DCF Studio

    NDSN · NMS · Industrials

    Nordson Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 110.13

    Market price

    USD 311.57

    Implied upside

    -64.7%

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

    Current EV/EBITDA of 22.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 110.13-64.7%
    Exit multiple
    USD 241.10-22.6%
    Market price
    USD 311.57

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m390m781mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 2.9bnUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.2bn+2.5%
    EBITUSD 742.1mUSD 760.9mUSD 780.1mUSD 799.8mUSD 820.0m+2.5%
    NOPATUSD 590.1mUSD 605.0mUSD 620.3mUSD 636.0mUSD 652.1m+2.5%
    Add depreciation & amortisationUSD 132.9mUSD 136.2mUSD 139.7mUSD 143.2mUSD 146.8m+2.5%
    Less capital expenditureUSD -55.6mUSD -57.0mUSD -58.5mUSD -60.0mUSD -61.5m+2.5%
    Less increase in working capitalUSD 39.4mUSD 40.4mUSD 41.4mUSD 42.5mUSD 43.5m-2.5%
    Free cashflow to firmUSD 706.7mUSD 724.6mUSD 742.9mUSD 761.7mUSD 780.9m+2.5%
    Discount factor0.95470.87030.79330.72310.6592-
    Present valueUSD 674.8mUSD 630.6mUSD 589.4mUSD 550.8mUSD 514.8m-6.5%
    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
    Beta0.981Reported 0.972, pulled toward 1.0 (Blume)
    Cost of equity10.39%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 17.4bn89.2% of capital
    Total debtUSD 2.1bn10.8% of capital, book value as a proxy
    Tax rate20.5%Effective, capped at statutory
    WACC9.70%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 110.13

    64% of EV

    Forecast FCFF, final year
    USD 780.9m
    Capex at depreciation, working capital in reinvestment
    USD 714.5m
    Less reinvestment at g/ROIC (21.0% of NOPAT)
    USD -150.3m
    Capitalised
    USD 564.2m
    ROIC (reported)
    11.9%
    Terminal value, undiscounted
    USD 8.0bn
    Terminal value, discounted
    USD 5.3bn
    Enterprise value
    USD 8.3bn
    Less net debt
    USD 2.0bn
    Equity value
    USD 6.3bn

    Exit at 20.0x EBITDA

    Value per shareUSD 241.10

    81% of EV

    Terminal value, undiscounted
    USD 19.3bn
    Terminal value, discounted
    USD 12.7bn
    Enterprise value
    USD 15.7bn
    Less net debt
    USD 2.0bn
    Equity value
    USD 13.7bn

    Spread between methods: 75%.

    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%
    7.70%148.00153.19159.30166.63175.62
    8.70%124.46127.42130.80134.71139.29
    9.70%106.61108.28110.13112.20114.55
    10.70%92.6093.4894.4395.4596.57
    11.70%81.3081.6982.0882.4982.90

    Outlined: this model. Green text: above today's price of 311.57. 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 year2.5%22.4%+19.9pp
    EBIT margin25.9%66.6%+40.7pp
    Discount rate9.7%5.3%-4.4pp
    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.