DCF Studio

    BZU.MI · MIL · Basic Materials

    Buzzi S.p.A.

    Also onConsensus Drift

    Implied value per share

    EUR 52.64

    Market price

    EUR 37.30

    Implied upside

    +41.1%

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

    AdjustedCapital expenditure runs at 8.4% of revenue against depreciation of 6.5%. 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.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 52.64+41.1%
    Exit multiple
    EUR 44.42+19.1%
    Market price
    EUR 37.30

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0m382m765mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 4.7bnEUR 4.9bnEUR 5.1bnEUR 5.3bnEUR 5.5bn+4.2%
    EBITEUR 950.5mEUR 990.3mEUR 1.0bnEUR 1.1bnEUR 1.1bn+4.2%
    NOPATEUR 775.8mEUR 808.3mEUR 842.1mEUR 877.4mEUR 914.1m+4.2%
    Add depreciation & amortisationEUR 304.4mEUR 317.2mEUR 330.5mEUR 344.3mEUR 358.7m+4.2%
    Less capital expenditureEUR -394.4mEUR -410.9mEUR -428.2mEUR -446.1mEUR -464.8m+4.2%
    Less increase in working capitalEUR -36.9mEUR -38.5mEUR -40.1mEUR -41.8mEUR -43.5m+4.2%
    Free cashflow to firmEUR 648.8mEUR 676.0mEUR 704.3mEUR 733.8mEUR 764.5m+4.2%
    Discount factor0.95100.86000.77770.70330.6360-
    Present valueEUR 617.0mEUR 581.3mEUR 547.7mEUR 516.1mEUR 486.2m-5.8%
    Present Value Of The ForecastEUR 2.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta1.023Reported 1.035, pulled toward 1.0 (Blume)
    Cost of equity10.85%Risk-free + beta x equity risk premium
    Cost of debt7.99%Interest expense / average total debt
    Market capitalisationEUR 6.6bn93.7% of capital
    Total debtEUR 441.0m6.3% of capital, book value as a proxy
    Tax rate18.4%Effective, capped at statutory
    WACC10.58%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 shareEUR 52.64

    67% of EV

    Forecast FCFF, final year
    EUR 764.5m
    Capex at depreciation, working capital in reinvestment
    EUR 922.5m
    Less reinvestment at g/ROIC (23.6% of NOPAT)
    EUR -217.6m
    Capitalised
    EUR 704.9m
    ROIC (reported)
    10.6%
    Terminal value, undiscounted
    EUR 8.9bn
    Terminal value, discounted
    EUR 5.7bn
    Enterprise value
    EUR 8.4bn
    Less net debt
    EUR -1.1bn
    Equity value
    EUR 9.5bn

    Exit at 4.5x EBITDA

    Value per shareEUR 44.42

    60% of EV

    Terminal value, undiscounted
    EUR 6.6bn
    Terminal value, discounted
    EUR 4.2bn
    Enterprise value
    EUR 6.9bn
    Less net debt
    EUR -1.1bn
    Equity value
    EUR 8.0bn

    Spread between methods: 17%.

    Sensitivity

    Value per share (EUR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.58%65.2066.1567.2268.4669.91
    9.58%57.9758.4158.9059.4560.05
    10.58%52.3352.4852.6452.8052.96
    11.58%48.1848.3248.4548.5948.72
    12.58%44.7244.8444.9645.0845.19

    Outlined: this model. Green text: above today's price of 37.30. 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 year4.2%-6.5%-10.7pp
    EBIT margin20.2%13.9%-6.3pp
    Discount rate10.6%15.5%+5.0pp
    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.