DCF Studio

    KVUE · NYQ · Consumer Defensive

    Kenvue Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 14.90

    Market price

    USD 17.81

    Implied upside

    -16.3%

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

    Value Per Share

    Perpetuity growth
    USD 14.90-16.3%
    Exit multiple
    USD 16.71-6.2%
    Market price
    USD 17.81

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 15.2bnUSD 15.2bnUSD 15.3bnUSD 15.4bnUSD 15.4bn+0.4%
    EBITUSD 2.6bnUSD 2.6bnUSD 2.6bnUSD 2.7bnUSD 2.7bn+0.4%
    NOPATUSD 2.1bnUSD 2.1bnUSD 2.1bnUSD 2.1bnUSD 2.1bn+0.4%
    Add depreciation & amortisationUSD 610.1mUSD 612.5mUSD 614.9mUSD 617.2mUSD 619.6m+0.4%
    Less capital expenditureUSD -436.3mUSD -438.0mUSD -439.6mUSD -441.3mUSD -443.1m+0.4%
    Less increase in working capitalUSD -9.2mUSD -9.2mUSD -9.3mUSD -9.3mUSD -9.3m+0.4%
    Free cashflow to firmUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.3bnUSD 2.3bn+0.4%
    Discount factor0.96450.89740.83490.77670.7226-
    Present valueUSD 2.2bnUSD 2.0bnUSD 1.9bnUSD 1.8bnUSD 1.6bn-6.6%
    Present Value Of The ForecastUSD 9.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.615Reported 0.426, pulled toward 1.0 (Blume)
    Cost of equity8.38%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 34.2bn79.8% of capital
    Total debtUSD 8.7bn20.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.49%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 14.90

    74% of EV

    Forecast FCFF, final year
    USD 2.3bn
    Capex at depreciation, working capital in reinvestment
    USD 2.3bn
    Less reinvestment at g/ROIC (22.9% of NOPAT)
    USD -536.6m
    Capitalised
    USD 1.8bn
    ROIC (reported)
    10.9%
    Terminal value, undiscounted
    USD 37.1bn
    Terminal value, discounted
    USD 26.8bn
    Enterprise value
    USD 36.3bn
    Less net debt
    USD 7.6bn
    Equity value
    USD 28.7bn

    Exit at 12.8x EBITDA

    Value per shareUSD 16.71

    76% of EV

    Terminal value, undiscounted
    USD 42.0bn
    Terminal value, discounted
    USD 30.3bn
    Enterprise value
    USD 39.8bn
    Less net debt
    USD 7.6bn
    Equity value
    USD 32.2bn

    Spread between methods: 11%.

    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%
    5.49%22.2124.0726.5229.9535.08
    6.49%17.1818.1119.2620.7322.68
    7.49%13.8314.3214.9015.6116.48
    8.49%11.4311.6911.9912.3412.75
    9.49%9.639.769.9110.0710.26

    Outlined: this model. Green text: above today's price of 17.81. 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 year0.4%3.9%+3.5pp
    EBIT margin17.3%20.2%+2.9pp
    Discount rate7.5%6.8%-0.7pp
    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.