DCF Studio

    AMP · NYQ · Financial Services

    Ameriprise Financial, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 1368.12

    Market price

    USD 544.33

    Implied upside

    +151.3%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedCapital expenditure runs at 1.1% of revenue against depreciation of -0.7%. 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.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    USD 1368.12+151.3%
    Exit multiple
    USD 1279.99+135.1%
    Market price
    USD 544.33

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn7bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 20.1bnUSD 22.0bnUSD 24.0bnUSD 26.1bnUSD 28.5bn+9.0%
    EBITUSD 4.9bnUSD 5.4bnUSD 5.8bnUSD 6.4bnUSD 6.9bn+9.0%
    NOPATUSD 3.9bnUSD 4.3bnUSD 4.6bnUSD 5.1bnUSD 5.5bn+9.0%
    Add depreciation & amortisationUSD -135.8mUSD -148.1mUSD -161.4mUSD -176.0mUSD -191.9m-9.0%
    Less capital expenditureUSD -219.5mUSD -239.3mUSD -260.9mUSD -284.5mUSD -310.1m+9.0%
    Less increase in working capitalUSD 1.7bnUSD 1.8bnUSD 2.0bnUSD 2.2bnUSD 2.4bn-9.0%
    Free cashflow to firmUSD 5.2bnUSD 5.7bnUSD 6.2bnUSD 6.8bnUSD 7.4bn+9.0%
    Discount factor0.95220.86330.78270.70970.6435-
    Present valueUSD 5.0bnUSD 4.9bnUSD 4.9bnUSD 4.8bnUSD 4.7bn-1.1%
    Present Value Of The ForecastUSD 24.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.090Reported 1.134, pulled toward 1.0 (Blume)
    Cost of equity10.99%Risk-free + beta x equity risk premium
    Cost of debt5.75%Interest expense / average total debt
    Market capitalisationUSD 48.1bn89.1% of capital
    Total debtUSD 5.9bn10.9% of capital, book value as a proxy
    Tax rate20.6%Effective, capped at statutory
    WACC10.29%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 1368.12

    64% of EV

    Forecast FCFF, final year
    USD 7.4bn
    Capex at depreciation, working capital in reinvestment
    USD 5.5bn
    Less reinvestment at g/ROIC (8.3% of NOPAT)
    USD -455.3m
    Capitalised
    USD 5.1bn
    ROIC (reported)
    30.3%
    Terminal value, undiscounted
    USD 66.5bn
    Terminal value, discounted
    USD 42.8bn
    Enterprise value
    USD 67.0bn
    Less net debt
    USD -57.8bn
    Equity value
    USD 124.9bn

    Exit at 8.0x EBITDA

    Value per shareUSD 1279.99

    59% of EV

    Terminal value, undiscounted
    USD 54.0bn
    Terminal value, discounted
    USD 34.7bn
    Enterprise value
    USD 59.0bn
    Less net debt
    USD -57.8bn
    Equity value
    USD 116.8bn

    Spread between methods: 7%.

    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%
    8.29%1510.811550.291596.451651.201717.23
    9.29%1406.481434.101465.691502.201544.89
    10.29%1325.591345.621368.121393.631422.80
    11.29%1261.001275.911292.441310.891331.63
    12.29%1208.171219.511231.951245.661260.87

    Outlined: this model. Green text: above today's price of 544.33. 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 year9.0%-38.9%-47.9pp
    EBIT margin24.4%-19.2%-43.5pp
    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.