DCF Studio

    F · NYQ · Consumer Cyclical

    Ford Motor Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -19.26

    Market price

    USD 13.21

    Implied upside

    -245.8%

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

    Current EV/EBITDA of 36.2x 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
    USD -19.26-245.8%
    Exit multiple
    USD 28.62+116.6%
    Market price
    USD 13.21

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 198.2bnUSD 209.7bnUSD 221.9bnUSD 234.8bnUSD 248.4bn+5.8%
    EBITUSD 2.5bnUSD 2.6bnUSD 2.8bnUSD 2.9bnUSD 3.1bn+5.8%
    NOPATUSD 2.0bnUSD 2.1bnUSD 2.3bnUSD 2.4bnUSD 2.5bn+5.8%
    Add depreciation & amortisationUSD 9.2bnUSD 9.7bnUSD 10.3bnUSD 10.9bnUSD 11.5bn+5.8%
    Less capital expenditureUSD -9.1bnUSD -9.7bnUSD -10.2bnUSD -10.8bnUSD -11.4bn+5.8%
    Less increase in working capitalUSD 2.0bnUSD 2.2bnUSD 2.3bnUSD 2.4bnUSD 2.6bn-5.8%
    Free cashflow to firmUSD 4.1bnUSD 4.4bnUSD 4.6bnUSD 4.9bnUSD 5.2bn+5.8%
    Discount factor0.96960.91160.85710.80580.7576-
    Present valueUSD 4.0bnUSD 4.0bnUSD 4.0bnUSD 3.9bnUSD 3.9bn-0.5%
    Present Value Of The ForecastUSD 19.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.559Reported 1.835, pulled toward 1.0 (Blume)
    Cost of equity13.57%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 52.7bn24.1% of capital
    Total debtUSD 165.7bn75.9% of capital, book value as a proxy
    Tax rate18.5%Effective, capped at statutory
    WACC6.36%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 -19.26

    61% of EV

    Forecast FCFF, final year
    USD 5.2bn
    Capex at depreciation, working capital in reinvestment
    USD 2.5bn
    Less reinvestment at g/ROIC (39.3% of NOPAT)
    USD -992.7m
    Capitalised
    USD 1.5bn
    ROIC (WACC floor)
    6.4%
    Terminal value, undiscounted
    USD 40.7bn
    Terminal value, discounted
    USD 30.8bn
    Enterprise value
    USD 50.6bn
    Less net debt
    USD 127.3bn
    Equity value
    USD -76.7bn

    Exit at 20.0x EBITDA

    Value per shareUSD 28.62

    92% of EV

    Terminal value, undiscounted
    USD 292.2bn
    Terminal value, discounted
    USD 221.4bn
    Enterprise value
    USD 241.1bn
    Less net debt
    USD 127.3bn
    Equity value
    USD 113.9bn

    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%
    4.36%-14.58-14.52-14.46-14.40-14.34
    5.36%-17.40-17.35-17.30-17.25-17.21
    6.36%-19.34-19.30-19.26-19.23-19.19
    7.36%-20.77-20.74-20.71-20.68-20.64
    8.36%-21.87-21.84-21.81-21.79-21.76

    Outlined: this model. Green text: above today's price of 13.21. 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 year5.8%29.3%+23.5pp
    EBIT margin1.2%5.2%+4.0pp
    Discount rate6.4%2.6%-3.7pp
    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.