DCF Studio

    LDO.MI · MIL · Industrials

    Leonardo S.p.a.

    Also onConsensus Drift

    Implied value per share

    EUR 41.94

    Market price

    EUR 50.45

    Implied upside

    -16.9%

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

    AdjustedCapital expenditure runs at 5.1% of revenue against depreciation of 3.6%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 41.94-16.9%
    Exit multiple
    EUR 57.51+14.0%
    Market price
    EUR 50.45

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0m414m828mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 21.4bnEUR 23.5bnEUR 25.9bnEUR 28.4bnEUR 31.2bn+9.9%
    EBITEUR 1.5bnEUR 1.7bnEUR 1.9bnEUR 2.0bnEUR 2.2bn+9.9%
    NOPATEUR 1.3bnEUR 1.4bnEUR 1.5bnEUR 1.7bnEUR 1.9bn+9.9%
    Add depreciation & amortisationEUR 780.2mEUR 857.1mEUR 941.5mEUR 1.0bnEUR 1.1bn+9.9%
    Less capital expenditureEUR -1.1bnEUR -1.2bnEUR -1.3bnEUR -1.5bnEUR -1.6bn+9.9%
    Less increase in working capitalEUR -386.4mEUR -424.5mEUR -466.3mEUR -512.2mEUR -562.7m+9.9%
    Free cashflow to firmEUR 568.9mEUR 624.9mEUR 686.5mEUR 754.1mEUR 828.4m+9.9%
    Discount factor0.96520.89910.83760.78030.7269-
    Present valueEUR 549.1mEUR 561.9mEUR 575.0mEUR 588.4mEUR 602.1m+2.3%
    Present Value Of The ForecastEUR 2.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.576Reported 0.367, pulled toward 1.0 (Blume)
    Cost of equity7.94%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 29.1bn86.6% of capital
    Total debtEUR 4.5bn13.4% of capital, book value as a proxy
    Tax rate17.4%Effective, capped at statutory
    WACC7.35%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 shareEUR 41.94

    89% of EV

    Forecast FCFF, final year
    EUR 828.4m
    Capex at depreciation, working capital in reinvestment
    EUR 2.2bn
    Less reinvestment at g/ROIC (33.0% of NOPAT)
    EUR -723.7m
    Capitalised
    EUR 1.5bn
    ROIC (reported)
    7.6%
    Terminal value, undiscounted
    EUR 31.0bn
    Terminal value, discounted
    EUR 22.6bn
    Enterprise value
    EUR 25.4bn
    Less net debt
    EUR 1.3bn
    Equity value
    EUR 24.2bn

    Exit at 12.8x EBITDA

    Value per shareEUR 57.51

    92% of EV

    Terminal value, undiscounted
    EUR 43.4bn
    Terminal value, discounted
    EUR 31.5bn
    Enterprise value
    EUR 34.4bn
    Less net debt
    EUR 1.3bn
    Equity value
    EUR 33.2bn

    Spread between methods: 31%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.35%66.6770.4975.5782.7493.68
    6.35%51.3252.6854.3656.4759.26
    7.35%41.2741.5941.9442.3342.78
    8.35%34.9235.0835.2335.3935.55
    9.35%30.1930.3330.4730.6030.74

    Outlined: this model. Green text: above today's price of 50.45. 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 year9.9%14.7%+4.9pp
    EBIT margin7.2%8.6%+1.4pp
    Discount rate7.3%6.6%-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.