DCF Studio

    EQT.ST · STO · Financial Services

    EQT AB (publ)

    Also onConsensus Drift

    Implied value per share

    SEK 134.48

    Market price

    SEK 299.90

    Implied upside

    -55.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · EUR model at 11.2866

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReports in EUR, trades in SEK. Modelled in EUR, converted at the end.
    AdjustedReported capital expenditure averages 1.29% of revenue against depreciation of 16.40%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 16.40% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Current EV/EBITDA of 250.5x 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
    SEK 134.48-55.2%
    Exit multiple
    SEK 413.85+38.0%
    Market price
    SEK 299.90

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 3.2bnEUR 3.8bnEUR 4.6bnEUR 5.6bnEUR 6.7bn+20.7%
    EBITEUR 931.4mEUR 1.1bnEUR 1.4bnEUR 1.6bnEUR 2.0bn+20.7%
    NOPATEUR 698.6mEUR 843.1mEUR 1.0bnEUR 1.2bnEUR 1.5bn+20.7%
    Add depreciation & amortisationEUR 521.2mEUR 629.0mEUR 759.1mEUR 916.2mEUR 1.1bn+20.7%
    Less capital expenditureEUR -521.2mEUR -629.0mEUR -759.1mEUR -916.2mEUR -1.1bn+20.7%
    Less increase in working capitalEUR -90.5mEUR -109.3mEUR -131.9mEUR -159.2mEUR -192.1m+20.7%
    Free cashflow to firmEUR 608.0mEUR 733.9mEUR 885.7mEUR 1.1bnEUR 1.3bn+20.7%
    Discount factor0.94310.83890.74610.66360.5903-
    Present valueEUR 573.4mEUR 615.6mEUR 660.8mEUR 709.4mEUR 761.6m+7.4%
    Present Value Of The ForecastEUR 3.3bn

    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
    Beta1.276Reported 1.412, pulled toward 1.0 (Blume)
    Cost of equity12.49%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 373.7bn99.3% of capital
    Total debtEUR 2.6bn0.7% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC12.43%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 11.92

    68% of EV

    Forecast FCFF, final year
    EUR 1.3bn
    Capex at depreciation, working capital in reinvestment
    EUR 1.5bn
    Less reinvestment at g/ROIC (20.1% of NOPAT)
    EUR -298.2m
    Capitalised
    EUR 1.2bn
    ROIC (WACC floor)
    12.4%
    Terminal value, undiscounted
    EUR 12.2bn
    Terminal value, discounted
    EUR 7.2bn
    Enterprise value
    EUR 10.5bn
    Less net debt
    EUR -3.5bn
    Equity value
    EUR 14.0bn

    Exit at 20.0x EBITDA

    Value per shareEUR 36.67

    92% of EV

    Terminal value, undiscounted
    EUR 61.6bn
    Terminal value, discounted
    EUR 36.4bn
    Enterprise value
    EUR 39.7bn
    Less net debt
    EUR -3.5bn
    Equity value
    EUR 43.2bn

    Spread between methods: 102%.

    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%
    10.43%13.7613.8013.8413.8813.92
    11.43%12.7212.7612.7912.8312.86
    12.43%11.8611.8911.9211.9511.97
    13.43%11.1211.1511.1711.2011.23
    14.43%10.4910.5110.5410.5610.58

    Outlined: this model. Green text: above today's price of 26.57. 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 year20.7%50.6%+29.9pp
    EBIT margin29.3%75.2%+45.9pp
    Discount rate12.4%5.2%-7.2pp
    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.