DCF Studio

    FER.MC · MCE · Industrials

    Ferrovial N.V.

    Also onConsensus Drift

    Implied value per share

    EUR 9.17

    Market price

    EUR 47.73

    Implied upside

    -80.8%

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

    AdjustedReported capital expenditure averages 1.67% of revenue against depreciation of 4.64%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 4.64% 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 28.1x 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
    EUR 9.17-80.8%
    Exit multiple
    EUR 32.49-31.9%
    Market price
    EUR 47.73

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 10.4bnEUR 11.3bnEUR 12.3bnEUR 13.3bnEUR 14.4bn+8.4%
    EBITEUR 848.3mEUR 919.8mEUR 997.4mEUR 1.1bnEUR 1.2bn+8.4%
    NOPATEUR 754.4mEUR 818.0mEUR 887.0mEUR 961.8mEUR 1.0bn+8.4%
    Add depreciation & amortisationEUR 484.9mEUR 525.8mEUR 570.1mEUR 618.2mEUR 670.3m+8.4%
    Less capital expenditureEUR -484.9mEUR -525.8mEUR -570.1mEUR -618.2mEUR -670.3m+8.4%
    Less increase in working capitalEUR 99.4mEUR 107.8mEUR 116.8mEUR 126.7mEUR 137.4m-8.4%
    Free cashflow to firmEUR 853.7mEUR 925.7mEUR 1.0bnEUR 1.1bnEUR 1.2bn+8.4%
    Discount factor0.96080.88710.81900.75610.6980-
    Present valueEUR 820.3mEUR 821.2mEUR 822.1mEUR 823.0mEUR 823.8m+0.1%
    Present Value Of The ForecastEUR 4.1bn

    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
    Beta0.853Reported 0.781, pulled toward 1.0 (Blume)
    Cost of equity9.75%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 34.4bn76.2% of capital
    Total debtEUR 10.7bn23.8% of capital, book value as a proxy
    Tax rate11.1%Effective, capped at statutory
    WACC8.32%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 9.17

    69% of EV

    Forecast FCFF, final year
    EUR 1.2bn
    Capex at depreciation, working capital in reinvestment
    EUR 1.0bn
    Less reinvestment at g/ROIC (30.1% of NOPAT)
    EUR -313.5m
    Capitalised
    EUR 729.4m
    ROIC (WACC floor)
    8.3%
    Terminal value, undiscounted
    EUR 12.9bn
    Terminal value, discounted
    EUR 9.0bn
    Enterprise value
    EUR 13.1bn
    Less net debt
    EUR 6.5bn
    Equity value
    EUR 6.6bn

    Exit at 20.0x EBITDA

    Value per shareEUR 32.49

    86% of EV

    Terminal value, undiscounted
    EUR 36.9bn
    Terminal value, discounted
    EUR 25.7bn
    Enterprise value
    EUR 29.8bn
    Less net debt
    EUR 6.5bn
    Equity value
    EUR 23.3bn

    Spread between methods: 112%.

    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%
    6.32%14.6614.7514.8414.9215.01
    7.32%11.4711.5511.6211.6911.76
    8.32%9.059.119.179.239.29
    9.32%7.157.207.257.307.36
    10.32%5.615.665.705.755.79

    Outlined: this model. Green text: above today's price of 47.73. 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 year8.4%37.4%+29.0pp
    EBIT margin8.1%26.0%+17.9pp
    Discount rate8.3%3.5%-4.8pp
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.