DCF Studio

    IVZ · NYQ · Financial Services

    Invesco Ltd.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -9.89

    Market price

    USD 30.53

    Implied upside

    -132.4%

    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.

    No usable EV/EBITDA (EBITDA is not positive), so the exit multiple falls back to 8x.

    Value Per Share

    Perpetuity growth
    USD -9.89-132.4%
    Exit multiple
    USD -7.89-125.8%
    Market price
    USD 30.53

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m178m357mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 6.5bnUSD 6.6bnUSD 6.7bnUSD 6.8bnUSD 7.0bn+1.8%
    EBITUSD 293.1mUSD 298.3mUSD 303.6mUSD 309.0mUSD 314.5m+1.8%
    NOPATUSD 231.5mUSD 235.6mUSD 239.8mUSD 244.1mUSD 248.4m+1.8%
    Add depreciation & amortisationUSD 192.0mUSD 195.4mUSD 198.9mUSD 202.4mUSD 206.0m+1.8%
    Less capital expenditureUSD -138.3mUSD -140.8mUSD -143.3mUSD -145.8mUSD -148.4m+1.8%
    Less increase in working capitalUSD 47.3mUSD 48.1mUSD 48.9mUSD 49.8mUSD 50.7m-1.8%
    Free cashflow to firmUSD 332.4mUSD 338.4mUSD 344.4mUSD 350.5mUSD 356.7m+1.8%
    Discount factor0.95770.87830.80550.73880.6776-
    Present valueUSD 318.4mUSD 297.2mUSD 277.4mUSD 258.9mUSD 241.7m-6.7%
    Present Value Of The ForecastUSD 1.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.405Reported 1.605, pulled toward 1.0 (Blume)
    Cost of equity12.73%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 13.5bn57.9% of capital
    Total debtUSD 9.8bn42.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.04%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 -9.89

    58% of EV

    Forecast FCFF, final year
    USD 356.7m
    Capex at depreciation, working capital in reinvestment
    USD 248.4m
    Less reinvestment at g/ROIC (27.7% of NOPAT)
    USD -68.7m
    Capitalised
    USD 179.7m
    ROIC (WACC floor)
    9.0%
    Terminal value, undiscounted
    USD 2.8bn
    Terminal value, discounted
    USD 1.9bn
    Enterprise value
    USD 3.3bn
    Less net debt
    USD 7.8bn
    Equity value
    USD -4.5bn

    Exit at 8.0x EBITDA

    Value per shareUSD -7.89

    67% of EV

    Terminal value, undiscounted
    USD 4.2bn
    Terminal value, discounted
    USD 2.8bn
    Enterprise value
    USD 4.2bn
    Less net debt
    USD 7.8bn
    Equity value
    USD -3.6bn

    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%
    7.03%-8.15-8.12-8.09-8.07-8.04
    8.04%-9.15-9.13-9.10-9.08-9.06
    9.04%-9.93-9.91-9.89-9.87-9.85
    10.04%-10.56-10.55-10.53-10.51-10.49
    11.04%-11.08-11.07-11.05-11.04-11.02

    Outlined: this model. Green text: above today's price of 30.53. 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 year1.8%40.1%+38.3pp
    EBIT margin4.5%33.4%+28.8pp
    Discount rate9.0%3.0%-6.0pp
    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.