DCF Studio

    HM-B.ST · STO · Consumer Cyclical

    H & M Hennes & Mauritz AB (publ)

    Also onConsensus Drift

    Implied value per share

    SEK 56.75

    Market price

    SEK 162.50

    Implied upside

    -65.1%

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

    AdjustedReported capital expenditure averages 4.01% of revenue against depreciation of 9.64%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 9.64% 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.

    Value Per Share

    Perpetuity growth
    SEK 56.75-65.1%
    Exit multiple
    SEK 119.52-26.5%
    Market price
    SEK 162.50

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (SEK). Outflows negative.

    0bn6bn12bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todaySEK
    LineFY26FY27FY28FY29FY30CAGR
    RevenueSEK 229.9bnSEK 231.5bnSEK 233.1bnSEK 234.8bnSEK 236.4bn+0.7%
    EBITSEK 14.1bnSEK 14.2bnSEK 14.3bnSEK 14.4bnSEK 14.5bn+0.7%
    NOPATSEK 10.6bnSEK 10.7bnSEK 10.8bnSEK 10.8bnSEK 10.9bn+0.7%
    Add depreciation & amortisationSEK 22.2bnSEK 22.3bnSEK 22.5bnSEK 22.6bnSEK 22.8bn+0.7%
    Less capital expenditureSEK -22.2bnSEK -22.3bnSEK -22.5bnSEK -22.6bnSEK -22.8bn+0.7%
    Less increase in working capitalSEK 679.5mSEK 684.3mSEK 689.1mSEK 693.9mSEK 698.8m-0.7%
    Free cashflow to firmSEK 11.3bnSEK 11.4bnSEK 11.4bnSEK 11.5bnSEK 11.6bn+0.7%
    Discount factor0.95790.87880.80630.73980.6788-
    Present valueSEK 10.8bnSEK 10.0bnSEK 9.2bnSEK 8.5bnSEK 7.9bn-7.6%
    Present Value Of The ForecastSEK 46.4bn

    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
    Beta1.006Reported 1.009, pulled toward 1.0 (Blume)
    Cost of equity10.74%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationSEK 259.4bn77.0% of capital
    Total debtSEK 77.5bn23.0% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.99%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 shareSEK 56.75

    69% of EV

    Forecast FCFF, final year
    SEK 11.6bn
    Capex at depreciation, working capital in reinvestment
    SEK 10.9bn
    Less reinvestment at g/ROIC (13.4% of NOPAT)
    SEK -1.5bn
    Capitalised
    SEK 9.4bn
    ROIC (reported)
    18.7%
    Terminal value, undiscounted
    SEK 149.2bn
    Terminal value, discounted
    SEK 101.2bn
    Enterprise value
    SEK 147.7bn
    Less net debt
    SEK 56.6bn
    Equity value
    SEK 91.0bn

    Exit at 8.0x EBITDA

    Value per shareSEK 119.52

    81% of EV

    Terminal value, undiscounted
    SEK 297.5bn
    Terminal value, discounted
    SEK 201.9bn
    Enterprise value
    SEK 248.3bn
    Less net debt
    SEK 56.6bn
    Equity value
    SEK 191.7bn

    Spread between methods: 71%.

    Sensitivity

    Value per share (SEK) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.99%80.1986.4594.07103.57115.76
    7.99%63.4467.3972.0477.5984.35
    8.99%51.1453.7556.7560.2364.32
    9.99%41.7143.5045.5247.8050.42
    10.99%34.2635.5136.9038.4540.18

    Outlined: this model. Green text: above today's price of 162.50. 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 year0.7%13.7%+13.0pp
    EBIT margin6.2%13.4%+7.2pp
    Discount rate9.0%5.4%-3.6pp
    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.