DCF Studio

    MTS.MC · MCE · Basic Materials

    ArcelorMittal S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 7.44

    Market price

    EUR 63.10

    Implied upside

    -88.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.8704

    AdjustedReports in USD, trades in EUR. Modelled in USD, converted at the end.
    AdjustedCapital expenditure runs at 6.3% of revenue against depreciation of 4.0%. 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 7.44-88.2%
    Exit multiple
    EUR 29.47-53.3%
    Market price
    EUR 63.10

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 56.2bnUSD 51.5bnUSD 47.1bnUSD 43.2bnUSD 39.5bn-8.4%
    EBITUSD 3.3bnUSD 3.0bnUSD 2.7bnUSD 2.5bnUSD 2.3bn-8.4%
    NOPATUSD 2.7bnUSD 2.5bnUSD 2.3bnUSD 2.1bnUSD 1.9bn-8.4%
    Add depreciation & amortisationUSD 2.3bnUSD 2.1bnUSD 1.9bnUSD 1.7bnUSD 1.6bn-8.4%
    Less capital expenditureUSD -3.5bnUSD -3.2bnUSD -3.0bnUSD -2.7bnUSD -2.5bn-8.4%
    Less increase in working capitalUSD -163.6mUSD -149.8mUSD -137.2mUSD -125.7mUSD -115.1m-8.4%
    Free cashflow to firmUSD 1.3bnUSD 1.2bnUSD 1.1bnUSD 976.1mUSD 894.0m-8.4%
    Discount factor0.94600.84650.75750.67780.6065-
    Present valueUSD 1.2bnUSD 984.9mUSD 807.2mUSD 661.6mUSD 542.3m-18.0%
    Present Value Of The ForecastUSD 4.2bn

    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
    Beta1.506Reported 1.755, pulled toward 1.0 (Blume)
    Cost of equity13.99%Risk-free + beta x equity risk premium
    Cost of debt4.62%Interest expense / average total debt
    Market capitalisationUSD 47.5bn78.0% of capital
    Total debtUSD 13.4bn22.0% of capital, book value as a proxy
    Tax rate17.1%Effective, capped at statutory
    WACC11.75%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 8.55

    71% of EV

    Forecast FCFF, final year
    USD 894.0m
    Capex at depreciation, working capital in reinvestment
    USD 2.0bn
    Less reinvestment at g/ROIC (21.3% of NOPAT)
    USD -416.9m
    Capitalised
    USD 1.5bn
    ROIC (WACC floor)
    11.8%
    Terminal value, undiscounted
    USD 17.1bn
    Terminal value, discounted
    USD 10.4bn
    Enterprise value
    USD 14.6bn
    Less net debt
    USD 8.0bn
    Equity value
    USD 6.5bn

    Exit at 12.6x EBITDA

    Value per shareUSD 33.86

    88% of EV

    Terminal value, undiscounted
    USD 49.1bn
    Terminal value, discounted
    USD 29.8bn
    Enterprise value
    USD 34.0bn
    Less net debt
    USD 8.0bn
    Equity value
    USD 25.9bn

    Spread between methods: 119%.

    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%
    9.75%12.7512.8312.9213.0113.09
    10.75%10.3710.4510.5210.6010.67
    11.75%8.428.488.558.618.68
    12.75%6.786.846.906.957.01
    13.75%5.395.445.495.545.60

    Outlined: this model. Green text: above today's price of 72.50. 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 year-8.4%24.9%+33.3pp
    EBIT margin5.8%20.8%+15.0pp
    Discount rate11.8%3.4%-8.4pp
    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.