DCF Studio

    SWK · NYQ · Industrials

    Stanley Black & Decker, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 29.50

    Market price

    USD 89.58

    Implied upside

    -67.1%

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

    Value Per Share

    Perpetuity growth
    USD 29.50-67.1%
    Exit multiple
    USD 49.05-45.2%
    Market price
    USD 89.58

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 14.6bnUSD 14.0bnUSD 13.5bnUSD 13.0bnUSD 12.5bn-3.7%
    EBITUSD 926.9mUSD 892.5mUSD 859.4mUSD 827.5mUSD 796.8m-3.7%
    NOPATUSD 891.4mUSD 858.4mUSD 826.5mUSD 795.9mUSD 766.3m-3.7%
    Add depreciation & amortisationUSD 530.3mUSD 510.7mUSD 491.7mUSD 473.5mUSD 455.9m-3.7%
    Less capital expenditureUSD -344.2mUSD -331.5mUSD -319.2mUSD -307.3mUSD -295.9m-3.7%
    Less increase in working capitalUSD 100.5mUSD 96.8mUSD 93.2mUSD 89.8mUSD 86.4m+3.7%
    Free cashflow to firmUSD 1.2bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.0bn-3.7%
    Discount factor0.95260.86430.78420.71160.6457-
    Present valueUSD 1.1bnUSD 980.4mUSD 856.6mUSD 748.4mUSD 653.9m-12.6%
    Present Value Of The ForecastUSD 4.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.116Reported 1.173, pulled toward 1.0 (Blume)
    Cost of equity11.14%Risk-free + beta x equity risk premium
    Cost of debt8.45%Interest expense / average total debt
    Market capitalisationUSD 13.5bn69.3% of capital
    Total debtUSD 6.0bn30.7% of capital, book value as a proxy
    Tax rate3.8%Effective, capped at statutory
    WACC10.21%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 29.50

    57% of EV

    Forecast FCFF, final year
    USD 1.0bn
    Capex at depreciation, working capital in reinvestment
    USD 900.3m
    Less reinvestment at g/ROIC (24.5% of NOPAT)
    USD -220.4m
    Capitalised
    USD 679.8m
    ROIC (WACC floor)
    10.2%
    Terminal value, undiscounted
    USD 9.0bn
    Terminal value, discounted
    USD 5.8bn
    Enterprise value
    USD 10.2bn
    Less net debt
    USD 5.7bn
    Equity value
    USD 4.5bn

    Exit at 10.9x EBITDA

    Value per shareUSD 49.05

    67% of EV

    Terminal value, undiscounted
    USD 13.6bn
    Terminal value, discounted
    USD 8.8bn
    Enterprise value
    USD 13.2bn
    Less net debt
    USD 5.7bn
    Equity value
    USD 7.5bn

    Spread between methods: 50%.

    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%
    8.21%43.6743.9244.1744.4344.68
    9.21%35.6135.8336.0536.2636.48
    10.21%29.1229.3129.5029.6929.87
    11.21%23.7823.9424.1124.2724.43
    12.21%19.3019.4419.5919.7319.88

    Outlined: this model. Green text: above today's price of 89.58. 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 year-3.7%15.9%+19.6pp
    EBIT margin6.4%13.4%+7.0pp
    Discount rate10.2%5.5%-4.7pp
    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.