DCF Studio

    PSN.L · LSE · Consumer Cyclical

    Persimmon Plc

    Also onConsensus Drift

    Implied value per share

    GBp 1113.64

    Market price

    GBp 1151.50

    Implied upside

    -3.3%

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

    AdjustedCapital expenditure runs at 1.1% of revenue against depreciation of 0.6%. 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: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 1113.64-3.3%
    Exit multiple
    GBp 1293.81+12.4%
    Market price
    GBp 1151.50

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m189m377mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 3.7bnGBP 3.7bnGBP 3.7bnGBP 3.7bnGBP 3.6bn-0.6%
    EBITGBP 511.2mGBP 508.3mGBP 505.5mGBP 502.6mGBP 499.7m-0.6%
    NOPATGBP 383.4mGBP 381.3mGBP 379.1mGBP 376.9mGBP 374.8m-0.6%
    Add depreciation & amortisationGBP 21.3mGBP 21.2mGBP 21.0mGBP 20.9mGBP 20.8m-0.6%
    Less capital expenditureGBP -39.2mGBP -39.0mGBP -38.8mGBP -38.5mGBP -38.3m-0.6%
    Less increase in working capitalGBP 11.6mGBP 11.5mGBP 11.4mGBP 11.4mGBP 11.3m+0.6%
    Free cashflow to firmGBP 377.1mGBP 374.9mGBP 372.8mGBP 370.7mGBP 368.6m-0.6%
    Discount factor0.94710.84950.76190.68340.6130-
    Present valueGBP 357.1mGBP 318.5mGBP 284.1mGBP 253.3mGBP 226.0m-10.8%
    Present Value Of The ForecastGBP 1.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.271Reported 1.404, pulled toward 1.0 (Blume)
    Cost of equity11.49%Risk-free + beta x equity risk premium
    Cost of debt6.50%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationGBP 3.7bn100.0% of capital
    Total debtGBP 0.000.0% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC11.49%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 shareGBP 11.14

    59% of EV

    Forecast FCFF, final year
    GBP 368.6m
    Capex at depreciation, working capital in reinvestment
    GBP 374.8m
    Less reinvestment at g/ROIC (21.8% of NOPAT)
    GBP -81.6m
    Capitalised
    GBP 293.3m
    ROIC (WACC floor)
    11.5%
    Terminal value, undiscounted
    GBP 3.3bn
    Terminal value, discounted
    GBP 2.0bn
    Enterprise value
    GBP 3.5bn
    Less net debt
    GBP -117.0m
    Equity value
    GBP 3.6bn

    Exit at 8.3x EBITDA

    Value per shareGBP 12.94

    65% of EV

    Terminal value, undiscounted
    GBP 4.3bn
    Terminal value, discounted
    GBP 2.6bn
    Enterprise value
    GBP 4.1bn
    Less net debt
    GBP -117.0m
    Equity value
    GBP 4.2bn

    Spread between methods: 15%.

    Sensitivity

    Value per share (GBP) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.49%13.2313.2713.3113.3513.39
    10.49%12.0512.0812.1212.1512.19
    11.49%11.0711.1111.1411.1711.20
    12.49%10.2610.2810.3110.3410.37
    13.49%9.569.589.619.639.66

    Outlined: this model. Green text: above today's price of 11.52. 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 year-0.6%1.3%+1.8pp
    EBIT margin13.7%14.2%+0.5pp
    Discount rate11.5%11.1%-0.4pp
    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.