DCF Studio

    ADS.DE · GER · Consumer Cyclical

    adidas AG

    Also onConsensus Drift

    Implied value per share

    EUR 30.21

    Market price

    EUR 142.25

    Implied upside

    -78.8%

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

    AdjustedReported capital expenditure averages 2.41% of revenue against depreciation of 4.84%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 4.84% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: EUR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 30.21-78.8%
    Exit multiple
    EUR 81.24-42.9%
    Market price
    EUR 142.25

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0m51m101mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 25.6bnEUR 26.5bnEUR 27.3bnEUR 28.2bnEUR 29.2bn+3.3%
    EBITEUR 1.2bnEUR 1.2bnEUR 1.3bnEUR 1.3bnEUR 1.3bn+3.3%
    NOPATEUR 820.7mEUR 847.7mEUR 875.7mEUR 904.5mEUR 934.4m+3.3%
    Add depreciation & amortisationEUR 1.3bnEUR 1.4bnEUR 1.4bnEUR 1.5bnEUR 1.5bn+3.3%
    Less capital expenditureEUR -1.2bnEUR -1.3bnEUR -1.3bnEUR -1.4bnEUR -1.4bn+3.3%
    Less increase in working capitalEUR -817.8mEUR -844.7mEUR -872.5mEUR -901.3mEUR -931.0m+3.3%
    Free cashflow to firmEUR 88.9mEUR 91.8mEUR 94.9mEUR 98.0mEUR 101.2m+3.3%
    Discount factor0.96140.88870.82150.75930.7019-
    Present valueEUR 85.5mEUR 81.6mEUR 77.9mEUR 74.4mEUR 71.0m-4.5%
    Present Value Of The ForecastEUR 390.5m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate2.60%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta1.129Reported 1.192, pulled toward 1.0 (Blume)
    Cost of equity9.37%Risk-free + beta x equity risk premium
    Cost of debt4.09%Interest expense / average total debt
    Market capitalisationEUR 24.9bn81.8% of capital
    Total debtEUR 5.6bn18.2% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC8.18%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 shareEUR 30.21

    96% of EV

    Forecast FCFF, final year
    EUR 101.2m
    Capex at depreciation, working capital in reinvestment
    EUR 1.0bn
    Less reinvestment at g/ROIC (28.8% of NOPAT)
    EUR -288.5m
    Capitalised
    EUR 714.4m
    ROIC (reported)
    8.7%
    Terminal value, undiscounted
    EUR 12.9bn
    Terminal value, discounted
    EUR 9.0bn
    Enterprise value
    EUR 9.4bn
    Less net debt
    EUR 4.0bn
    Equity value
    EUR 5.4bn

    Exit at 9.1x EBITDA

    Value per shareEUR 81.24

    98% of EV

    Terminal value, undiscounted
    EUR 25.9bn
    Terminal value, discounted
    EUR 18.2bn
    Enterprise value
    EUR 18.5bn
    Less net debt
    EUR 4.0bn
    Equity value
    EUR 14.5bn

    Spread between methods: 92%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.18%56.5460.1364.6370.4778.39
    7.18%40.3541.8843.6945.8748.58
    8.18%29.1129.6330.2130.8631.60
    9.18%21.3321.5421.7421.9522.15
    10.18%15.6715.8416.0216.2016.38

    Outlined: this model. Green text: above today's price of 142.25. 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 margin4.6%12.2%+7.6pp
    Discount rate8.2%4.6%-3.6pp
    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.