DCF Studio

    BX · NYQ · Financial Services

    Blackstone Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 126.79

    Market price

    USD 124.96

    Implied upside

    +1.5%

    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.
    AdjustedCapital expenditure runs at 2.0% of revenue against depreciation of 0.5%. 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.

    Current EV/EBITDA of 22.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 126.79+1.5%
    Exit multiple
    USD 277.23+121.9%
    Market price
    USD 124.96

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn6bn11bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 14.9bnUSD 18.0bnUSD 21.6bnUSD 26.0bnUSD 31.2bn+20.3%
    EBITUSD 7.7bnUSD 9.3bnUSD 11.2bnUSD 13.5bnUSD 16.2bn+20.3%
    NOPATUSD 6.5bnUSD 7.9bnUSD 9.4bnUSD 11.4bnUSD 13.7bn+20.3%
    Add depreciation & amortisationUSD 79.6mUSD 95.7mUSD 115.1mUSD 138.4mUSD 166.5m+20.3%
    Less capital expenditureUSD -298.4mUSD -358.9mUSD -431.6mUSD -519.1mUSD -624.4m+20.3%
    Less increase in working capitalUSD -986.9mUSD -1.2bnUSD -1.4bnUSD -1.7bnUSD -2.1bn+20.3%
    Free cashflow to firmUSD 5.3bnUSD 6.4bnUSD 7.7bnUSD 9.3bnUSD 11.1bn+20.3%
    Discount factor0.94550.84510.75540.67530.6036-
    Present valueUSD 5.0bnUSD 5.4bnUSD 5.8bnUSD 6.3bnUSD 6.7bn+7.5%
    Present Value Of The ForecastUSD 29.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.374Reported 1.558, pulled toward 1.0 (Blume)
    Cost of equity12.55%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 149.4bn91.8% of capital
    Total debtUSD 13.3bn8.2% of capital, book value as a proxy
    Tax rate15.8%Effective, capped at statutory
    WACC11.87%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 126.79

    73% of EV

    Forecast FCFF, final year
    USD 11.1bn
    Capex at depreciation, working capital in reinvestment
    USD 13.8bn
    Less reinvestment at g/ROIC (11.8% of NOPAT)
    USD -1.6bn
    Capitalised
    USD 12.2bn
    ROIC (reported)
    21.2%
    Terminal value, undiscounted
    USD 133.1bn
    Terminal value, discounted
    USD 80.4bn
    Enterprise value
    USD 109.6bn
    Less net debt
    USD 10.7bn
    Equity value
    USD 98.9bn

    Exit at 20.0x EBITDA

    Value per shareUSD 277.23

    87% of EV

    Terminal value, undiscounted
    USD 327.6bn
    Terminal value, discounted
    USD 197.7bn
    Enterprise value
    USD 227.0bn
    Less net debt
    USD 10.7bn
    Equity value
    USD 216.3bn

    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%
    9.87%156.09161.52167.66174.65182.69
    10.87%136.57140.45144.76149.58155.02
    11.87%120.88123.70126.79130.21134.00
    12.87%107.99110.08112.34114.81117.51
    13.87%97.2498.79100.47102.27104.23

    Outlined: this model. Green text: above today's price of 124.96. 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 year20.3%19.9%-0.4pp
    EBIT margin51.9%51.3%-0.6pp
    Discount rate11.9%12.0%+0.1pp
    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.