DCF Studio

    BARC.L · LSE · Financial Services

    Barclays PLC

    Also onConsensus Drift

    Implied value per share

    GBp 718.70

    Market price

    GBp 462.20

    Implied upside

    +55.5%

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

    Value Per Share

    Perpetuity growth
    GBp 718.70+55.5%
    Exit multiple
    GBp 540.54+16.9%
    Market price
    GBp 462.20

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0bn3bn7bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 30.7bnGBP 32.3bnGBP 33.9bnGBP 35.7bnGBP 37.6bn+5.2%
    EBITGBP 8.9bnGBP 9.4bnGBP 9.9bnGBP 10.4bnGBP 10.9bn+5.2%
    NOPATGBP 7.1bnGBP 7.5bnGBP 7.9bnGBP 8.3bnGBP 8.7bn+5.2%
    Add depreciation & amortisationGBP 2.0bnGBP 2.1bnGBP 2.2bnGBP 2.4bnGBP 2.5bn+5.2%
    Less capital expenditureGBP -2.0bnGBP -2.1bnGBP -2.2bnGBP -2.3bnGBP -2.5bn+5.2%
    Less increase in working capitalGBP -1.5bnGBP -1.6bnGBP -1.7bnGBP -1.8bnGBP -1.9bn+5.2%
    Free cashflow to firmGBP 5.6bnGBP 5.9bnGBP 6.2bnGBP 6.6bnGBP 6.9bn+5.2%
    Discount factor0.95880.88150.81040.74500.6849-
    Present valueGBP 5.4bnGBP 5.2bnGBP 5.1bnGBP 4.9bnGBP 4.7bn-3.3%
    Present Value Of The ForecastGBP 25.3bn

    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
    Beta0.915Reported 0.873, pulled toward 1.0 (Blume)
    Cost of equity9.53%Risk-free + beta x equity risk premium
    Cost of debt10.69%Interest expense / average total debt
    Market capitalisationGBP 61.9bn22.0% of capital
    Total debtGBP 219.9bn78.0% of capital, book value as a proxy
    Tax rate19.9%Effective, capped at statutory
    WACC8.77%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 7.19

    73% of EV

    Forecast FCFF, final year
    GBP 6.9bn
    Capex at depreciation, working capital in reinvestment
    GBP 8.7bn
    Less reinvestment at g/ROIC (28.5% of NOPAT)
    GBP -2.5bn
    Capitalised
    GBP 6.2bn
    ROIC (WACC floor)
    8.8%
    Terminal value, undiscounted
    GBP 102.0bn
    Terminal value, discounted
    GBP 69.9bn
    Enterprise value
    GBP 95.1bn
    Less net debt
    GBP -9.8bn
    Equity value
    GBP 105.0bn

    Exit at 4.8x EBITDA

    Value per shareGBP 5.41

    63% of EV

    Terminal value, undiscounted
    GBP 64.0bn
    Terminal value, discounted
    GBP 43.9bn
    Enterprise value
    GBP 69.1bn
    Less net debt
    GBP -9.8bn
    Equity value
    GBP 78.9bn

    Spread between methods: 28%.

    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%
    6.77%9.159.199.229.259.29
    7.77%8.028.048.078.108.13
    8.77%7.147.167.197.217.23
    9.77%6.456.476.496.516.53
    10.77%5.885.905.925.945.95

    Outlined: this model. Green text: above today's price of 4.62. 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 year5.2%-13.4%-18.6pp
    EBIT margin29.0%18.4%-10.7pp
    Discount rate8.8%14.1%+5.3pp
    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.