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    Implied value per share

    USD 114.58

    Market price

    USD 87.49

    Implied upside

    +31.0%

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

    Value Per Share

    Perpetuity growth
    USD 114.58+31.0%
    Exit multiple
    USD 87.51+0.0%
    Market price
    USD 87.49

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 12.4bnUSD 12.7bnUSD 13.0bnUSD 13.3bnUSD 13.5bn+2.1%
    EBITUSD 2.2bnUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.3bn+2.1%
    NOPATUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bn+2.1%
    Add depreciation & amortisationUSD 3.1bnUSD 3.2bnUSD 3.3bnUSD 3.3bnUSD 3.4bn+2.1%
    Less capital expenditureUSD -3.1bnUSD -3.2bnUSD -3.3bnUSD -3.3bnUSD -3.4bn+2.1%
    Less increase in working capitalUSD -9.3mUSD -9.5mUSD -9.7mUSD -9.9mUSD -10.1m+2.1%
    Free cashflow to firmUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.8bn+2.1%
    Discount factor0.96590.90110.84060.78420.7316-
    Present valueUSD 1.6bnUSD 1.6bnUSD 1.5bnUSD 1.4bnUSD 1.3bn-4.7%
    Present Value Of The ForecastUSD 7.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.546Reported 0.323, pulled toward 1.0 (Blume)
    Cost of equity8.00%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 20.3bn80.0% of capital
    Total debtUSD 5.1bn20.0% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.19%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 shareUSD 114.58

    77% of EV

    Forecast FCFF, final year
    USD 1.8bn
    Capex at depreciation, working capital in reinvestment
    USD 1.9bn
    Less reinvestment at g/ROIC (17.0% of NOPAT)
    USD -315.7m
    Capitalised
    USD 1.5bn
    ROIC (reported)
    14.7%
    Terminal value, undiscounted
    USD 33.6bn
    Terminal value, discounted
    USD 24.5bn
    Enterprise value
    USD 32.0bn
    Less net debt
    USD 4.4bn
    Equity value
    USD 27.5bn

    Exit at 4.3x EBITDA

    Value per shareUSD 87.51

    71% of EV

    Terminal value, undiscounted
    USD 24.7bn
    Terminal value, discounted
    USD 18.0bn
    Enterprise value
    USD 25.5bn
    Less net debt
    USD 4.4bn
    Equity value
    USD 21.0bn

    Spread between methods: 27%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.19%165.29183.18207.63243.14299.50
    6.19%127.32136.69148.54164.04185.22
    7.19%102.68108.07114.58122.60132.73
    8.19%85.3788.6792.5297.07102.55
    9.19%72.5574.6477.0179.7482.91

    Outlined: this model. Green text: above today's price of 87.49. 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 year2.1%-3.0%-5.1pp
    EBIT margin17.3%13.8%-3.5pp
    Discount rate7.2%8.5%+1.3pp
    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.