DCF Studio

    MMM · NYQ · Industrials

    3M Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -5.03

    Market price

    USD 165.89

    Implied upside

    -103.0%

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

    Value Per Share

    Perpetuity growth
    USD -5.03-103.0%
    Exit multiple
    USD 22.81-86.3%
    Market price
    USD 165.89

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m389m779mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 24.6bnUSD 24.2bnUSD 23.8bnUSD 23.4bnUSD 23.1bn-1.6%
    EBITUSD 157.7mUSD 155.3mUSD 152.8mUSD 150.4mUSD 148.1m-1.6%
    NOPATUSD 131.4mUSD 129.4mUSD 127.3mUSD 125.3mUSD 123.4m-1.6%
    Add depreciation & amortisationUSD 1.6bnUSD 1.6bnUSD 1.5bnUSD 1.5bnUSD 1.5bn-1.6%
    Less capital expenditureUSD -1.3bnUSD -1.3bnUSD -1.3bnUSD -1.3bnUSD -1.3bn-1.6%
    Less increase in working capitalUSD 391.7mUSD 385.6mUSD 379.5mUSD 373.5mUSD 367.7m+1.6%
    Free cashflow to firmUSD 778.6mUSD 766.4mUSD 754.3mUSD 742.5mUSD 730.8m-1.6%
    Discount factor0.95270.86470.78480.71230.6465-
    Present valueUSD 741.7mUSD 662.7mUSD 592.0mUSD 528.9mUSD 472.5m-10.7%
    Present Value Of The ForecastUSD 3.0bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.050Reported 1.074, pulled toward 1.0 (Blume)
    Cost of equity10.77%Risk-free + beta x equity risk premium
    Cost of debt7.38%Interest expense / average total debt
    Market capitalisationUSD 85.6bn87.2% of capital
    Total debtUSD 12.6bn12.8% of capital, book value as a proxy
    Tax rate16.7%Effective, capped at statutory
    WACC10.18%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 -5.03

    24% of EV

    Forecast FCFF, final year
    USD 730.8m
    Capex at depreciation, working capital in reinvestment
    USD 123.4m
    Less reinvestment at g/ROIC (10.8% of NOPAT)
    USD -13.4m
    Capitalised
    USD 110.0m
    ROIC (reported)
    23.1%
    Terminal value, undiscounted
    USD 1.5bn
    Terminal value, discounted
    USD 949.5m
    Enterprise value
    USD 3.9bn
    Less net debt
    USD 6.7bn
    Equity value
    USD -2.7bn

    Exit at 15.1x EBITDA

    Value per shareUSD 22.81

    84% of EV

    Terminal value, undiscounted
    USD 24.8bn
    Terminal value, discounted
    USD 16.0bn
    Enterprise value
    USD 19.0bn
    Less net debt
    USD 6.7bn
    Equity value
    USD 12.3bn

    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%
    8.18%-4.27-4.13-3.97-3.78-3.54
    9.18%-4.77-4.67-4.56-4.44-4.29
    10.18%-5.17-5.10-5.03-4.94-4.84
    11.18%-5.51-5.46-5.40-5.34-5.28
    12.18%-5.79-5.76-5.72-5.68-5.63

    Outlined: this model. Green text: above today's price of 165.89. 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
    EBIT margin0.6%41.5%+40.8pp
    Discount rate10.2%2.6%-7.6pp
    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.