DCF Studio

    AAL.L · LSE · Basic Materials

    Anglo American plc

    Also onConsensus Drift

    Implied value per share

    GBp 166.40

    Market price

    GBp 3955.00

    Implied upside

    -95.8%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.7466

    Wrong toolThis model values the shares at 4.2% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedReports in USD, trades in GBp. Modelled in USD, converted at the end.
    AdjustedCapital expenditure runs at 19.7% of revenue against depreciation of 10.1%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 166.40-95.8%
    Exit multiple
    GBp 276.90-93.0%
    Market price
    GBp 3955.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m175m351mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 15.0bnUSD 12.1bnUSD 9.8bnUSD 7.9bnUSD 6.4bn-19.2%
    EBITUSD 3.6bnUSD 2.9bnUSD 2.3bnUSD 1.9bnUSD 1.5bn-19.2%
    NOPATUSD 2.7bnUSD 2.2bnUSD 1.8bnUSD 1.4bnUSD 1.1bn-19.2%
    Add depreciation & amortisationUSD 1.5bnUSD 1.2bnUSD 990.7mUSD 800.8mUSD 647.3m-19.2%
    Less capital expenditureUSD -2.9bnUSD -2.4bnUSD -1.9bnUSD -1.6bnUSD -1.3bn-19.2%
    Less increase in working capitalUSD -909.1mUSD -734.8mUSD -594.0mUSD -480.1mUSD -388.1m-19.2%
    Free cashflow to firmUSD 350.8mUSD 283.6mUSD 229.2mUSD 185.3mUSD 149.7m-19.2%
    Discount factor0.96090.88710.81900.75620.6981-
    Present valueUSD 337.1mUSD 251.5mUSD 187.7mUSD 140.1mUSD 104.5m-25.4%
    Present Value Of The ForecastUSD 1.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.991Reported 0.986, pulled toward 1.0 (Blume)
    Cost of equity9.95%Risk-free + beta x equity risk premium
    Cost of debt5.12%Interest expense / average total debt
    Market capitalisationUSD 42.4bn73.2% of capital
    Total debtUSD 15.5bn26.8% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.31%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 2.23

    91% of EV

    Forecast FCFF, final year
    USD 149.7m
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (23.4% of NOPAT)
    USD -269.1m
    Capitalised
    USD 880.2m
    ROIC (reported)
    10.7%
    Terminal value, undiscounted
    USD 15.5bn
    Terminal value, discounted
    USD 10.8bn
    Enterprise value
    USD 11.9bn
    Less net debt
    USD 9.3bn
    Equity value
    USD 2.5bn

    Exit at 8.2x EBITDA

    Value per shareUSD 3.71

    92% of EV

    Terminal value, undiscounted
    USD 17.9bn
    Terminal value, discounted
    USD 12.5bn
    Enterprise value
    USD 13.5bn
    Less net debt
    USD 9.3bn
    Equity value
    USD 4.2bn

    Spread between methods: 50%.

    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%
    6.31%6.677.518.569.9311.76
    7.31%3.774.204.735.376.16
    8.31%1.731.962.232.542.90
    9.31%0.230.350.480.620.78
    10.31%-0.91-0.87-0.82-0.77-0.71

    Outlined: this model. Green text: above today's price of 52.97. 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 year-19.2%12.7%+31.8pp
    Discount rate8.3%3.6%-4.7pp
    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.