DCF Studio

    MRU.TO · TOR · Consumer Defensive

    Metro Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 135.58

    Market price

    CAD 91.46

    Implied upside

    +48.2%

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

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

    Value Per Share

    Perpetuity growth
    CAD 135.58+48.2%
    Exit multiple
    CAD 106.55+16.5%
    Market price
    CAD 91.46

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 23.2bnCAD 24.4bnCAD 25.6bnCAD 27.0bnCAD 28.4bn+5.2%
    EBITCAD 1.6bnCAD 1.7bnCAD 1.8bnCAD 1.8bnCAD 1.9bn+5.2%
    NOPATCAD 1.2bnCAD 1.3bnCAD 1.3bnCAD 1.4bnCAD 1.5bn+5.2%
    Add depreciation & amortisationCAD 612.7mCAD 644.7mCAD 678.4mCAD 713.8mCAD 751.1m+5.2%
    Less capital expenditureCAD -672.7mCAD -707.9mCAD -744.8mCAD -783.8mCAD -824.7m+5.2%
    Less increase in working capitalCAD -133.0mCAD -140.0mCAD -147.3mCAD -155.0mCAD -163.1m+5.2%
    Free cashflow to firmCAD 1.0bnCAD 1.1bnCAD 1.1bnCAD 1.2bnCAD 1.2bn+5.2%
    Discount factor0.97270.92030.87080.82390.7796-
    Present valueCAD 978.6mCAD 974.3mCAD 970.0mCAD 965.7mCAD 961.5m-0.4%
    Present Value Of The ForecastCAD 4.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.561Reported 0.345, pulled toward 1.0 (Blume)
    Cost of equity6.39%Risk-free + beta x equity risk premium
    Cost of debt3.68%Interest expense / average total debt
    Market capitalisationCAD 19.1bn80.6% of capital
    Total debtCAD 4.6bn19.4% of capital, book value as a proxy
    Tax rate24.2%Effective, capped at statutory
    WACC5.69%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 shareCAD 135.58

    86% of EV

    Forecast FCFF, final year
    CAD 1.2bn
    Capex at depreciation, working capital in reinvestment
    CAD 1.6bn
    Less reinvestment at g/ROIC (22.3% of NOPAT)
    CAD -347.9m
    Capitalised
    CAD 1.2bn
    ROIC (reported)
    11.2%
    Terminal value, undiscounted
    CAD 39.0bn
    Terminal value, discounted
    CAD 30.4bn
    Enterprise value
    CAD 35.3bn
    Less net debt
    CAD 4.5bn
    Equity value
    CAD 30.7bn

    Exit at 11.4x EBITDA

    Value per shareCAD 106.55

    83% of EV

    Terminal value, undiscounted
    CAD 30.6bn
    Terminal value, discounted
    CAD 23.8bn
    Enterprise value
    CAD 28.7bn
    Less net debt
    CAD 4.5bn
    Equity value
    CAD 24.2bn

    Spread between methods: 24%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.69%237.56292.90394.55643.242202.92
    4.69%156.48176.65205.92252.37337.65
    5.69%114.14123.44135.58152.14176.15
    6.69%88.1592.9498.82106.23115.89
    7.69%70.5773.1776.2279.8884.37

    Outlined: this model. Green text: above today's price of 91.46. 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 year5.2%-2.7%-7.9pp
    EBIT margin6.8%4.8%-2.0pp
    Discount rate5.7%7.0%+1.3pp
    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.