DCF Studio

    ATCO-A.ST · STO · Industrials

    Atlas Copco AB (publ)

    Also onConsensus Drift

    Implied value per share

    SEK 77.72

    Market price

    SEK 197.20

    Implied upside

    -60.6%

    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.

    Current EV/EBITDA of 22.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    SEK 77.72-60.6%
    Exit multiple
    SEK 178.08-9.7%
    Market price
    SEK 197.20

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (SEK). Outflows negative.

    0bn19bn39bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todaySEK
    LineFY26FY27FY28FY29FY30CAGR
    RevenueSEK 178.5bnSEK 189.2bnSEK 200.5bnSEK 212.6bnSEK 225.3bn+6.0%
    EBITSEK 38.4bnSEK 40.7bnSEK 43.2bnSEK 45.7bnSEK 48.5bn+6.0%
    NOPATSEK 30.1bnSEK 31.9bnSEK 33.8bnSEK 35.8bnSEK 38.0bn+6.0%
    Add depreciation & amortisationSEK 8.7bnSEK 9.3bnSEK 9.8bnSEK 10.4bnSEK 11.0bn+6.0%
    Less capital expenditureSEK -6.2bnSEK -6.5bnSEK -6.9bnSEK -7.3bnSEK -7.8bn+6.0%
    Less increase in working capitalSEK -1.9bnSEK -2.0bnSEK -2.1bnSEK -2.2bnSEK -2.4bn+6.0%
    Free cashflow to firmSEK 30.8bnSEK 32.7bnSEK 34.6bnSEK 36.7bnSEK 38.9bn+6.0%
    Discount factor0.95030.85810.77480.69970.6318-
    Present valueSEK 29.3bnSEK 28.0bnSEK 26.8bnSEK 25.7bnSEK 24.6bn-4.3%
    Present Value Of The ForecastSEK 134.4bn

    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
    Beta1.048Reported 1.072, pulled toward 1.0 (Blume)
    Cost of equity11.01%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationSEK 962.1bn96.5% of capital
    Total debtSEK 34.8bn3.5% of capital, book value as a proxy
    Tax rate21.7%Effective, capped at statutory
    WACC10.74%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 shareSEK 77.72

    66% of EV

    Forecast FCFF, final year
    SEK 38.9bn
    Capex at depreciation, working capital in reinvestment
    SEK 38.0bn
    Less reinvestment at g/ROIC (11.8% of NOPAT)
    SEK -4.5bn
    Capitalised
    SEK 33.5bn
    ROIC (reported)
    21.3%
    Terminal value, undiscounted
    SEK 416.7bn
    Terminal value, discounted
    SEK 263.3bn
    Enterprise value
    SEK 397.7bn
    Less net debt
    SEK 18.9bn
    Equity value
    SEK 378.7bn

    Exit at 20.0x EBITDA

    Value per shareSEK 178.08

    85% of EV

    Terminal value, undiscounted
    SEK 1190.8bn
    Terminal value, discounted
    SEK 752.3bn
    Enterprise value
    SEK 886.7bn
    Less net debt
    SEK 18.9bn
    Equity value
    SEK 867.8bn

    Spread between methods: 78%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.74%94.5698.19102.38107.27113.08
    9.74%83.0185.5288.3691.6095.34
    10.74%73.9575.7477.7279.9582.47
    11.74%66.6667.9569.3870.9572.71
    12.74%60.6661.6162.6563.7965.04

    Outlined: this model. Green text: above today's price of 197.20. 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 year6.0%31.3%+25.3pp
    EBIT margin21.5%53.3%+31.8pp
    Discount rate10.7%5.7%-5.0pp
    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.