DCF Studio

    TECK-B.TO · TOR · Basic Materials

    Teck Resources Limited

    Also onConsensus Drift

    Implied value per share

    CAD -6.08

    Market price

    CAD 91.70

    Implied upside

    -106.6%

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

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 36.7% of revenue against depreciation of 14.8%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD -6.08-106.6%
    Exit multiple
    CAD 15.97-82.6%
    Market price
    CAD 91.70

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    -743458173-3717290870FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 9.2bnCAD 7.8bnCAD 6.7bnCAD 5.7bnCAD 4.9bn-14.7%
    EBITCAD 1.5bnCAD 1.3bnCAD 1.1bnCAD 925.9mCAD 790.0m-14.7%
    NOPATCAD 1.1bnCAD 934.8mCAD 797.6mCAD 680.5mCAD 580.6m-14.7%
    Add depreciation & amortisationCAD 1.4bnCAD 1.2bnCAD 990.9mCAD 845.5mCAD 721.4m-14.7%
    Less capital expenditureCAD -3.4bnCAD -2.9bnCAD -2.5bnCAD -2.1bnCAD -1.8bn-14.7%
    Less increase in working capitalCAD 168.3mCAD 143.6mCAD 122.5mCAD 104.5mCAD 89.2m+14.7%
    Free cashflow to firmCAD -743.5mCAD -634.3mCAD -541.2mCAD -461.8mCAD -394.0m+14.7%
    Discount factor0.95330.86630.78720.71540.6501-
    Present valueCAD -708.7mCAD -549.5mCAD -426.1mCAD -330.4mCAD -256.1m+22.5%
    Present Value Of The ForecastCAD -2.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.404Reported 1.603, pulled toward 1.0 (Blume)
    Cost of equity11.02%Risk-free + beta x equity risk premium
    Cost of debt7.43%Interest expense / average total debt
    Market capitalisationCAD 45.0bn82.4% of capital
    Total debtCAD 9.6bn17.6% of capital, book value as a proxy
    Tax rate26.5%Effective, capped at statutory
    WACC10.04%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 shareCAD -6.08

    244% of EV

    Forecast FCFF, final year
    CAD -394.0m
    Capex at depreciation, working capital in reinvestment
    CAD 580.6m
    Less reinvestment at g/ROIC (24.9% of NOPAT)
    CAD -144.5m
    Capitalised
    CAD 436.1m
    ROIC (WACC floor)
    10.0%
    Terminal value, undiscounted
    CAD 5.9bn
    Terminal value, discounted
    CAD 3.9bn
    Enterprise value
    CAD 1.6bn
    Less net debt
    CAD 4.6bn
    Equity value
    CAD -3.0bn

    Exit at 15.0x EBITDA

    Value per shareCAD 15.97

    118% of EV

    Terminal value, undiscounted
    CAD 22.7bn
    Terminal value, discounted
    CAD 14.8bn
    Enterprise value
    CAD 12.5bn
    Less net debt
    CAD 4.6bn
    Equity value
    CAD 7.9bn

    Sensitivity

    Value per share (CAD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.04%-3.59-3.54-3.49-3.44-3.38
    9.04%-5.03-4.99-4.95-4.90-4.86
    10.04%-6.16-6.12-6.08-6.05-6.01
    11.04%-7.05-7.02-6.99-6.95-6.92
    12.04%-7.78-7.75-7.72-7.69-7.66

    Outlined: this model. Green text: above today's price of 91.70. 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-14.7%53.9%+68.6pp
    Discount rate10.0%2.6%-7.4pp
    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.