DCF Studio

    ORA.PA · PAR · Communication Services

    Orange S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 40.12

    Market price

    EUR 15.03

    Implied upside

    +166.9%

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

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

    Current EV/EBITDA of 2.6x sits outside a defensible 3-20x band, so the exit multiple is capped at 3.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    EUR 40.12+166.9%
    Exit multiple
    EUR 22.69+51.0%
    Market price
    EUR 15.03

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 40.8bnEUR 41.3bnEUR 41.7bnEUR 42.2bnEUR 42.6bn+1.1%
    EBITEUR 5.4bnEUR 5.4bnEUR 5.5bnEUR 5.5bnEUR 5.6bn+1.1%
    NOPATEUR 4.0bnEUR 4.0bnEUR 4.1bnEUR 4.1bnEUR 4.1bn+1.1%
    Add depreciation & amortisationEUR 8.6bnEUR 8.7bnEUR 8.8bnEUR 8.9bnEUR 9.0bn+1.1%
    Less capital expenditureEUR -8.0bnEUR -8.1bnEUR -8.2bnEUR -8.3bnEUR -8.4bn+1.1%
    Less increase in working capitalEUR -432.1mEUR -436.7mEUR -441.4mEUR -446.1mEUR -450.9m+1.1%
    Free cashflow to firmEUR 4.2bnEUR 4.2bnEUR 4.3bnEUR 4.3bnEUR 4.4bn+1.1%
    Discount factor0.97230.91910.86880.82130.7764-
    Present valueEUR 4.1bnEUR 3.9bnEUR 3.7bnEUR 3.5bnEUR 3.4bn-4.5%
    Present Value Of The ForecastEUR 18.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.491Reported 0.241, pulled toward 1.0 (Blume)
    Cost of equity6.15%Risk-free + beta x equity risk premium
    Cost of debt5.20%Implied cost of debt of 18.0% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationEUR 39.9bn84.2% of capital
    Total debtEUR 7.5bn15.8% of capital, book value as a proxy
    Tax rate25.8%Effective, capped at statutory
    WACC5.79%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 shareEUR 40.12

    81% of EV

    Forecast FCFF, final year
    EUR 4.4bn
    Capex at depreciation, working capital in reinvestment
    EUR 4.1bn
    Less reinvestment at g/ROIC (20.0% of NOPAT)
    EUR -829.0m
    Capitalised
    EUR 3.3bn
    ROIC (reported)
    12.5%
    Terminal value, undiscounted
    EUR 103.6bn
    Terminal value, discounted
    EUR 80.4bn
    Enterprise value
    EUR 99.0bn
    Less net debt
    EUR -7.7bn
    Equity value
    EUR 106.7bn

    Exit at 3.0x EBITDA

    Value per shareEUR 22.69

    65% of EV

    Terminal value, undiscounted
    EUR 43.8bn
    Terminal value, discounted
    EUR 34.0bn
    Enterprise value
    EUR 52.6bn
    Less net debt
    EUR -7.7bn
    Equity value
    EUR 60.4bn

    Spread between methods: 56%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.79%61.7973.5494.38141.68354.23
    4.79%44.4148.9355.4065.4683.31
    5.79%35.1337.3040.1243.9349.38
    6.79%29.3530.5231.9533.7436.07
    7.79%25.4126.0726.8627.8028.95

    Outlined: this model. Green text: above today's price of 15.03. 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
    EBIT margin13.1%4.2%-8.9pp
    Discount rate5.8%14.1%+8.3pp
    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.