DCF Studio

    DCC.L · LSE · Energy

    DCC Energy plc

    Also onConsensus Drift

    Implied value per share

    GBp 2927.60

    Market price

    GBp 6425.00

    Implied upside

    -54.4%

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

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

    Value Per Share

    Perpetuity growth
    GBp 2927.60-54.4%
    Exit multiple
    GBp 2721.28-57.6%
    Market price
    GBp 6425.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m223m446mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayGBP
    LineFY27FY28FY29FY30FY31CAGR
    RevenueGBP 13.7bnGBP 12.1bnGBP 10.7bnGBP 9.5bnGBP 8.4bn-11.4%
    EBITGBP 391.2mGBP 346.6mGBP 307.1mGBP 272.1mGBP 241.0m-11.4%
    NOPATGBP 313.8mGBP 278.0mGBP 246.3mGBP 218.2mGBP 193.3m-11.4%
    Add depreciation & amortisationGBP 272.4mGBP 241.3mGBP 213.8mGBP 189.4mGBP 167.8m-11.4%
    Less capital expenditureGBP -169.6mGBP -150.3mGBP -133.1mGBP -118.0mGBP -104.5m-11.4%
    Less increase in working capitalGBP 29.7mGBP 26.3mGBP 23.3mGBP 20.7mGBP 18.3m+11.4%
    Free cashflow to firmGBP 446.3mGBP 395.4mGBP 350.3mGBP 310.4mGBP 275.0m-11.4%
    Discount factor0.96480.89810.83610.77830.7245-
    Present valueGBP 430.6mGBP 355.1mGBP 292.9mGBP 241.6mGBP 199.2m-17.5%
    Present Value Of The ForecastGBP 1.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.819Reported 0.730, pulled toward 1.0 (Blume)
    Cost of equity9.01%Risk-free + beta x equity risk premium
    Cost of debt4.50%Interest expense / average total debt
    Market capitalisationGBP 5.5bn70.7% of capital
    Total debtGBP 2.3bn29.3% of capital, book value as a proxy
    Tax rate19.8%Effective, capped at statutory
    WACC7.42%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 shareGBP 29.28

    62% of EV

    Forecast FCFF, final year
    GBP 275.0m
    Capex at depreciation, working capital in reinvestment
    GBP 236.2m
    Less reinvestment at g/ROIC (31.5% of NOPAT)
    GBP -74.4m
    Capitalised
    GBP 161.8m
    ROIC (reported)
    7.9%
    Terminal value, undiscounted
    GBP 3.4bn
    Terminal value, discounted
    GBP 2.4bn
    Enterprise value
    GBP 4.0bn
    Less net debt
    GBP 1.2bn
    Equity value
    GBP 2.8bn

    Exit at 7.6x EBITDA

    Value per shareGBP 27.21

    60% of EV

    Terminal value, undiscounted
    GBP 3.1bn
    Terminal value, discounted
    GBP 2.2bn
    Enterprise value
    GBP 3.8bn
    Less net debt
    GBP 1.2bn
    Equity value
    GBP 2.6bn

    Spread between methods: 7%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.42%45.4448.0151.4156.1663.33
    6.42%35.3536.3437.5639.1041.13
    7.42%28.6228.9329.2829.6830.15
    8.42%24.0824.1824.2924.3924.49
    9.42%20.8120.9020.9821.0721.16

    Outlined: this model. Green text: above today's price of 64.25. 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-11.4%2.9%+14.3pp
    EBIT margin2.9%5.9%+3.1pp
    Discount rate7.4%4.9%-2.6pp
    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.