DCF Studio

    WEIR.L · LSE · Industrials

    Weir PLC

    Also onConsensus Drift

    Implied value per share

    GBp 1154.12

    Market price

    GBp 2620.00

    Implied upside

    -55.9%

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

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

    Value Per Share

    Perpetuity growth
    GBp 1154.12-55.9%
    Exit multiple
    GBp 2240.55-14.5%
    Market price
    GBp 2620.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m183m366mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 2.6bnGBP 2.6bnGBP 2.7bnGBP 2.7bnGBP 2.7bn+1.2%
    EBITGBP 405.3mGBP 410.3mGBP 415.3mGBP 420.4mGBP 425.6m+1.2%
    NOPATGBP 310.9mGBP 314.7mGBP 318.5mGBP 322.5mGBP 326.4m+1.2%
    Add depreciation & amortisationGBP 116.6mGBP 118.0mGBP 119.5mGBP 120.9mGBP 122.4m+1.2%
    Less capital expenditureGBP -73.1mGBP -74.0mGBP -74.9mGBP -75.8mGBP -76.8m+1.2%
    Less increase in working capitalGBP -5.4mGBP -5.5mGBP -5.5mGBP -5.6mGBP -5.7m+1.2%
    Free cashflow to firmGBP 348.9mGBP 353.2mGBP 357.6mGBP 362.0mGBP 366.4m+1.2%
    Discount factor0.95770.87830.80550.73870.6775-
    Present valueGBP 334.1mGBP 310.2mGBP 288.0mGBP 267.4mGBP 248.2m-7.2%
    Present Value Of The ForecastGBP 1.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.057Reported 1.085, pulled toward 1.0 (Blume)
    Cost of equity10.31%Risk-free + beta x equity risk premium
    Cost of debt5.44%Interest expense / average total debt
    Market capitalisationGBP 6.8bn79.2% of capital
    Total debtGBP 1.8bn20.8% of capital, book value as a proxy
    Tax rate23.3%Effective, capped at statutory
    WACC9.04%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 shareGBP 11.54

    66% of EV

    Forecast FCFF, final year
    GBP 366.4m
    Capex at depreciation, working capital in reinvestment
    GBP 356.7m
    Less reinvestment at g/ROIC (25.5% of NOPAT)
    GBP -90.9m
    Capitalised
    GBP 265.8m
    ROIC (reported)
    9.8%
    Terminal value, undiscounted
    GBP 4.2bn
    Terminal value, discounted
    GBP 2.8bn
    Enterprise value
    GBP 4.3bn
    Less net debt
    GBP 1.3bn
    Equity value
    GBP 3.0bn

    Exit at 15.2x EBITDA

    Value per shareGBP 22.41

    80% of EV

    Terminal value, undiscounted
    GBP 8.3bn
    Terminal value, discounted
    GBP 5.6bn
    Enterprise value
    GBP 7.1bn
    Less net debt
    GBP 1.3bn
    Equity value
    GBP 5.8bn

    Spread between methods: 64%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.04%16.6217.2217.9418.8319.95
    8.04%13.5513.8414.1714.5615.02
    9.04%11.2811.4111.5411.6911.86
    10.04%9.589.639.679.729.76
    11.04%8.328.368.408.448.48

    Outlined: this model. Green text: above today's price of 26.20. 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 year1.2%18.4%+17.2pp
    EBIT margin15.6%31.0%+15.3pp
    Discount rate9.0%5.7%-3.3pp
    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.