DCF Studio

    WPM.TO · TOR · Basic Materials

    Wheaton Precious Metals Corp.

    Also onConsensus Drift

    Implied value per share

    CAD 122.53

    Market price

    CAD 210.91

    Implied upside

    -41.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.3982

    AdjustedReports in USD, trades in CAD. Modelled in USD, converted at the end.
    AdjustedCapital expenditure runs at 47.5% of revenue against depreciation of 10.8%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Current EV/EBITDA of 59.8x 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
    CAD 122.53-41.9%
    Exit multiple
    CAD 238.65+13.2%
    Market price
    CAD 210.91

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 3.0bnUSD 3.9bnUSD 5.0bnUSD 6.5bnUSD 8.4bn+29.5%
    EBITUSD 1.7bnUSD 2.2bnUSD 2.8bnUSD 3.6bnUSD 4.7bn+29.5%
    NOPATUSD 1.6bnUSD 2.0bnUSD 2.6bnUSD 3.4bnUSD 4.4bn+29.5%
    Add depreciation & amortisationUSD 324.8mUSD 420.8mUSD 545.0mUSD 706.0mUSD 914.4m+29.5%
    Less capital expenditureUSD -1.4bnUSD -1.8bnUSD -2.4bnUSD -3.1bnUSD -4.0bn+29.5%
    Less increase in working capitalUSD -20.2mUSD -26.1mUSD -33.9mUSD -43.9mUSD -56.8m+29.5%
    Free cashflow to firmUSD 431.3mUSD 558.7mUSD 723.7mUSD 937.4mUSD 1.2bn+29.5%
    Discount factor0.95430.86900.79140.72070.6563-
    Present valueUSD 411.6mUSD 485.5mUSD 572.7mUSD 675.6mUSD 796.9m+18.0%
    Present Value Of The ForecastUSD 2.9bn

    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
    Beta1.184Reported 1.274, pulled toward 1.0 (Blume)
    Cost of equity9.81%Risk-free + beta x equity risk premium
    Cost of debt6.56%Interest expense / average total debt
    Market capitalisationUSD 95.8bn100.0% of capital
    Total debtUSD 7.9m0.0% of capital, book value as a proxy
    Tax rate6.8%Effective, capped at statutory
    WACC9.81%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 87.63

    92% of EV

    Forecast FCFF, final year
    USD 1.2bn
    Capex at depreciation, working capital in reinvestment
    USD 5.2bn
    Less reinvestment at g/ROIC (25.5% of NOPAT)
    USD -1.3bn
    Capitalised
    USD 3.9bn
    ROIC (WACC floor)
    9.8%
    Terminal value, undiscounted
    USD 54.5bn
    Terminal value, discounted
    USD 35.8bn
    Enterprise value
    USD 38.7bn
    Less net debt
    USD -1.1bn
    Equity value
    USD 39.8bn

    Exit at 20.0x EBITDA

    Value per shareUSD 170.69

    96% of EV

    Terminal value, undiscounted
    USD 112.0bn
    Terminal value, discounted
    USD 73.5bn
    Enterprise value
    USD 76.5bn
    Less net debt
    USD -1.1bn
    Equity value
    USD 77.6bn

    Spread between methods: 64%.

    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%
    7.81%116.72117.76118.90120.18121.63
    8.81%99.5299.97100.41100.86101.30
    9.81%86.8787.2587.6388.0288.40
    10.81%76.6777.0177.3477.6878.01
    11.81%68.3168.6068.9069.1969.49

    Outlined: this model. Green text: above today's price of 150.84. 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 year29.5%45.1%+15.6pp
    EBIT margin55.5%94.9%+39.4pp
    Discount rate9.8%6.8%-3.0pp
    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.