DCF Studio

    AUTO.L · LSE · Communication Services

    Autotrader Group plc

    Also onConsensus Drift

    Implied value per share

    GBp 724.34

    Market price

    GBp 488.20

    Implied upside

    +48.4%

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

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

    Value Per Share

    Perpetuity growth
    GBp 724.34+48.4%
    Exit multiple
    GBp 618.67+26.7%
    Market price
    GBp 488.20

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m210m421mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayGBP
    LineFY27FY28FY29FY30FY31CAGR
    RevenueGBP 672.2mGBP 723.7mGBP 779.2mGBP 838.9mGBP 903.3m+7.7%
    EBITGBP 403.2mGBP 434.1mGBP 467.4mGBP 503.2mGBP 541.8m+7.7%
    NOPATGBP 304.0mGBP 327.3mGBP 352.4mGBP 379.4mGBP 408.5m+7.7%
    Add depreciation & amortisationGBP 22.2mGBP 23.9mGBP 25.7mGBP 27.7mGBP 29.8m+7.7%
    Less capital expenditureGBP -10.8mGBP -11.6mGBP -12.5mGBP -13.4mGBP -14.5m+7.7%
    Less increase in working capitalGBP -2.5mGBP -2.7mGBP -2.9mGBP -3.2mGBP -3.4m+7.7%
    Free cashflow to firmGBP 312.9mGBP 336.9mGBP 362.8mGBP 390.6mGBP 420.5m+7.7%
    Discount factor0.95970.88390.81400.74970.6905-
    Present valueGBP 300.3mGBP 297.8mGBP 295.3mGBP 292.8mGBP 290.3m-0.8%
    Present Value Of The ForecastGBP 1.5bn

    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
    Beta0.794Reported 0.693, pulled toward 1.0 (Blume)
    Cost of equity8.87%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 3.8bn94.7% of capital
    Total debtGBP 211.0m5.3% of capital, book value as a proxy
    Tax rate24.6%Effective, capped at statutory
    WACC8.58%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 shareGBP 7.24

    76% of EV

    Forecast FCFF, final year
    GBP 420.5m
    Capex at depreciation, working capital in reinvestment
    GBP 424.2m
    Less reinvestment at g/ROIC (5.3% of NOPAT)
    GBP -22.5m
    Capitalised
    GBP 401.7m
    ROIC (reported)
    47.1%
    Terminal value, undiscounted
    GBP 6.8bn
    Terminal value, discounted
    GBP 4.7bn
    Enterprise value
    GBP 6.2bn
    Less net debt
    GBP 192.8m
    Equity value
    GBP 6.0bn

    Exit at 9.6x EBITDA

    Value per shareGBP 6.19

    72% of EV

    Terminal value, undiscounted
    GBP 5.5bn
    Terminal value, discounted
    GBP 3.8bn
    Enterprise value
    GBP 5.3bn
    Less net debt
    GBP 192.8m
    Equity value
    GBP 5.1bn

    Spread between methods: 16%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.58%9.139.9010.8512.0713.69
    7.58%7.608.108.699.4210.32
    8.58%6.506.847.247.718.27
    9.58%5.675.926.206.536.90
    10.58%5.035.215.425.655.92

    Outlined: this model. Green text: above today's price of 4.88. 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 year7.7%-1.2%-8.8pp
    EBIT margin60.0%40.4%-19.6pp
    Discount rate8.6%11.4%+2.9pp
    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.