DCF Studio

    J · NYQ · Industrials

    Jacobs Solutions Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 92.25

    Market price

    USD 143.40

    Implied upside

    -35.7%

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

    Value Per Share

    Perpetuity growth
    USD 92.25-35.7%
    Exit multiple
    USD 158.96+10.9%
    Market price
    USD 143.40

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 12.9bnUSD 13.8bnUSD 14.8bnUSD 15.8bnUSD 17.0bn+7.1%
    EBITUSD 804.0mUSD 861.3mUSD 922.8mUSD 988.6mUSD 1.1bn+7.1%
    NOPATUSD 657.8mUSD 704.7mUSD 755.0mUSD 808.8mUSD 866.5m+7.1%
    Add depreciation & amortisationUSD 340.5mUSD 364.8mUSD 390.8mUSD 418.7mUSD 448.6m+7.1%
    Less capital expenditureUSD -138.0mUSD -147.8mUSD -158.4mUSD -169.7mUSD -181.8m+7.1%
    Less increase in working capitalUSD -82.2mUSD -88.0mUSD -94.3mUSD -101.1mUSD -108.3m+7.1%
    Free cashflow to firmUSD 778.1mUSD 833.6mUSD 893.1mUSD 956.8mUSD 1.0bn+7.1%
    Discount factor0.95950.88330.81310.74850.6891-
    Present valueUSD 746.6mUSD 736.3mUSD 726.2mUSD 716.2mUSD 706.3m-1.4%
    Present Value Of The ForecastUSD 3.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.785Reported 0.679, pulled toward 1.0 (Blume)
    Cost of equity9.32%Risk-free + beta x equity risk premium
    Cost of debt5.34%Interest expense / average total debt
    Market capitalisationUSD 16.8bn86.1% of capital
    Total debtUSD 2.7bn13.9% of capital, book value as a proxy
    Tax rate18.2%Effective, capped at statutory
    WACC8.63%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 92.25

    71% of EV

    Forecast FCFF, final year
    USD 1.0bn
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (29.0% of NOPAT)
    USD -321.8m
    Capitalised
    USD 788.7m
    ROIC (WACC floor)
    8.6%
    Terminal value, undiscounted
    USD 13.2bn
    Terminal value, discounted
    USD 9.1bn
    Enterprise value
    USD 12.7bn
    Less net debt
    USD 1.5bn
    Equity value
    USD 11.2bn

    Exit at 16.6x EBITDA

    Value per shareUSD 158.96

    83% of EV

    Terminal value, undiscounted
    USD 25.0bn
    Terminal value, discounted
    USD 17.2bn
    Enterprise value
    USD 20.9bn
    Less net debt
    USD 1.5bn
    Equity value
    USD 19.4bn

    Spread between methods: 53%.

    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%
    6.63%125.71127.25129.04131.20133.90
    7.63%105.44105.87106.30106.73107.16
    8.63%91.5291.8992.2592.6192.98
    9.63%80.5280.8381.1481.4681.77
    10.63%71.6071.8772.1472.4272.69

    Outlined: this model. Green text: above today's price of 143.40. 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 year7.1%18.0%+10.9pp
    EBIT margin6.2%10.1%+3.8pp
    Discount rate8.6%6.2%-2.4pp
    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.