DCF Studio

    BR · NYQ · Technology

    Broadridge Financial Solutions, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 137.96

    Market price

    USD 163.13

    Implied upside

    -15.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 137.96-15.4%
    Exit multiple
    USD 188.25+15.4%
    Market price
    USD 163.13

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 8.0bnUSD 8.6bnUSD 9.2bnUSD 9.9bnUSD 10.6bn+7.2%
    EBITUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bn+7.2%
    NOPATUSD 1.0bnUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.4bn+7.2%
    Add depreciation & amortisationUSD 384.2mUSD 412.1mUSD 441.9mUSD 474.0mUSD 508.3m+7.2%
    Less capital expenditureUSD -123.3mUSD -132.3mUSD -141.8mUSD -152.1mUSD -163.1m+7.2%
    Less increase in working capitalUSD -201.6mUSD -216.2mUSD -231.9mUSD -248.7mUSD -266.7m+7.2%
    Free cashflow to firmUSD 1.1bnUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bn+7.2%
    Discount factor0.95700.87660.80290.73540.6735-
    Present valueUSD 1.1bnUSD 1.0bnUSD 1.0bnUSD 1.0bnUSD 984.1m-1.8%
    Present Value Of The ForecastUSD 5.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.940Reported 0.910, pulled toward 1.0 (Blume)
    Cost of equity10.17%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 18.6bn84.1% of capital
    Total debtUSD 3.5bn15.9% of capital, book value as a proxy
    Tax rate20.7%Effective, capped at statutory
    WACC9.18%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 137.96

    74% of EV

    Forecast FCFF, final year
    USD 1.5bn
    Capex at depreciation, working capital in reinvestment
    USD 1.6bn
    Less reinvestment at g/ROIC (16.4% of NOPAT)
    USD -268.2m
    Capitalised
    USD 1.4bn
    ROIC (reported)
    15.3%
    Terminal value, undiscounted
    USD 21.0bn
    Terminal value, discounted
    USD 14.2bn
    Enterprise value
    USD 19.3bn
    Less net debt
    USD 3.1bn
    Equity value
    USD 16.2bn

    Exit at 13.2x EBITDA

    Value per shareUSD 188.25

    80% of EV

    Terminal value, undiscounted
    USD 29.8bn
    Terminal value, discounted
    USD 20.1bn
    Enterprise value
    USD 25.2bn
    Less net debt
    USD 3.1bn
    Equity value
    USD 22.0bn

    Spread between methods: 31%.

    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%
    7.18%184.13194.36206.70221.92241.18
    8.18%152.62158.93166.29175.00185.51
    9.18%129.34133.37137.96143.25149.41
    10.18%111.43114.07117.01120.33124.09
    11.18%97.2398.98100.89103.00105.34

    Outlined: this model. Green text: above today's price of 163.13. 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 year7.2%11.3%+4.0pp
    EBIT margin16.4%19.3%+2.9pp
    Discount rate9.2%8.3%-0.9pp
    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.