DCF Studio

    FIS · NYQ · Technology

    Fidelity National Information Services, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 14.61

    Market price

    USD 35.62

    Implied upside

    -59.0%

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

    AdjustedReported capital expenditure averages 8.88% of revenue against depreciation and amortisation of 17.96%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 17.96% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 14.61-59.0%
    Exit multiple
    USD 34.29-3.7%
    Market price
    USD 35.62

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 11.0bnUSD 11.4bnUSD 11.7bnUSD 12.1bnUSD 12.5bn+3.2%
    EBITUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+3.2%
    NOPATUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+3.2%
    Add depreciation & amortisationUSD 2.0bnUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.2bn+3.2%
    Less capital expenditureUSD -2.0bnUSD -2.0bnUSD -2.1bnUSD -2.2bnUSD -2.2bn+3.2%
    Less increase in working capitalUSD -339.5mUSD -350.3mUSD -361.4mUSD -372.9mUSD -384.8m+3.2%
    Free cashflow to firmUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.2bn+3.2%
    Discount factor0.96530.89950.83810.78100.7277-
    Present valueUSD 993.1mUSD 954.8mUSD 918.0mUSD 882.6mUSD 848.6m-3.9%
    Present Value Of The ForecastUSD 4.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.867Reported 0.801, pulled toward 1.0 (Blume)
    Cost of equity9.76%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 18.4bn57.9% of capital
    Total debtUSD 13.3bn42.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.32%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 shareUSD 14.61

    77% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.6bn
    Less reinvestment at g/ROIC (34.2% of NOPAT)
    USD -529.8m
    Capitalised
    USD 1.0bn
    ROIC (WACC floor)
    7.3%
    Terminal value, undiscounted
    USD 21.7bn
    Terminal value, discounted
    USD 15.8bn
    Enterprise value
    USD 20.4bn
    Less net debt
    USD 12.7bn
    Equity value
    USD 7.7bn

    Exit at 8.5x EBITDA

    Value per shareUSD 34.29

    85% of EV

    Terminal value, undiscounted
    USD 35.9bn
    Terminal value, discounted
    USD 26.1bn
    Enterprise value
    USD 30.7bn
    Less net debt
    USD 12.7bn
    Equity value
    USD 18.0bn

    Spread between methods: 80%.

    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%
    5.32%29.5629.7830.0030.2230.44
    6.32%20.7220.9021.0821.2621.43
    7.32%14.3214.4614.6114.7614.91
    8.32%9.479.599.729.849.96
    9.32%5.675.785.885.996.10

    Outlined: this model. Green text: above today's price of 35.62. 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 year3.2%21.4%+18.3pp
    EBIT margin15.7%23.6%+7.9pp
    Discount rate7.3%4.8%-2.5pp
    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.