DCF Studio

    RWE.DE · GER · Utilities

    RWE Aktiengesellschaft

    Also onConsensus Drift

    Implied value per share

    EUR -1.59

    Market price

    EUR 60.44

    Implied upside

    -102.6%

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

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 31.3% of revenue against depreciation of 10.5%. 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 -1.59-102.6%
    Exit multiple
    EUR 1.95-96.8%
    Market price
    EUR 60.44

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    -1677841228-8389206140FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 13.6bnEUR 10.5bnEUR 8.1bnEUR 6.2bnEUR 4.8bn-22.9%
    EBITEUR 1.5bnEUR 1.1bnEUR 874.1mEUR 674.2mEUR 520.0m-22.9%
    NOPATEUR 1.2bnEUR 945.0mEUR 728.9mEUR 562.2mEUR 433.6m-22.9%
    Add depreciation & amortisationEUR 1.4bnEUR 1.1bnEUR 848.4mEUR 654.4mEUR 504.7m-22.9%
    Less capital expenditureEUR -4.3bnEUR -3.3bnEUR -2.5bnEUR -2.0bnEUR -1.5bn-22.9%
    Less increase in working capitalEUR -72.1mEUR -55.6mEUR -42.9mEUR -33.1mEUR -25.5m-22.9%
    Free cashflow to firmEUR -1.7bnEUR -1.3bnEUR -998.2mEUR -769.9mEUR -593.9m+22.9%
    Discount factor0.97200.91820.86750.81950.7742-
    Present valueEUR -1.6bnEUR -1.2bnEUR -865.9mEUR -631.0mEUR -459.8m+27.1%
    Present Value Of The ForecastEUR -4.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate2.60%EUR assumption - no free live source available for this market (assumption)
    Equity risk premium6.00%Market assumption
    Beta0.713Reported 0.572, pulled toward 1.0 (Blume)
    Cost of equity6.88%Risk-free + beta x equity risk premium
    Cost of debt3.60%Interest expense / average total debt
    Market capitalisationEUR 47.1bn73.5% of capital
    Total debtEUR 17.0bn26.5% of capital, book value as a proxy
    Tax rate16.6%Effective, capped at statutory
    WACC5.85%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 -1.59

    291% of EV

    Forecast FCFF, final year
    EUR -593.9m
    Capex at depreciation, working capital in reinvestment
    EUR 433.6m
    Less reinvestment at g/ROIC (29.1% of NOPAT)
    EUR -126.3m
    Capitalised
    EUR 307.3m
    ROIC (reported)
    8.6%
    Terminal value, undiscounted
    EUR 9.4bn
    Terminal value, discounted
    EUR 7.3bn
    Enterprise value
    EUR 2.5bn
    Less net debt
    EUR 3.7bn
    Equity value
    EUR -1.2bn

    Exit at 12.4x EBITDA

    Value per shareEUR 1.95

    194% of EV

    Terminal value, undiscounted
    EUR 12.7bn
    Terminal value, discounted
    EUR 9.9bn
    Enterprise value
    EUR 5.1bn
    Less net debt
    EUR 3.7bn
    Equity value
    EUR 1.4bn

    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%
    3.85%6.079.4015.1727.6975.66
    4.85%0.321.493.165.7110.11
    5.85%-2.71-2.22-1.59-0.760.43
    6.85%-4.56-4.35-4.10-3.79-3.39
    7.85%-5.77-5.70-5.61-5.51-5.39

    Outlined: this model. Green text: above today's price of 60.44. 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-22.9%18.6%+41.5pp
    EBIT margin10.8%56.1%+45.3pp
    Discount rate5.9%3.0%-2.8pp
    Download as Excel

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