DCF Studio

    CLS.TO · TOR · Technology

    Celestica Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 155.60

    Market price

    CAD 465.13

    Implied upside

    -66.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.3982

    AdjustedReports in USD, trades in CAD. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Current EV/EBITDA of 47.2x 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
    CAD 155.60-66.5%
    Exit multiple
    CAD 384.32-17.4%
    Market price
    CAD 465.13

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 14.8bnUSD 17.7bnUSD 21.2bnUSD 25.3bnUSD 30.3bn+19.6%
    EBITUSD 871.7mUSD 1.0bnUSD 1.2bnUSD 1.5bnUSD 1.8bn+19.6%
    NOPATUSD 698.6mUSD 835.3mUSD 998.7mUSD 1.2bnUSD 1.4bn+19.6%
    Add depreciation & amortisationUSD 230.9mUSD 276.1mUSD 330.1mUSD 394.6mUSD 471.8m+19.6%
    Less capital expenditureUSD -239.6mUSD -286.5mUSD -342.6mUSD -409.6mUSD -489.7m+19.6%
    Less increase in working capitalUSD -101.7mUSD -121.6mUSD -145.4mUSD -173.8mUSD -207.8m+19.6%
    Free cashflow to firmUSD 588.2mUSD 703.3mUSD 840.8mUSD 1.0bnUSD 1.2bn+19.6%
    Discount factor0.95160.86160.78010.70640.6396-
    Present valueUSD 559.7mUSD 605.9mUSD 655.9mUSD 710.1mUSD 768.7m+8.3%
    Present Value Of The ForecastUSD 3.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.311Reported 1.464, pulled toward 1.0 (Blume)
    Cost of equity10.51%Risk-free + beta x equity risk premium
    Cost of debt6.69%Interest expense / average total debt
    Market capitalisationUSD 58.7bn98.7% of capital
    Total debtUSD 776.5m1.3% of capital, book value as a proxy
    Tax rate19.9%Effective, capped at statutory
    WACC10.44%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 111.29

    75% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.4bn
    Less reinvestment at g/ROIC (16.7% of NOPAT)
    USD -238.8m
    Capitalised
    USD 1.2bn
    ROIC (reported)
    14.9%
    Terminal value, undiscounted
    USD 15.3bn
    Terminal value, discounted
    USD 9.8bn
    Enterprise value
    USD 13.1bn
    Less net debt
    USD 180.9m
    Equity value
    USD 12.9bn

    Exit at 20.0x EBITDA

    Value per shareUSD 274.87

    90% of EV

    Terminal value, undiscounted
    USD 45.1bn
    Terminal value, discounted
    USD 28.8bn
    Enterprise value
    USD 32.1bn
    Less net debt
    USD 180.9m
    Equity value
    USD 31.9bn

    Spread between methods: 85%.

    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%
    8.44%140.48145.26150.81157.32165.09
    9.44%121.66124.72128.19132.15136.73
    10.44%107.08109.08111.29113.77116.56
    11.44%95.4796.7898.2099.75101.48
    12.44%86.0286.8687.7688.7389.78

    Outlined: this model. Green text: above today's price of 332.66. 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 year19.6%52.2%+32.6pp
    EBIT margin5.9%16.9%+11.0pp
    Discount rate10.4%5.3%-5.2pp
    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.