DCF Studio

    CRL · NYQ · Healthcare

    Charles River Laboratories International, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 42.40

    Market price

    USD 278.06

    Implied upside

    -84.8%

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

    Value Per Share

    Perpetuity growth
    USD 42.40-84.8%
    Exit multiple
    USD 211.43-24.0%
    Market price
    USD 278.06

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m244m489mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 4.0bnUSD 4.0bnUSD 4.1bnUSD 4.1bnUSD 4.1bn+0.3%
    EBITUSD 526.1mUSD 527.8mUSD 529.5mUSD 531.3mUSD 533.0m+0.3%
    NOPATUSD 416.0mUSD 417.3mUSD 418.7mUSD 420.1mUSD 421.5m+0.3%
    Add depreciation & amortisationUSD 344.7mUSD 345.8mUSD 347.0mUSD 348.1mUSD 349.3m+0.3%
    Less capital expenditureUSD -272.8mUSD -273.7mUSD -274.6mUSD -275.5mUSD -276.4m+0.3%
    Less increase in working capitalUSD -5.4mUSD -5.4mUSD -5.4mUSD -5.4mUSD -5.4m+0.3%
    Free cashflow to firmUSD 482.5mUSD 484.0mUSD 485.6mUSD 487.2mUSD 488.8m+0.3%
    Discount factor0.95050.85860.77570.70070.6330-
    Present valueUSD 458.5mUSD 415.6mUSD 376.7mUSD 341.4mUSD 309.4m-9.4%
    Present Value Of The ForecastUSD 1.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.271Reported 1.405, pulled toward 1.0 (Blume)
    Cost of equity11.99%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 13.4bn83.9% of capital
    Total debtUSD 2.6bn16.1% of capital, book value as a proxy
    Tax rate20.9%Effective, capped at statutory
    WACC10.70%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 42.40

    57% of EV

    Forecast FCFF, final year
    USD 488.8m
    Capex at depreciation, working capital in reinvestment
    USD 421.5m
    Less reinvestment at g/ROIC (23.4% of NOPAT)
    USD -98.5m
    Capitalised
    USD 322.9m
    ROIC (WACC floor)
    10.7%
    Terminal value, undiscounted
    USD 4.0bn
    Terminal value, discounted
    USD 2.6bn
    Enterprise value
    USD 4.5bn
    Less net debt
    USD 2.4bn
    Equity value
    USD 2.1bn

    Exit at 19.6x EBITDA

    Value per shareUSD 211.43

    85% of EV

    Terminal value, undiscounted
    USD 17.3bn
    Terminal value, discounted
    USD 10.9bn
    Enterprise value
    USD 12.8bn
    Less net debt
    USD 2.4bn
    Equity value
    USD 10.5bn

    Spread between methods: 133%.

    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%
    8.70%60.6861.0161.3561.6862.02
    9.70%50.3350.6250.9151.2051.48
    10.70%41.9042.1542.4042.6542.90
    11.70%34.8935.1235.3435.5635.78
    12.70%28.9829.1829.3729.5729.76

    Outlined: this model. Green text: above today's price of 278.06. 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 year0.3%45.6%+45.3pp
    EBIT margin13.1%49.4%+36.3pp
    Discount rate10.7%4.2%-6.5pp
    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.