DCF Studio

    SLB · NYQ · Energy

    SLB N.V.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 55.15

    Market price

    USD 51.12

    Implied upside

    +7.9%

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

    Value Per Share

    Perpetuity growth
    USD 55.15+7.9%
    Exit multiple
    USD 70.60+38.1%
    Market price
    USD 51.12

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn3bn7bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 38.7bnUSD 41.9bnUSD 45.4bnUSD 49.2bnUSD 53.3bn+8.3%
    EBITUSD 6.2bnUSD 6.7bnUSD 7.3bnUSD 7.9bnUSD 8.5bn+8.3%
    NOPATUSD 5.0bnUSD 5.4bnUSD 5.9bnUSD 6.4bnUSD 6.9bn+8.3%
    Add depreciation & amortisationUSD 2.2bnUSD 2.3bnUSD 2.5bnUSD 2.7bnUSD 3.0bn+8.3%
    Less capital expenditureUSD -2.3bnUSD -2.5bnUSD -2.7bnUSD -2.9bnUSD -3.2bn+8.3%
    Less increase in working capitalUSD -94.3mUSD -102.2mUSD -110.7mUSD -119.9mUSD -129.9m+8.3%
    Free cashflow to firmUSD 4.8bnUSD 5.2bnUSD 5.6bnUSD 6.1bnUSD 6.6bn+8.3%
    Discount factor0.95820.87970.80770.74160.6809-
    Present valueUSD 4.6bnUSD 4.6bnUSD 4.5bnUSD 4.5bnUSD 4.5bn-0.5%
    Present Value Of The ForecastUSD 22.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.849Reported 0.774, pulled toward 1.0 (Blume)
    Cost of equity9.67%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 75.9bn86.7% of capital
    Total debtUSD 11.6bn13.3% of capital, book value as a proxy
    Tax rate19.2%Effective, capped at statutory
    WACC8.92%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 55.15

    74% of EV

    Forecast FCFF, final year
    USD 6.6bn
    Capex at depreciation, working capital in reinvestment
    USD 7.3bn
    Less reinvestment at g/ROIC (19.6% of NOPAT)
    USD -1.4bn
    Capitalised
    USD 5.9bn
    ROIC (reported)
    12.7%
    Terminal value, undiscounted
    USD 94.0bn
    Terminal value, discounted
    USD 64.0bn
    Enterprise value
    USD 86.7bn
    Less net debt
    USD 7.4bn
    Equity value
    USD 79.3bn

    Exit at 11.0x EBITDA

    Value per shareUSD 70.60

    79% of EV

    Terminal value, undiscounted
    USD 126.7bn
    Terminal value, discounted
    USD 86.2bn
    Enterprise value
    USD 108.9bn
    Less net debt
    USD 7.4bn
    Equity value
    USD 101.5bn

    Spread between methods: 25%.

    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%
    6.92%73.7077.3181.7187.1894.22
    7.92%61.4463.5365.9868.9072.44
    8.92%52.5053.7455.1556.7858.69
    9.92%45.6846.4247.2448.1649.20
    10.92%40.3140.7441.2041.7142.27

    Outlined: this model. Green text: above today's price of 51.12. 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 year8.3%6.6%-1.7pp
    EBIT margin16.0%14.9%-1.1pp
    Discount rate8.9%9.4%+0.5pp
    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.