacturer customers, which are based mainly in the United States and Canada.

Estimated WACC for the firm today is 6.88% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and noted growth rates:

(click to enlarge)

Average Annual Growth FCF: ~ 32%

CAGR FCF: ~ 18%
Consensus Forecast Industry 5-Year Growth: ~ 16% per year

Consensus Forecast Company 5-Year Growth: ~ 12% per year

Internal Growth Rate: ~ 4%

Sustainable Growth Rate: ~ 28%

Scenario 1
Average FCF (past five years) is $861 million

• Start at $861 million FCF
• Assume a 5-year growth rate in FCF of 12% per year, then no growth or 0% growth in FCF per year forever:

Discounted Cash Flow Valuation

The firm's future free cash flows, discounted at a WACC of 6.88%, give a present value for the entire firm (Debt + Equity) of $22658 million. If the firm's fair value of debt is estimated at $1636 million, then the fair value of the firm's equity could be $21022 million. $21022 million / 235 million outstanding shares is approximately $89 per share and a 20% margin of safety is $71/share.

Scenario 2
All else being equal,

• Assume a 5-year growth rate in FCF of 4% per year, then 0% growth in FCF per year forever:

Discounted Cash Flow Valuation

• Present Value of the entire firm (Debt + Equity): $15312 million
• Value of Equity: $13676 million or $58/share
• 20% margin of safety is $46/share

Sources

Morningstar.com

Yahoo! Finance

AmerisourceBergen

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Through a global chain of almost 17,500 company-owned and licensed stores, Starbucks sells coffee, espresso, teas, cold blended beverages, complementary food items, and other accessories. In addition to its retail operations, the firm distributes packaged coffee, VIA single-serve packets, K-Cups, and tea through grocery stores and warehouse clubs under the Starbucks, Tazo, and the Seattle's Best Coffee brands.

Estimated WACC for the firm today is 9.41% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and noted growth rates:

(click to enlarge)

Average Annual Growth FCF: ~ 35%

CAGR FCF: ~ 17.5%
Consensus Forecast Industry 5-Year Growth: ~ 12% per year

Consensus Forecast Company 5-Year Growth: ~ 18% per year

Internal Growth Rate: ~ 12%

Sustainable Growth Rate: ~ 22%

Scenario 1
Average FCF (2012, 2011, 2010) is $1080 million

• Start at $1080 million FCF
• Assume a 5-year growth rate in FCF of 18% per year, then no growth or 0% growth in FCF per year forever:

Discounted Cash Flow Valuation

The firm's future free cash flows, discounted at a WACC of 9.41%, give a present value for the entire firm (Debt + Equity) of $26570 million. If the firm's fair value of debt is estimated at $674 million, then the fair value of the firm's equity could be $25896 million. $25896 million / 744 million outstanding shares is approximately $35 per share and a 20% margin of safety is $28/share.

Scenario 2
All else being equal,

• Assume a 5-year growth rate in FCF of 18% per year, then 4% growth in FCF per year forever:

Discounted Cash Flow Valuation

• Present Value of the entire firm (Debt + Equity): $41173 million
• Value of Equity: $40499 million or $54/share
• 20% margin of safety is $43/share

Sources

Morningstar.com

Yahoo! Finance

Starbucks.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Established in 1940, Air Products is the world's largest supplier of hydrogen and helium. It offers a unique portfolio of products and services in a number of industries, including technology, energy, industrial, and health care. The company operates in more than 40 countries, with international sales representing 60% of revenue. Air Products generates $10 billion in annual sales and employs almost 20,000 workers.

Estimated WACC for the firm today is 10.11% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and noted growth rates:

(click to enlarge)

Average Annual Growth FCF: ~ 55%

CAGR FCF: ~ -4.6%
Consensus Forecast Industry 5-Year Growth: ~ 11% per year

Consensus Forecast Company 5-Year Growth: ~ 8% per year

Internal Growth Rate: ~ 4%

Sustainable Growth Rate: ~ 11%

Scenario 1
The highest level of FCF achieved in the past 10 years is $595 million

• Start at $595 million FCF
• Assume a 5-year growth rate in FCF of 11% per year, then 4% growth in FCF per year forever:

Discounted Cash Flow Valuation

The firm's future free cash flows, discounted at a WACC of 10.11%, give a present value for the entire firm (Debt + Equity) of $14307 million. If the firm's fair value of debt is estimated at $5006 million, then the fair value of the firm's equity could be $9301 million. $9301 million / 213 million outstanding shares is approximately $44 per share and a 20% margin of safety is $35/share.

Scenario 2
All else being equal,

• Assume a 5-year growth rate in FCF of 11% per year, then 6.75% growth in FCF per year forever:

Discounted Cash Flow Valuation

• Present Value of the entire firm (Debt + Equity): $23527 million
• Value of Equity: $18521 million or $87/share
• 20% margin of safety is $70/share

Sources

Morningstar.com

Yahoo! Finance

Airproducts.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disney owns the rights to some of the most famous characters ever created, including Mickey Mouse and Winnie the Pooh. These characters and others are featured in several theme parks Disney owns or licenses around the world. Disney makes live-action and animated films under several labels and owns ABC, Disney Channel, and ESPN. Disney also owns a 42.5% stake in A&E, The History Channel, and Lifetime Networks. The company generates about 25% of its sales from outside the United States.

Estimated WACC for the firm today is 10.70% using the Capital Asset Pricing Model and the company's recent SEC filings.

Recent free cash flows and noted growth rates:

(click to enlarge)

Average Annual Growth FCF: ~ 16%

CAGR FCF: ~ 9%
Consensus Forecast Industry 5-Year Growth: ~ 18% per year

Consensus Forecast Company 5-Year Growth: ~ 11% per year

Internal Growth Rate: ~ 7%

Sustainable Growth Rate: ~ 14%

Scenario 1
Average FCF (2012, 2011, 2010) is $4028 million

• Start at $4028 million FCF
• Assume a 5-year growth rate in FCF of 11% per year, then no growth or 0% growth in FCF per year forever:

Discounted Cash Flow Valuation

The firm's future free cash flows, discounted at a WACC of 10.70%, give a present value for the entire firm (Debt + Equity) of $62640 million. If the firm's fair value of debt is estimated at $15146 million, then the fair value of the firm's equity could be $47494 million. $47494 million / 1770 million outstanding shares is approximately $27 per share and a 20% margin of safety is $22/share.

Scenario 2
All else being equal,

• Assume a 5-year growth rate in FCF of 11% per year, then 5.25% growth in FCF per year forever:

Discounted Cash Flow Valuation

• Present Value of the entire firm (Debt + Equity): $103402 million
• Value of Equity: $88256 million or $50/share
• 20% margin of safety is $40/share

Sources

Morningstar.com

Yahoo! Finance

The Walt Disney Company

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.