DCF Studio

    A · NYQ · Healthcare

    Agilent Technologies, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 42.24

    Market price

    USD 156.47

    Implied upside

    -73.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 25.9x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 42.24-73.0%
    Exit multiple
    USD 93.77-40.1%
    Market price
    USD 156.47

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 7.0bnUSD 7.0bnUSD 7.0bnUSD 7.1bnUSD 7.1bn+0.5%
    EBITUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bn+0.5%
    NOPATUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.4bn+0.5%
    Add depreciation & amortisationUSD 291.3mUSD 292.7mUSD 294.1mUSD 295.5mUSD 297.0m+0.5%
    Less capital expenditureUSD -353.9mUSD -355.6mUSD -357.3mUSD -359.0mUSD -360.8m+0.5%
    Less increase in working capitalUSD -8.6mUSD -8.7mUSD -8.7mUSD -8.8mUSD -8.8m+0.5%
    Free cashflow to firmUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bn+0.5%
    Discount factor0.94960.85640.77220.69640.6280-
    Present valueUSD 1.2bnUSD 1.1bnUSD 990.0mUSD 897.1mUSD 812.9m-9.4%
    Present Value Of The ForecastUSD 5.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.161Reported 1.241, pulled toward 1.0 (Blume)
    Cost of equity11.39%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 44.1bn92.9% of capital
    Total debtUSD 3.4bn7.1% of capital, book value as a proxy
    Tax rate12.2%Effective, capped at statutory
    WACC10.89%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 42.24

    63% of EV

    Forecast FCFF, final year
    USD 1.3bn
    Capex at depreciation, working capital in reinvestment
    USD 1.4bn
    Less reinvestment at g/ROIC (17.9% of NOPAT)
    USD -245.2m
    Capitalised
    USD 1.1bn
    ROIC (reported)
    13.9%
    Terminal value, undiscounted
    USD 13.7bn
    Terminal value, discounted
    USD 8.6bn
    Enterprise value
    USD 13.6bn
    Less net debt
    USD 1.6bn
    Equity value
    USD 12.0bn

    Exit at 20.0x EBITDA

    Value per shareUSD 93.77

    82% of EV

    Terminal value, undiscounted
    USD 37.1bn
    Terminal value, discounted
    USD 23.3bn
    Enterprise value
    USD 28.3bn
    Less net debt
    USD 1.6bn
    Equity value
    USD 26.7bn

    Spread between methods: 76%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.89%52.8754.2555.8357.6659.81
    9.89%46.2947.1548.1249.2250.47
    10.89%41.1041.6442.2442.9043.63
    11.89%36.9137.2437.6037.9938.41
    12.89%33.4533.6433.8434.0634.28

    Outlined: this model. Green text: above today's price of 156.47. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year0.5%35.3%+34.8pp
    EBIT margin21.9%73.2%+51.3pp
    Discount rate10.9%4.8%-6.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.