DCF Studio

    IR · NYQ · Industrials

    Ingersoll Rand Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 45.05

    Market price

    USD 71.83

    Implied upside

    -37.3%

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

    Value Per Share

    Perpetuity growth
    USD 45.05-37.3%
    Exit multiple
    USD 83.18+15.8%
    Market price
    USD 71.83

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 8.3bnUSD 9.1bnUSD 9.9bnUSD 10.8bnUSD 11.7bn+8.9%
    EBITUSD 1.5bnUSD 1.7bnUSD 1.8bnUSD 2.0bnUSD 2.1bn+8.9%
    NOPATUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.7bn+8.9%
    Add depreciation & amortisationUSD 568.2mUSD 619.0mUSD 674.4mUSD 734.8mUSD 800.5m+8.9%
    Less capital expenditureUSD -145.1mUSD -158.1mUSD -172.3mUSD -187.7mUSD -204.5m+8.9%
    Less increase in working capitalUSD -97.5mUSD -106.2mUSD -115.7mUSD -126.1mUSD -137.3m+8.9%
    Free cashflow to firmUSD 1.5bnUSD 1.7bnUSD 1.8bnUSD 2.0bnUSD 2.1bn+8.9%
    Discount factor0.95340.86660.78760.71590.6507-
    Present valueUSD 1.5bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bn-1.0%
    Present Value Of The ForecastUSD 7.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.098Reported 1.147, pulled toward 1.0 (Blume)
    Cost of equity11.04%Risk-free + beta x equity risk premium
    Cost of debt5.25%Interest expense / average total debt
    Market capitalisationUSD 27.9bn85.2% of capital
    Total debtUSD 4.8bn14.8% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.02%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 45.05

    67% of EV

    Forecast FCFF, final year
    USD 2.1bn
    Capex at depreciation, working capital in reinvestment
    USD 2.2bn
    Less reinvestment at g/ROIC (25.0% of NOPAT)
    USD -545.2m
    Capitalised
    USD 1.6bn
    ROIC (WACC floor)
    10.0%
    Terminal value, undiscounted
    USD 22.4bn
    Terminal value, discounted
    USD 14.5bn
    Enterprise value
    USD 21.7bn
    Less net debt
    USD 3.6bn
    Equity value
    USD 18.1bn

    Exit at 15.6x EBITDA

    Value per shareUSD 83.18

    81% of EV

    Terminal value, undiscounted
    USD 45.8bn
    Terminal value, discounted
    USD 29.8bn
    Enterprise value
    USD 37.0bn
    Less net debt
    USD 3.6bn
    Equity value
    USD 33.4bn

    Spread between methods: 59%.

    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%
    8.02%58.3558.5958.8359.0759.31
    9.02%50.7650.9751.1751.3851.58
    10.02%44.7044.8845.0545.2345.41
    11.02%39.7439.9040.0540.2140.36
    12.02%35.6235.7635.8936.0336.16

    Outlined: this model. Green text: above today's price of 71.83. 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 year8.9%19.9%+10.9pp
    EBIT margin18.2%29.8%+11.6pp
    Discount rate10.0%7.0%-3.0pp
    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.