DCF Studio

    ESSITY-B.ST · STO · Consumer Defensive

    Essity AB (publ)

    Also onConsensus Drift

    Implied value per share

    SEK 271.91

    Market price

    SEK 261.60

    Implied upside

    +3.9%

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

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

    Value Per Share

    Perpetuity growth
    SEK 271.91+3.9%
    Exit multiple
    SEK 260.11-0.6%
    Market price
    SEK 261.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (SEK). Outflows negative.

    0bn7bn15bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todaySEK
    LineFY26FY27FY28FY29FY30CAGR
    RevenueSEK 141.0bnSEK 143.5bnSEK 146.1bnSEK 148.7bnSEK 151.3bn+1.8%
    EBITSEK 15.6bnSEK 15.9bnSEK 16.2bnSEK 16.4bnSEK 16.7bn+1.8%
    NOPATSEK 11.7bnSEK 11.9bnSEK 12.1bnSEK 12.3bnSEK 12.6bn+1.8%
    Add depreciation & amortisationSEK 8.0bnSEK 8.1bnSEK 8.3bnSEK 8.4bnSEK 8.6bn+1.8%
    Less capital expenditureSEK -6.7bnSEK -6.8bnSEK -6.9bnSEK -7.1bnSEK -7.2bn+1.8%
    Less increase in working capitalSEK 631.3mSEK 642.6mSEK 654.1mSEK 665.8mSEK 677.7m-1.8%
    Free cashflow to firmSEK 13.6bnSEK 13.9bnSEK 14.1bnSEK 14.4bnSEK 14.6bn+1.8%
    Discount factor0.96620.90200.84200.78600.7338-
    Present valueSEK 13.1bnSEK 12.5bnSEK 11.9bnSEK 11.3bnSEK 10.7bn-5.0%
    Present Value Of The ForecastSEK 59.5bn

    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
    Beta0.578Reported 0.370, pulled toward 1.0 (Blume)
    Cost of equity7.96%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationSEK 176.7bn82.6% of capital
    Total debtSEK 37.2bn17.4% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC7.12%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 shareSEK 271.91

    72% of EV

    Forecast FCFF, final year
    SEK 14.6bn
    Capex at depreciation, working capital in reinvestment
    SEK 12.6bn
    Less reinvestment at g/ROIC (23.8% of NOPAT)
    SEK -3.0bn
    Capitalised
    SEK 9.6bn
    ROIC (reported)
    10.5%
    Terminal value, undiscounted
    SEK 212.2bn
    Terminal value, discounted
    SEK 155.7bn
    Enterprise value
    SEK 215.2bn
    Less net debt
    SEK 27.9bn
    Equity value
    SEK 187.3bn

    Exit at 7.9x EBITDA

    Value per shareSEK 260.11

    71% of EV

    Terminal value, undiscounted
    SEK 201.1bn
    Terminal value, discounted
    SEK 147.6bn
    Enterprise value
    SEK 207.1bn
    Less net debt
    SEK 27.9bn
    Equity value
    SEK 179.2bn

    Spread between methods: 4%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.12%399.67435.05483.67554.90669.64
    6.12%310.50327.38348.73376.72415.13
    7.12%252.88261.53271.91284.65300.74
    8.12%212.53217.02222.20228.27235.52
    9.12%182.66184.87187.32190.09193.24

    Outlined: this model. Green text: above today's price of 261.60. 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 year1.8%1.1%-0.7pp
    EBIT margin11.1%10.7%-0.4pp
    Discount rate7.1%7.3%+0.2pp
    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.