DCF Studio

    LR.PA · PAR · Industrials

    Legrand SA

    Also onConsensus Drift

    Implied value per share

    EUR 73.21

    Market price

    EUR 135.80

    Implied upside

    -46.1%

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

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

    Value Per Share

    Perpetuity growth
    EUR 73.21-46.1%
    Exit multiple
    EUR 137.04+0.9%
    Market price
    EUR 135.80

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 9.9bnEUR 10.3bnEUR 10.8bnEUR 11.2bnEUR 11.7bn+4.4%
    EBITEUR 1.8bnEUR 1.9bnEUR 2.0bnEUR 2.1bnEUR 2.2bn+4.4%
    NOPATEUR 1.4bnEUR 1.4bnEUR 1.5bnEUR 1.6bnEUR 1.6bn+4.4%
    Add depreciation & amortisationEUR 438.1mEUR 457.2mEUR 477.2mEUR 498.0mEUR 519.8m+4.4%
    Less capital expenditureEUR -268.9mEUR -280.6mEUR -292.9mEUR -305.7mEUR -319.0m+4.4%
    Less increase in working capitalEUR -69.1mEUR -72.1mEUR -75.3mEUR -78.6mEUR -82.0m+4.4%
    Free cashflow to firmEUR 1.5bnEUR 1.5bnEUR 1.6bnEUR 1.7bnEUR 1.7bn+4.4%
    Discount factor0.96180.88980.82310.76140.7044-
    Present valueEUR 1.4bnEUR 1.4bnEUR 1.3bnEUR 1.3bnEUR 1.2bn-3.5%
    Present Value Of The ForecastEUR 6.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.993Reported 0.990, pulled toward 1.0 (Blume)
    Cost of equity9.16%Risk-free + beta x equity risk premium
    Cost of debt3.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 35.6bn84.4% of capital
    Total debtEUR 6.6bn15.6% of capital, book value as a proxy
    Tax rate25.8%Effective, capped at statutory
    WACC8.10%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 73.21

    72% of EV

    Forecast FCFF, final year
    EUR 1.7bn
    Capex at depreciation, working capital in reinvestment
    EUR 1.8bn
    Less reinvestment at g/ROIC (25.2% of NOPAT)
    EUR -447.2m
    Capitalised
    EUR 1.3bn
    ROIC (reported)
    9.9%
    Terminal value, undiscounted
    EUR 24.4bn
    Terminal value, discounted
    EUR 17.2bn
    Enterprise value
    EUR 23.7bn
    Less net debt
    EUR 4.2bn
    Equity value
    EUR 19.5bn

    Exit at 18.0x EBITDA

    Value per shareEUR 137.04

    84% of EV

    Terminal value, undiscounted
    EUR 48.5bn
    Terminal value, discounted
    EUR 34.2bn
    Enterprise value
    EUR 40.7bn
    Less net debt
    EUR 4.2bn
    Equity value
    EUR 36.5bn

    Spread between methods: 61%.

    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%
    6.10%105.77111.59118.95128.61141.90
    7.10%84.8187.6891.1395.36100.69
    8.10%70.1871.5973.2175.0977.34
    9.10%59.4060.0160.6861.4262.26
    10.10%51.2351.4451.6651.8752.08

    Outlined: this model. Green text: above today's price of 135.80. 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 year4.4%18.2%+13.9pp
    EBIT margin18.6%32.8%+14.2pp
    Discount rate8.1%5.7%-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.