DCF Studio

    IBKR · NMS · Financial Services

    Interactive Brokers Group, Inc.

    Also onConsensus Drift

    Implied value per share

    USD 726.88

    Market price

    USD 90.69

    Implied upside

    +701.5%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReported capital expenditure averages just 0.86% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.29% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 726.88+701.5%
    Exit multiple
    USD 1100.86+1113.9%
    Market price
    USD 90.69

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn23bn46bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 13.8bnUSD 18.5bnUSD 24.9bnUSD 33.5bnUSD 45.2bn+34.6%
    EBITUSD 11.3bnUSD 15.2bnUSD 20.5bnUSD 27.6bnUSD 37.1bn+34.6%
    NOPATUSD 10.4bnUSD 14.0bnUSD 18.8bnUSD 25.3bnUSD 34.1bn+34.6%
    Add depreciation & amortisationUSD 177.2mUSD 238.5mUSD 321.0mUSD 432.1mUSD 581.5m+34.6%
    Less capital expenditureUSD -177.2mUSD -238.5mUSD -321.0mUSD -432.1mUSD -581.5m+34.6%
    Less increase in working capitalUSD 3.5bnUSD 4.8bnUSD 6.4bnUSD 8.6bnUSD 11.6bn-34.6%
    Free cashflow to firmUSD 13.9bnUSD 18.7bnUSD 25.2bnUSD 33.9bnUSD 45.7bn+34.6%
    Discount factor0.94580.84610.75690.67710.6058-
    Present valueUSD 13.2bnUSD 15.9bnUSD 19.1bnUSD 23.0bnUSD 27.7bn+20.4%
    Present Value Of The ForecastUSD 98.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.234Reported 1.349, pulled toward 1.0 (Blume)
    Cost of equity11.78%Risk-free + beta x equity risk premium
    Cost of debt7.00%Implied cost of debt of 25569.7% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationUSD 154.5bn100.0% of capital
    Total debtUSD 19.0m0.0% of capital, book value as a proxy
    Tax rate8.1%Effective, capped at statutory
    WACC11.78%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 726.88

    69% of EV

    Forecast FCFF, final year
    USD 45.7bn
    Capex at depreciation, working capital in reinvestment
    USD 34.1bn
    Less reinvestment at g/ROIC (4.2% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 32.7bn
    ROIC (reported)
    60.0%
    Terminal value, undiscounted
    USD 360.6bn
    Terminal value, discounted
    USD 218.5bn
    Enterprise value
    USD 317.2bn
    Less net debt
    USD -4.9bn
    Equity value
    USD 322.2bn

    Exit at 16.8x EBITDA

    Value per shareUSD 1100.86

    80% of EV

    Terminal value, undiscounted
    USD 634.3bn
    Terminal value, discounted
    USD 384.2bn
    Enterprise value
    USD 483.0bn
    Less net debt
    USD -4.9bn
    Equity value
    USD 488.0bn

    Spread between methods: 41%.

    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%
    9.78%849.51885.93927.29974.691029.57
    10.78%756.88784.31815.00849.59888.87
    11.78%682.27703.45726.88752.92782.07
    12.78%620.89637.59655.87675.98698.22
    13.78%569.52582.90597.43613.28630.63

    Outlined: this model. Green text: above today's price of 90.69. 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 year34.6%-15.7%-50.3pp
    EBIT margin82.1%2.9%-79.3pp
    Discount rate11.8%78.6%+66.9pp
    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.