DCF Studio

    WTB.L · LSE · Consumer Cyclical

    Whitbread plc

    Also onConsensus Drift

    Implied value per share

    GBp 4516.62

    Market price

    GBp 2310.00

    Implied upside

    +95.5%

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

    AdjustedCapital expenditure runs at 19.5% of revenue against depreciation of 13.6%. 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: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 4516.62+95.5%
    Exit multiple
    GBp 2561.89+10.9%
    Market price
    GBp 2310.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m184m369mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayGBP
    LineFY27FY28FY29FY30FY31CAGR
    RevenueGBP 3.0bnGBP 3.1bnGBP 3.2bnGBP 3.4bnGBP 3.5bn+3.6%
    EBITGBP 648.4mGBP 671.8mGBP 696.1mGBP 721.2mGBP 747.3m+3.6%
    NOPATGBP 486.3mGBP 503.8mGBP 522.0mGBP 540.9mGBP 560.5m+3.6%
    Add depreciation & amortisationGBP 412.0mGBP 426.8mGBP 442.3mGBP 458.2mGBP 474.8m+3.6%
    Less capital expenditureGBP -589.0mGBP -610.3mGBP -632.4mGBP -655.2mGBP -678.9m+3.6%
    Less increase in working capitalGBP 10.8mGBP 11.2mGBP 11.6mGBP 12.0mGBP 12.5m-3.6%
    Free cashflow to firmGBP 320.0mGBP 331.6mGBP 343.6mGBP 356.0mGBP 368.8m+3.6%
    Discount factor0.97320.92180.87310.82700.7834-
    Present valueGBP 311.5mGBP 305.7mGBP 300.0mGBP 294.4mGBP 288.9m-1.9%
    Present Value Of The ForecastGBP 1.5bn

    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
    Beta0.762Reported 0.645, pulled toward 1.0 (Blume)
    Cost of equity8.69%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 3.9bn41.4% of capital
    Total debtGBP 5.5bn58.6% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC5.58%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 45.17

    89% of EV

    Forecast FCFF, final year
    GBP 368.8m
    Capex at depreciation, working capital in reinvestment
    GBP 583.9m
    Less reinvestment at g/ROIC (24.0% of NOPAT)
    GBP -140.0m
    Capitalised
    GBP 443.9m
    ROIC (reported)
    10.4%
    Terminal value, undiscounted
    GBP 14.8bn
    Terminal value, discounted
    GBP 11.6bn
    Enterprise value
    GBP 13.1bn
    Less net debt
    GBP 5.2bn
    Equity value
    GBP 7.9bn

    Exit at 8.6x EBITDA

    Value per shareGBP 25.62

    85% of EV

    Terminal value, undiscounted
    GBP 10.5bn
    Terminal value, discounted
    GBP 8.2bn
    Enterprise value
    GBP 9.7bn
    Less net debt
    GBP 5.2bn
    Equity value
    GBP 4.5bn

    Spread between methods: 55%.

    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%
    3.58%98.95128.90186.56344.102575.45
    4.58%56.3066.6081.79106.54154.16
    5.58%34.6139.1745.1753.4465.65
    6.58%21.5023.7526.5330.0634.69
    7.58%12.7213.8915.2616.9018.92

    Outlined: this model. Green text: above today's price of 23.10. 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 year3.6%-3.5%-7.1pp
    EBIT margin21.4%15.3%-6.1pp
    Discount rate5.6%6.8%+1.3pp
    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.