DCF Studio

    GLE.PA · PAR · Financial Services

    Société Générale Société anonyme

    Also onConsensus Drift

    Implied value per share

    EUR 203.11

    Market price

    EUR 72.59

    Implied upside

    +179.8%

    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.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 23.2% of revenue against depreciation of 17.7%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: EUR assumption - no free live source available for this market.

    Current EV/EBITDA of 1.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 3.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    EUR 203.11+179.8%
    Exit multiple
    EUR 97.60+34.4%
    Market price
    EUR 72.59

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    -7355686284-36778431420FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 59.6bnEUR 67.6bnEUR 76.6bnEUR 86.9bnEUR 98.5bn+13.4%
    EBITEUR 7.9bnEUR 8.9bnEUR 10.1bnEUR 11.5bnEUR 13.0bn+13.4%
    NOPATEUR 5.8bnEUR 6.6bnEUR 7.5bnEUR 8.5bnEUR 9.7bn+13.4%
    Add depreciation & amortisationEUR 10.6bnEUR 12.0bnEUR 13.6bnEUR 15.4bnEUR 17.5bn+13.4%
    Less capital expenditureEUR -13.8bnEUR -15.7bnEUR -17.8bnEUR -20.2bnEUR -22.9bn+13.4%
    Less increase in working capitalEUR -7.0bnEUR -8.0bnEUR -9.0bnEUR -10.2bnEUR -11.6bn+13.4%
    Free cashflow to firmEUR -4.5bnEUR -5.0bnEUR -5.7bnEUR -6.5bnEUR -7.4bn-13.4%
    Discount factor0.97540.92800.88300.84010.7993-
    Present valueEUR -4.3bnEUR -4.7bnEUR -5.1bnEUR -5.5bnEUR -5.9bn-7.9%
    Present Value Of The ForecastEUR -25.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.977Reported 0.966, pulled toward 1.0 (Blume)
    Cost of equity9.06%Risk-free + beta x equity risk premium
    Cost of debt5.20%Implied cost of debt of 19.2% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationEUR 52.6bn23.9% of capital
    Total debtEUR 167.1bn76.1% of capital, book value as a proxy
    Tax rate25.8%Effective, capped at statutory
    WACC5.10%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 203.11

    120% of EV

    Forecast FCFF, final year
    EUR -7.4bn
    Capex at depreciation, working capital in reinvestment
    EUR 9.7bn
    Less reinvestment at g/ROIC (49.0% of NOPAT)
    EUR -4.7bn
    Capitalised
    EUR 4.9bn
    ROIC (WACC floor)
    5.1%
    Terminal value, undiscounted
    EUR 193.9bn
    Terminal value, discounted
    EUR 155.0bn
    Enterprise value
    EUR 129.6bn
    Less net debt
    EUR -28.1bn
    Equity value
    EUR 157.7bn

    Exit at 3.0x EBITDA

    Value per shareEUR 97.60

    153% of EV

    Terminal value, undiscounted
    EUR 91.5bn
    Terminal value, discounted
    EUR 73.1bn
    Enterprise value
    EUR 47.7bn
    Less net debt
    EUR -28.1bn
    Equity value
    EUR 75.8bn

    Spread between methods: 70%.

    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%
    3.10%356.17357.92359.661067.38—
    4.10%259.30260.56261.83263.09264.36
    5.10%201.16202.13203.11204.08205.05
    6.10%162.68163.46164.24165.02165.80
    7.10%135.52136.17136.81137.45138.10

    Outlined: this model. Green text: above today's price of 72.59. 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
    EBIT margin13.2%6.1%-7.1pp
    Discount rate5.1%11.9%+6.8pp
    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.