DCF Studio

    BEN · NYQ · Financial Services

    Franklin Templeton Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 18.32

    Market price

    USD 33.01

    Implied upside

    -44.5%

    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.

    Value Per Share

    Perpetuity growth
    USD 18.32-44.5%
    Exit multiple
    USD 39.98+21.1%
    Market price
    USD 33.01

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 8.9bnUSD 9.1bnUSD 9.3bnUSD 9.5bnUSD 9.7bn+2.0%
    EBITUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.6bn+2.0%
    NOPATUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bn+2.0%
    Add depreciation & amortisationUSD 484.4mUSD 493.8mUSD 503.5mUSD 513.4mUSD 523.4m+2.0%
    Less capital expenditureUSD -152.9mUSD -155.8mUSD -158.9mUSD -162.0mUSD -165.2m+2.0%
    Less increase in working capitalUSD -39.8mUSD -40.6mUSD -41.4mUSD -42.2mUSD -43.0m+2.0%
    Free cashflow to firmUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.6bn+2.0%
    Discount factor0.95880.88150.81040.74500.6850-
    Present valueUSD 1.4bnUSD 1.3bnUSD 1.3bnUSD 1.2bnUSD 1.1bn-6.3%
    Present Value Of The ForecastUSD 6.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.382Reported 1.570, pulled toward 1.0 (Blume)
    Cost of equity12.60%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 16.8bn55.8% of capital
    Total debtUSD 13.3bn44.2% of capital, book value as a proxy
    Tax rate21.0%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 shareUSD 18.32

    67% of EV

    Forecast FCFF, final year
    USD 1.6bn
    Capex at depreciation, working capital in reinvestment
    USD 1.6bn
    Less reinvestment at g/ROIC (28.5% of NOPAT)
    USD -459.0m
    Capitalised
    USD 1.2bn
    ROIC (WACC floor)
    8.8%
    Terminal value, undiscounted
    USD 18.8bn
    Terminal value, discounted
    USD 12.9bn
    Enterprise value
    USD 19.2bn
    Less net debt
    USD 9.7bn
    Equity value
    USD 9.5bn

    Exit at 16.2x EBITDA

    Value per shareUSD 39.98

    79% of EV

    Terminal value, undiscounted
    USD 35.2bn
    Terminal value, discounted
    USD 24.1bn
    Enterprise value
    USD 30.4bn
    Less net debt
    USD 9.7bn
    Equity value
    USD 20.7bn

    Spread between methods: 74%.

    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%
    6.77%28.6928.8729.0429.2129.38
    7.77%22.7022.8422.9923.1323.27
    8.77%18.0718.2018.3218.4418.56
    9.77%14.4014.5014.6014.7114.81
    10.77%11.4011.4911.5811.6711.77

    Outlined: this model. Green text: above today's price of 33.01. 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 year2.0%10.9%+8.9pp
    EBIT margin17.0%25.4%+8.4pp
    Discount rate8.8%6.2%-2.5pp
    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.