DCF Studio

    VOLV-B.ST · STO · Industrials

    AB Volvo (publ)

    Also onConsensus Drift

    Implied value per share

    SEK 206.29

    Market price

    SEK 333.00

    Implied upside

    -38.1%

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

    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    SEK 206.29-38.1%
    Exit multiple
    SEK 325.36-2.3%
    Market price
    SEK 333.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (SEK). Outflows negative.

    0bn22bn44bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todaySEK
    LineFY26FY27FY28FY29FY30CAGR
    RevenueSEK 481.1bnSEK 483.0bnSEK 485.0bnSEK 486.9bnSEK 488.8bn+0.4%
    EBITSEK 58.5bnSEK 58.7bnSEK 59.0bnSEK 59.2bnSEK 59.4bn+0.4%
    NOPATSEK 43.9bnSEK 44.0bnSEK 44.2bnSEK 44.4bnSEK 44.6bn+0.4%
    Add depreciation & amortisationSEK 20.3bnSEK 20.4bnSEK 20.5bnSEK 20.5bnSEK 20.6bn+0.4%
    Less capital expenditureSEK -21.3bnSEK -21.4bnSEK -21.5bnSEK -21.6bnSEK -21.7bn+0.4%
    Less increase in working capitalSEK 687.7mSEK 690.5mSEK 693.2mSEK 696.0mSEK 698.8m-0.4%
    Free cashflow to firmSEK 43.5bnSEK 43.7bnSEK 43.9bnSEK 44.1bnSEK 44.2bn+0.4%
    Discount factor0.95960.88360.81360.74910.6898-
    Present valueSEK 41.8bnSEK 38.6bnSEK 35.7bnSEK 33.0bnSEK 30.5bn-7.6%
    Present Value Of The ForecastSEK 179.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.983Reported 0.975, pulled toward 1.0 (Blume)
    Cost of equity10.59%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationSEK 677.1bn73.3% of capital
    Total debtSEK 247.0bn26.7% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC8.60%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 shareSEK 206.29

    70% of EV

    Forecast FCFF, final year
    SEK 44.2bn
    Capex at depreciation, working capital in reinvestment
    SEK 47.1bn
    Less reinvestment at g/ROIC (22.6% of NOPAT)
    SEK -10.7bn
    Capitalised
    SEK 36.4bn
    ROIC (reported)
    11.0%
    Terminal value, undiscounted
    SEK 611.6bn
    Terminal value, discounted
    SEK 421.9bn
    Enterprise value
    SEK 601.5bn
    Less net debt
    SEK 182.1bn
    Equity value
    SEK 419.4bn

    Exit at 12.0x EBITDA

    Value per shareSEK 325.36

    79% of EV

    Terminal value, undiscounted
    SEK 962.5bn
    Terminal value, discounted
    SEK 663.9bn
    Enterprise value
    SEK 843.6bn
    Less net debt
    SEK 182.1bn
    Equity value
    SEK 661.5bn

    Spread between methods: 45%.

    Sensitivity

    Value per share (SEK) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.60%301.24317.86338.35364.30398.37
    7.60%240.04248.94259.45272.08287.60
    8.60%196.01200.82206.29212.61220.03
    9.60%162.82165.28168.00171.02174.43
    10.60%136.88137.95139.08140.27141.53

    Outlined: this model. Green text: above today's price of 333.00. 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 year0.4%7.2%+6.8pp
    EBIT margin12.2%17.6%+5.4pp
    Discount rate8.6%6.7%-1.9pp
    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.