DCF Studio

    CCI · NYQ · Real Estate

    Crown Castle Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -37.98

    Market price

    USD 73.06

    Implied upside

    -152.0%

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

    AdjustedReported capital expenditure averages 8.02% of revenue against depreciation of 18.44%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 18.44% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Current EV/EBITDA of 22.1x 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 -37.98-152.0%
    Exit multiple
    USD -17.98-124.6%
    Market price
    USD 73.06

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.6bnUSD 3.1bnUSD 2.6bnUSD 2.2bnUSD 1.9bn-15.2%
    EBITUSD 1.6bnUSD 1.4bnUSD 1.2bnUSD 988.5mUSD 838.5m-15.2%
    NOPATUSD 1.6bnUSD 1.4bnUSD 1.1bnUSD 973.9mUSD 826.1m-15.2%
    Add depreciation & amortisationUSD 666.8mUSD 565.6mUSD 479.8mUSD 407.0mUSD 345.2m-15.2%
    Less capital expenditureUSD -666.8mUSD -565.6mUSD -479.8mUSD -407.0mUSD -345.2m-15.2%
    Less increase in working capitalUSD -108.9mUSD -92.4mUSD -78.4mUSD -66.5mUSD -56.4m-15.2%
    Free cashflow to firmUSD 1.5bnUSD 1.3bnUSD 1.1bnUSD 907.4mUSD 769.7m-15.2%
    Discount factor0.96330.89400.82960.76990.7144-
    Present valueUSD 1.4bnUSD 1.1bnUSD 887.4mUSD 698.6mUSD 549.9m-21.3%
    Present Value Of The ForecastUSD 4.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.979Reported 0.969, pulled toward 1.0 (Blume)
    Cost of equity10.38%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 31.9bn51.9% of capital
    Total debtUSD 29.6bn48.1% of capital, book value as a proxy
    Tax rate1.5%Effective, capped at statutory
    WACC7.76%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 -37.98

    64% of EV

    Forecast FCFF, final year
    USD 769.7m
    Capex at depreciation, working capital in reinvestment
    USD 826.1m
    Less reinvestment at g/ROIC (29.0% of NOPAT)
    USD -239.2m
    Capitalised
    USD 586.9m
    ROIC (reported)
    8.6%
    Terminal value, undiscounted
    USD 11.4bn
    Terminal value, discounted
    USD 8.2bn
    Enterprise value
    USD 12.9bn
    Less net debt
    USD 29.5bn
    Equity value
    USD -16.6bn

    Exit at 20.0x EBITDA

    Value per shareUSD -17.98

    78% of EV

    Terminal value, undiscounted
    USD 23.7bn
    Terminal value, discounted
    USD 16.9bn
    Enterprise value
    USD 21.6bn
    Less net debt
    USD 29.5bn
    Equity value
    USD -7.9bn

    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%
    5.76%-27.33-25.63-23.43-20.47-16.23
    6.76%-34.02-33.28-32.40-31.29-29.88
    7.76%-38.59-38.31-37.98-37.61-37.17
    8.76%-41.87-41.80-41.72-41.65-41.57
    9.76%-44.14-44.08-44.02-43.95-43.89

    Outlined: this model. Green text: above today's price of 73.06. 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 year-15.2%20.2%+35.4pp
    Discount rate7.8%3.4%-4.3pp
    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.