DCF Studio

    TFC · NYQ · Financial Services

    Truist Financial Corporation

    Also onConsensus Drift

    Implied value per share

    USD 9.61

    Market price

    USD 48.56

    Implied upside

    -80.2%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReported capital expenditure averages just 0.71% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 3.67% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 9.61-80.2%
    Exit multiple
    USD 17.15-64.7%
    Market price
    USD 48.56

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 20.4bnUSD 20.6bnUSD 20.7bnUSD 20.8bnUSD 20.9bn+0.6%
    EBITUSD 3.0bnUSD 3.0bnUSD 3.0bnUSD 3.0bnUSD 3.0bn+0.6%
    NOPATUSD 2.5bnUSD 2.5bnUSD 2.5bnUSD 2.5bnUSD 2.5bn+0.6%
    Add depreciation & amortisationUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bn+0.6%
    Less capital expenditureUSD -749.2mUSD -753.5mUSD -757.9mUSD -762.2mUSD -766.6m+0.6%
    Less increase in working capitalUSD 116.7mUSD 117.3mUSD 118.0mUSD 118.7mUSD 119.4m-0.6%
    Free cashflow to firmUSD 3.1bnUSD 3.1bnUSD 3.1bnUSD 3.1bnUSD 3.1bn+0.6%
    Discount factor0.96310.89330.82860.76860.7129-
    Present valueUSD 3.0bnUSD 2.8bnUSD 2.6bnUSD 2.4bnUSD 2.2bn-6.7%
    Present Value Of The ForecastUSD 12.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.908Reported 0.862, pulled toward 1.0 (Blume)
    Cost of equity9.99%Risk-free + beta x equity risk premium
    Cost of debt7.00%Implied cost of debt of 17.3% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationUSD 59.3bn48.0% of capital
    Total debtUSD 64.3bn52.0% of capital, book value as a proxy
    Tax rate17.1%Effective, capped at statutory
    WACC7.81%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 9.61

    68% of EV

    Forecast FCFF, final year
    USD 3.1bn
    Capex at depreciation, working capital in reinvestment
    USD 2.9bn
    Less reinvestment at g/ROIC (32.0% of NOPAT)
    USD -940.7m
    Capitalised
    USD 2.0bn
    ROIC (WACC floor)
    7.8%
    Terminal value, undiscounted
    USD 38.6bn
    Terminal value, discounted
    USD 27.5bn
    Enterprise value
    USD 40.4bn
    Less net debt
    USD 27.9bn
    Equity value
    USD 12.5bn

    Exit at 12.1x EBITDA

    Value per shareUSD 17.15

    74% of EV

    Terminal value, undiscounted
    USD 52.4bn
    Terminal value, discounted
    USD 37.3bn
    Enterprise value
    USD 50.3bn
    Less net debt
    USD 27.9bn
    Equity value
    USD 22.3bn

    Spread between methods: 56%.

    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%
    5.81%19.5219.6719.8219.9720.12
    6.81%13.7213.8413.9614.0914.21
    7.81%9.409.509.619.719.81
    8.81%6.066.156.246.326.41
    9.81%3.403.483.553.633.70

    Outlined: this model. Green text: above today's price of 48.56. 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 year0.6%15.5%+14.9pp
    EBIT margin14.5%36.3%+21.7pp
    Discount rate7.8%4.0%-3.8pp
    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.