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DIRECTV, Inc. [DTV]Buy 1,000 Shares

Profile: DirecTV (DTV) provides digital satellite broadcasting service to the United States and Latin America, offering up to 1800 channels, 130 High Definition channels, various movie and sports packages, and DVR capabilities to nearly 20 million subscribers.

Competitive Advantage: DirecTV is the only Pay-TV provider with a growing presence in Latin America and the only provider to offer an NFL sports package. They also offer more HD & premium channels than competitors and have a strong marketing base through AT&T.

Investment Thesis: DirecTV provides opportunity for growth through a strong industry position, a first mover advantage in Latin America, and through offering the highest quality product at competitive prices.

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Stock Information
Ticker DTV
Industry Tech
Sector Cable/Satellite
Class Growth
Mkt. Cap $23.72B
Beta 0.95
Price $22.58
52 Wk Range $17.70–$29.10 Shares 1.05B

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Key Ratios (TTM)
EPS $1.35
FCF per share $1.20
Price/Earnings 16.76
PEG (5yr Exp) 1.44
Price/Book (MRQ) 4.13
Price/Sales 1.23
EV/EBITDA 5.40
Current Ratio 2.46
Debt/Equity 0.99
ROE 28.34%
ROA 9.46%
ROI 12.43%

| 2007| 2008| 2009E| 2010E| 2011E| 2012E| 2013E|
NI| 1,359| 1,543| 1,723| 1,941| 2,188| 2,465| 2,771| + Depr.| 1,448| 1,644| 1,836| 2,068| 2,331| 2,626| 2,952| + Int.| 130| 159| 177| 199| 225| 253| 285|
- CapEx| 2326| 2641| 2949| 3292| 3676| 4103| 4581|
- NWC| 53| 158| 155| 188| 212| 239| 264|
FCFF| 664| 863| 942| 1,051| 1,174| 1,310| 1,463|

WACC| 10%| PV of CF| $33,327| Shares Out| 1,050|
Growth (LT)| 5%| +Cash| 802| | |
Terminal Value| $51,200| -LT Debt| 3,347| Share Value| $29.32| Total CF| $52,663| Equity Value| $30,782| | |

Report written by: Pete Markovich, Janelle Heim, Jay Hammond and John Hammon Table of Contents

Company Overview 3
Recent Company News 3
Competitive Advantage 4
Segments 4
Revenues by Operating Segment4
Management 5
Macroeconomic Environment 6
Industry Analysis 6
Competitors 7
SWOT Analysis 8
Who’s Buying Now? 9
Analysts Recommendations 9
Investor Relations 10
Financial Ratio Analysis
Profitability 11
Financial Strength 11
Asset Management 12
Debt Management 12
Extended DuPont Model 13
Historic Price Multiples 13
Pro Forma Income Statement 16
Discounted Cash Flows Valuation 17
Forecast Valuations 18
Projected Relative Valuation 19
Investment Summary 20
Financial Statements 21
ValueLine Investment Survey 24

Company Overview
Company Profile

DirecTV (DTV) provides a high quality digital satellite broadcasting service to subscribers in the United States and Latin American geographic markets. DirecTV’s business strategy revolves around product differentiation, therefore the company focuses on the ability to offer a large variety of channels and services, including up to 1800 standard channels, more than 130 High Definition (HDTV) channels, various movie and sports packages, and DVR capabilities to nearly 20 million subscribers. DirecTV’s customer market is mainly individual consumers and households; however the company also offers services to bars, hotels, restaurants, and hospitals through their DirecTV for business service.

Company History

* June, 1994 – DirecTV launches services in the United States. * October, 1994 – DirecTV attains nationwide availability. * November, 1995 – The one millionth customer signs with DirecTV. * April, 1999 – DirecTV acquires the satellite...
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