DCF Studio

    CLX · NYQ · Consumer Defensive

    The Clorox Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 51.05

    Market price

    USD 83.10

    Implied upside

    -38.6%

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

    Value Per Share

    Perpetuity growth
    USD 51.05-38.6%
    Exit multiple
    USD 55.69-33.0%
    Market price
    USD 83.10

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m369m738mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 6.5bnUSD 6.3bnUSD 6.1bnUSD 5.9bnUSD 5.7bn-3.1%
    EBITUSD 831.5mUSD 805.6mUSD 780.5mUSD 756.2mUSD 732.7m-3.1%
    NOPATUSD 656.9mUSD 636.4mUSD 616.6mUSD 597.4mUSD 578.8m-3.1%
    Add depreciation & amortisationUSD 215.9mUSD 209.2mUSD 202.7mUSD 196.4mUSD 190.3m-3.1%
    Less capital expenditureUSD -199.4mUSD -193.2mUSD -187.2mUSD -181.4mUSD -175.7m-3.1%
    Less increase in working capitalUSD 64.3mUSD 62.3mUSD 60.4mUSD 58.5mUSD 56.7m+3.1%
    Free cashflow to firmUSD 737.7mUSD 714.7mUSD 692.5mUSD 670.9mUSD 650.0m-3.1%
    Discount factor0.96630.90230.84260.78680.7347-
    Present valueUSD 712.8mUSD 644.9mUSD 583.4mUSD 527.8mUSD 477.5m-9.5%
    Present Value Of The ForecastUSD 2.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.694Reported 0.544, pulled toward 1.0 (Blume)
    Cost of equity8.82%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 10.0bn64.5% of capital
    Total debtUSD 5.5bn35.5% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.09%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 51.05

    75% of EV

    Forecast FCFF, final year
    USD 650.0m
    Capex at depreciation, working capital in reinvestment
    USD 596.1m
    Less reinvestment at g/ROIC (11.4% of NOPAT)
    USD -67.8m
    Capitalised
    USD 528.3m
    ROIC (reported)
    22.0%
    Terminal value, undiscounted
    USD 11.8bn
    Terminal value, discounted
    USD 8.7bn
    Enterprise value
    USD 11.6bn
    Less net debt
    USD 5.4bn
    Equity value
    USD 6.2bn

    Exit at 13.6x EBITDA

    Value per shareUSD 55.69

    76% of EV

    Terminal value, undiscounted
    USD 12.6bn
    Terminal value, discounted
    USD 9.2bn
    Enterprise value
    USD 12.2bn
    Less net debt
    USD 5.4bn
    Equity value
    USD 6.8bn

    Spread between methods: 9%.

    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%
    5.09%83.9798.26118.02147.19194.64
    6.09%57.6865.4075.2588.25106.25
    7.09%40.7545.4151.0558.0666.99
    8.09%28.9431.9435.4739.6744.77
    9.09%20.2122.2424.5827.2830.45

    Outlined: this model. Green text: above today's price of 83.10. 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-3.1%4.4%+7.5pp
    EBIT margin12.8%17.3%+4.5pp
    Discount rate7.1%5.9%-1.2pp
    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.