DCF Studio

    BBVA.MC · MCE · Financial Services

    Banco Bilbao Vizcaya Argentaria, S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 36.01

    Market price

    EUR 24.66

    Implied upside

    +46.0%

    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 6.0% of revenue against depreciation of 4.2%. 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.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 36.01+46.0%
    Exit multiple
    EUR 35.10+42.3%
    Market price
    EUR 24.66

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn6bn11bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 44.1bnEUR 49.4bnEUR 55.4bnEUR 62.0bnEUR 69.4bn+12.0%
    EBITEUR 17.0bnEUR 19.1bnEUR 21.3bnEUR 23.9bnEUR 26.8bn+12.0%
    NOPATEUR 12.8bnEUR 14.3bnEUR 16.0bnEUR 17.9bnEUR 20.1bn+12.0%
    Add depreciation & amortisationEUR 1.8bnEUR 2.1bnEUR 2.3bnEUR 2.6bnEUR 2.9bn+12.0%
    Less capital expenditureEUR -2.6bnEUR -2.9bnEUR -3.3bnEUR -3.7bnEUR -4.1bn+12.0%
    Less increase in working capitalEUR -4.7bnEUR -5.3bnEUR -5.9bnEUR -6.6bnEUR -7.4bn+12.0%
    Free cashflow to firmEUR 7.2bnEUR 8.1bnEUR 9.1bnEUR 10.2bnEUR 11.4bn+12.0%
    Discount factor0.96220.89080.82470.76350.7069-
    Present valueEUR 7.0bnEUR 7.2bnEUR 7.5bnEUR 7.8bnEUR 8.1bn+3.7%
    Present Value Of The ForecastEUR 37.5bn

    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
    Beta0.926Reported 0.890, pulled toward 1.0 (Blume)
    Cost of equity10.22%Risk-free + beta x equity risk premium
    Cost of debt6.20%Implied cost of debt of 38.8% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationEUR 136.1bn60.4% of capital
    Total debtEUR 89.3bn39.6% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.01%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 shareEUR 36.01

    83% of EV

    Forecast FCFF, final year
    EUR 11.4bn
    Capex at depreciation, working capital in reinvestment
    EUR 20.9bn
    Less reinvestment at g/ROIC (31.2% of NOPAT)
    EUR -6.5bn
    Capitalised
    EUR 14.4bn
    ROIC (WACC floor)
    8.0%
    Terminal value, undiscounted
    EUR 267.2bn
    Terminal value, discounted
    EUR 188.9bn
    Enterprise value
    EUR 226.4bn
    Less net debt
    EUR 19.4bn
    Equity value
    EUR 207.0bn

    Exit at 8.8x EBITDA

    Value per shareEUR 35.10

    83% of EV

    Terminal value, undiscounted
    EUR 259.8bn
    Terminal value, discounted
    EUR 183.7bn
    Enterprise value
    EUR 221.2bn
    Less net debt
    EUR 19.4bn
    Equity value
    EUR 201.8bn

    Spread between methods: 3%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.01%54.4356.5959.3162.8767.78
    7.01%43.3044.0744.9746.0647.41
    8.01%35.6935.8536.0136.1736.33
    9.01%30.7530.8931.0231.1631.30
    10.01%26.8326.9427.0627.1827.30

    Outlined: this model. Green text: above today's price of 24.66. 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 year12.0%1.9%-10.1pp
    EBIT margin38.5%28.4%-10.2pp
    Discount rate8.0%10.7%+2.7pp
    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.