DCF Studio

    IMO.TO · TOR · Energy

    Imperial Oil Limited

    Also onConsensus Drift

    Implied value per share

    CAD 98.85

    Market price

    CAD 181.83

    Implied upside

    -45.6%

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

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

    Value Per Share

    Perpetuity growth
    CAD 98.85-45.6%
    Exit multiple
    CAD 128.65-29.2%
    Market price
    CAD 181.83

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn2bn5bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 41.8bnCAD 38.6bnCAD 35.7bnCAD 33.0bnCAD 30.5bn-7.6%
    EBITCAD 5.3bnCAD 4.9bnCAD 4.5bnCAD 4.2bnCAD 3.9bn-7.6%
    NOPATCAD 4.1bnCAD 3.8bnCAD 3.5bnCAD 3.2bnCAD 3.0bn-7.6%
    Add depreciation & amortisationCAD 1.8bnCAD 1.6bnCAD 1.5bnCAD 1.4bnCAD 1.3bn-7.6%
    Less capital expenditureCAD -1.5bnCAD -1.4bnCAD -1.3bnCAD -1.2bnCAD -1.1bn-7.6%
    Less increase in working capitalCAD 637.4mCAD 589.2mCAD 544.6mCAD 503.4mCAD 465.4m+7.6%
    Free cashflow to firmCAD 4.9bnCAD 4.6bnCAD 4.2bnCAD 3.9bnCAD 3.6bn-7.6%
    Discount factor0.96300.89310.82820.76800.7123-
    Present valueCAD 4.8bnCAD 4.1bnCAD 3.5bnCAD 3.0bnCAD 2.6bn-14.3%
    Present Value Of The ForecastCAD 17.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.869Reported 0.805, pulled toward 1.0 (Blume)
    Cost of equity8.08%Risk-free + beta x equity risk premium
    Cost of debt3.30%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationCAD 87.9bn95.5% of capital
    Total debtCAD 4.1bn4.5% of capital, book value as a proxy
    Tax rate23.2%Effective, capped at statutory
    WACC7.83%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 shareCAD 98.85

    66% of EV

    Forecast FCFF, final year
    CAD 3.6bn
    Capex at depreciation, working capital in reinvestment
    CAD 3.0bn
    Less reinvestment at g/ROIC (14.0% of NOPAT)
    CAD -414.1m
    Capitalised
    CAD 2.5bn
    ROIC (reported)
    17.9%
    Terminal value, undiscounted
    CAD 49.0bn
    Terminal value, discounted
    CAD 34.9bn
    Enterprise value
    CAD 52.8bn
    Less net debt
    CAD 3.0bn
    Equity value
    CAD 49.8bn

    Exit at 13.6x EBITDA

    Value per shareCAD 128.65

    74% of EV

    Terminal value, undiscounted
    CAD 70.1bn
    Terminal value, discounted
    CAD 49.9bn
    Enterprise value
    CAD 67.8bn
    Less net debt
    CAD 3.0bn
    Equity value
    CAD 64.8bn

    Spread between methods: 26%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.83%128.90138.82151.67169.02193.76
    6.83%106.50112.22119.23128.04139.45
    7.83%91.1094.6698.85103.90110.08
    8.83%79.8482.1684.8387.9491.61
    9.83%71.2372.8074.5776.5878.89

    Outlined: this model. Green text: above today's price of 181.83. 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-7.6%7.3%+14.9pp
    EBIT margin12.7%23.3%+10.7pp
    Discount rate7.8%5.2%-2.6pp
    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.