DCF Studio

    VRSK · NMS · Industrials

    Verisk Analytics, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 155.75

    Market price

    USD 175.41

    Implied upside

    -11.2%

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

    Value Per Share

    Perpetuity growth
    USD 155.75-11.2%
    Exit multiple
    USD 212.21+21.0%
    Market price
    USD 175.41

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.3bnUSD 3.5bnUSD 3.8bnUSD 4.1bnUSD 4.3bn+7.2%
    EBITUSD 1.5bnUSD 1.6bnUSD 1.8bnUSD 1.9bnUSD 2.0bn+7.2%
    NOPATUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bn+7.2%
    Add depreciation & amortisationUSD 373.4mUSD 400.1mUSD 428.8mUSD 459.5mUSD 492.4m+7.2%
    Less capital expenditureUSD -290.5mUSD -311.3mUSD -333.6mUSD -357.5mUSD -383.1m+7.2%
    Less increase in working capitalUSD -87.6mUSD -93.8mUSD -100.6mUSD -107.8mUSD -115.5m+7.2%
    Free cashflow to firmUSD 1.2bnUSD 1.3bnUSD 1.4bnUSD 1.5bnUSD 1.6bn+7.2%
    Discount factor0.96080.88710.81900.75610.6981-
    Present valueUSD 1.2bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bn-1.1%
    Present Value Of The ForecastUSD 5.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.774Reported 0.662, pulled toward 1.0 (Blume)
    Cost of equity9.25%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 22.8bn82.3% of capital
    Total debtUSD 4.9bn17.7% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.32%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 155.75

    77% of EV

    Forecast FCFF, final year
    USD 1.6bn
    Capex at depreciation, working capital in reinvestment
    USD 1.7bn
    Less reinvestment at g/ROIC (10.1% of NOPAT)
    USD -172.1m
    Capitalised
    USD 1.5bn
    ROIC (reported)
    24.8%
    Terminal value, undiscounted
    USD 27.0bn
    Terminal value, discounted
    USD 18.9bn
    Enterprise value
    USD 24.5bn
    Less net debt
    USD 2.7bn
    Equity value
    USD 21.8bn

    Exit at 15.3x EBITDA

    Value per shareUSD 212.21

    83% of EV

    Terminal value, undiscounted
    USD 38.4bn
    Terminal value, discounted
    USD 26.8bn
    Enterprise value
    USD 32.4bn
    Less net debt
    USD 2.7bn
    Equity value
    USD 29.7bn

    Spread between methods: 31%.

    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%
    6.32%206.03223.85246.29275.45314.89
    7.32%167.30178.33191.62207.93228.49
    8.32%139.96147.24155.75165.82177.95
    9.32%119.62124.65130.40137.04144.78
    10.32%103.91107.51111.55116.12121.34

    Outlined: this model. Green text: above today's price of 175.41. 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 year7.2%9.8%+2.7pp
    EBIT margin46.4%51.9%+5.5pp
    Discount rate8.3%7.7%-0.6pp
    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.