DCF Studio

    BALL · NYQ · Consumer Cyclical

    Ball Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 23.47

    Market price

    USD 60.15

    Implied upside

    -61.0%

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

    AdjustedCapital expenditure runs at 7.2% of revenue against depreciation of 5.2%. 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.

    Value Per Share

    Perpetuity growth
    USD 23.47-61.0%
    Exit multiple
    USD 41.63-30.8%
    Market price
    USD 60.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m370m740mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 13.1bnUSD 13.0bnUSD 13.0bnUSD 12.9bnUSD 12.8bn-0.5%
    EBITUSD 1.3bnUSD 1.3bnUSD 1.2bnUSD 1.2bnUSD 1.2bn-0.5%
    NOPATUSD 996.3mUSD 991.0mUSD 985.8mUSD 980.6mUSD 975.4m-0.5%
    Add depreciation & amortisationUSD 677.3mUSD 673.7mUSD 670.2mUSD 666.6mUSD 663.1m-0.5%
    Less capital expenditureUSD -939.8mUSD -934.8mUSD -929.9mUSD -925.0mUSD -920.1m-0.5%
    Less increase in working capitalUSD 6.7mUSD 6.6mUSD 6.6mUSD 6.6mUSD 6.5m+0.5%
    Free cashflow to firmUSD 740.5mUSD 736.6mUSD 732.7mUSD 728.8mUSD 724.9m-0.5%
    Discount factor0.96060.88640.81790.75480.6965-
    Present valueUSD 711.3mUSD 652.9mUSD 599.3mUSD 550.1mUSD 504.9m-8.2%
    Present Value Of The ForecastUSD 3.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.967Reported 0.951, pulled toward 1.0 (Blume)
    Cost of equity10.32%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 15.9bn69.4% of capital
    Total debtUSD 7.0bn30.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.37%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 23.47

    75% of EV

    Forecast FCFF, final year
    USD 724.9m
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (29.9% of NOPAT)
    USD -324.3m
    Capitalised
    USD 761.4m
    ROIC (WACC floor)
    8.4%
    Terminal value, undiscounted
    USD 13.3bn
    Terminal value, discounted
    USD 9.3bn
    Enterprise value
    USD 12.3bn
    Less net debt
    USD 5.8bn
    Equity value
    USD 6.5bn

    Exit at 10.8x EBITDA

    Value per shareUSD 41.63

    83% of EV

    Terminal value, undiscounted
    USD 20.5bn
    Terminal value, discounted
    USD 14.3bn
    Enterprise value
    USD 17.3bn
    Less net debt
    USD 5.8bn
    Equity value
    USD 11.5bn

    Spread between methods: 56%.

    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%
    6.37%40.5842.1444.0646.4949.70
    7.37%30.0730.5231.0431.6232.31
    8.37%23.1523.3123.4723.6423.80
    9.37%18.1718.3118.4518.5918.73
    10.37%14.1714.2914.4114.5314.65

    Outlined: this model. Green text: above today's price of 60.15. 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 year-0.5%14.6%+15.2pp
    EBIT margin9.6%17.5%+7.9pp
    Discount rate8.4%5.6%-2.8pp
    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.