DCF Studio

    PHIA.AS · AMS · Healthcare

    Koninklijke Philips N.V.

    Also onConsensus Drift

    Implied value per share

    EUR 5.94

    Market price

    EUR 21.60

    Implied upside

    -72.5%

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

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

    Value Per Share

    Perpetuity growth
    EUR 5.94-72.5%
    Exit multiple
    EUR 11.61-46.2%
    Market price
    EUR 21.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0m473m947mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 17.8bnEUR 17.8bnEUR 17.8bnEUR 17.8bnEUR 17.8bn+0.0%
    EBITEUR 403.7mEUR 403.8mEUR 403.8mEUR 403.9mEUR 403.9m+0.0%
    NOPATEUR 302.8mEUR 302.8mEUR 302.9mEUR 302.9mEUR 303.0m+0.0%
    Add depreciation & amortisationEUR 1.3bnEUR 1.3bnEUR 1.3bnEUR 1.3bnEUR 1.3bn+0.0%
    Less capital expenditureEUR -693.9mEUR -694.0mEUR -694.1mEUR -694.2mEUR -694.3m+0.0%
    Less increase in working capitalEUR 2.3mEUR 2.3mEUR 2.3mEUR 2.3mEUR 2.3m-0.0%
    Free cashflow to firmEUR 946.1mEUR 946.2mEUR 946.3mEUR 946.5mEUR 946.6m+0.0%
    Discount factor0.96060.88640.81790.75470.6963-
    Present valueEUR 908.8mEUR 838.7mEUR 774.0mEUR 714.3mEUR 659.1m-7.7%
    Present Value Of The ForecastEUR 3.9bn

    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
    Beta0.940Reported 0.910, pulled toward 1.0 (Blume)
    Cost of equity10.31%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 21.1bn73.0% of capital
    Total debtEUR 7.8bn27.0% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.37%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 5.94

    64% of EV

    Forecast FCFF, final year
    EUR 946.6m
    Capex at depreciation, working capital in reinvestment
    EUR 802.1m
    Less reinvestment at g/ROIC (29.9% of NOPAT)
    EUR -239.4m
    Capitalised
    EUR 562.7m
    ROIC (WACC floor)
    8.4%
    Terminal value, undiscounted
    EUR 9.8bn
    Terminal value, discounted
    EUR 6.8bn
    Enterprise value
    EUR 10.7bn
    Less net debt
    EUR 5.0bn
    Equity value
    EUR 5.7bn

    Exit at 10.2x EBITDA

    Value per shareEUR 11.61

    76% of EV

    Terminal value, undiscounted
    EUR 17.7bn
    Terminal value, discounted
    EUR 12.3bn
    Enterprise value
    EUR 16.2bn
    Less net debt
    EUR 5.0bn
    Equity value
    EUR 11.2bn

    Spread between methods: 65%.

    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%
    6.38%9.069.119.169.219.26
    7.38%7.257.297.337.377.41
    8.38%5.875.905.945.976.01
    9.38%4.784.814.844.874.90
    10.38%3.893.923.953.974.00

    Outlined: this model. Green text: above today's price of 21.60. 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 year0.0%10.5%+10.5pp
    EBIT margin2.3%11.2%+8.9pp
    Discount rate8.4%3.8%-4.6pp
    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.