DCF Studio

    COR · NYQ · Healthcare

    Cencora, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 319.40

    Market price

    USD 308.78

    Implied upside

    +3.4%

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

    AdjustedReported capital expenditure averages just 0.19% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.3%. 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.

    Value Per Share

    Perpetuity growth
    USD 319.40+3.4%
    Exit multiple
    USD 352.84+14.3%
    Market price
    USD 308.78

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 354.9bnUSD 391.9bnUSD 432.8bnUSD 477.9bnUSD 527.8bn+10.4%
    EBITUSD 4.0bnUSD 4.4bnUSD 4.8bnUSD 5.3bnUSD 5.9bn+10.4%
    NOPATUSD 3.1bnUSD 3.5bnUSD 3.8bnUSD 4.2bnUSD 4.7bn+10.4%
    Add depreciation & amortisationUSD 1.2bnUSD 1.4bnUSD 1.5bnUSD 1.7bnUSD 1.8bn+10.4%
    Less capital expenditureUSD -3.5bnUSD -3.9bnUSD -4.3bnUSD -4.8bnUSD -5.3bn+10.4%
    Less increase in working capitalUSD 315.1mUSD 347.9mUSD 384.2mUSD 424.3mUSD 468.6m-10.4%
    Free cashflow to firmUSD 1.1bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.7bn+10.4%
    Discount factor0.95990.88440.81490.75080.6917-
    Present valueUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.2bn+1.8%
    Present Value Of The ForecastUSD 5.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.715Reported 0.574, pulled toward 1.0 (Blume)
    Cost of equity8.93%Risk-free + beta x equity risk premium
    Cost of debt6.97%Interest expense / average total debt
    Market capitalisationUSD 58.9bn88.5% of capital
    Total debtUSD 7.7bn11.5% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.53%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 319.40

    91% of EV

    Forecast FCFF, final year
    USD 1.7bn
    Capex at depreciation, working capital in reinvestment
    USD 5.5bn
    Less reinvestment at g/ROIC (6.3% of NOPAT)
    USD -342.5m
    Capitalised
    USD 5.1bn
    ROIC (reported)
    39.8%
    Terminal value, undiscounted
    USD 86.8bn
    Terminal value, discounted
    USD 60.0bn
    Enterprise value
    USD 65.7bn
    Less net debt
    USD 3.3bn
    Equity value
    USD 62.4bn

    Exit at 12.4x EBITDA

    Value per shareUSD 352.84

    92% of EV

    Terminal value, undiscounted
    USD 96.2bn
    Terminal value, discounted
    USD 66.6bn
    Enterprise value
    USD 72.2bn
    Less net debt
    USD 3.3bn
    Equity value
    USD 68.9bn

    Spread between methods: 10%.

    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%
    6.53%420.78462.01513.39579.22666.68
    7.53%338.55365.08396.84435.54483.77
    8.53%280.11298.27319.39344.29374.09
    9.53%236.57249.56264.36281.38301.19
    10.53%202.97212.57223.34235.50249.37

    Outlined: this model. Green text: above today's price of 308.78. 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 year10.4%9.7%-0.7pp
    EBIT margin1.1%1.1%-0.0pp
    Discount rate8.5%8.7%+0.2pp
    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.