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Hercules Capital Inc – Securities and Commodity Exchanges
Hercules Capital, Inc. is the leading and largest specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a broad variety of technology, life sciences and sustainable and renewable technology industries. Since inception (December 2003), Hercules has committed more than $11.1 billion to over 520 companies and is the lender of choice for entrepreneurs and venture capital firms seeking growth capital financing.
Analysis Results
Intrinsic Value $68.17
Latest Price $13.70
Relative Value 80% 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 6.5%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 4.5%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 6.5%, 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 256 245
2023 273 250
2024 291 255
2025 310 260
2026 330 265
Terminal Value

Assuming the company was sold after the projection period at an exit multiple of 30, the terminal value of the company would be 9890 million. This corresponds to a present value of 7600 million.

Intrinsic Value Per Share

The total present value of the projected cash flows is 1270 million. Adding in the terminal value gives a total present value of 8870 million.

There are presently 130.0 million outstanding shares, so the intrinsic value per share is 68.17.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 2,588,152,000
Current Cash 0
Current Liabilities 1,284,084,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,304,068,000
Change in NCWC 12,330,000
EBIT 174,155,000
Tax Provision 0
Depreciation and Amortization 317,000
Capital Expenditure -106,000
Unlevered Free Cash Flow 186,696,000
Current Assets 2,614,719,000
Current Cash 0
Current Liabilities 1,322,981,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,291,738,000
Change in NCWC 159,390,000
EBIT 227,261,000
Tax Provision 0
Depreciation and Amortization 415,000
Capital Expenditure -137,000
Unlevered Free Cash Flow 386,929,000
Current Assets 2,449,729,000
Current Cash 0
Current Liabilities 1,317,381,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,132,348,000
Change in NCWC 178,906,000
EBIT 173,598,000
Tax Provision 0
Depreciation and Amortization 262,000
Capital Expenditure -595,000
Unlevered Free Cash Flow 352,171,000
Current Assets 1,943,189,000
Current Cash 0
Current Liabilities 989,747,000
Current Debt 0
Non-Cash Working Capital (NCWC) 953,442,000
Change in NCWC 117,719,000
EBIT 97,642,000
Tax Provision 0
Depreciation and Amortization 199,000
Capital Expenditure -475,000
Unlevered Free Cash Flow 215,085,000
Current Assets 1,649,471,000
Current Cash 0
Current Liabilities 813,748,000
Current Debt 0
Non-Cash Working Capital (NCWC) 835,723,000
Change in NCWC 55,061,000
EBIT 69,733,000
Tax Provision 0
Depreciation and Amortization 201,000
Capital Expenditure -274,000
Unlevered Free Cash Flow 124,721,000
Current Assets 1,456,922,000
Current Cash 0
Current Liabilities 676,260,000
Current Debt 0
Non-Cash Working Capital (NCWC) 780,662,000
Change in NCWC 84,025,000
EBIT 96,920,000
Tax Provision 0
Depreciation and Amortization 202,000
Capital Expenditure -252,000
Unlevered Free Cash Flow 180,895,000
Current Assets 1,314,264,000
Current Cash 0
Current Liabilities 617,627,000
Current Debt 0
Non-Cash Working Capital (NCWC) 696,637,000
Change in NCWC 67,030,000
EBIT 78,648,000
Tax Provision 0
Depreciation and Amortization 193,000
Capital Expenditure -187,000
Unlevered Free Cash Flow 145,684,000
Current Assets 1,269,966,000
Current Cash 0
Current Liabilities 640,359,000
Current Debt 0
Non-Cash Working Capital (NCWC) 629,607,000
Change in NCWC 7,419,000
EBIT 91,862,000
Tax Provision 0
Depreciation and Amortization 266,000
Capital Expenditure -190,000
Unlevered Free Cash Flow 99,357,000
Current Assets 1,193,896,000
Current Cash 0
Current Liabilities 571,708,000
Current Debt 0
Non-Cash Working Capital (NCWC) 622,188,000
Change in NCWC 130,934,000
EBIT 87,901,000
Tax Provision 0
Depreciation and Amortization 252,000
Capital Expenditure -311,000
Unlevered Free Cash Flow 218,776,000

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