DCF Studio

    HWDN.L · LSE · Consumer Cyclical

    Howden Joinery Group Plc

    Also onConsensus Drift

    Implied value per share

    GBp 620.88

    Market price

    GBp 750.00

    Implied upside

    -17.2%

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

    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 620.88-17.2%
    Exit multiple
    GBp 727.33-3.0%
    Market price
    GBp 750.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m158m317mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 2.5bnGBP 2.5bnGBP 2.5bnGBP 2.6bnGBP 2.6bn+1.4%
    EBITGBP 379.6mGBP 384.9mGBP 390.3mGBP 395.8mGBP 401.4m+1.4%
    NOPATGBP 294.8mGBP 299.0mGBP 303.2mGBP 307.4mGBP 311.7m+1.4%
    Add depreciation & amortisationGBP 154.3mGBP 156.5mGBP 158.7mGBP 160.9mGBP 163.2m+1.4%
    Less capital expenditureGBP -140.6mGBP -142.6mGBP -144.6mGBP -146.6mGBP -148.7m+1.4%
    Less increase in working capitalGBP -8.8mGBP -8.9mGBP -9.1mGBP -9.2mGBP -9.3m+1.4%
    Free cashflow to firmGBP 299.7mGBP 303.9mGBP 308.2mGBP 312.5mGBP 316.9m+1.4%
    Discount factor0.95370.86730.78880.71740.6524-
    Present valueGBP 285.8mGBP 263.6mGBP 243.1mGBP 224.2mGBP 206.8m-7.8%
    Present Value Of The ForecastGBP 1.2bn

    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
    Beta1.194Reported 1.290, pulled toward 1.0 (Blume)
    Cost of equity11.07%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 4.1bn85.3% of capital
    Total debtGBP 704.9m14.7% of capital, book value as a proxy
    Tax rate22.3%Effective, capped at statutory
    WACC9.95%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 shareGBP 6.21

    67% of EV

    Forecast FCFF, final year
    GBP 316.9m
    Capex at depreciation, working capital in reinvestment
    GBP 313.4m
    Less reinvestment at g/ROIC (9.9% of NOPAT)
    GBP -31.1m
    Capitalised
    GBP 282.2m
    ROIC (reported)
    25.2%
    Terminal value, undiscounted
    GBP 3.9bn
    Terminal value, discounted
    GBP 2.5bn
    Enterprise value
    GBP 3.8bn
    Less net debt
    GBP 360.4m
    Equity value
    GBP 3.4bn

    Exit at 8.5x EBITDA

    Value per shareGBP 7.27

    72% of EV

    Terminal value, undiscounted
    GBP 4.8bn
    Terminal value, discounted
    GBP 3.1bn
    Enterprise value
    GBP 4.3bn
    Less net debt
    GBP 360.4m
    Equity value
    GBP 4.0bn

    Spread between methods: 16%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.95%7.688.088.559.119.80
    8.95%6.626.897.207.567.99
    9.95%5.805.996.216.466.74
    10.95%5.165.305.455.635.82
    11.95%4.634.744.854.985.12

    Outlined: this model. Green text: above today's price of 7.50. 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 year1.4%6.2%+4.8pp
    EBIT margin15.5%18.4%+2.9pp
    Discount rate10.0%8.7%-1.3pp
    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.