DCF Studio

    CVNA · NYQ · Consumer Cyclical

    Carvana Co.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -0.87

    Market price

    USD 65.11

    Implied upside

    -101.3%

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

    AdjustedBeta of 3.497 is not usable in a cost of equity. Clamped to 2.50.

    Current EV/EBITDA of 34.7x 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
    USD -0.87-101.3%
    Exit multiple
    USD 9.50-85.4%
    Market price
    USD 65.11

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m129m257mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 23.2bnUSD 26.6bnUSD 30.4bnUSD 34.7bnUSD 39.7bn+14.3%
    EBITUSD 272.9mUSD 311.9mUSD 356.6mUSD 407.6mUSD 466.0m+14.3%
    NOPATUSD 233.9mUSD 267.4mUSD 305.6mUSD 349.4mUSD 399.4m+14.3%
    Add depreciation & amortisationUSD 509.4mUSD 582.3mUSD 665.6mUSD 760.9mUSD 869.8m+14.3%
    Less capital expenditureUSD -346.2mUSD -395.7mUSD -452.3mUSD -517.1mUSD -591.1m+14.3%
    Less increase in working capitalUSD -246.6mUSD -281.9mUSD -322.2mUSD -368.4mUSD -421.1m+14.3%
    Free cashflow to firmUSD 150.5mUSD 172.0mUSD 196.7mUSD 224.8mUSD 257.0m+14.3%
    Discount factor0.92080.78070.66190.56120.4758-
    Present valueUSD 138.6mUSD 134.3mUSD 130.2mUSD 126.2mUSD 122.3m-3.1%
    Present Value Of The ForecastUSD 651.5m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta2.500Clamped from a reported 3.497
    Cost of equity18.75%Risk-free + beta x equity risk premium
    Cost of debt8.73%Interest expense / average total debt
    Market capitalisationUSD 72.2bn92.9% of capital
    Total debtUSD 5.5bn7.1% of capital, book value as a proxy
    Tax rate14.3%Effective, capped at statutory
    WACC17.95%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 -0.87

    62% of EV

    Forecast FCFF, final year
    USD 257.0m
    Capex at depreciation, working capital in reinvestment
    USD 399.4m
    Less reinvestment at g/ROIC (13.9% of NOPAT)
    USD -55.6m
    Capitalised
    USD 343.8m
    ROIC (WACC floor)
    17.9%
    Terminal value, undiscounted
    USD 2.3bn
    Terminal value, discounted
    USD 1.1bn
    Enterprise value
    USD 1.7bn
    Less net debt
    USD 2.7bn
    Equity value
    USD -971.3m

    Exit at 20.0x EBITDA

    Value per shareUSD 9.50

    95% of EV

    Terminal value, undiscounted
    USD 26.7bn
    Terminal value, discounted
    USD 12.7bn
    Enterprise value
    USD 13.4bn
    Less net debt
    USD 2.7bn
    Equity value
    USD 10.7bn

    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%
    15.95%-0.64-0.64-0.63-0.63-0.62
    16.95%-0.77-0.76-0.76-0.75-0.75
    17.95%-0.88-0.87-0.87-0.86-0.86
    18.95%-0.97-0.97-0.96-0.96-0.95
    19.95%-1.06-1.05-1.05-1.05-1.04

    Outlined: this model. Green text: above today's price of 65.11. 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
    EBIT margin1.2%42.6%+41.4pp
    Discount rate17.9%2.9%-15.0pp
    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.