DCF Studio

    DOV · NYQ · Industrials

    Dover Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 83.22

    Market price

    USD 187.42

    Implied upside

    -55.6%

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

    Value Per Share

    Perpetuity growth
    USD 83.22-55.6%
    Exit multiple
    USD 147.45-21.3%
    Market price
    USD 187.42

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 8.2bnUSD 8.3bnUSD 8.3bnUSD 8.4bnUSD 8.5bn+1.0%
    EBITUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.4bn+1.0%
    NOPATUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bn+1.0%
    Add depreciation & amortisationUSD 343.3mUSD 346.8mUSD 350.5mUSD 354.1mUSD 357.8m+1.0%
    Less capital expenditureUSD -203.7mUSD -205.8mUSD -207.9mUSD -210.1mUSD -212.3m+1.0%
    Less increase in working capitalUSD -23.9mUSD -24.1mUSD -24.4mUSD -24.6mUSD -24.9m+1.0%
    Free cashflow to firmUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.2bn+1.0%
    Discount factor0.95270.86480.78490.71240.6467-
    Present valueUSD 1.1bnUSD 1.0bnUSD 957.1mUSD 877.8mUSD 805.1m-8.3%
    Present Value Of The ForecastUSD 4.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.098Reported 1.146, pulled toward 1.0 (Blume)
    Cost of equity11.04%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 25.2bn87.6% of capital
    Total debtUSD 3.6bn12.4% of capital, book value as a proxy
    Tax rate18.5%Effective, capped at statutory
    WACC10.17%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 83.22

    64% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.3bn
    Less reinvestment at g/ROIC (22.7% of NOPAT)
    USD -290.3m
    Capitalised
    USD 988.8m
    ROIC (reported)
    11.0%
    Terminal value, undiscounted
    USD 13.2bn
    Terminal value, discounted
    USD 8.5bn
    Enterprise value
    USD 13.4bn
    Less net debt
    USD 1.9bn
    Equity value
    USD 11.5bn

    Exit at 15.5x EBITDA

    Value per shareUSD 147.45

    78% of EV

    Terminal value, undiscounted
    USD 26.9bn
    Terminal value, discounted
    USD 17.4bn
    Enterprise value
    USD 22.2bn
    Less net debt
    USD 1.9bn
    Equity value
    USD 20.3bn

    Spread between methods: 56%.

    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%
    8.17%108.42110.92113.82117.22121.28
    9.17%93.4594.7796.2597.9299.84
    10.17%81.9182.5483.2283.9584.75
    11.17%72.8673.1173.3773.6373.89
    12.17%65.9666.1866.4166.6466.87

    Outlined: this model. Green text: above today's price of 187.42. 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 year1.0%22.1%+21.1pp
    EBIT margin16.2%35.8%+19.6pp
    Discount rate10.2%6.0%-4.2pp
    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.