DCF Studio

    AAI.AX · ASX · Basic Materials

    Alcoa Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 17.84

    Market price

    AUD 66.00

    Implied upside

    -73.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.4042

    AdjustedReports in USD, trades in AUD. Modelled in USD, converted at the end.

    Value Per Share

    Perpetuity growth
    AUD 17.84-73.0%
    Exit multiple
    AUD 65.68-0.5%
    Market price
    AUD 66.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m272m544mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 13.0bnUSD 13.1bnUSD 13.2bnUSD 13.4bnUSD 13.5bn+1.0%
    EBITUSD 693.6mUSD 700.6mUSD 707.6mUSD 714.8mUSD 722.0m+1.0%
    NOPATUSD 485.5mUSD 490.4mUSD 495.3mUSD 500.3mUSD 505.4m+1.0%
    Add depreciation & amortisationUSD 686.8mUSD 693.7mUSD 700.7mUSD 707.8mUSD 714.9m+1.0%
    Less capital expenditureUSD -602.0mUSD -608.1mUSD -614.2mUSD -620.4mUSD -626.6m+1.0%
    Less increase in working capitalUSD -48.0mUSD -48.5mUSD -49.0mUSD -49.4mUSD -49.9m+1.0%
    Free cashflow to firmUSD 522.4mUSD 527.6mUSD 532.9mUSD 538.3mUSD 543.7m+1.0%
    Discount factor0.94260.83740.74400.66100.5873-
    Present valueUSD 492.4mUSD 441.8mUSD 396.5mUSD 355.8mUSD 319.3m-10.3%
    Present Value Of The ForecastUSD 2.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.35%Australian Government 10-year (RBA F2)
    Equity risk premium6.00%Market assumption
    Beta1.423Reported 1.631, pulled toward 1.0 (Blume)
    Cost of equity13.88%Risk-free + beta x equity risk premium
    Cost of debt5.72%Interest expense / average total debt
    Market capitalisationUSD 17.4bn86.5% of capital
    Total debtUSD 2.7bn13.5% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC12.56%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 12.71

    55% of EV

    Forecast FCFF, final year
    USD 543.7m
    Capex at depreciation, working capital in reinvestment
    USD 505.4m
    Less reinvestment at g/ROIC (19.9% of NOPAT)
    USD -100.6m
    Capitalised
    USD 404.7m
    ROIC (WACC floor)
    12.6%
    Terminal value, undiscounted
    USD 4.1bn
    Terminal value, discounted
    USD 2.4bn
    Enterprise value
    USD 4.4bn
    Less net debt
    USD 1.1bn
    Equity value
    USD 3.3bn

    Exit at 13.4x EBITDA

    Value per shareUSD 46.77

    85% of EV

    Terminal value, undiscounted
    USD 19.3bn
    Terminal value, discounted
    USD 11.3bn
    Enterprise value
    USD 13.3bn
    Less net debt
    USD 1.1bn
    Equity value
    USD 12.2bn

    Spread between methods: 115%.

    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%
    10.56%15.6015.6615.7115.7715.83
    11.56%13.9814.0314.0814.1314.18
    12.56%12.6212.6612.7112.7512.80
    13.56%11.4511.4911.5311.5711.61
    14.56%10.4510.4910.5210.5610.59

    Outlined: this model. Green text: above today's price of 47.00. 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
    EBIT margin5.4%16.5%+11.2pp
    Discount rate12.6%5.0%-7.5pp
    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.