DCF Studio

    SJM · NYQ · Consumer Defensive

    The J. M. Smucker Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 173.37

    Market price

    USD 122.95

    Implied upside

    +41.0%

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

    Value Per Share

    Perpetuity growth
    USD 173.37+41.0%
    Exit multiple
    USD 149.53+21.6%
    Market price
    USD 122.95

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 9.2bnUSD 9.4bnUSD 9.6bnUSD 9.8bnUSD 10.0bn+2.0%
    EBITUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.6bn+2.0%
    NOPATUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bn+2.0%
    Add depreciation & amortisationUSD 513.1mUSD 523.4mUSD 533.8mUSD 544.5mUSD 555.4m+2.0%
    Less capital expenditureUSD -479.8mUSD -489.4mUSD -499.1mUSD -509.1mUSD -519.3m+2.0%
    Less increase in working capitalUSD 4.3mUSD 4.4mUSD 4.5mUSD 4.5mUSD 4.6m-2.0%
    Free cashflow to firmUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bn+2.0%
    Discount factor0.96910.91020.85480.80280.7540-
    Present valueUSD 1.2bnUSD 1.1bnUSD 1.1bnUSD 1.0bnUSD 1.0bn-4.2%
    Present Value Of The ForecastUSD 5.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.506Reported 0.263, pulled toward 1.0 (Blume)
    Cost of equity7.78%Risk-free + beta x equity risk premium
    Cost of debt5.13%Interest expense / average total debt
    Market capitalisationUSD 13.1bn64.9% of capital
    Total debtUSD 7.1bn35.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.48%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 173.37

    79% of EV

    Forecast FCFF, final year
    USD 1.3bn
    Capex at depreciation, working capital in reinvestment
    USD 1.5bn
    Less reinvestment at g/ROIC (30.3% of NOPAT)
    USD -447.7m
    Capitalised
    USD 1.0bn
    ROIC (reported)
    8.3%
    Terminal value, undiscounted
    USD 26.6bn
    Terminal value, discounted
    USD 20.1bn
    Enterprise value
    USD 25.5bn
    Less net debt
    USD 7.0bn
    Equity value
    USD 18.5bn

    Exit at 10.6x EBITDA

    Value per shareUSD 149.53

    76% of EV

    Terminal value, undiscounted
    USD 23.2bn
    Terminal value, discounted
    USD 17.5bn
    Enterprise value
    USD 23.0bn
    Less net debt
    USD 7.0bn
    Equity value
    USD 16.0bn

    Spread between methods: 15%.

    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%
    4.48%305.65343.31399.69493.81683.66
    5.48%214.50229.19248.59275.57315.86
    6.48%159.95165.98173.36182.70194.95
    7.48%123.62125.79128.27131.17134.65
    8.48%98.3298.8999.46100.02100.59

    Outlined: this model. Green text: above today's price of 122.95. 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 year2.0%-3.2%-5.2pp
    EBIT margin16.3%12.5%-3.9pp
    Discount rate6.5%7.6%+1.2pp
    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.