DCF Studio

    CM.TO · TOR · Financial Services

    Canadian Imperial Bank of Commerce

    Also onConsensus Drift

    Implied value per share

    CAD 70.69

    Market price

    CAD 161.03

    Implied upside

    -56.1%

    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.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Current EV/EBITDA of 26.3x 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 70.69-56.1%
    Exit multiple
    CAD 181.45+12.7%
    Market price
    CAD 161.03

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn9bn17bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 31.9bnCAD 35.1bnCAD 38.7bnCAD 42.6bnCAD 46.9bn+10.1%
    EBITCAD 11.2bnCAD 12.3bnCAD 13.6bnCAD 14.9bnCAD 16.4bn+10.1%
    NOPATCAD 8.7bnCAD 9.6bnCAD 10.5bnCAD 11.6bnCAD 12.8bn+10.1%
    Add depreciation & amortisationCAD 1.5bnCAD 1.6bnCAD 1.8bnCAD 2.0bnCAD 2.2bn+10.1%
    Less capital expenditureCAD -1.4bnCAD -1.5bnCAD -1.7bnCAD -1.9bnCAD -2.1bn+10.1%
    Less increase in working capitalCAD 2.9bnCAD 3.2bnCAD 3.5bnCAD 3.9bnCAD 4.3bn-10.1%
    Free cashflow to firmCAD 11.7bnCAD 12.8bnCAD 14.1bnCAD 15.6bnCAD 17.1bn+10.1%
    Discount factor0.96990.91230.85810.80710.7592-
    Present valueCAD 11.3bnCAD 11.7bnCAD 12.1bnCAD 12.6bnCAD 13.0bn+3.5%
    Present Value Of The ForecastCAD 60.7bn

    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
    Beta1.170Reported 1.254, pulled toward 1.0 (Blume)
    Cost of equity9.74%Risk-free + beta x equity risk premium
    Cost of debt5.30%Implied cost of debt of 15.1% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationCAD 146.2bn39.1% of capital
    Total debtCAD 227.8bn60.9% of capital, book value as a proxy
    Tax rate22.3%Effective, capped at statutory
    WACC6.31%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 shareCAD 70.69

    75% of EV

    Forecast FCFF, final year
    CAD 17.1bn
    Capex at depreciation, working capital in reinvestment
    CAD 14.4bn
    Less reinvestment at g/ROIC (39.6% of NOPAT)
    CAD -5.7bn
    Capitalised
    CAD 8.7bn
    ROIC (WACC floor)
    6.3%
    Terminal value, undiscounted
    CAD 234.1bn
    Terminal value, discounted
    CAD 177.8bn
    Enterprise value
    CAD 238.5bn
    Less net debt
    CAD 172.0bn
    Equity value
    CAD 66.5bn

    Exit at 20.0x EBITDA

    Value per shareCAD 181.45

    82% of EV

    Terminal value, undiscounted
    CAD 371.4bn
    Terminal value, discounted
    CAD 281.9bn
    Enterprise value
    CAD 342.7bn
    Less net debt
    CAD 172.0bn
    Equity value
    CAD 170.7bn

    Spread between methods: 88%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.31%183.30184.77186.24187.71189.18
    5.31%115.31116.46117.60118.74119.88
    6.31%68.8469.7670.6971.6172.53
    7.31%35.0635.8236.5937.3538.11
    8.31%9.3910.0410.6811.3311.97

    Outlined: this model. Green text: above today's price of 161.03. 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 year10.1%16.8%+6.8pp
    EBIT margin35.0%49.8%+14.7pp
    Discount rate6.3%4.6%-1.7pp
    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.