DCF Studio

    PNR · NYQ · Industrials

    Pentair plc

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 44.37

    Market price

    USD 55.92

    Implied upside

    -20.7%

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

    Value Per Share

    Perpetuity growth
    USD 44.37-20.7%
    Exit multiple
    USD 45.99-17.7%
    Market price
    USD 55.92

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m378m755mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 4.2bnUSD 4.2bnUSD 4.2bnUSD 4.2bnUSD 4.3bn+0.4%
    EBITUSD 804.3mUSD 807.8mUSD 811.3mUSD 814.8mUSD 818.4m+0.4%
    NOPATUSD 699.9mUSD 702.9mUSD 706.0mUSD 709.1mUSD 712.2m+0.4%
    Add depreciation & amortisationUSD 115.4mUSD 115.9mUSD 116.4mUSD 116.9mUSD 117.5m+0.4%
    Less capital expenditureUSD -77.5mUSD -77.8mUSD -78.1mUSD -78.5mUSD -78.8m+0.4%
    Less increase in working capitalUSD 4.5mUSD 4.6mUSD 4.6mUSD 4.6mUSD 4.6m-0.4%
    Free cashflow to firmUSD 742.4mUSD 745.6mUSD 748.9mUSD 752.1mUSD 755.4m+0.4%
    Discount factor0.95550.87230.79630.72700.6637-
    Present valueUSD 709.3mUSD 650.4mUSD 596.3mUSD 546.8mUSD 501.4m-8.3%
    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
    Beta1.012Reported 1.018, pulled toward 1.0 (Blume)
    Cost of equity10.56%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 8.9bn83.5% of capital
    Total debtUSD 1.8bn16.5% of capital, book value as a proxy
    Tax rate13.0%Effective, capped at statutory
    WACC9.54%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 44.37

    67% of EV

    Forecast FCFF, final year
    USD 755.4m
    Capex at depreciation, working capital in reinvestment
    USD 761.8m
    Less reinvestment at g/ROIC (18.5% of NOPAT)
    USD -140.7m
    Capitalised
    USD 621.1m
    ROIC (reported)
    13.5%
    Terminal value, undiscounted
    USD 9.0bn
    Terminal value, discounted
    USD 6.0bn
    Enterprise value
    USD 9.0bn
    Less net debt
    USD 1.7bn
    Equity value
    USD 7.3bn

    Exit at 10.1x EBITDA

    Value per shareUSD 45.99

    68% of EV

    Terminal value, undiscounted
    USD 9.5bn
    Terminal value, discounted
    USD 6.3bn
    Enterprise value
    USD 9.3bn
    Less net debt
    USD 1.7bn
    Equity value
    USD 7.6bn

    Spread between methods: 4%.

    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%
    7.54%58.5161.0063.9567.5371.97
    8.54%49.3250.8252.5554.5856.98
    9.54%42.4043.3344.3745.5646.92
    10.54%37.0037.5738.2138.9139.69
    11.54%32.6733.0233.3933.8034.24

    Outlined: this model. Green text: above today's price of 55.92. 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 year0.4%4.6%+4.2pp
    EBIT margin19.2%23.5%+4.3pp
    Discount rate9.5%8.2%-1.3pp
    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.