DCF Studio

    GPC · NYQ · Consumer Cyclical

    Genuine Parts Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 108.60

    Market price

    USD 128.08

    Implied upside

    -15.2%

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

    Value Per Share

    Perpetuity growth
    USD 108.60-15.2%
    Exit multiple
    USD 151.13+18.0%
    Market price
    USD 128.08

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 25.1bnUSD 25.9bnUSD 26.7bnUSD 27.6bnUSD 28.5bn+3.2%
    EBITUSD 1.6bnUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.9bn+3.2%
    NOPATUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bn+3.2%
    Add depreciation & amortisationUSD 441.7mUSD 455.9mUSD 470.6mUSD 485.7mUSD 501.4m+3.2%
    Less capital expenditureUSD -508.3mUSD -524.7mUSD -541.6mUSD -559.0mUSD -577.0m+3.2%
    Less increase in working capitalUSD -227.5mUSD -234.8mUSD -242.4mUSD -250.2mUSD -258.2m+3.2%
    Free cashflow to firmUSD 994.5mUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.1bn+3.2%
    Discount factor0.96310.89340.82870.76870.7131-
    Present valueUSD 957.8mUSD 917.1mUSD 878.1mUSD 840.8mUSD 805.0m-4.3%
    Present Value Of The ForecastUSD 4.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.770Reported 0.656, pulled toward 1.0 (Blume)
    Cost of equity9.23%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 17.7bn73.0% of capital
    Total debtUSD 6.5bn27.0% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.80%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 108.60

    79% of EV

    Forecast FCFF, final year
    USD 1.1bn
    Capex at depreciation, working capital in reinvestment
    USD 1.5bn
    Less reinvestment at g/ROIC (16.8% of NOPAT)
    USD -245.2m
    Capitalised
    USD 1.2bn
    ROIC (reported)
    14.9%
    Terminal value, undiscounted
    USD 23.5bn
    Terminal value, discounted
    USD 16.8bn
    Enterprise value
    USD 21.2bn
    Less net debt
    USD 6.1bn
    Equity value
    USD 15.1bn

    Exit at 13.5x EBITDA

    Value per shareUSD 151.13

    84% of EV

    Terminal value, undiscounted
    USD 31.8bn
    Terminal value, discounted
    USD 22.7bn
    Enterprise value
    USD 27.1bn
    Less net debt
    USD 6.1bn
    Equity value
    USD 21.0bn

    Spread between methods: 33%.

    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%
    5.80%162.44178.81200.04228.76269.82
    6.80%123.28132.45143.68157.81176.13
    7.80%96.58102.09108.60116.41125.97
    8.80%77.2280.6884.6689.2894.73
    9.80%62.5564.7867.2970.1373.39

    Outlined: this model. Green text: above today's price of 128.08. 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%7.2%+4.0pp
    EBIT margin6.5%7.3%+0.8pp
    Discount rate7.8%7.2%-0.6pp
    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.