DCF Studio

    VTR · NYQ · Real Estate

    Ventas, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 0.93

    Market price

    USD 86.69

    Implied upside

    -98.9%

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

    Wrong toolThis model values the shares at 1.1% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedReported capital expenditure averages 12.15% of revenue against depreciation of 27.26%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 27.26% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Current EV/EBITDA of 25.1x 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 0.93-98.9%
    Exit multiple
    USD 107.21+23.7%
    Market price
    USD 86.69

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 6.5bnUSD 7.3bnUSD 8.2bnUSD 9.2bnUSD 10.4bn+12.2%
    EBITUSD 809.9mUSD 908.8mUSD 1.0bnUSD 1.1bnUSD 1.3bn+12.2%
    NOPATUSD 639.8mUSD 718.0mUSD 805.6mUSD 904.0mUSD 1.0bn+12.2%
    Add depreciation & amortisationUSD 1.8bnUSD 2.0bnUSD 2.3bnUSD 2.6bnUSD 2.9bn+12.2%
    Less capital expenditureUSD -1.8bnUSD -2.0bnUSD -2.2bnUSD -2.5bnUSD -2.8bn+12.2%
    Less increase in working capitalUSD 38.7mUSD 43.4mUSD 48.7mUSD 54.7mUSD 61.4m-12.2%
    Free cashflow to firmUSD 710.9mUSD 797.7mUSD 895.1mUSD 1.0bnUSD 1.1bn+12.2%
    Discount factor0.96130.88830.82090.75860.7010-
    Present valueUSD 683.4mUSD 708.7mUSD 734.8mUSD 762.0mUSD 790.1m+3.7%
    Present Value Of The ForecastUSD 3.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.815Reported 0.724, pulled toward 1.0 (Blume)
    Cost of equity9.48%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 44.5bn77.1% of capital
    Total debtUSD 13.2bn22.9% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.21%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 0.93

    71% of EV

    Forecast FCFF, final year
    USD 1.1bn
    Capex at depreciation, working capital in reinvestment
    USD 1.1bn
    Less reinvestment at g/ROIC (30.4% of NOPAT)
    USD -321.1m
    Capitalised
    USD 733.8m
    ROIC (WACC floor)
    8.2%
    Terminal value, undiscounted
    USD 13.2bn
    Terminal value, discounted
    USD 9.2bn
    Enterprise value
    USD 12.9bn
    Less net debt
    USD 12.5bn
    Equity value
    USD 430.1m

    Exit at 20.0x EBITDA

    Value per shareUSD 107.21

    94% of EV

    Terminal value, undiscounted
    USD 83.3bn
    Terminal value, discounted
    USD 58.4bn
    Enterprise value
    USD 62.1bn
    Less net debt
    USD 12.5bn
    Equity value
    USD 49.6bn

    Spread between methods: 197%.

    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%
    6.21%9.789.9210.0610.2010.34
    7.21%4.634.744.864.975.09
    8.21%0.740.830.931.031.12
    9.21%-2.31-2.23-2.14-2.06-1.98
    10.21%-4.75-4.68-4.61-4.54-4.47

    Outlined: this model. Green text: above today's price of 86.69. 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 year12.2%51.4%+39.2pp
    EBIT margin12.4%52.7%+40.3pp
    Discount rate8.2%2.7%-5.5pp
    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.