DCF Studio

    EL.PA · PAR · Healthcare

    EssilorLuxottica Société anonyme

    Also onConsensus Drift

    Implied value per share

    EUR 141.11

    Market price

    EUR 139.00

    Implied upside

    +1.5%

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

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

    Value Per Share

    Perpetuity growth
    EUR 141.11+1.5%
    Exit multiple
    EUR 180.44+29.8%
    Market price
    EUR 139.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn2bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 30.0bnEUR 31.5bnEUR 33.1bnEUR 34.9bnEUR 36.7bn+5.2%
    EBITEUR 3.8bnEUR 4.0bnEUR 4.2bnEUR 4.4bnEUR 4.6bn+5.2%
    NOPATEUR 2.9bnEUR 3.0bnEUR 3.2bnEUR 3.3bnEUR 3.5bn+5.2%
    Add depreciation & amortisationEUR 3.4bnEUR 3.6bnEUR 3.8bnEUR 4.0bnEUR 4.2bn+5.2%
    Less capital expenditureEUR -1.8bnEUR -1.9bnEUR -2.0bnEUR -2.1bnEUR -2.2bn+5.2%
    Less increase in working capitalEUR -750.1mEUR -788.8mEUR -829.6mEUR -872.5mEUR -917.5m+5.2%
    Free cashflow to firmEUR 3.8bnEUR 4.0bnEUR 4.2bnEUR 4.4bnEUR 4.6bn+5.2%
    Discount factor0.96920.91030.85500.80310.7543-
    Present valueEUR 3.7bnEUR 3.6bnEUR 3.6bnEUR 3.5bnEUR 3.5bn-1.2%
    Present Value Of The ForecastEUR 17.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.696Reported 0.546, pulled toward 1.0 (Blume)
    Cost of equity7.37%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 63.8bn81.6% of capital
    Total debtEUR 14.4bn18.4% of capital, book value as a proxy
    Tax rate23.9%Effective, capped at statutory
    WACC6.46%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 shareEUR 141.11

    77% of EV

    Forecast FCFF, final year
    EUR 4.6bn
    Capex at depreciation, working capital in reinvestment
    EUR 4.9bn
    Less reinvestment at g/ROIC (38.7% of NOPAT)
    EUR -1.9bn
    Capitalised
    EUR 3.0bn
    ROIC (WACC floor)
    6.5%
    Terminal value, undiscounted
    EUR 77.5bn
    Terminal value, discounted
    EUR 58.5bn
    Enterprise value
    EUR 76.4bn
    Less net debt
    EUR 10.9bn
    Equity value
    EUR 65.6bn

    Exit at 11.5x EBITDA

    Value per shareEUR 180.44

    81% of EV

    Terminal value, undiscounted
    EUR 101.7bn
    Terminal value, discounted
    EUR 76.8bn
    Enterprise value
    EUR 94.7bn
    Less net debt
    EUR 10.9bn
    Equity value
    EUR 83.8bn

    Spread between methods: 24%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.46%227.30236.61250.24272.61317.29
    5.46%170.00170.76171.51172.27173.03
    6.46%139.88140.50141.11141.72142.34
    7.46%117.86118.37118.88119.39119.90
    8.46%101.07101.50101.93102.36102.79

    Outlined: this model. Green text: above today's price of 139.00. 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 year5.2%4.8%-0.4pp
    EBIT margin12.6%12.3%-0.2pp
    Discount rate6.5%6.5%+0.1pp
    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.