DCF Studio

    SDR.L · LSE · Financial Services

    Schroders plc

    Also onConsensus Drift

    Implied value per share

    GBp 914.69

    Market price

    GBp 587.50

    Implied upside

    +55.7%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 914.69+55.7%
    Exit multiple
    GBp 760.40+29.4%
    Market price
    GBp 587.50

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m439m877mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 3.4bnGBP 3.5bnGBP 3.7bnGBP 3.8bnGBP 4.0bn+4.0%
    EBITGBP 587.8mGBP 611.2mGBP 635.5mGBP 660.8mGBP 687.1m+4.0%
    NOPATGBP 482.8mGBP 502.0mGBP 521.9mGBP 542.7mGBP 564.3m+4.0%
    Add depreciation & amortisationGBP 216.3mGBP 224.9mGBP 233.8mGBP 243.1mGBP 252.8m+4.0%
    Less capital expenditureGBP -77.9mGBP -81.0mGBP -84.2mGBP -87.5mGBP -91.0m+4.0%
    Less increase in working capitalGBP 129.3mGBP 134.5mGBP 139.8mGBP 145.4mGBP 151.1m-4.0%
    Free cashflow to firmGBP 750.5mGBP 780.3mGBP 811.4mGBP 843.7mGBP 877.2m+4.0%
    Discount factor0.95390.86810.78990.71880.6541-
    Present valueGBP 715.9mGBP 677.4mGBP 640.9mGBP 606.4mGBP 573.8m-5.4%
    Present Value Of The ForecastGBP 3.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.051Reported 1.076, pulled toward 1.0 (Blume)
    Cost of equity10.28%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 9.2bn94.1% of capital
    Total debtGBP 573.6m5.9% of capital, book value as a proxy
    Tax rate17.9%Effective, capped at statutory
    WACC9.89%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 9.15

    60% of EV

    Forecast FCFF, final year
    GBP 877.2m
    Capex at depreciation, working capital in reinvestment
    GBP 700.5m
    Less reinvestment at g/ROIC (25.3% of NOPAT)
    GBP -177.0m
    Capitalised
    GBP 523.4m
    ROIC (WACC floor)
    9.9%
    Terminal value, undiscounted
    GBP 7.3bn
    Terminal value, discounted
    GBP 4.7bn
    Enterprise value
    GBP 8.0bn
    Less net debt
    GBP -6.7bn
    Equity value
    GBP 14.7bn

    Exit at 3.7x EBITDA

    Value per shareGBP 7.60

    41% of EV

    Terminal value, undiscounted
    GBP 3.5bn
    Terminal value, discounted
    GBP 2.3bn
    Enterprise value
    GBP 5.5bn
    Less net debt
    GBP -6.7bn
    Equity value
    GBP 12.2bn

    Spread between methods: 18%.

    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%
    7.89%10.4110.5010.6010.7210.86
    8.89%9.669.709.739.779.81
    9.89%9.129.139.159.169.18
    10.89%8.708.718.738.748.75
    11.89%8.358.368.378.398.40

    Outlined: this model. Green text: above today's price of 5.88. 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 year4.0%-11.2%-15.1pp
    EBIT margin17.4%1.9%-15.5pp
    Discount rate9.9%33.1%+23.2pp
    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.