DCF Studio

    WN.TO · TOR · Consumer Defensive

    George Weston Limited

    Also onConsensus Drift

    Implied value per share

    CAD 263.08

    Market price

    CAD 99.34

    Implied upside

    +164.8%

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

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

    Value Per Share

    Perpetuity growth
    CAD 263.08+164.8%
    Exit multiple
    CAD 133.73+34.6%
    Market price
    CAD 99.34

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 67.2bnCAD 70.0bnCAD 73.0bnCAD 76.0bnCAD 79.2bn+4.2%
    EBITCAD 5.0bnCAD 5.2bnCAD 5.4bnCAD 5.6bnCAD 5.9bn+4.2%
    NOPATCAD 3.7bnCAD 3.9bnCAD 4.0bnCAD 4.2bnCAD 4.4bn+4.2%
    Add depreciation & amortisationCAD 2.8bnCAD 2.9bnCAD 3.0bnCAD 3.1bnCAD 3.2bn+4.2%
    Less capital expenditureCAD -2.5bnCAD -2.6bnCAD -2.7bnCAD -2.8bnCAD -2.9bn+4.2%
    Less increase in working capitalCAD -207.0mCAD -215.7mCAD -224.7mCAD -234.1mCAD -243.9m+4.2%
    Free cashflow to firmCAD 3.8bnCAD 3.9bnCAD 4.1bnCAD 4.3bnCAD 4.4bn+4.2%
    Discount factor0.97180.91790.86690.81880.7733-
    Present valueCAD 3.7bnCAD 3.6bnCAD 3.5bnCAD 3.5bnCAD 3.4bn-1.6%
    Present Value Of The ForecastCAD 17.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta0.654Reported 0.484, pulled toward 1.0 (Blume)
    Cost of equity6.90%Risk-free + beta x equity risk premium
    Cost of debt5.30%Assumed: risk-free + 2bp (interest expense not reported)
    Market capitalisationCAD 37.2bn65.5% of capital
    Total debtCAD 19.6bn34.5% of capital, book value as a proxy
    Tax rate25.6%Effective, capped at statutory
    WACC5.88%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 shareCAD 263.08

    85% of EV

    Forecast FCFF, final year
    CAD 4.4bn
    Capex at depreciation, working capital in reinvestment
    CAD 5.2bn
    Less reinvestment at g/ROIC (16.3% of NOPAT)
    CAD -847.1m
    Capitalised
    CAD 4.4bn
    ROIC (reported)
    15.3%
    Terminal value, undiscounted
    CAD 132.0bn
    Terminal value, discounted
    CAD 102.1bn
    Enterprise value
    CAD 119.8bn
    Less net debt
    CAD 18.1bn
    Equity value
    CAD 101.7bn

    Exit at 7.4x EBITDA

    Value per shareCAD 133.73

    75% of EV

    Terminal value, undiscounted
    CAD 67.4bn
    Terminal value, discounted
    CAD 52.1bn
    Enterprise value
    CAD 69.8bn
    Less net debt
    CAD 18.1bn
    Equity value
    CAD 51.7bn

    Spread between methods: 65%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.88%437.41536.15706.211069.312389.24
    4.88%294.24334.49391.52478.70628.85
    5.88%216.50236.83263.08298.33348.25
    6.88%167.69179.21193.29210.92233.67
    7.88%134.20141.21149.45159.32171.38

    Outlined: this model. Green text: above today's price of 99.34. 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 year4.2%-12.4%-16.6pp
    EBIT margin7.4%2.9%-4.5pp
    Discount rate5.9%9.8%+3.9pp
    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.