DCF Studio

    FDS · NYQ · Financial Services

    FactSet Research Systems Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 257.87

    Market price

    USD 283.83

    Implied upside

    -9.1%

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

    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.
    AdjustedReported capital expenditure averages 3.57% of revenue against depreciation of 7.21%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 7.21% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 257.87-9.1%
    Exit multiple
    USD 319.92+12.7%
    Market price
    USD 283.83

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m394m787mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 2.5bnUSD 2.7bnUSD 2.9bnUSD 3.2bnUSD 3.4bn+8.0%
    EBITUSD 774.1mUSD 835.9mUSD 902.7mUSD 974.7mUSD 1.1bn+8.0%
    NOPATUSD 639.6mUSD 690.7mUSD 745.8mUSD 805.4mUSD 869.7m+8.0%
    Add depreciation & amortisationUSD 180.7mUSD 195.1mUSD 210.7mUSD 227.5mUSD 245.7m+8.0%
    Less capital expenditureUSD -180.7mUSD -195.1mUSD -210.7mUSD -227.5mUSD -245.7m+8.0%
    Less increase in working capitalUSD -60.5mUSD -65.3mUSD -70.6mUSD -76.2mUSD -82.3m+8.0%
    Free cashflow to firmUSD 579.1mUSD 625.4mUSD 675.3mUSD 729.2mUSD 787.4m+8.0%
    Discount factor0.95900.88210.81130.74620.6863-
    Present valueUSD 555.4mUSD 551.6mUSD 547.9mUSD 544.1mUSD 540.4m-0.7%
    Present Value Of The ForecastUSD 2.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.806Reported 0.711, pulled toward 1.0 (Blume)
    Cost of equity9.43%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 10.1bn86.6% of capital
    Total debtUSD 1.6bn13.4% of capital, book value as a proxy
    Tax rate17.4%Effective, capped at statutory
    WACC8.72%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 257.87

    75% of EV

    Forecast FCFF, final year
    USD 787.4m
    Capex at depreciation, working capital in reinvestment
    USD 869.7m
    Less reinvestment at g/ROIC (14.9% of NOPAT)
    USD -129.9m
    Capitalised
    USD 739.8m
    ROIC (reported)
    16.7%
    Terminal value, undiscounted
    USD 12.2bn
    Terminal value, discounted
    USD 8.4bn
    Enterprise value
    USD 11.1bn
    Less net debt
    USD 1.2bn
    Equity value
    USD 9.9bn

    Exit at 12.1x EBITDA

    Value per shareUSD 319.92

    80% of EV

    Terminal value, undiscounted
    USD 15.7bn
    Terminal value, discounted
    USD 10.7bn
    Enterprise value
    USD 13.5bn
    Less net debt
    USD 1.2bn
    Equity value
    USD 12.3bn

    Spread between methods: 21%.

    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%
    6.72%342.46364.84392.40427.22472.68
    7.72%282.36296.05312.26331.80355.85
    8.72%238.94247.73257.87269.70283.70
    9.72%206.09211.94218.54226.05234.69
    10.72%180.40184.37188.77193.68199.22

    Outlined: this model. Green text: above today's price of 283.83. 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 year8.0%10.2%+2.2pp
    EBIT margin30.9%33.6%+2.7pp
    Discount rate8.7%8.2%-0.5pp
    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.