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    VMC · NYQ · Basic Materials

    Vulcan Materials Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 65.79

    Market price

    USD 240.83

    Implied upside

    -72.7%

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

    Value Per Share

    Perpetuity growth
    USD 65.79-72.7%
    Exit multiple
    USD 178.31-26.0%
    Market price
    USD 240.83

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 8.2bnUSD 8.4bnUSD 8.6bnUSD 8.9bnUSD 9.1bn+2.8%
    EBITUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bnUSD 1.6bn+2.8%
    NOPATUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bn+2.8%
    Add depreciation & amortisationUSD 606.4mUSD 623.2mUSD 640.5mUSD 658.3mUSD 676.5m+2.8%
    Less capital expenditureUSD -739.8mUSD -760.3mUSD -781.4mUSD -803.1mUSD -825.4m+2.8%
    Less increase in working capitalUSD -22.3mUSD -22.9mUSD -23.6mUSD -24.2mUSD -24.9m+2.8%
    Free cashflow to firmUSD 974.3mUSD 1.0bnUSD 1.0bnUSD 1.1bnUSD 1.1bn+2.8%
    Discount factor0.95440.86930.79190.72130.6570-
    Present valueUSD 929.8mUSD 870.5mUSD 814.9mUSD 762.9mUSD 714.2m-6.4%
    Present Value Of The ForecastUSD 4.1bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.036Reported 1.054, pulled toward 1.0 (Blume)
    Cost of equity10.70%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 31.2bn86.5% of capital
    Total debtUSD 4.9bn13.5% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.78%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 65.79

    70% of EV

    Forecast FCFF, final year
    USD 1.1bn
    Capex at depreciation, working capital in reinvestment
    USD 1.4bn
    Less reinvestment at g/ROIC (25.6% of NOPAT)
    USD -346.7m
    Capitalised
    USD 1.0bn
    ROIC (WACC floor)
    9.8%
    Terminal value, undiscounted
    USD 14.2bn
    Terminal value, discounted
    USD 9.3bn
    Enterprise value
    USD 13.4bn
    Less net debt
    USD 4.7bn
    Equity value
    USD 8.7bn

    Exit at 16.3x EBITDA

    Value per shareUSD 178.31

    86% of EV

    Terminal value, undiscounted
    USD 36.9bn
    Terminal value, discounted
    USD 24.3bn
    Enterprise value
    USD 28.4bn
    Less net debt
    USD 4.7bn
    Equity value
    USD 23.7bn

    Spread between methods: 92%.

    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%
    7.78%94.8296.6098.63101.01103.85
    8.78%77.2177.7178.2378.7879.35
    9.78%65.1065.4465.7966.1366.47
    10.78%55.4655.7556.0556.3556.65
    11.78%47.4747.7448.0048.2648.53

    Outlined: this model. Green text: above today's price of 240.83. 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 year2.8%29.5%+26.8pp
    EBIT margin17.5%47.9%+30.3pp
    Discount rate9.8%5.0%-4.8pp
    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.