DCF Studio

    KGF.L · LSE · Consumer Cyclical

    Kingfisher plc

    Also onConsensus Drift

    Implied value per share

    GBp 286.06

    Market price

    GBp 301.80

    Implied upside

    -5.2%

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

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

    Value Per Share

    Perpetuity growth
    GBp 286.06-5.2%
    Exit multiple
    GBp 318.69+5.6%
    Market price
    GBp 301.80

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m342m684mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayGBP
    LineFY27FY28FY29FY30FY31CAGR
    RevenueGBP 12.9bnGBP 12.9bnGBP 12.8bnGBP 12.8bnGBP 12.8bn-0.3%
    EBITGBP 552.3mGBP 550.6mGBP 549.0mGBP 547.4mGBP 545.8m-0.3%
    NOPATGBP 414.2mGBP 413.0mGBP 411.8mGBP 410.6mGBP 409.4m-0.3%
    Add depreciation & amortisationGBP 635.0mGBP 633.2mGBP 631.3mGBP 629.5mGBP 627.6m-0.3%
    Less capital expenditureGBP -385.1mGBP -384.0mGBP -382.9mGBP -381.8mGBP -380.7m-0.3%
    Less increase in working capitalGBP 20.0mGBP 20.0mGBP 19.9mGBP 19.9mGBP 19.8m+0.3%
    Free cashflow to firmGBP 684.1mGBP 682.1mGBP 680.1mGBP 678.1mGBP 676.1m-0.3%
    Discount factor0.96060.88630.81780.75450.6962-
    Present valueGBP 657.1mGBP 604.5mGBP 556.2mGBP 511.7mGBP 470.7m-8.0%
    Present Value Of The ForecastGBP 2.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.088Reported 1.131, pulled toward 1.0 (Blume)
    Cost of equity10.48%Risk-free + beta x equity risk premium
    Cost of debt5.32%Interest expense / average total debt
    Market capitalisationGBP 4.9bn67.6% of capital
    Total debtGBP 2.3bn32.4% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.38%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 shareGBP 2.86

    60% of EV

    Forecast FCFF, final year
    GBP 676.1m
    Capex at depreciation, working capital in reinvestment
    GBP 492.8m
    Less reinvestment at g/ROIC (29.8% of NOPAT)
    GBP -147.0m
    Capitalised
    GBP 345.8m
    ROIC (WACC floor)
    8.4%
    Terminal value, undiscounted
    GBP 6.0bn
    Terminal value, discounted
    GBP 4.2bn
    Enterprise value
    GBP 7.0bn
    Less net debt
    GBP 1.9bn
    Equity value
    GBP 5.1bn

    Exit at 5.8x EBITDA

    Value per shareGBP 3.19

    63% of EV

    Terminal value, undiscounted
    GBP 6.9bn
    Terminal value, discounted
    GBP 4.8bn
    Enterprise value
    GBP 7.6bn
    Less net debt
    GBP 1.9bn
    Equity value
    GBP 5.7bn

    Spread between methods: 11%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.38%3.913.933.943.963.98
    7.38%3.303.323.333.343.36
    8.38%2.842.852.862.872.88
    9.38%2.472.482.492.502.51
    10.38%2.172.182.192.202.21

    Outlined: this model. Green text: above today's price of 3.02. 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-0.3%29.9%+30.2pp
    EBIT margin4.3%4.5%+0.2pp
    Discount rate8.4%8.0%-0.4pp
    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.