DCF Studio

    WSP.TO · TOR · Industrials

    WSP Global Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 330.49

    Market price

    CAD 176.15

    Implied upside

    +87.6%

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

    AdjustedReported capital expenditure averages 1.12% of revenue against depreciation of 2.98%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 2.98% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 330.49+87.6%
    Exit multiple
    CAD 333.46+89.3%
    Market price
    CAD 176.15

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (CAD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayCAD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueCAD 21.1bnCAD 24.3bnCAD 28.0bnCAD 32.3bnCAD 37.2bn+15.3%
    EBITCAD 1.8bnCAD 2.1bnCAD 2.4bnCAD 2.8bnCAD 3.2bn+15.3%
    NOPATCAD 1.3bnCAD 1.5bnCAD 1.8bnCAD 2.1bnCAD 2.4bn+15.3%
    Add depreciation & amortisationCAD 940.3mCAD 1.1bnCAD 1.2bnCAD 1.4bnCAD 1.7bn+15.3%
    Less capital expenditureCAD -628.6mCAD -724.7mCAD -835.4mCAD -963.2mCAD -1.1bn+15.3%
    Less increase in working capitalCAD -316.6mCAD -365.0mCAD -420.8mCAD -485.1mCAD -559.3m+15.3%
    Free cashflow to firmCAD 1.3bnCAD 1.5bnCAD 1.8bnCAD 2.0bnCAD 2.4bn+15.3%
    Discount factor0.96920.91050.85530.80340.7547-
    Present valueCAD 1.3bnCAD 1.4bnCAD 1.5bnCAD 1.6bnCAD 1.8bn+8.3%
    Present Value Of The ForecastCAD 7.6bn

    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
    Beta0.657Reported 0.488, pulled toward 1.0 (Blume)
    Cost of equity6.91%Risk-free + beta x equity risk premium
    Cost of debt5.70%Interest expense / average total debt
    Market capitalisationCAD 23.7bn83.0% of capital
    Total debtCAD 4.9bn17.0% of capital, book value as a proxy
    Tax rate26.2%Effective, capped at statutory
    WACC6.45%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 330.49

    84% of EV

    Forecast FCFF, final year
    CAD 2.4bn
    Capex at depreciation, working capital in reinvestment
    CAD 2.8bn
    Less reinvestment at g/ROIC (28.6% of NOPAT)
    CAD -794.6m
    Capitalised
    CAD 2.0bn
    ROIC (reported)
    8.7%
    Terminal value, undiscounted
    CAD 51.4bn
    Terminal value, discounted
    CAD 38.8bn
    Enterprise value
    CAD 46.4bn
    Less net debt
    CAD 3.1bn
    Equity value
    CAD 43.3bn

    Exit at 10.6x EBITDA

    Value per shareCAD 333.46

    84% of EV

    Terminal value, undiscounted
    CAD 51.9bn
    Terminal value, discounted
    CAD 39.2bn
    Enterprise value
    CAD 46.8bn
    Less net debt
    CAD 3.1bn
    Equity value
    CAD 43.7bn

    Spread between methods: 1%.

    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%
    4.45%533.45596.02690.12848.301171.39
    5.45%390.87416.05449.44496.04566.02
    6.45%305.93316.93330.49347.70370.44
    7.45%249.58254.19259.54265.91273.66
    8.45%209.48210.90212.42214.05215.85

    Outlined: this model. Green text: above today's price of 176.15. 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 year15.3%1.0%-14.3pp
    EBIT margin8.6%4.4%-4.3pp
    Discount rate6.5%9.8%+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.