DCF Studio

    WOR.AX · ASX · Energy

    Worley Limited

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    AUD 7.85

    Market price

    AUD 9.82

    Implied upside

    -20.1%

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

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    AdjustedReported capital expenditure averages just 0.70% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.07% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    AUD 7.85-20.1%
    Exit multiple
    AUD 15.04+53.1%
    Market price
    AUD 9.82

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (AUD). Outflows negative.

    0m209m419mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayAUD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueAUD 10.5bnAUD 10.3bnAUD 10.1bnAUD 9.9bnAUD 9.7bn-1.9%
    EBITAUD 504.5mAUD 494.8mAUD 485.2mAUD 475.8mAUD 466.6m-1.9%
    NOPATAUD 353.2mAUD 346.3mAUD 339.6mAUD 333.1mAUD 326.6m-1.9%
    Add depreciation & amortisationAUD 183.1mAUD 179.6mAUD 176.1mAUD 172.7mAUD 169.3m-1.9%
    Less capital expenditureAUD -112.0mAUD -109.8mAUD -107.7mAUD -105.6mAUD -103.6m-1.9%
    Less increase in working capitalAUD -5.5mAUD -5.4mAUD -5.3mAUD -5.2mAUD -5.1m-1.9%
    Free cashflow to firmAUD 418.8mAUD 410.7mAUD 402.8mAUD 395.0mAUD 387.3m-1.9%
    Discount factor0.96670.90330.84410.78880.7371-
    Present valueAUD 404.8mAUD 371.0mAUD 340.0mAUD 311.6mAUD 285.5m-8.4%
    Present Value Of The ForecastAUD 1.7bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.35%Australian Government 10-year (RBA F2)
    Equity risk premium6.00%Market assumption
    Beta0.601Reported 0.405, pulled toward 1.0 (Blume)
    Cost of equity8.96%Risk-free + beta x equity risk premium
    Cost of debt5.35%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationAUD 4.8bn62.7% of capital
    Total debtAUD 2.8bn37.3% of capital, book value as a proxy
    Tax rate30.0%Effective, capped at statutory
    WACC7.01%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 shareAUD 7.85

    70% of EV

    Forecast FCFF, final year
    AUD 387.3m
    Capex at depreciation, working capital in reinvestment
    AUD 372.7m
    Less reinvestment at g/ROIC (35.6% of NOPAT)
    AUD -132.8m
    Capitalised
    AUD 239.8m
    ROIC (WACC floor)
    7.0%
    Terminal value, undiscounted
    AUD 5.4bn
    Terminal value, discounted
    AUD 4.0bn
    Enterprise value
    AUD 5.7bn
    Less net debt
    AUD 1.7bn
    Equity value
    AUD 4.0bn

    Exit at 16.4x EBITDA

    Value per shareAUD 15.04

    82% of EV

    Terminal value, undiscounted
    AUD 10.4bn
    Terminal value, discounted
    AUD 7.7bn
    Enterprise value
    AUD 9.4bn
    Less net debt
    AUD 1.7bn
    Equity value
    AUD 7.6bn

    Spread between methods: 63%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.01%12.2712.4712.7313.0913.66
    6.01%9.549.599.639.689.73
    7.01%7.777.817.857.897.93
    8.01%6.446.486.516.546.57
    9.01%5.415.445.465.495.52

    Outlined: this model. Green text: above today's price of 9.82. 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 year-1.9%1.6%+3.5pp
    EBIT margin4.8%5.8%+1.0pp
    Discount rate7.0%5.9%-1.1pp
    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.