DCF Studio

    BLK · NYQ · Financial Services

    BlackRock, Inc.

    Also onConsensus Drift

    Implied value per share

    USD 609.86

    Market price

    USD 1069.78

    Implied upside

    -43.0%

    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.

    Value Per Share

    Perpetuity growth
    USD 609.86-43.0%
    Exit multiple
    USD 1361.79+27.3%
    Market price
    USD 1069.78

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn6bn12bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 26.8bnUSD 29.7bnUSD 32.8bnUSD 36.3bnUSD 40.2bn+10.7%
    EBITUSD 9.5bnUSD 10.5bnUSD 11.6bnUSD 12.8bnUSD 14.2bn+10.7%
    NOPATUSD 7.5bnUSD 8.3bnUSD 9.2bnUSD 10.1bnUSD 11.2bn+10.7%
    Add depreciation & amortisationUSD 802.0mUSD 887.4mUSD 982.0mUSD 1.1bnUSD 1.2bn+10.7%
    Less capital expenditureUSD -516.3mUSD -571.3mUSD -632.1mUSD -699.5mUSD -774.0m+10.7%
    Less increase in working capitalUSD 178.2mUSD 197.2mUSD 218.2mUSD 241.5mUSD 267.2m-10.7%
    Free cashflow to firmUSD 7.9bnUSD 8.8bnUSD 9.7bnUSD 10.8bnUSD 11.9bn+10.7%
    Discount factor0.94730.85010.76290.68460.6144-
    Present valueUSD 7.5bnUSD 7.5bnUSD 7.4bnUSD 7.4bnUSD 7.3bn-0.7%
    Present Value Of The ForecastUSD 37.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.287Reported 1.429, pulled toward 1.0 (Blume)
    Cost of equity12.08%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 173.8bn92.1% of capital
    Total debtUSD 15.0bn7.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC11.43%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 609.86

    62% of EV

    Forecast FCFF, final year
    USD 11.9bn
    Capex at depreciation, working capital in reinvestment
    USD 11.2bn
    Less reinvestment at g/ROIC (21.9% of NOPAT)
    USD -2.5bn
    Capitalised
    USD 8.8bn
    ROIC (WACC floor)
    11.4%
    Terminal value, undiscounted
    USD 100.5bn
    Terminal value, discounted
    USD 61.8bn
    Enterprise value
    USD 98.9bn
    Less net debt
    USD 739.0m
    Equity value
    USD 98.1bn

    Exit at 19.3x EBITDA

    Value per shareUSD 1361.79

    83% of EV

    Terminal value, undiscounted
    USD 297.5bn
    Terminal value, discounted
    USD 182.7bn
    Enterprise value
    USD 219.9bn
    Less net debt
    USD 739.0m
    Equity value
    USD 219.1bn

    Spread between methods: 76%.

    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%
    9.43%744.27750.07756.37763.31771.03
    10.43%665.03667.17669.31671.45673.58
    11.43%606.11607.98609.86611.73613.60
    12.43%556.72558.37560.03561.68563.33
    13.43%514.72516.19517.67519.14520.61

    Outlined: this model. Green text: above today's price of 1069.78. 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 year10.7%25.6%+15.0pp
    EBIT margin35.3%62.4%+27.0pp
    Discount rate11.4%7.3%-4.1pp
    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.