DCF Studio

    PODD · NMS · Healthcare

    Insulet Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 89.24

    Market price

    USD 140.60

    Implied upside

    -36.5%

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

    AdjustedCapital expenditure runs at 8.3% of revenue against depreciation of 4.1%. 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.

    Value Per Share

    Perpetuity growth
    USD 89.24-36.5%
    Exit multiple
    USD 245.37+74.5%
    Market price
    USD 140.60

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m200m400mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.5bnUSD 4.4bnUSD 5.6bnUSD 7.2bnUSD 9.1bn+27.5%
    EBITUSD 416.7mUSD 531.5mUSD 677.8mUSD 864.5mUSD 1.1bn+27.5%
    NOPATUSD 329.2mUSD 419.8mUSD 535.5mUSD 683.0mUSD 871.1m+27.5%
    Add depreciation & amortisationUSD 141.4mUSD 180.3mUSD 229.9mUSD 293.3mUSD 374.0m+27.5%
    Less capital expenditureUSD -285.4mUSD -364.0mUSD -464.3mUSD -592.2mUSD -755.3m+27.5%
    Less increase in working capitalUSD -33.9mUSD -43.2mUSD -55.1mUSD -70.2mUSD -89.6m+27.5%
    Free cashflow to firmUSD 151.3mUSD 192.9mUSD 246.0mUSD 313.8mUSD 400.2m+27.5%
    Discount factor0.95260.86450.78460.71200.6462-
    Present valueUSD 144.1mUSD 166.8mUSD 193.0mUSD 223.4mUSD 258.6m+15.7%
    Present Value Of The ForecastUSD 986.0m

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.053Reported 1.079, pulled toward 1.0 (Blume)
    Cost of equity10.79%Risk-free + beta x equity risk premium
    Cost of debt5.10%Interest expense / average total debt
    Market capitalisationUSD 9.8bn91.1% of capital
    Total debtUSD 949.2m8.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC10.19%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 89.24

    85% of EV

    Forecast FCFF, final year
    USD 400.2m
    Capex at depreciation, working capital in reinvestment
    USD 871.1m
    Less reinvestment at g/ROIC (24.5% of NOPAT)
    USD -213.7m
    Capitalised
    USD 657.3m
    ROIC (WACC floor)
    10.2%
    Terminal value, undiscounted
    USD 8.8bn
    Terminal value, discounted
    USD 5.7bn
    Enterprise value
    USD 6.6bn
    Less net debt
    USD 233.1m
    Equity value
    USD 6.4bn

    Exit at 17.7x EBITDA

    Value per shareUSD 245.37

    94% of EV

    Terminal value, undiscounted
    USD 26.1bn
    Terminal value, discounted
    USD 16.9bn
    Enterprise value
    USD 17.9bn
    Less net debt
    USD 233.1m
    Equity value
    USD 17.6bn

    Spread between methods: 93%.

    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%
    8.19%118.11119.31120.64122.13123.84
    9.19%100.94101.38101.82102.27102.71
    10.19%88.4788.8689.2489.6290.01
    11.19%78.3378.6779.0079.3479.67
    12.19%69.9470.2370.5370.8371.12

    Outlined: this model. Green text: above today's price of 140.60. 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 year27.5%40.2%+12.6pp
    EBIT margin12.1%17.8%+5.7pp
    Discount rate10.2%7.5%-2.7pp
    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.