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Frontdoor Inc. – Offices of Lawyers
Frontdoor is a company that's obsessed with taking the hassle out of owning a home. With services powered by people and enabled by technology, it is the parent company of four home service plan brands: American Home Shield, HSA, Landmark and OneGuard, as well as ProConnect, an on-demand membership service for home repairs and maintenance, and Streem, a technology company that enables businesses to serve customers through an enhanced augmented reality, computer vision and machine learning platform. Frontdoor serves 2.2 million customers across the U.S. through a network of approximately 17,000 pre-qualified contractor firms that employ approximately 60,000 technicians. The company's customizable home service plans help customers protect and maintain their homes from costly and unexpected breakdowns of essential home systems and appliances. With nearly 50 years of experience, the company responds to over four million service requests annually.
Analysis Results
Intrinsic Value $128.85
Latest Price $22.78
Relative Value 82% undervalued
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Cash Flow (Millions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 25.0%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 7.1%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 25.0%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (million) Present value (million)
2022 271 253
2023 339 295
2024 424 345
2025 530 402
2026 662 470
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 13200 million. This corresponds to a present value of 8740 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 1770 million. Adding in the terminal value gives a total present value of 10500 million.

There are presently 81.5 million outstanding shares, so the intrinsic value per share is 128.85.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 294,000,000
Current Cash 262,000,000
Current Liabilities 378,000,000
Current Debt 17,000,000
Non-Cash Working Capital (NCWC) -329,000,000
Change in NCWC 38,000,000
EBIT 238,000,000
Tax Provision 39,000,000
Depreciation and Amortization 35,000,000
Capital Expenditure -31,000,000
Unlevered Free Cash Flow 224,084,337
Current Assets 626,000,000
Current Cash 597,000,000
Current Liabilities 403,000,000
Current Debt 7,000,000
Non-Cash Working Capital (NCWC) -367,000,000
Change in NCWC -37,000,000
EBIT 215,000,000
Tax Provision 36,000,000
Depreciation and Amortization 34,000,000
Capital Expenditure -32,000,000
Unlevered Free Cash Flow 128,053,691
Current Assets 462,000,000
Current Cash 435,000,000
Current Liabilities 364,000,000
Current Debt 7,000,000
Non-Cash Working Capital (NCWC) -330,000,000
Change in NCWC -17,000,000
EBIT 262,000,000
Tax Provision 50,000,000
Depreciation and Amortization 24,000,000
Capital Expenditure -22,000,000
Unlevered Free Cash Flow 182,784,313
Current Assets 330,000,000
Current Cash 305,000,000
Current Liabilities 345,000,000
Current Debt 7,000,000
Non-Cash Working Capital (NCWC) -313,000,000
Change in NCWC -50,000,000
EBIT 214,000,000
Tax Provision 42,000,000
Depreciation and Amortization 20,000,000
Capital Expenditure -27,000,000
Unlevered Free Cash Flow 103,179,640

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