DCF Studio

    AKZA.AS · AMS · Basic Materials

    Akzo Nobel N.V.

    Also onConsensus Drift

    Implied value per share

    EUR 36.45

    Market price

    EUR 56.08

    Implied upside

    -35.0%

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

    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 36.45-35.0%
    Exit multiple
    EUR 41.96-25.2%
    Market price
    EUR 56.08

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0m480m960mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 9.9bnEUR 9.7bnEUR 9.5bnEUR 9.3bnEUR 9.1bn-2.2%
    EBITEUR 899.3mEUR 879.8mEUR 860.8mEUR 842.2mEUR 824.0m-2.2%
    NOPATEUR 674.5mEUR 659.9mEUR 645.6mEUR 631.7mEUR 618.0m-2.2%
    Add depreciation & amortisationEUR 346.0mEUR 338.5mEUR 331.2mEUR 324.0mEUR 317.0m-2.2%
    Less capital expenditureEUR -280.1mEUR -274.0mEUR -268.1mEUR -262.3mEUR -256.6m-2.2%
    Less increase in working capitalEUR 219.5mEUR 214.8mEUR 210.1mEUR 205.6mEUR 201.1m+2.2%
    Free cashflow to firmEUR 959.9mEUR 939.1mEUR 918.8mEUR 899.0mEUR 879.5m-2.2%
    Discount factor0.95920.88260.81210.74720.6875-
    Present valueEUR 920.7mEUR 828.9mEUR 746.2mEUR 671.7mEUR 604.7m-10.0%
    Present Value Of The ForecastEUR 3.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta1.120Reported 1.179, pulled toward 1.0 (Blume)
    Cost of equity11.48%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 9.6bn66.4% of capital
    Total debtEUR 4.9bn33.6% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.68%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 36.45

    59% of EV

    Forecast FCFF, final year
    EUR 879.5m
    Capex at depreciation, working capital in reinvestment
    EUR 670.1m
    Less reinvestment at g/ROIC (28.8% of NOPAT)
    EUR -193.0m
    Capitalised
    EUR 477.1m
    ROIC (WACC floor)
    8.7%
    Terminal value, undiscounted
    EUR 7.9bn
    Terminal value, discounted
    EUR 5.4bn
    Enterprise value
    EUR 9.2bn
    Less net debt
    EUR 2.9bn
    Equity value
    EUR 6.3bn

    Exit at 8.1x EBITDA

    Value per shareEUR 41.96

    63% of EV

    Terminal value, undiscounted
    EUR 9.3bn
    Terminal value, discounted
    EUR 6.4bn
    Enterprise value
    EUR 10.2bn
    Less net debt
    EUR 2.9bn
    Equity value
    EUR 7.2bn

    Spread between methods: 14%.

    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%
    6.68%51.5452.4953.6355.0256.78
    7.68%42.1942.3742.5542.7442.92
    8.68%36.1436.2936.4536.6036.76
    9.68%31.3231.4531.5831.7231.85
    10.68%27.3827.5027.6127.7327.84

    Outlined: this model. Green text: above today's price of 56.08. 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 margin9.0%13.0%+4.0pp
    Discount rate8.7%6.5%-2.2pp
    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.