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    VRT · NYQ · Industrials

    Vertiv Holdings Co

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 57.38

    Market price

    USD 249.39

    Implied upside

    -77.0%

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

    Current EV/EBITDA of 44.2x 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
    USD 57.38-77.0%
    Exit multiple
    USD 152.62-38.8%
    Market price
    USD 249.39

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 12.4bnUSD 15.1bnUSD 18.4bnUSD 22.4bnUSD 27.2bn+21.6%
    EBITUSD 1.7bnUSD 2.0bnUSD 2.4bnUSD 3.0bnUSD 3.6bn+21.6%
    NOPATUSD 1.3bnUSD 1.6bnUSD 1.9bnUSD 2.3bnUSD 2.9bn+21.6%
    Add depreciation & amortisationUSD 489.3mUSD 594.9mUSD 723.3mUSD 879.5mUSD 1.1bn+21.6%
    Less capital expenditureUSD -261.9mUSD -318.4mUSD -387.2mUSD -470.7mUSD -572.3m+21.6%
    Less increase in working capitalUSD 219.4mUSD 266.7mUSD 324.3mUSD 394.3mUSD 479.4m-21.6%
    Free cashflow to firmUSD 1.8bnUSD 2.1bnUSD 2.6bnUSD 3.1bnUSD 3.8bn+21.6%
    Discount factor0.93610.82030.71880.62990.5520-
    Present valueUSD 1.6bnUSD 1.7bnUSD 1.9bnUSD 2.0bnUSD 2.1bn+6.5%
    Present Value Of The ForecastUSD 9.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.720Reported 2.075, pulled toward 1.0 (Blume)
    Cost of equity14.46%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 96.0bn96.7% of capital
    Total debtUSD 3.2bn3.3% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC14.12%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 57.38

    61% of EV

    Forecast FCFF, final year
    USD 3.8bn
    Capex at depreciation, working capital in reinvestment
    USD 3.5bn
    Less reinvestment at g/ROIC (14.3% of NOPAT)
    USD -495.5m
    Capitalised
    USD 3.0bn
    ROIC (reported)
    17.5%
    Terminal value, undiscounted
    USD 26.2bn
    Terminal value, discounted
    USD 14.5bn
    Enterprise value
    USD 23.8bn
    Less net debt
    USD 1.4bn
    Equity value
    USD 22.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 152.62

    85% of EV

    Terminal value, undiscounted
    USD 93.6bn
    Terminal value, discounted
    USD 51.7bn
    Enterprise value
    USD 61.0bn
    Less net debt
    USD 1.4bn
    Equity value
    USD 59.6bn

    Spread between methods: 91%.

    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%
    12.12%67.8468.8469.9371.1272.44
    13.12%61.6162.3163.0663.8864.77
    14.12%56.3656.8657.3857.9358.53
    15.12%51.8952.2352.5952.9653.36
    16.12%48.0448.2748.5048.7549.00

    Outlined: this model. Green text: above today's price of 249.39. 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 year21.6%65.6%+44.0pp
    EBIT margin13.3%66.1%+52.8pp
    Discount rate14.1%5.3%-8.8pp
    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.