DCF Studio

    SMIN.L · LSE · Industrials

    Smiths Group plc

    Also onConsensus Drift

    Implied value per share

    GBp 1301.95

    Market price

    GBp 2537.00

    Implied upside

    -48.7%

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

    AdjustedOnly 3 year(s) of history available to anchor assumptions on.
    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 1301.95-48.7%
    Exit multiple
    GBp 1689.38-33.4%
    Market price
    GBp 2537.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m192m384mFY25FY26FY27FY28FY29
    Nominal FCFFDiscounted to todayGBP
    LineFY25FY26FY27FY28FY29CAGR
    RevenueGBP 2.9bnGBP 3.0bnGBP 3.1bnGBP 3.3bnGBP 3.4bn+4.0%
    EBITGBP 382.0mGBP 397.4mGBP 413.5mGBP 430.3mGBP 447.7m+4.0%
    NOPATGBP 286.5mGBP 298.1mGBP 310.2mGBP 322.7mGBP 335.8m+4.0%
    Add depreciation & amortisationGBP 138.1mGBP 143.7mGBP 149.5mGBP 155.6mGBP 161.8m+4.0%
    Less capital expenditureGBP -88.6mGBP -92.2mGBP -95.9mGBP -99.8mGBP -103.8m+4.0%
    Less increase in working capitalGBP -8.3mGBP -8.7mGBP -9.0mGBP -9.4mGBP -9.8m+4.0%
    Free cashflow to firmGBP 327.7mGBP 341.0mGBP 354.8mGBP 369.1mGBP 384.1m+4.0%
    Discount factor0.95800.87910.80680.74040.6795-
    Present valueGBP 313.9mGBP 299.7mGBP 286.2mGBP 273.3mGBP 261.0m-4.5%
    Present Value Of The ForecastGBP 1.4bn

    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
    Beta0.824Reported 0.738, pulled toward 1.0 (Blume)
    Cost of equity9.03%Risk-free + beta x equity risk premium
    Cost of debt10.97%Interest expense / average total debt
    Market capitalisationGBP 7.2bn91.6% of capital
    Total debtGBP 659.0m8.4% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.97%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 13.02

    70% of EV

    Forecast FCFF, final year
    GBP 384.1m
    Capex at depreciation, working capital in reinvestment
    GBP 390.0m
    Less reinvestment at g/ROIC (21.7% of NOPAT)
    GBP -84.8m
    Capitalised
    GBP 305.2m
    ROIC (reported)
    11.5%
    Terminal value, undiscounted
    GBP 4.8bn
    Terminal value, discounted
    GBP 3.3bn
    Enterprise value
    GBP 4.7bn
    Less net debt
    GBP 200.0m
    Equity value
    GBP 4.5bn

    Exit at 11.2x EBITDA

    Value per shareGBP 16.89

    76% of EV

    Terminal value, undiscounted
    GBP 6.8bn
    Terminal value, discounted
    GBP 4.6bn
    Enterprise value
    GBP 6.1bn
    Less net debt
    GBP 200.0m
    Equity value
    GBP 5.9bn

    Spread between methods: 26%.

    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%
    6.97%17.1317.8118.6419.6620.97
    7.97%14.5014.8815.3215.8416.47
    8.97%12.5712.7813.0213.2913.60
    9.97%11.1011.2111.3311.4711.62
    10.97%9.939.9910.0410.1010.16

    Outlined: this model. Green text: above today's price of 25.37. 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%20.8%+16.8pp
    EBIT margin13.2%27.1%+13.9pp
    Discount rate9.0%5.8%-3.2pp
    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.