DCF Studio

    PSKY · NMS · Communication Services

    Paramount Skydance Corporation

    Also onConsensus Drift

    Implied value per share

    USD 18.18

    Market price

    USD 10.21

    Implied upside

    +78.1%

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

    Value Per Share

    Perpetuity growth
    USD 18.18+78.1%
    Exit multiple
    USD 26.23+156.9%
    Market price
    USD 10.21

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY25FY26FY27FY28FY29
    Nominal FCFFDiscounted to todayUSD
    LineFY25FY26FY27FY28FY29CAGR
    RevenueUSD 29.4bnUSD 29.6bnUSD 29.9bnUSD 30.1bnUSD 30.3bn+0.7%
    EBITUSD 2.1bnUSD 2.1bnUSD 2.1bnUSD 2.1bnUSD 2.1bn+0.7%
    NOPATUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.8bnUSD 1.8bn+0.7%
    Add depreciation & amortisationUSD 395.0mUSD 397.9mUSD 400.7mUSD 403.7mUSD 406.6m+0.7%
    Less capital expenditureUSD -326.0mUSD -328.4mUSD -330.8mUSD -333.2mUSD -335.6m+0.7%
    Less increase in working capitalUSD 212.0mUSD 213.6mUSD 215.1mUSD 216.7mUSD 218.3m-0.7%
    Free cashflow to firmUSD 2.0bnUSD 2.0bnUSD 2.1bnUSD 2.1bnUSD 2.1bn+0.7%
    Discount factor0.96250.89170.82610.76530.7090-
    Present valueUSD 1.9bnUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.5bn-6.7%
    Present Value Of The ForecastUSD 8.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.348Reported 1.520, pulled toward 1.0 (Blume)
    Cost of equity12.41%Risk-free + beta x equity risk premium
    Cost of debt5.48%Interest expense / average total debt
    Market capitalisationUSD 11.5bn42.4% of capital
    Total debtUSD 15.5bn57.6% of capital, book value as a proxy
    Tax rate15.2%Effective, capped at statutory
    WACC7.94%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 18.18

    66% of EV

    Forecast FCFF, final year
    USD 2.1bn
    Capex at depreciation, working capital in reinvestment
    USD 1.8bn
    Less reinvestment at g/ROIC (31.5% of NOPAT)
    USD -565.2m
    Capitalised
    USD 1.2bn
    ROIC (WACC floor)
    7.9%
    Terminal value, undiscounted
    USD 23.2bn
    Terminal value, discounted
    USD 16.4bn
    Enterprise value
    USD 25.0bn
    Less net debt
    USD 12.9bn
    Equity value
    USD 12.1bn

    Exit at 12.2x EBITDA

    Value per shareUSD 26.23

    72% of EV

    Terminal value, undiscounted
    USD 30.7bn
    Terminal value, discounted
    USD 21.8bn
    Enterprise value
    USD 30.3bn
    Less net debt
    USD 12.9bn
    Equity value
    USD 17.4bn

    Spread between methods: 36%.

    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%
    5.94%29.6529.8230.0030.1730.35
    6.94%22.9523.1023.2423.3923.53
    7.94%17.9418.0618.1818.3018.42
    8.94%14.0414.1414.2414.3514.45
    9.94%10.9211.0011.0911.1811.27

    Outlined: this model. Green text: above today's price of 10.21. 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 year0.7%-1.7%-2.4pp
    EBIT margin7.0%5.4%-1.6pp
    Discount rate7.9%10.3%+2.3pp
    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.