DCF Studio

    TPR · NYQ · Consumer Cyclical

    Tapestry, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 76.65

    Market price

    USD 115.00

    Implied upside

    -33.3%

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

    Value Per Share

    Perpetuity growth
    USD 76.65-33.3%
    Exit multiple
    USD 105.33-8.4%
    Market price
    USD 115.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 8.5bnUSD 9.0bnUSD 9.6bnUSD 10.2bnUSD 10.9bn+6.3%
    EBITUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 2.0bnUSD 2.1bn+6.3%
    NOPATUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bnUSD 1.7bn+6.3%
    Add depreciation & amortisationUSD 270.6mUSD 287.7mUSD 305.9mUSD 325.2mUSD 345.7m+6.3%
    Less capital expenditureUSD -174.9mUSD -186.0mUSD -197.7mUSD -210.2mUSD -223.5m+6.3%
    Less increase in working capitalUSD 60.6mUSD 64.5mUSD 68.5mUSD 72.9mUSD 77.5m-6.3%
    Free cashflow to firmUSD 1.5bnUSD 1.6bnUSD 1.7bnUSD 1.8bnUSD 1.9bn+6.3%
    Discount factor0.94950.85610.77180.69590.6274-
    Present valueUSD 1.4bnUSD 1.4bnUSD 1.3bnUSD 1.2bnUSD 1.2bn-4.1%
    Present Value Of The ForecastUSD 6.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.289Reported 1.432, pulled toward 1.0 (Blume)
    Cost of equity12.09%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 22.9bn85.3% of capital
    Total debtUSD 4.0bn14.7% of capital, book value as a proxy
    Tax rate18.0%Effective, capped at statutory
    WACC10.91%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 76.65

    65% of EV

    Forecast FCFF, final year
    USD 1.9bn
    Capex at depreciation, working capital in reinvestment
    USD 1.8bn
    Less reinvestment at g/ROIC (8.9% of NOPAT)
    USD -157.5m
    Capitalised
    USD 1.6bn
    ROIC (reported)
    28.2%
    Terminal value, undiscounted
    USD 19.7bn
    Terminal value, discounted
    USD 12.4bn
    Enterprise value
    USD 18.9bn
    Less net debt
    USD 2.8bn
    Equity value
    USD 16.1bn

    Exit at 12.1x EBITDA

    Value per shareUSD 105.33

    74% of EV

    Terminal value, undiscounted
    USD 29.3bn
    Terminal value, discounted
    USD 18.4bn
    Enterprise value
    USD 24.9bn
    Less net debt
    USD 2.8bn
    Equity value
    USD 22.1bn

    Spread between methods: 32%.

    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%
    8.91%93.7998.07103.01108.77115.57
    9.91%81.5584.6188.0692.0096.54
    10.91%71.9174.1576.6579.4582.62
    11.91%64.1065.7967.6469.7071.98
    12.91%57.6658.9560.3661.8963.59

    Outlined: this model. Green text: above today's price of 115.00. 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 year6.3%15.0%+8.7pp
    EBIT margin19.2%27.9%+8.7pp
    Discount rate10.9%8.3%-2.6pp
    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.