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Brookfield Renewable Partners L.P.
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=== DCF and WACC === The following table shows the WACC calculation: {| class="wikitable" |+WACC | '''Risk Free Rate of Return''' |3.8%<ref>https://markets.ft.com/data/bonds/tearsheet/summary?s=US10YT</ref> |- | '''Beta''' |0.74<ref>https://markets.ft.com/data/equities/tearsheet/summary?s=BEP.UN:TOR</ref> |- | '''Market Rate of Return''' |9.8%<ref>https://www.officialdata.org/us/stocks/s-p-500/1900</ref> |- | '''Cost of Equity''' |'''8.3%''' |- | '''Credit Spread''' |2.00%<ref>S&P Global</ref> |- | '''Cost of Debt''' |'''4.6%''' |- |'''Shares Outstanding''' |288.78<ref>https://markets.ft.com/data/equities/tearsheet/summary?s=BEP:NYQ</ref> |- |'''Share Price''' |29.96<ref>Share Price as of 14/07/2023 - https://markets.ft.com/data/equities/tearsheet/summary?s=BEP:NYQ</ref> |- | '''Equity''' | '''8,651.85''' |- |'''Long Term Debt''' |22,797.00<ref>https://markets.ft.com/data/equities/tearsheet/financials?s=BEP:NYQ&subView=BalanceSheet&periodType=q</ref> |- | '''Debt''' | '''830.99''' |- | '''E/D+E''' |91.2% |- | '''D/D+E''' |8.8% |- | '''WACC''' |'''7.9%''' |} The following table shows a 10 year DCF valuation for Brookfield Renewable Partners. The effective tax rate used for the WACC calculation above and in the DCF valuation below was set at 21%. The terminal growth rate was set at 3.3%, equivalent to the annualised US GDP growth rate. {| class="wikitable" |+DCF Calculation ! '''Units ($m)''' !'''2023''' !'''2024''' !'''2025''' !'''2026''' !'''2027''' !'''2028''' !'''2029''' !'''2030''' !'''2031''' !'''2032''' |- | '''FCF''' | '''1,994.97''' | '''1,796.75''' | '''2,004.69''' | '''1,946.44''' | '''2,156.77''' | '''2,100.91''' | '''2,313.63''' | '''2,260.17''' | '''2,475.28''' | '''2,424.21''' |- |'''Discount Factor''' |0.965507934 |0.895146668 |0.82991297 |0.769433169 |0.713360826 |0.661374748 |0.613177148 |0.568491943 |0.527063166 |0.488653506 |- |'''Present Value of FCF''' | '''1,926.16''' | '''1,608.35''' | '''1,663.72''' | '''1,497.65''' | '''1,538.56''' | '''1,389.49''' | '''1,418.67''' | '''1,284.89''' | '''1,304.63''' | '''1,184.60''' |} {| class="wikitable" |+DCF Calculation |'''Growth Rate''' |'''3.3%''' |- |'''Terminal Value''' |'''54,662.74''' |- |'''Present Value of Terminal Value''' |'''26,711.14''' |- |'''Enterprise Value''' |'''41,527.85''' |- |'''Equity Value''' |'''17,210.85''' |- |'''Implied Share Price''' |'''$ Β 59.60''' |} The valuation shows that as of 14/07/2023, Brookfield Renewable Partners is undervalued. There is a potential upside of 99% over 10 years, equivalent to an annual share price rise of 9.9% from the end of 2023. The sensitivity analysis below shows how share price varies in different growth rate environments, and for different WACC values. {| class="wikitable" |+Sensitivity Analysis ! '''$ Β 59.60''' ! ! colspan="8" |'''WACC''' |- ! ! !'''6.0%''' !'''6.5%''' !'''7.0%''' !'''7.5%''' !'''8.0%''' !'''8.5%''' !'''9.0%''' !'''9.5%''' |- ! rowspan="7" |'''Growth Rate''' !'''2.0%''' |$ 94.76 |$ 75.06 |$ 59.31 |$ 46.42 |$ 35.68 |$ 26.60 |$ 18.82 |$ 12.08 |- !'''2.5%''' |$ 113.07 |$ 88.75 |$ 69.83 |$ 54.70 |$ 42.32 |$ 32.00 |$ 23.27 |$ 15.79 |- !'''3.0%''' |$ 137.48 |$ 106.34 |$ 82.98 |$ 64.81 |$ 50.27 |$ 38.38 |$ 28.46 |$ 20.07 |- !'''3.5%''' |$ 171.66 |$ 129.80 |$ 99.89 |$ 77.45 |$ 60.00 |$ 46.03 |$ 34.59 |$ 25.06 |- !'''4.0%''' |$ 222.92 |$ 162.64 |$ 122.44 |$ 93.71 |$ 72.15 |$ 55.38 |$ 41.95 |$ 30.96 |- !'''4.5%''' |$ 308.36 |$ 211.90 |$ 154.00 |$ 115.38 |$ 87.78 |$ 67.07 |$ 50.95 |$ 38.04 |- !'''5.0%''' |$ 479.25 |$ 294.01 |$ 201.35 |$ 145.73 |$ 108.62 |$ 82.10 |$ 62.19 |$ 46.69 |}
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