DCF Studio

    ROK · NYQ · Industrials

    Rockwell Automation, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 95.36

    Market price

    USD 415.62

    Implied upside

    -77.1%

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

    Current EV/EBITDA of 28.3x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 95.36-77.1%
    Exit multiple
    USD 226.01-45.6%
    Market price
    USD 415.62

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 8.5bnUSD 8.8bnUSD 9.0bnUSD 9.2bnUSD 9.4bn+2.4%
    EBITUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+2.4%
    NOPATUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bn+2.4%
    Add depreciation & amortisationUSD 289.9mUSD 297.0mUSD 304.2mUSD 311.6mUSD 319.2m+2.4%
    Less capital expenditureUSD -182.6mUSD -187.1mUSD -191.6mUSD -196.3mUSD -201.1m+2.4%
    Less increase in working capitalUSD 108.6mUSD 111.3mUSD 114.0mUSD 116.8mUSD 119.6m-2.4%
    Free cashflow to firmUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+2.4%
    Discount factor0.94580.84600.75670.67690.6055-
    Present valueUSD 1.3bnUSD 1.2bnUSD 1.1bnUSD 1.0bnUSD 946.7m-8.4%
    Present Value Of The ForecastUSD 5.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.345Reported 1.515, pulled toward 1.0 (Blume)
    Cost of equity12.40%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 46.2bn92.7% of capital
    Total debtUSD 3.6bn7.3% of capital, book value as a proxy
    Tax rate16.4%Effective, capped at statutory
    WACC11.80%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 shareUSD 95.36

    59% of EV

    Forecast FCFF, final year
    USD 1.6bn
    Capex at depreciation, working capital in reinvestment
    USD 1.5bn
    Less reinvestment at g/ROIC (14.6% of NOPAT)
    USD -211.5m
    Capitalised
    USD 1.2bn
    ROIC (reported)
    17.2%
    Terminal value, undiscounted
    USD 13.7bn
    Terminal value, discounted
    USD 8.3bn
    Enterprise value
    USD 14.0bn
    Less net debt
    USD 3.2bn
    Equity value
    USD 10.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 226.01

    80% of EV

    Terminal value, undiscounted
    USD 38.1bn
    Terminal value, discounted
    USD 23.1bn
    Enterprise value
    USD 28.7bn
    Less net debt
    USD 3.2bn
    Equity value
    USD 25.6bn

    Spread between methods: 81%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    9.80%118.45121.77125.51129.77134.66
    10.80%103.86106.13108.64111.45114.62
    11.80%92.0793.6495.3697.2599.34
    12.80%82.3583.4484.6385.9187.30
    13.80%74.1974.9575.7676.6277.55

    Outlined: this model. Green text: above today's price of 415.62. 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 year2.4%31.8%+29.4pp
    EBIT margin16.8%66.1%+49.3pp
    Discount rate11.8%4.9%-6.9pp
    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.