DCF Studio

    PRY.MI · MIL · Industrials

    Prysmian S.p.A.

    Also onConsensus Drift

    Implied value per share

    EUR 37.58

    Market price

    EUR 122.45

    Implied upside

    -69.3%

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

    AdjustedCapital expenditure runs at 3.9% of revenue against depreciation of 3.1%. 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.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 37.58-69.3%
    Exit multiple
    EUR 114.72-6.3%
    Market price
    EUR 122.45

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 21.0bnEUR 22.5bnEUR 24.0bnEUR 25.7bnEUR 27.5bn+6.9%
    EBITEUR 1.4bnEUR 1.5bnEUR 1.6bnEUR 1.7bnEUR 1.8bn+6.9%
    NOPATEUR 1.0bnEUR 1.1bnEUR 1.2bnEUR 1.2bnEUR 1.3bn+6.9%
    Add depreciation & amortisationEUR 642.2mEUR 686.8mEUR 734.5mEUR 785.4mEUR 839.9m+6.9%
    Less capital expenditureEUR -818.1mEUR -874.9mEUR -935.6mEUR -1.0bnEUR -1.1bn+6.9%
    Less increase in working capitalEUR 73.3mEUR 78.4mEUR 83.8mEUR 89.6mEUR 95.8m-6.9%
    Free cashflow to firmEUR 915.8mEUR 979.4mEUR 1.0bnEUR 1.1bnEUR 1.2bn+6.9%
    Discount factor0.95560.87250.79670.72750.6643-
    Present valueEUR 875.1mEUR 854.6mEUR 834.5mEUR 814.8mEUR 795.7m-2.4%
    Present Value Of The ForecastEUR 4.2bn

    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
    Beta0.957Reported 0.936, pulled toward 1.0 (Blume)
    Cost of equity10.42%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 36.6bn87.6% of capital
    Total debtEUR 5.2bn12.4% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC9.52%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 37.58

    71% of EV

    Forecast FCFF, final year
    EUR 1.2bn
    Capex at depreciation, working capital in reinvestment
    EUR 1.4bn
    Less reinvestment at g/ROIC (26.0% of NOPAT)
    EUR -364.3m
    Capitalised
    EUR 1.0bn
    ROIC (reported)
    9.6%
    Terminal value, undiscounted
    EUR 15.1bn
    Terminal value, discounted
    EUR 10.0bn
    Enterprise value
    EUR 14.2bn
    Less net debt
    EUR 3.1bn
    Equity value
    EUR 11.1bn

    Exit at 18.9x EBITDA

    Value per shareEUR 114.72

    89% of EV

    Terminal value, undiscounted
    EUR 49.4bn
    Terminal value, discounted
    EUR 32.8bn
    Enterprise value
    EUR 37.0bn
    Less net debt
    EUR 3.1bn
    Equity value
    EUR 33.9bn

    Spread between methods: 101%.

    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%
    7.52%52.9154.2955.9257.8660.24
    8.52%43.9344.5445.2346.0146.91
    9.52%37.2037.3937.5837.7837.98
    10.52%32.4232.5632.7032.8532.99
    11.52%28.5328.6528.7828.9029.03

    Outlined: this model. Green text: above today's price of 122.45. 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 year6.9%32.4%+25.5pp
    EBIT margin6.5%17.9%+11.4pp
    Discount rate9.5%5.0%-4.6pp
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.