DCF Tool

TWO

Two Harbors Investment Corp – Other Financial Vehicles
two harbors investment corp., a maryland corporation, is a real estate investment trust that invests in residential mortgage-backed securities, residential mortgage loans, mortgage servicing rights, commercial real estate and other financial assets. two harbors is headquartered in new york, ny, and is externally managed and advised by prcm advisers llc, a wholly-owned subsidiary of pine river capital management l.p. additional information is available at www.twoharborsinvestment.com.
Analysis Results
Intrinsic Value $0.01
Latest Price $13.43
Relative Value 233720% overvalued
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Cash Flow (Billions)
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 -56.3%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 4.1%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -56.3%, 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 (billion) Present value (billion)
2023 0.000221 0.000212
2024 9.68e-05 8.93e-05
2025 4.23e-05 3.75e-05
2026 1.85e-05 1.58e-05
2027 8.1e-06 6.62e-06
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 0.000243 billion. This corresponds to a present value of 0.000191 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 0.000362 billion. Adding in the terminal value gives a total present value of 0.000552 billion.

There are presently 96.2 million outstanding shares, so the intrinsic value per share is 0.01.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 11,762,980,000
Current Cash 0
Current Liabilities 11,136,644,000
Current Debt 398,011,000
Non-Cash Working Capital (NCWC) 1,024,347,000
Change in NCWC -914,527,000
EBIT 324,452,000
Tax Provision 104,213,000
Depreciation and Amortization 0
Capital Expenditure 0
Unlevered Free Cash Flow -694,288,000
Current Assets 10,781,986,000
Current Cash 0
Current Liabilities 9,239,888,000
Current Debt 396,776,000
Non-Cash Working Capital (NCWC) 1,938,874,000
Change in NCWC -34,556,000
EBIT 191,419,000
Tax Provision 4,192,000
Depreciation and Amortization 0
Capital Expenditure 0
Unlevered Free Cash Flow 152,671,000
Current Assets 17,921,383,000
Current Cash 0
Current Liabilities 16,343,562,000
Current Debt 395,609,000
Non-Cash Working Capital (NCWC) 1,973,430,000
Change in NCWC -2,013,771,000
EBIT -1,660,117,000
Tax Provision -35,688,000
Depreciation and Amortization 0
Capital Expenditure 0
Unlevered Free Cash Flow -3,673,888,000
Current Assets 34,473,556,000
Current Cash 0
Current Liabilities 30,880,857,000
Current Debt 394,502,000
Non-Cash Working Capital (NCWC) 3,987,201,000
Change in NCWC 1,308,915,000
EBIT 310,402,000
Tax Provision -13,560,000
Depreciation and Amortization 0
Capital Expenditure 0
Unlevered Free Cash Flow 1,619,317,000
Current Assets 28,516,998,000
Current Cash 0
Current Liabilities 25,838,712,000
Current Debt 0
Non-Cash Working Capital (NCWC) 2,678,286,000
Change in NCWC -145,287,000
EBIT 92,474,000
Tax Provision 41,823,000
Depreciation and Amortization 0
Capital Expenditure 0
Unlevered Free Cash Flow -52,813,000
Current Assets 24,038,419,000
Current Cash 0
Current Liabilities 21,214,846,000
Current Debt 0
Non-Cash Working Capital (NCWC) 2,823,573,000
Change in NCWC 65,926,000
EBIT 297,757,000
Tax Provision -10,482,000
Depreciation and Amortization 969,000
Capital Expenditure -629,000
Unlevered Free Cash Flow 364,023,000
Current Assets 19,447,465,000
Current Cash 0
Current Liabilities 16,689,818,000
Current Debt 0
Non-Cash Working Capital (NCWC) 2,757,647,000
Change in NCWC -328,578,000
EBIT 368,571,000
Tax Provision 12,303,000
Depreciation and Amortization 1,283,000
Capital Expenditure -338,000
Unlevered Free Cash Flow 28,534,376
Current Assets 14,069,049,000
Current Cash 0
Current Liabilities 10,982,824,000
Current Debt 0
Non-Cash Working Capital (NCWC) 3,086,225,000
Change in NCWC -480,264,000
EBIT 475,720,000
Tax Provision -16,490,000
Depreciation and Amortization 1,362,000
Capital Expenditure -930,000
Unlevered Free Cash Flow -4,112,000
Current Assets 20,573,283,000
Current Cash 0
Current Liabilities 17,006,794,000
Current Debt 0
Non-Cash Working Capital (NCWC) 3,566,489,000
Change in NCWC 75,711,000
EBIT 93,401,000
Tax Provision -73,738,000
Depreciation and Amortization 1,616,000
Capital Expenditure 0
Unlevered Free Cash Flow 170,728,000
Current Assets 16,762,947,000
Current Cash 0
Current Liabilities 13,272,169,000
Current Debt 0
Non-Cash Working Capital (NCWC) 3,490,778,000
Change in NCWC 387,490,000
EBIT 659,451,000
Tax Provision 84,411,000
Depreciation and Amortization 1,674,000
Capital Expenditure 0
Unlevered Free Cash Flow 964,204,000
Current Assets 16,466,655,000
Current Cash 0
Current Liabilities 13,363,367,000
Current Debt 0
Non-Cash Working Capital (NCWC) 3,103,288,000
Change in NCWC 2,006,476,000
EBIT 245,197,000
Tax Provision -42,219,000
Depreciation and Amortization 1,732,000
Capital Expenditure -293,745,000
Unlevered Free Cash Flow 1,959,660,000

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