DCF Studio

    ENEL.MI · MIL · Utilities

    Enel SpA

    Also onConsensus Drift

    Implied value per share

    EUR -5.63

    Market price

    EUR 8.87

    Implied upside

    -163.5%

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

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 14.3% of revenue against depreciation of 10.6%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR -5.63-163.5%
    Exit multiple
    EUR -3.01-134.0%
    Market price
    EUR 8.87

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    -1373995220-6869976100FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 58.6bnEUR 51.0bnEUR 44.3bnEUR 38.5bnEUR 33.5bn-13.1%
    EBITEUR 774.6mEUR 673.4mEUR 585.4mEUR 508.9mEUR 442.4m-13.1%
    NOPATEUR 580.9mEUR 505.0mEUR 439.1mEUR 381.7mEUR 331.8m-13.1%
    Add depreciation & amortisationEUR 6.2bnEUR 5.4bnEUR 4.7bnEUR 4.1bnEUR 3.5bn-13.1%
    Less capital expenditureEUR -8.4bnEUR -7.3bnEUR -6.3bnEUR -5.5bnEUR -4.8bn-13.1%
    Less increase in working capitalEUR 200.1mEUR 173.9mEUR 151.2mEUR 131.4mEUR 114.3m+13.1%
    Free cashflow to firmEUR -1.4bnEUR -1.2bnEUR -1.0bnEUR -902.7mEUR -784.8m+13.1%
    Discount factor0.96620.90190.84180.78580.7335-
    Present valueEUR -1.3bnEUR -1.1bnEUR -874.2mEUR -709.4mEUR -575.7m+18.9%
    Present Value Of The ForecastEUR -4.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.927Reported 0.891, pulled toward 1.0 (Blume)
    Cost of equity10.23%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 88.0bn56.2% of capital
    Total debtEUR 68.5bn43.8% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC7.13%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 -5.63

    849% of EV

    Forecast FCFF, final year
    EUR -784.8m
    Capex at depreciation, working capital in reinvestment
    EUR 490.5m
    Less reinvestment at g/ROIC (35.1% of NOPAT)
    EUR -172.0m
    Capitalised
    EUR 318.5m
    ROIC (WACC floor)
    7.1%
    Terminal value, undiscounted
    EUR 7.1bn
    Terminal value, discounted
    EUR 5.2bn
    Enterprise value
    EUR 609.0m
    Less net debt
    EUR 61.6bn
    Equity value
    EUR -61.0bn

    Exit at 11.5x EBITDA

    Value per shareEUR -3.01

    116% of EV

    Terminal value, undiscounted
    EUR 45.7bn
    Terminal value, discounted
    EUR 33.5bn
    Enterprise value
    EUR 29.0bn
    Less net debt
    EUR 61.6bn
    Equity value
    EUR -32.7bn

    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%
    5.13%-5.41-5.41-5.40-5.40-5.40
    6.13%-5.54-5.54-5.54-5.54-5.53
    7.13%-5.64-5.64-5.63-5.63-5.63
    8.13%-5.70-5.70-5.70-5.70-5.70
    9.13%-5.75-5.75-5.75-5.75-5.75

    Outlined: this model. Green text: above today's price of 8.87. 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-13.1%89.9%+102.9pp
    EBIT margin1.3%39.5%+38.2pp
    Discount rate7.1%2.6%-4.5pp
    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.