DCF Studio

    IBE.MC · MCE · Utilities

    Iberdrola, S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 3.14

    Market price

    EUR 20.29

    Implied upside

    -84.5%

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

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

    Value Per Share

    Perpetuity growth
    EUR 3.14-84.5%
    Exit multiple
    EUR 7.78-61.7%
    Market price
    EUR 20.29

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn3bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 41.2bnEUR 38.5bnEUR 36.0bnEUR 33.7bnEUR 31.5bn-6.5%
    EBITEUR 8.4bnEUR 7.9bnEUR 7.4bnEUR 6.9bnEUR 6.4bn-6.5%
    NOPATEUR 6.6bnEUR 6.2bnEUR 5.8bnEUR 5.4bnEUR 5.0bn-6.5%
    Add depreciation & amortisationEUR 5.6bnEUR 5.2bnEUR 4.9bnEUR 4.5bnEUR 4.2bn-6.5%
    Less capital expenditureEUR -6.9bnEUR -6.4bnEUR -6.0bnEUR -5.6bnEUR -5.3bn-6.5%
    Less increase in working capitalEUR -230.9mEUR -215.9mEUR -201.8mEUR -188.7mEUR -176.4m-6.5%
    Free cashflow to firmEUR 5.0bnEUR 4.7bnEUR 4.4bnEUR 4.1bnEUR 3.8bn-6.5%
    Discount factor0.96610.90180.84170.78570.7333-
    Present valueEUR 4.9bnEUR 4.2bnEUR 3.7bnEUR 3.2bnEUR 2.8bn-12.7%
    Present Value Of The ForecastEUR 18.9bn

    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
    Beta0.702Reported 0.555, pulled toward 1.0 (Blume)
    Cost of equity8.76%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 135.4bn70.3% of capital
    Total debtEUR 57.2bn29.7% of capital, book value as a proxy
    Tax rate21.8%Effective, capped at statutory
    WACC7.13%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 3.14

    74% of EV

    Forecast FCFF, final year
    EUR 3.8bn
    Capex at depreciation, working capital in reinvestment
    EUR 5.0bn
    Less reinvestment at g/ROIC (33.7% of NOPAT)
    EUR -1.7bn
    Capitalised
    EUR 3.3bn
    ROIC (reported)
    7.4%
    Terminal value, undiscounted
    EUR 73.9bn
    Terminal value, discounted
    EUR 54.2bn
    Enterprise value
    EUR 73.1bn
    Less net debt
    EUR 51.9bn
    Equity value
    EUR 21.2bn

    Exit at 10.9x EBITDA

    Value per shareEUR 7.78

    82% of EV

    Terminal value, undiscounted
    EUR 116.6bn
    Terminal value, discounted
    EUR 85.5bn
    Enterprise value
    EUR 104.4bn
    Less net debt
    EUR 51.9bn
    Equity value
    EUR 52.5bn

    Spread between methods: 85%.

    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%
    5.13%8.529.4110.6212.3715.18
    6.13%5.165.475.866.367.03
    7.13%2.983.063.143.243.35
    8.13%1.611.641.671.711.74
    9.13%0.600.630.650.680.71

    Outlined: this model. Green text: above today's price of 20.29. 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-6.5%14.6%+21.1pp
    EBIT margin20.5%50.5%+30.0pp
    Discount rate7.1%4.2%-2.9pp
    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.