DCF Studio

    EDV.AX · ASX · Consumer Defensive

    Endeavour Group Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD -1.30

    Market price

    AUD 2.90

    Implied upside

    -144.9%

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

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.

    Current EV/EBITDA of 25.1x 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
    AUD -1.30-144.9%
    Exit multiple
    AUD 5.08+75.3%
    Market price
    AUD 2.90

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m161m323mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 12.3bnAUD 12.4bnAUD 12.5bnAUD 12.7bnAUD 12.8bn+0.9%
    EBITAUD 203.5mAUD 205.3mAUD 207.2mAUD 209.1mAUD 211.0m+0.9%
    NOPATAUD 142.4mAUD 143.7mAUD 145.0mAUD 146.4mAUD 147.7m+0.9%
    Add depreciation & amortisationAUD 636.4mAUD 642.2mAUD 648.1mAUD 654.0mAUD 660.0m+0.9%
    Less capital expenditureAUD -420.6mAUD -424.4mAUD -428.3mAUD -432.2mAUD -436.2m+0.9%
    Less increase in working capitalAUD -47.0mAUD -47.4mAUD -47.9mAUD -48.3mAUD -48.7m+0.9%
    Free cashflow to firmAUD 311.3mAUD 314.1mAUD 317.0mAUD 319.9mAUD 322.8m+0.9%
    Discount factor0.97080.91500.86240.81280.7661-
    Present valueAUD 302.2mAUD 287.4mAUD 273.4mAUD 260.0mAUD 247.3m-4.9%
    Present Value Of The ForecastAUD 1.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.35%Australian Government 10-year (RBA F2)
    Equity risk premium6.00%Market assumption
    Beta0.573Reported 0.362, pulled toward 1.0 (Blume)
    Cost of equity8.78%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 5.2bn46.7% of capital
    Total debtAUD 5.9bn53.3% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC6.10%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 shareAUD -1.30

    58% of EV

    Forecast FCFF, final year
    AUD 322.8m
    Capex at depreciation, working capital in reinvestment
    AUD 147.7m
    Less reinvestment at g/ROIC (41.0% of NOPAT)
    AUD -60.5m
    Capitalised
    AUD 87.2m
    ROIC (WACC floor)
    6.1%
    Terminal value, undiscounted
    AUD 2.5bn
    Terminal value, discounted
    AUD 1.9bn
    Enterprise value
    AUD 3.3bn
    Less net debt
    AUD 5.6bn
    Equity value
    AUD -2.3bn

    Exit at 20.0x EBITDA

    Value per shareAUD 5.08

    91% of EV

    Terminal value, undiscounted
    AUD 17.4bn
    Terminal value, discounted
    AUD 13.3bn
    Enterprise value
    AUD 14.7bn
    Less net debt
    AUD 5.6bn
    Equity value
    AUD 9.1bn

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.10%-0.48-0.39-0.230.060.83
    5.10%-1.03-1.03-1.02-1.01-1.01
    6.10%-1.31-1.31-1.30-1.30-1.29
    7.10%-1.51-1.51-1.50-1.50-1.50
    8.10%-1.67-1.66-1.66-1.66-1.65

    Outlined: this model. Green text: above today's price of 2.90. 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 margin1.7%6.6%+4.9pp
    Discount rate6.1%3.2%-2.9pp
    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.