DCF Studio

    REN.AS · AMS · Industrials

    RELX PLC

    Also onConsensus Drift

    Implied value per share

    EUR 32.30

    Market price

    EUR 29.28

    Implied upside

    +10.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · GBP model at 1.1659

    AdjustedReports in GBP, trades in EUR. Modelled in GBP, converted at the end.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 32.30+10.3%
    Exit multiple
    EUR 33.96+16.0%
    Market price
    EUR 29.28

    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 factor0.96690.90390.84510.79010.7386-
    Present valueGBP 2.2bnGBP 2.2bnGBP 2.1bnGBP 2.1bnGBP 2.0bn-2.9%
    Present Value Of The ForecastGBP 10.6bn

    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
    Beta0.508Reported 0.265, pulled toward 1.0 (Blume)
    Cost of equity7.50%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 50.9bn87.5% of capital
    Total debtGBP 7.3bn12.5% of capital, book value as a proxy
    Tax rate23.4%Effective, capped at statutory
    WACC6.96%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 27.70

    82% 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 64.5bn
    Terminal value, discounted
    GBP 47.6bn
    Enterprise value
    GBP 58.2bn
    Less net debt
    GBP 7.1bn
    Equity value
    GBP 51.1bn

    Exit at 15.9x EBITDA

    Value per shareGBP 29.12

    83% of EV

    Terminal value, undiscounted
    GBP 68.0bn
    Terminal value, discounted
    GBP 50.3bn
    Enterprise value
    GBP 60.8bn
    Less net debt
    GBP 7.1bn
    Equity value
    GBP 53.7bn

    Spread between methods: 5%.

    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%
    4.96%39.9545.4253.0964.6584.08
    5.96%30.1233.0136.7341.6948.66
    6.96%23.8925.6027.7030.3233.68
    7.96%19.5920.6921.9823.5325.41
    8.96%16.4517.1818.0319.0120.17

    Outlined: this model. Green text: above today's price of 25.11. 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%1.8%-2.0pp
    EBIT margin29.2%26.3%-2.8pp
    Discount rate7.0%7.4%+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.