DCF Studio

    GLEN.L · LSE · Basic Materials

    Glencore plc

    Also onConsensus Drift

    Implied value per share

    GBp 472.30

    Market price

    GBp 556.80

    Implied upside

    -15.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.7466

    AdjustedReports in USD, trades in GBp. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 472.30-15.2%
    Exit multiple
    GBp 760.22+36.5%
    Market price
    GBp 556.80

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn5bn10bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 244.8bnUSD 242.1bnUSD 239.4bnUSD 236.7bnUSD 234.1bn-1.1%
    EBITUSD 10.4bnUSD 10.3bnUSD 10.2bnUSD 10.0bnUSD 9.9bn-1.1%
    NOPATUSD 7.8bnUSD 7.7bnUSD 7.6bnUSD 7.5bnUSD 7.4bn-1.1%
    Add depreciation & amortisationUSD 6.8bnUSD 6.7bnUSD 6.6bnUSD 6.5bnUSD 6.5bn-1.1%
    Less capital expenditureUSD -5.2bnUSD -5.2bnUSD -5.1bnUSD -5.0bnUSD -5.0bn-1.1%
    Less increase in working capitalUSD 166.5mUSD 164.6mUSD 162.8mUSD 161.0mUSD 159.2m+1.1%
    Free cashflow to firmUSD 9.5bnUSD 9.4bnUSD 9.3bnUSD 9.2bnUSD 9.1bn-1.1%
    Discount factor0.96490.89830.83630.77850.7248-
    Present valueUSD 9.2bnUSD 8.5bnUSD 7.8bnUSD 7.2bnUSD 6.6bn-7.9%
    Present Value Of The ForecastUSD 39.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.680Reported 0.522, pulled toward 1.0 (Blume)
    Cost of equity8.24%Risk-free + beta x equity risk premium
    Cost of debt8.16%Interest expense / average total debt
    Market capitalisationUSD 65.3bn61.2% of capital
    Total debtUSD 41.5bn38.8% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC7.41%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 6.33

    66% of EV

    Forecast FCFF, final year
    USD 9.1bn
    Capex at depreciation, working capital in reinvestment
    USD 7.6bn
    Less reinvestment at g/ROIC (33.7% of NOPAT)
    USD -2.5bn
    Capitalised
    USD 5.0bn
    ROIC (WACC floor)
    7.4%
    Terminal value, undiscounted
    USD 104.4bn
    Terminal value, discounted
    USD 75.7bn
    Enterprise value
    USD 114.9bn
    Less net debt
    USD 38.6bn
    Equity value
    USD 76.3bn

    Exit at 10.3x EBITDA

    Value per shareUSD 10.18

    76% of EV

    Terminal value, undiscounted
    USD 168.6bn
    Terminal value, discounted
    USD 122.2bn
    Enterprise value
    USD 161.4bn
    Less net debt
    USD 38.6bn
    Equity value
    USD 122.8bn

    Spread between methods: 47%.

    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%
    5.41%10.0810.4510.9411.6312.64
    6.41%7.667.727.797.877.96
    7.41%6.266.306.336.366.39
    8.41%5.235.265.285.315.34
    9.41%4.424.444.464.484.51

    Outlined: this model. Green text: above today's price of 7.46. 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 year-1.1%1.9%+3.0pp
    EBIT margin4.2%4.8%+0.5pp
    Discount rate7.4%6.6%-0.9pp
    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.