DCF Studio

    REP.MC · MCE · Energy

    Repsol, S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 31.17

    Market price

    EUR 29.61

    Implied upside

    +5.3%

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

    AdjustedBeta of -0.141 is not usable in a cost of equity. Clamped to 0.30.
    AdjustedCapital expenditure runs at 6.9% of revenue against depreciation of 4.2%. 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 31.17+5.3%
    Exit multiple
    EUR 19.75-33.3%
    Market price
    EUR 29.61

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 49.4bnEUR 44.5bnEUR 40.0bnEUR 36.1bnEUR 32.5bn-10.0%
    EBITEUR 3.6bnEUR 3.2bnEUR 2.9bnEUR 2.6bnEUR 2.4bn-10.0%
    NOPATEUR 2.7bnEUR 2.4bnEUR 2.2bnEUR 2.0bnEUR 1.8bn-10.0%
    Add depreciation & amortisationEUR 2.1bnEUR 1.9bnEUR 1.7bnEUR 1.5bnEUR 1.4bn-10.0%
    Less capital expenditureEUR -3.4bnEUR -3.1bnEUR -2.8bnEUR -2.5bnEUR -2.3bn-10.0%
    Less increase in working capitalEUR 296.0mEUR 266.5mEUR 240.0mEUR 216.1mEUR 194.6m+10.0%
    Free cashflow to firmEUR 1.6bnEUR 1.5bnEUR 1.3bnEUR 1.2bnEUR 1.1bn-10.0%
    Discount factor0.97470.92590.87960.83560.7938-
    Present valueEUR 1.6bnEUR 1.4bnEUR 1.2bnEUR 1.0bnEUR 858.0m-14.5%
    Present Value Of The ForecastEUR 6.0bn

    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
    Beta0.300Clamped from a reported -0.141
    Cost of equity6.15%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 31.6bn70.5% of capital
    Total debtEUR 13.2bn29.5% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC5.26%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 31.17

    85% of EV

    Forecast FCFF, final year
    EUR 1.1bn
    Capex at depreciation, working capital in reinvestment
    EUR 1.8bn
    Less reinvestment at g/ROIC (33.2% of NOPAT)
    EUR -588.4m
    Capitalised
    EUR 1.2bn
    ROIC (reported)
    7.5%
    Terminal value, undiscounted
    EUR 43.9bn
    Terminal value, discounted
    EUR 34.9bn
    Enterprise value
    EUR 40.9bn
    Less net debt
    EUR 5.6bn
    Equity value
    EUR 35.3bn

    Exit at 7.4x EBITDA

    Value per shareEUR 19.75

    78% of EV

    Terminal value, undiscounted
    EUR 27.6bn
    Terminal value, discounted
    EUR 21.9bn
    Enterprise value
    EUR 27.9bn
    Less net debt
    EUR 5.6bn
    Equity value
    EUR 22.4bn

    Spread between methods: 45%.

    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%
    3.26%63.0580.91122.04318.42—
    4.26%38.6543.4350.8664.1194.57
    5.26%27.2228.9131.1734.4039.42
    6.26%20.5921.2021.9422.8924.15
    7.26%16.2716.4216.5816.7616.97

    Outlined: this model. Green text: above today's price of 29.61. 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-10.0%-10.9%-0.9pp
    EBIT margin7.3%7.0%-0.3pp
    Discount rate5.3%5.4%+0.1pp
    Download as Excel

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