DCF Studio

    REL.L · LSE · Industrials

    RELX PLC

    Also onConsensus Drift

    Implied value per share

    GBp 2934.85

    Market price

    GBp 2499.00

    Implied upside

    +17.4%

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

    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 2934.85+17.4%
    Exit multiple
    GBp 2587.49+3.5%
    Market price
    GBp 2499.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 10.0bnGBP 10.4bnGBP 10.8bnGBP 11.2bnGBP 11.6bn+3.9%
    EBITGBP 2.9bnGBP 3.0bnGBP 3.1bnGBP 3.3bnGBP 3.4bn+3.9%
    NOPATGBP 2.2bnGBP 2.3bnGBP 2.4bnGBP 2.5bnGBP 2.6bn+3.9%
    Add depreciation & amortisationGBP 761.2mGBP 790.8mGBP 821.5mGBP 853.4mGBP 886.6m+3.9%
    Less capital expenditureGBP -520.8mGBP -541.0mGBP -562.1mGBP -583.9mGBP -606.6m+3.9%
    Less increase in working capitalGBP -150.6mGBP -156.4mGBP -162.5mGBP -168.8mGBP -175.4m+3.9%
    Free cashflow to firmGBP 2.3bnGBP 2.4bnGBP 2.5bnGBP 2.6bnGBP 2.7bn+3.9%
    Discount factor0.96790.90680.84950.79590.7456-
    Present valueGBP 2.2bnGBP 2.2bnGBP 2.1bnGBP 2.1bnGBP 2.0bn-2.7%
    Present Value Of The ForecastGBP 10.6bn

    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
    Beta0.508Reported 0.265, pulled toward 1.0 (Blume)
    Cost of equity7.29%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 43.5bn85.7% of capital
    Total debtGBP 7.3bn14.3% of capital, book value as a proxy
    Tax rate23.4%Effective, capped at statutory
    WACC6.74%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 29.35

    83% of EV

    Forecast FCFF, final year
    GBP 2.7bn
    Capex at depreciation, working capital in reinvestment
    GBP 3.2bn
    Less reinvestment at g/ROIC (11.8% of NOPAT)
    GBP -376.0m
    Capitalised
    GBP 2.8bn
    ROIC (reported)
    21.2%
    Terminal value, undiscounted
    GBP 67.9bn
    Terminal value, discounted
    GBP 50.6bn
    Enterprise value
    GBP 61.2bn
    Less net debt
    GBP 7.1bn
    Equity value
    GBP 54.1bn

    Exit at 13.9x EBITDA

    Value per shareGBP 25.87

    81% of EV

    Terminal value, undiscounted
    GBP 59.3bn
    Terminal value, discounted
    GBP 44.2bn
    Enterprise value
    GBP 54.8bn
    Less net debt
    GBP 7.1bn
    Equity value
    GBP 47.7bn

    Spread between methods: 13%.

    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%
    4.74%42.9849.4358.7473.3899.80
    5.74%31.9135.2139.5145.3753.83
    6.74%25.0726.9929.3532.3336.23
    7.74%20.4321.6423.0724.8026.92
    8.74%17.0717.8718.8019.8921.17

    Outlined: this model. Green text: above today's price of 24.99. 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 year3.9%0.6%-3.3pp
    EBIT margin29.2%24.6%-4.6pp
    Discount rate6.7%7.4%+0.6pp
    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.