DCF Studio

    RI.PA · PAR · Consumer Defensive

    Pernod Ricard SA

    Also onConsensus Drift

    Implied value per share

    EUR 73.98

    Market price

    EUR 59.44

    Implied upside

    +24.5%

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

    AdjustedCapital expenditure runs at 5.7% of revenue against depreciation of 3.9%. 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: EUR assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 73.98+24.5%
    Exit multiple
    EUR 26.39-55.6%
    Market price
    EUR 59.44

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0m494m989mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayEUR
    LineFY27FY28FY29FY30FY31CAGR
    RevenueEUR 8.6bnEUR 7.9bnEUR 7.3bnEUR 6.7bnEUR 6.1bn-8.2%
    EBITEUR 2.3bnEUR 2.1bnEUR 1.9bnEUR 1.8bnEUR 1.6bn-8.2%
    NOPATEUR 1.7bnEUR 1.6bnEUR 1.4bnEUR 1.3bnEUR 1.2bn-8.2%
    Add depreciation & amortisationEUR 334.2mEUR 307.0mEUR 281.9mEUR 258.9mEUR 237.8m-8.2%
    Less capital expenditureEUR -490.0mEUR -450.0mEUR -413.3mEUR -379.6mEUR -348.6m-8.2%
    Less increase in working capitalEUR -564.1mEUR -518.1mEUR -475.8mEUR -437.0mEUR -401.4m-8.2%
    Free cashflow to firmEUR 988.7mEUR 908.1mEUR 834.0mEUR 766.0mEUR 703.5m-8.2%
    Discount factor0.97510.92720.88160.83830.7971-
    Present valueEUR 964.1mEUR 842.0mEUR 735.3mEUR 642.1mEUR 560.8m-12.7%
    Present Value Of The ForecastEUR 3.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.20%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.648Reported 0.474, pulled toward 1.0 (Blume)
    Cost of equity7.09%Risk-free + beta x equity risk premium
    Cost of debt3.91%Interest expense / average total debt
    Market capitalisationEUR 15.0bn54.2% of capital
    Total debtEUR 12.7bn45.8% of capital, book value as a proxy
    Tax rate25.8%Effective, capped at statutory
    WACC5.17%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 73.98

    87% of EV

    Forecast FCFF, final year
    EUR 703.5m
    Capex at depreciation, working capital in reinvestment
    EUR 1.2bn
    Less reinvestment at g/ROIC (31.3% of NOPAT)
    EUR -381.1m
    Capitalised
    EUR 834.6m
    ROIC (reported)
    8.0%
    Terminal value, undiscounted
    EUR 32.1bn
    Terminal value, discounted
    EUR 25.6bn
    Enterprise value
    EUR 29.3bn
    Less net debt
    EUR 10.7bn
    Equity value
    EUR 18.6bn

    Exit at 9.1x EBITDA

    Value per shareEUR 26.39

    78% of EV

    Terminal value, undiscounted
    EUR 17.0bn
    Terminal value, discounted
    EUR 13.6bn
    Enterprise value
    EUR 17.3bn
    Less net debt
    EUR 10.7bn
    Equity value
    EUR 6.6bn

    Spread between methods: 95%.

    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%
    3.17%180.41247.63415.051576.91—
    4.17%96.88114.40142.28193.79322.04
    5.17%58.9465.3173.9886.53106.47
    6.17%37.2739.7842.9246.9752.45
    7.17%23.2724.1525.1726.3727.85

    Outlined: this model. Green text: above today's price of 59.44. 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-8.2%-10.3%-2.1pp
    EBIT margin26.7%23.6%-3.0pp
    Discount rate5.2%5.6%+0.4pp
    Download as Excel

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