For the
VALUATION AT 2.5% FCF & 10.5% DR valuation, you are calculating Terminal Value based on a 8.5% discount rate. This is having a material impact on your valuation.
Also, this is probably pedantic, but anyway... I am unsure of your valuation date; however, it looks like a while ago. One option is to:
- adjust the first years earnings based on how far through we are;
- discount mid-period;
- adjust net debt for dividends since April (increase debt); and
- adjust net debt for likely earnings since April (reduced debt, lets hope).
EDIT: Also, since you are increasing the cash flows at a constant rate, you should get the same result as if you just applied the Gordon Growth model to your first cash flow. As an example, using your second valuation (1.5% and 8.5%):
Enterprise value = 45.3*(1.015)/(0.088-0.015) = 629.86
Equity value = 629.86 enterprise value – 106.6 debt = 523.26
Share value = 523.26 equity value / 355.9 shares = $1.47 per share.
This is the same result as your DCF.
By undertaking a DCF, you might think you are putting in more 'science' than you actually have. All you have really said is share value is $1.47 at 1.5% perpetual growth and a 8.8% discount rate.
Also, disc. I have ~3-4% of my portfolio in TGH.