DCF Studio

    EOS.AX · ASX · Industrials

    Electro Optic Systems Holdings Limited

    Also onConsensus Drift

    Implied value per share

    AUD 0.06

    Market price

    AUD 10.34

    Implied upside

    -99.4%

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

    Wrong toolThis model values the shares at 0.6% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    AUD 0.06-99.4%
    Exit multiple
    AUD -0.38-103.7%
    Market price
    AUD 10.34

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    -25340377-126701880FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayAUD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueAUD 125.5mAUD 122.5mAUD 119.7mAUD 116.9mAUD 114.1m-2.3%
    EBITAUD -33.0mAUD -32.2mAUD -31.4mAUD -30.7mAUD -30.0m+2.3%
    NOPATAUD -23.1mAUD -22.5mAUD -22.0mAUD -21.5mAUD -21.0m+2.3%
    Add depreciation & amortisationAUD 11.2mAUD 11.0mAUD 10.7mAUD 10.5mAUD 10.2m-2.3%
    Less capital expenditureAUD -13.3mAUD -13.0mAUD -12.7mAUD -12.4mAUD -12.1m-2.3%
    Less increase in working capitalAUD -237.2kAUD -231.6kAUD -226.2kAUD -220.9kAUD -215.8k-2.3%
    Free cashflow to firmAUD -25.3mAUD -24.7mAUD -24.2mAUD -23.6mAUD -23.1m+2.3%
    Discount factor0.92780.79860.68740.59170.5093-
    Present valueAUD -23.5mAUD -19.8mAUD -16.6mAUD -14.0mAUD -11.7m+15.9%
    Present Value Of The ForecastAUD -85.6m

    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
    Beta1.818Reported 2.221, pulled toward 1.0 (Blume)
    Cost of equity16.26%Risk-free + beta x equity risk premium
    Cost of debt7.35%Implied cost of debt of 42.7% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationAUD 2.3bn99.3% of capital
    Total debtAUD 17.1m0.7% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC16.17%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 shareAUD 0.06

    0% of EV

    Terminal value, undiscounted
    AUD 0.00
    Terminal value, discounted
    AUD 0.00
    Enterprise value
    AUD -85.6m
    Less net debt
    AUD -96.7m
    Equity value
    AUD 11.1m

    Exit at 8.0x EBITDA

    Value per shareAUD -0.38

    48% of EV

    Terminal value, undiscounted
    AUD -158.0m
    Terminal value, discounted
    AUD -80.5m
    Enterprise value
    AUD -166.1m
    Less net debt
    AUD -96.7m
    Equity value
    AUD -69.4m

    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%
    14.17%0.040.040.040.040.04
    15.17%0.050.050.050.050.05
    16.17%0.060.060.060.060.06
    17.17%0.070.070.070.070.07
    18.17%0.080.080.080.080.08

    Outlined: this model. Green text: above today's price of 10.34. Shading: distance from this model's own value.

    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.