DCF Studio

    ENT.L · LSE · Consumer Cyclical

    Entain Plc

    Also onConsensus Drift

    Implied value per share

    GBp 1770.59

    Market price

    GBp 476.70

    Implied upside

    +271.4%

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

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

    Value Per Share

    Perpetuity growth
    GBp 1770.59+271.4%
    Exit multiple
    GBp 1091.61+129.0%
    Market price
    GBp 476.70

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m494m988mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 5.6bnGBP 6.0bnGBP 6.4bnGBP 6.9bnGBP 7.4bn+7.0%
    EBITGBP 573.9mGBP 613.9mGBP 656.7mGBP 702.5mGBP 751.5m+7.0%
    NOPATGBP 430.5mGBP 460.5mGBP 492.6mGBP 526.9mGBP 563.6m+7.0%
    Add depreciation & amortisationGBP 618.2mGBP 661.3mGBP 707.4mGBP 756.7mGBP 809.4m+7.0%
    Less capital expenditureGBP -319.5mGBP -341.7mGBP -365.6mGBP -391.0mGBP -418.3m+7.0%
    Less increase in working capitalGBP 25.2mGBP 27.0mGBP 28.9mGBP 30.9mGBP 33.0m-7.0%
    Free cashflow to firmGBP 754.4mGBP 807.0mGBP 863.2mGBP 923.4mGBP 987.8m+7.0%
    Discount factor0.96780.90640.84880.79500.7445-
    Present valueGBP 730.1mGBP 731.4mGBP 732.8mGBP 734.1mGBP 735.4m+0.2%
    Present Value Of The ForecastGBP 3.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.838Reported 0.758, pulled toward 1.0 (Blume)
    Cost of equity9.11%Risk-free + beta x equity risk premium
    Cost of debt6.66%Interest expense / average total debt
    Market capitalisationGBP 3.1bn43.3% of capital
    Total debtGBP 4.0bn56.7% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC6.77%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 shareGBP 17.71

    76% of EV

    Forecast FCFF, final year
    GBP 987.8m
    Capex at depreciation, working capital in reinvestment
    GBP 1.0bn
    Less reinvestment at g/ROIC (36.7% of NOPAT)
    GBP -371.1m
    Capitalised
    GBP 639.3m
    ROIC (reported)
    6.8%
    Terminal value, undiscounted
    GBP 15.3bn
    Terminal value, discounted
    GBP 11.4bn
    Enterprise value
    GBP 15.1bn
    Less net debt
    GBP 3.6bn
    Equity value
    GBP 11.4bn

    Exit at 6.0x EBITDA

    Value per shareGBP 10.92

    66% of EV

    Terminal value, undiscounted
    GBP 9.4bn
    Terminal value, discounted
    GBP 7.0bn
    Enterprise value
    GBP 10.7bn
    Less net debt
    GBP 3.6bn
    Equity value
    GBP 7.0bn

    Spread between methods: 47%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.77%30.9633.2336.4741.4750.33
    5.77%22.6723.3624.2425.4027.03
    6.77%17.5117.6117.7117.8117.92
    7.77%14.4914.5614.6314.7014.77
    8.77%12.1712.2312.2912.3612.42

    Outlined: this model. Green text: above today's price of 4.77. 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 year7.0%-10.4%-17.4pp
    EBIT margin10.2%0.1%-10.1pp
    Discount rate6.8%15.0%+8.3pp
    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.