DCF Studio

    NDAQ · NMS · Financial Services

    Nasdaq, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 41.42

    Market price

    USD 93.54

    Implied upside

    -55.7%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReported capital expenditure averages 2.77% of revenue against depreciation and amortisation of 6.35%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 6.35% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 41.42-55.7%
    Exit multiple
    USD 104.66+11.9%
    Market price
    USD 93.54

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 9.1bnUSD 10.0bnUSD 11.0bnUSD 12.0bnUSD 13.2bn+9.9%
    EBITUSD 2.5bnUSD 2.8bnUSD 3.1bnUSD 3.4bnUSD 3.7bn+9.9%
    NOPATUSD 2.0bnUSD 2.2bnUSD 2.4bnUSD 2.7bnUSD 2.9bn+9.9%
    Add depreciation & amortisationUSD 576.6mUSD 633.6mUSD 696.3mUSD 765.2mUSD 840.8m+9.9%
    Less capital expenditureUSD -576.6mUSD -633.6mUSD -696.3mUSD -765.2mUSD -840.8m+9.9%
    Less increase in working capitalUSD -196.7mUSD -216.2mUSD -237.5mUSD -261.0mUSD -286.9m+9.9%
    Free cashflow to firmUSD 1.8bnUSD 2.0bnUSD 2.2bnUSD 2.4bnUSD 2.6bn+9.9%
    Discount factor0.95600.87380.79860.72990.6671-
    Present valueUSD 1.7bnUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.8bn+0.4%
    Present Value Of The ForecastUSD 8.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.983Reported 0.974, pulled toward 1.0 (Blume)
    Cost of equity10.40%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 52.3bn84.7% of capital
    Total debtUSD 9.5bn15.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.41%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 41.42

    71% of EV

    Forecast FCFF, final year
    USD 2.6bn
    Capex at depreciation, working capital in reinvestment
    USD 2.9bn
    Less reinvestment at g/ROIC (26.6% of NOPAT)
    USD -779.5m
    Capitalised
    USD 2.2bn
    ROIC (WACC floor)
    9.4%
    Terminal value, undiscounted
    USD 32.0bn
    Terminal value, discounted
    USD 21.3bn
    Enterprise value
    USD 30.1bn
    Less net debt
    USD 6.1bn
    Equity value
    USD 24.0bn

    Exit at 19.1x EBITDA

    Value per shareUSD 104.66

    87% of EV

    Terminal value, undiscounted
    USD 86.8bn
    Terminal value, discounted
    USD 57.9bn
    Enterprise value
    USD 66.7bn
    Less net debt
    USD 6.1bn
    Equity value
    USD 60.6bn

    Spread between methods: 87%.

    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%
    7.41%56.9457.7958.7659.9161.30
    8.41%47.4747.6847.8948.1048.31
    9.41%41.0641.2441.4241.6041.78
    10.41%35.8936.0536.2136.3636.52
    11.41%31.6431.7831.9232.0532.19

    Outlined: this model. Green text: above today's price of 93.54. 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%29.2%+19.4pp
    EBIT margin28.1%55.3%+27.3pp
    Discount rate9.4%5.7%-3.7pp
    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.