DCF Studio

    BF-B · NYQ · Consumer Defensive

    Brown-Forman Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 33.10

    Market price

    USD 30.00

    Implied upside

    +10.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-04-30

    AdjustedCapital expenditure runs at 4.2% of revenue against depreciation of 2.1%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 33.10+10.3%
    Exit multiple
    USD 29.67-1.1%
    Market price
    USD 30.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m418m835mFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 3.9bnUSD 4.0bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.3bnUSD 4.4bnUSD 4.5bnUSD 4.7bnUSD 4.8bn+2.2%
    EBITUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.4bn+2.2%
    NOPATUSD 894.1mUSD 910.5mUSD 927.9mUSD 946.4mUSD 966.2mUSD 987.1mUSD 1.0bnUSD 1.0bnUSD 1.1bnUSD 1.1bn+2.2%
    Add depreciation & amortisationUSD 83.7mUSD 85.2mUSD 86.8mUSD 88.6mUSD 90.4mUSD 92.4mUSD 94.4mUSD 96.6mUSD 99.0mUSD 101.4m+2.2%
    Less capital expenditureUSD -164.4mUSD -176.0mUSD -188.2mUSD -201.0mUSD -214.3mUSD -228.4mUSD -243.1mUSD -258.6mUSD -274.9mUSD -292.0m+6.6%
    Capex, % of revenue4.2%4.4%4.6%4.8%5.0%5.3%5.5%5.7%5.9%6.1%-
    Less increase in working capitalUSD -3.2mUSD -36.0mUSD -38.3mUSD -40.8mUSD -43.3mUSD -46.0mUSD -48.8mUSD -51.8mUSD -54.9mUSD -58.2m+38.3%
    Free cashflow to firmUSD 810.3mUSD 783.6mUSD 788.2mUSD 793.2mUSD 798.9mUSD 805.0mUSD 811.8mUSD 819.1mUSD 827.0mUSD 835.4m+0.3%
    Discount factor0.96800.90710.85000.79660.74640.69950.65550.61420.57560.5394-
    Present valueUSD 784.4mUSD 710.9mUSD 670.0mUSD 631.9mUSD 596.3mUSD 563.1mUSD 532.1mUSD 503.1mUSD 476.0mUSD 450.6m-
    Present Value Of The ForecastUSD 5.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.538Reported 0.310, pulled toward 1.0 (Blume)
    Cost of equity7.17%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 11.2x interest cover. Book interest / average debt was lower, at 3.9%.
    Market capitalisationUSD 13.8bn84.6% of capital
    Total debtUSD 2.5bn15.4% of capital, book value as a proxy
    Tax rate20.4%Effective, capped at statutory
    WACC6.71%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 33.10

    66% of EV

    Forecast FCFF, final year
    USD 835.4m
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (17.6% of NOPAT)
    USD -190.6m
    Capitalised
    USD 893.6m
    ROIC (reported)
    14.2%
    Terminal value, undiscounted
    USD 21.7bn
    Terminal value, discounted
    USD 11.7bn
    Enterprise value
    USD 17.6bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 15.4bn

    Exit at 12.8x EBITDA

    Value per shareUSD 29.67

    63% of EV

    Terminal value, undiscounted
    USD 18.8bn
    Terminal value, discounted
    USD 10.1bn
    Enterprise value
    USD 16.0bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 13.8bn

    Spread between methods: 11%.

    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%
    4.71%52.0557.8466.3479.94104.92
    5.71%38.5841.1344.5449.2956.29
    6.71%30.2931.5233.1035.1537.90
    7.71%24.6825.2826.0427.0028.23
    8.71%20.6320.9121.2621.7022.26

    Outlined: this model. Green text: above today's price of 30.00. 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.

    InputActualModelImplied
    Revenue growth, a year-2.4%2.0%0.9%
    EBIT margin30.5%28.5%26.3%
    Discount rate-6.7%7.1%
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.