DCF Studio

    NESN.SW · EBS · Consumer Defensive

    Nestlé S.A.

    Also onConsensus Drift

    Implied value per share

    CHF 289.38

    Market price

    CHF 76.27

    Implied upside

    +279.4%

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

    AdjustedCapital expenditure runs at 6.1% of revenue against depreciation of 3.8%. 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: CHF assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CHF 289.38+279.4%
    Exit multiple
    CHF 76.37+0.1%
    Market price
    CHF 76.27

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CHF). Outflows negative.

    0bn6bn11bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCHF
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCHF 88.3bnCHF 86.8bnCHF 85.2bnCHF 83.7bnCHF 82.3bn-1.8%
    EBITCHF 14.5bnCHF 14.3bnCHF 14.0bnCHF 13.8bnCHF 13.6bn-1.8%
    NOPATCHF 12.4bnCHF 12.1bnCHF 11.9bnCHF 11.7bnCHF 11.5bn-1.8%
    Add depreciation & amortisationCHF 3.4bnCHF 3.3bnCHF 3.3bnCHF 3.2bnCHF 3.2bn-1.8%
    Less capital expenditureCHF -5.4bnCHF -5.3bnCHF -5.2bnCHF -5.1bnCHF -5.0bn-1.8%
    Less increase in working capitalCHF 781.4mCHF 767.7mCHF 754.2mCHF 741.0mCHF 728.0m+1.8%
    Free cashflow to firmCHF 11.2bnCHF 11.0bnCHF 10.8bnCHF 10.6bnCHF 10.4bn-1.8%
    Discount factor0.98160.94590.91140.87820.8462-
    Present valueCHF 11.0bnCHF 10.4bnCHF 9.8bnCHF 9.3bnCHF 8.8bn-5.3%
    Present Value Of The ForecastCHF 49.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate0.50%CHF assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.662Reported 0.496, pulled toward 1.0 (Blume)
    Cost of equity4.14%Risk-free + beta x equity risk premium
    Cost of debt3.00%Interest expense / average total debt
    Market capitalisationCHF 196.2bn77.2% of capital
    Total debtCHF 57.9bn22.8% of capital, book value as a proxy
    Tax rate15.0%Effective, capped at statutory
    WACC3.78%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 shareCHF 289.38

    94% of EV

    Forecast FCFF, final year
    CHF 10.4bn
    Capex at depreciation, working capital in reinvestment
    CHF 11.9bn
    Less reinvestment at g/ROIC (6.8% of NOPAT)
    CHF -810.1m
    Capitalised
    CHF 11.0bn
    ROIC (reported)
    36.6%
    Terminal value, undiscounted
    CHF 884.0bn
    Terminal value, discounted
    CHF 748.0bn
    Enterprise value
    CHF 797.4bn
    Less net debt
    CHF 51.9bn
    Equity value
    CHF 745.5bn

    Exit at 14.1x EBITDA

    Value per shareCHF 76.37

    80% of EV

    Terminal value, undiscounted
    CHF 235.5bn
    Terminal value, discounted
    CHF 199.3bn
    Enterprise value
    CHF 248.7bn
    Less net debt
    CHF 51.9bn
    Equity value
    CHF 196.7bn

    Spread between methods: 116%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    1.78%1474.37————
    2.78%308.62501.891383.73——
    3.78%165.21209.88289.39470.691297.93
    4.78%109.23127.90154.74196.62271.17
    5.78%79.4289.30102.18119.67144.82

    Outlined: this model. Green text: above today's price of 76.27. 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-1.8%-25.0%-23.2pp
    EBIT margin16.5%4.9%-11.6pp
    Discount rate3.8%6.7%+2.9pp
    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.