DCF Studio

    SW · NYQ · Consumer Cyclical

    Smurfit Westrock Plc

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 201.80

    Market price

    USD 44.33

    Implied upside

    +355.2%

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

    Value Per Share

    Perpetuity growth
    USD 201.80+355.2%
    Exit multiple
    USD 218.65+393.2%
    Market price
    USD 44.33

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn4bn8bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 41.2bnUSD 54.5bnUSD 72.0bnUSD 95.1bnUSD 125.7bn+32.2%
    EBITUSD 4.0bnUSD 5.3bnUSD 7.0bnUSD 9.3bnUSD 12.3bn+32.2%
    NOPATUSD 3.2bnUSD 4.2bnUSD 5.6bnUSD 7.3bnUSD 9.7bn+32.2%
    Add depreciation & amortisationUSD 2.7bnUSD 3.5bnUSD 4.7bnUSD 6.2bnUSD 8.1bn+32.2%
    Less capital expenditureUSD -2.9bnUSD -3.9bnUSD -5.1bnUSD -6.8bnUSD -9.0bn+32.2%
    Less increase in working capitalUSD -388.1mUSD -512.8mUSD -677.7mUSD -895.7mUSD -1.2bn+32.2%
    Free cashflow to firmUSD 2.5bnUSD 3.3bnUSD 4.4bnUSD 5.8bnUSD 7.7bn+32.2%
    Discount factor0.96120.88800.82050.75800.7003-
    Present valueUSD 2.4bnUSD 3.0bnUSD 3.6bnUSD 4.4bnUSD 5.4bn+22.1%
    Present Value Of The ForecastUSD 18.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.954Reported 0.931, pulled toward 1.0 (Blume)
    Cost of equity10.24%Risk-free + beta x equity risk premium
    Cost of debt6.14%Interest expense / average total debt
    Market capitalisationUSD 23.3bn62.8% of capital
    Total debtUSD 13.8bn37.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.24%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 201.80

    84% of EV

    Forecast FCFF, final year
    USD 7.7bn
    Capex at depreciation, working capital in reinvestment
    USD 11.2bn
    Less reinvestment at g/ROIC (28.9% of NOPAT)
    USD -3.2bn
    Capitalised
    USD 8.0bn
    ROIC (reported)
    8.6%
    Terminal value, undiscounted
    USD 142.0bn
    Terminal value, discounted
    USD 99.5bn
    Enterprise value
    USD 118.3bn
    Less net debt
    USD 12.9bn
    Equity value
    USD 105.4bn

    Exit at 7.6x EBITDA

    Value per shareUSD 218.65

    85% of EV

    Terminal value, undiscounted
    USD 154.6bn
    Terminal value, discounted
    USD 108.3bn
    Enterprise value
    USD 127.1bn
    Less net debt
    USD 12.9bn
    Equity value
    USD 114.2bn

    Spread between methods: 8%.

    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%
    6.24%302.18315.15331.34352.24380.43
    7.24%240.96246.42252.83260.54270.08
    8.24%198.08199.86201.80203.95206.37
    9.24%168.50169.28170.06170.84171.62
    10.24%146.42147.10147.77148.45149.12

    Outlined: this model. Green text: above today's price of 44.33. 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 year32.2%1.5%-30.6pp
    EBIT margin9.8%2.5%-7.3pp
    Discount rate8.2%21.4%+13.2pp
    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.