DCF Studio

    DOL.TO · TOR · Consumer Defensive

    Dollarama Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 191.82

    Market price

    CAD 174.18

    Implied upside

    +10.1%

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

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

    Current EV/EBITDA of 23.5x 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 191.82+10.1%
    Exit multiple
    CAD 237.22+36.2%
    Market price
    CAD 174.18

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn1bn3bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayCAD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueCAD 8.2bnCAD 9.2bnCAD 10.4bnCAD 11.8bnCAD 13.3bn+12.8%
    EBITCAD 2.0bnCAD 2.2bnCAD 2.5bnCAD 2.8bnCAD 3.2bn+12.8%
    NOPATCAD 1.5bnCAD 1.6bnCAD 1.9bnCAD 2.1bnCAD 2.4bn+12.8%
    Add depreciation & amortisationCAD 522.8mCAD 589.8mCAD 665.4mCAD 750.7mCAD 847.0m+12.8%
    Less capital expenditureCAD -317.2mCAD -357.9mCAD -403.8mCAD -455.5mCAD -513.9m+12.8%
    Less increase in working capitalCAD -11.5mCAD -13.0mCAD -14.6mCAD -16.5mCAD -18.6m+12.8%
    Free cashflow to firmCAD 1.7bnCAD 1.9bnCAD 2.1bnCAD 2.4bnCAD 2.7bn+12.8%
    Discount factor0.97090.91520.86270.81320.7665-
    Present valueCAD 1.6bnCAD 1.7bnCAD 1.8bnCAD 1.9bnCAD 2.1bn+6.3%
    Present Value Of The ForecastCAD 9.1bn

    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
    Beta0.571Reported 0.360, pulled toward 1.0 (Blume)
    Cost of equity6.44%Risk-free + beta x equity risk premium
    Cost of debt4.04%Interest expense / average total debt
    Market capitalisationCAD 46.7bn89.7% of capital
    Total debtCAD 5.4bn10.3% of capital, book value as a proxy
    Tax rate25.3%Effective, capped at statutory
    WACC6.09%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 191.82

    84% of EV

    Forecast FCFF, final year
    CAD 2.7bn
    Capex at depreciation, working capital in reinvestment
    CAD 2.4bn
    Less reinvestment at g/ROIC (7.0% of NOPAT)
    CAD -168.2m
    Capitalised
    CAD 2.2bn
    ROIC (reported)
    35.8%
    Terminal value, undiscounted
    CAD 63.9bn
    Terminal value, discounted
    CAD 49.0bn
    Enterprise value
    CAD 58.1bn
    Less net debt
    CAD 5.1bn
    Equity value
    CAD 53.1bn

    Exit at 20.0x EBITDA

    Value per shareCAD 237.22

    87% of EV

    Terminal value, undiscounted
    CAD 80.3bn
    Terminal value, discounted
    CAD 61.6bn
    Enterprise value
    CAD 70.7bn
    Less net debt
    CAD 5.1bn
    Equity value
    CAD 65.6bn

    Spread between methods: 21%.

    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%
    4.09%289.32351.42452.58646.701171.30
    5.09%204.07232.48271.83329.99424.73
    6.09%155.97171.72191.82218.41255.24
    7.09%125.08134.83146.67161.40180.20
    8.09%103.57110.05117.67126.77137.84

    Outlined: this model. Green text: above today's price of 174.18. 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 year12.8%10.7%-2.1pp
    EBIT margin23.9%21.8%-2.1pp
    Discount rate6.1%6.4%+0.3pp
    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.