DCF Studio

    SNA · NYQ · Industrials

    Snap-on Incorporated

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 282.53

    Market price

    USD 372.15

    Implied upside

    -24.1%

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

    Value Per Share

    Perpetuity growth
    USD 282.53-24.1%
    Exit multiple
    USD 351.25-5.6%
    Market price
    USD 372.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 5.3bnUSD 5.4bnUSD 5.5bnUSD 5.6bnUSD 5.7bn+2.1%
    EBITUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.5bn+2.1%
    NOPATUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.2bn+2.1%
    Add depreciation & amortisationUSD 103.2mUSD 105.4mUSD 107.6mUSD 109.9mUSD 112.2m+2.1%
    Less capital expenditureUSD -88.3mUSD -90.1mUSD -92.1mUSD -94.0mUSD -96.0m+2.1%
    Less increase in working capitalUSD -109.0mUSD -111.3mUSD -113.6mUSD -116.0mUSD -118.5m+2.1%
    Free cashflow to firmUSD 973.6mUSD 994.2mUSD 1.0bnUSD 1.0bnUSD 1.1bn+2.1%
    Discount factor0.95740.87760.80450.73740.6760-
    Present valueUSD 932.2mUSD 872.5mUSD 816.7mUSD 764.5mUSD 715.6m-6.4%
    Present Value Of The ForecastUSD 4.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.807Reported 0.712, pulled toward 1.0 (Blume)
    Cost of equity9.44%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 19.3bn93.7% of capital
    Total debtUSD 1.3bn6.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.09%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 282.53

    72% of EV

    Forecast FCFF, final year
    USD 1.1bn
    Capex at depreciation, working capital in reinvestment
    USD 1.2bn
    Less reinvestment at g/ROIC (15.3% of NOPAT)
    USD -181.4m
    Capitalised
    USD 1.0bn
    ROIC (reported)
    16.3%
    Terminal value, undiscounted
    USD 15.6bn
    Terminal value, discounted
    USD 10.5bn
    Enterprise value
    USD 14.6bn
    Less net debt
    USD -332.6m
    Equity value
    USD 15.0bn

    Exit at 13.3x EBITDA

    Value per shareUSD 351.25

    78% of EV

    Terminal value, undiscounted
    USD 21.0bn
    Terminal value, discounted
    USD 14.2bn
    Enterprise value
    USD 18.3bn
    Less net debt
    USD -332.6m
    Equity value
    USD 18.6bn

    Spread between methods: 22%.

    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%
    7.09%357.72375.67397.43424.38458.69
    8.09%305.49316.65329.72345.27364.09
    9.09%267.02274.26282.53292.07303.24
    10.09%237.51242.34247.74253.83260.79
    11.09%214.16217.43221.02225.01229.46

    Outlined: this model. Green text: above today's price of 372.15. 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 year2.1%11.6%+9.5pp
    EBIT margin25.7%33.9%+8.2pp
    Discount rate9.1%7.4%-1.7pp
    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.