DCF Studio

    VLTO · NYQ · Industrials

    Veralto Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 62.80

    Market price

    USD 94.49

    Implied upside

    -33.5%

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

    AdjustedReported capital expenditure averages just 0.99% 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 1.00% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 62.80-33.5%
    Exit multiple
    USD 94.05-0.5%
    Market price
    USD 94.49

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 5.7bnUSD 6.0bnUSD 6.2bnUSD 6.5bnUSD 6.7bn+4.2%
    EBITUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.6bn+4.2%
    NOPATUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bn+4.2%
    Add depreciation & amortisationUSD 93.1mUSD 97.0mUSD 101.1mUSD 105.3mUSD 109.6m+4.2%
    Less capital expenditureUSD -57.3mUSD -59.7mUSD -62.2mUSD -64.8mUSD -67.5m+4.2%
    Less increase in working capitalUSD -50.0mUSD -52.1mUSD -54.2mUSD -56.5mUSD -58.8m+4.2%
    Free cashflow to firmUSD 1.0bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bn+4.2%
    Discount factor0.95790.87900.80650.74010.6791-
    Present valueUSD 984.1mUSD 940.6mUSD 898.9mUSD 859.1mUSD 821.1m-4.4%
    Present Value Of The ForecastUSD 4.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.839Reported 0.759, pulled toward 1.0 (Blume)
    Cost of equity9.61%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 23.0bn88.9% of capital
    Total debtUSD 2.9bn11.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.98%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 62.80

    73% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 1.3bn
    Less reinvestment at g/ROIC (11.6% of NOPAT)
    USD -147.7m
    Capitalised
    USD 1.1bn
    ROIC (reported)
    21.5%
    Terminal value, undiscounted
    USD 17.8bn
    Terminal value, discounted
    USD 12.1bn
    Enterprise value
    USD 16.6bn
    Less net debt
    USD 848.0m
    Equity value
    USD 15.7bn

    Exit at 17.6x EBITDA

    Value per shareUSD 94.05

    82% of EV

    Terminal value, undiscounted
    USD 29.3bn
    Terminal value, discounted
    USD 19.9bn
    Enterprise value
    USD 24.4bn
    Less net debt
    USD 848.0m
    Equity value
    USD 23.5bn

    Spread between methods: 40%.

    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%
    6.98%79.9985.0491.1998.87108.72
    7.98%67.3770.6074.4178.9684.51
    8.98%58.1260.3062.7965.7069.12
    9.98%51.0552.5754.2856.2358.46
    10.98%45.4846.5647.7749.1250.64

    Outlined: this model. Green text: above today's price of 94.49. 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 year4.2%14.3%+10.1pp
    EBIT margin23.0%34.3%+11.3pp
    Discount rate9.0%6.8%-2.2pp
    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.