As of May 25, 2025, HC2 Holdings Inc has a Discounted Cash Flow (DCF) derived fair value of $5.55 per share. With the current market price at $3.68, this represents a potential upside of 50.7%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $3.65 |
| DCF Fair Value (10-year) | $5.55 |
| Potential Upside (5-year) | -0.8% |
| Potential Upside (10-year) | 50.7% |
| Discount Rate (WACC) | 5.0% - 8.2% |
Revenue is projected to grow from $1006 million in 12-2020 to $1178 million by 12-2030, representing a compound annual growth rate of approximately 1.6%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2020 | 1006 | 7% |
| 12-2021 | 762 | -24% |
| 12-2022 | 809 | 6% |
| 12-2023 | 845 | 4% |
| 12-2024 | 895 | 6% |
| 12-2025 | 950 | 6% |
| 12-2026 | 983 | 3% |
| 12-2027 | 1053 | 7% |
| 12-2028 | 1080 | 3% |
| 12-2029 | 1122 | 4% |
| 12-2030 | 1178 | 5% |
Net profit margin is expected to improve from -4% in 12-2020 to -2% by 12-2030, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2020 | (38) | -4% |
| 12-2021 | (13) | -2% |
| 12-2022 | (14) | -2% |
| 12-2023 | (15) | -2% |
| 12-2024 | (15) | -2% |
| 12-2025 | (16) | -2% |
| 12-2026 | (17) | -2% |
| 12-2027 | (18) | -2% |
| 12-2028 | (19) | -2% |
| 12-2029 | (19) | -2% |
| 12-2030 | (20) | -2% |
with a 5-year average of $32 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2021 | 30 |
| 12-2022 | 27 |
| 12-2023 | 23 |
| 12-2024 | 19 |
| 12-2025 | 19 |
| 12-2026 | 21 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 25 |
| Days Inventory | 0 |
| Days Payables | 36 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 6M/2021 | 36 | (4) | 9 | 10 | 21 |
| 2022 | 71 | (8) | 19 | (12) | 73 |
| 2023 | 69 | (9) | 19 | 2 | 57 |
| 2024 | 68 | (9) | 20 | 3 | 54 |
| 2025 | 71 | (10) | 22 | (3) | 63 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 3.65 | -0.8% |
| 10-Year DCF (Growth) | 5.55 | 50.7% |
| 5-Year DCF (EBITDA) | 0.23 | -93.7% |
| 10-Year DCF (EBITDA) | 2.42 | -34.3% |
Is HC2 Holdings Inc (HCHC) a buy or a sell? HC2 Holdings Inc is definitely a buy. Based on our DCF analysis, HC2 Holdings Inc (HCHC) appears to be significantly undervalued with upside potential of 50.7%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $3.68.