DCF Studio

    UBSG.SW · EBS · Financial Services

    UBS Group AG

    Also onConsensus Drift

    Implied value per share

    CHF 71.31

    Market price

    CHF 41.55

    Implied upside

    +71.6%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 0.8218

    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.
    AdjustedReports in USD, trades in CHF. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: CHF assumption - no free live source available for this market.

    Current EV/EBITDA of 20.4x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    CHF 71.31+71.6%
    Exit multiple
    CHF 129.77+212.3%
    Market price
    CHF 41.55

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn18bn36bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 53.2bnUSD 59.8bnUSD 67.2bnUSD 75.6bnUSD 85.0bn+12.4%
    EBITUSD 17.5bnUSD 19.6bnUSD 22.1bnUSD 24.8bnUSD 27.9bn+12.4%
    NOPATUSD 14.8bnUSD 16.7bnUSD 18.8bnUSD 21.1bnUSD 23.7bn+12.4%
    Add depreciation & amortisationUSD 4.1bnUSD 4.7bnUSD 5.2bnUSD 5.9bnUSD 6.6bn+12.4%
    Less capital expenditureUSD -2.5bnUSD -2.8bnUSD -3.1bnUSD -3.5bnUSD -3.9bn+12.4%
    Less increase in working capitalUSD 5.9bnUSD 6.6bnUSD 7.4bnUSD 8.4bnUSD 9.4bn-12.4%
    Free cashflow to firmUSD 22.4bnUSD 25.2bnUSD 28.3bnUSD 31.9bnUSD 35.8bn+12.4%
    Discount factor0.96960.91150.85690.80550.7572-
    Present valueUSD 21.7bnUSD 23.0bnUSD 24.3bnUSD 25.7bnUSD 27.1bn+5.7%
    Present Value Of The ForecastUSD 121.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate0.50%CHF assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.887Reported 0.832, pulled toward 1.0 (Blume)
    Cost of equity5.38%Risk-free + beta x equity risk premium
    Cost of debt7.94%Interest expense / average total debt
    Market capitalisationUSD 127.2bn27.5% of capital
    Total debtUSD 336.0bn72.5% of capital, book value as a proxy
    Tax rate15.0%Effective, capped at statutory
    WACC6.37%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 86.77

    70% of EV

    Forecast FCFF, final year
    USD 35.8bn
    Capex at depreciation, working capital in reinvestment
    USD 23.7bn
    Less reinvestment at g/ROIC (39.2% of NOPAT)
    USD -9.3bn
    Capitalised
    USD 14.4bn
    ROIC (WACC floor)
    6.4%
    Terminal value, undiscounted
    USD 381.4bn
    Terminal value, discounted
    USD 288.8bn
    Enterprise value
    USD 410.5bn
    Less net debt
    USD 125.0bn
    Equity value
    USD 285.5bn

    Exit at 20.0x EBITDA

    Value per shareUSD 157.90

    81% of EV

    Terminal value, undiscounted
    USD 690.4bn
    Terminal value, discounted
    USD 522.8bn
    Enterprise value
    USD 644.6bn
    Less net debt
    USD 125.0bn
    Equity value
    USD 519.5bn

    Spread between methods: 58%.

    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%
    4.37%138.84139.52140.20140.88141.55
    5.37%107.49108.02108.55109.08109.61
    6.37%85.9286.3486.7787.2087.63
    7.37%70.1470.5070.8571.2171.56
    8.37%58.1058.4058.6958.9959.29

    Outlined: this model. Green text: above today's price of 50.56. 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 year12.4%5.2%-7.3pp
    EBIT margin32.8%22.2%-10.6pp
    Discount rate6.4%9.2%+2.8pp
    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.