DCF Studio

    ZBRA · NMS · Technology

    Zebra Technologies Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 74.27

    Market price

    USD 346.63

    Implied upside

    -78.6%

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

    Value Per Share

    Perpetuity growth
    USD 74.27-78.6%
    Exit multiple
    USD 204.35-41.0%
    Market price
    USD 346.63

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m356m712mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 5.3bnUSD 5.2bnUSD 5.0bnUSD 4.9bnUSD 4.8bn-2.3%
    EBITUSD 779.6mUSD 761.9mUSD 744.6mUSD 727.7mUSD 711.2m-2.3%
    NOPATUSD 655.9mUSD 641.0mUSD 626.5mUSD 612.2mUSD 598.3m-2.3%
    Add depreciation & amortisationUSD 187.9mUSD 183.6mUSD 179.4mUSD 175.4mUSD 171.4m-2.3%
    Less capital expenditureUSD -78.8mUSD -77.0mUSD -75.2mUSD -73.5mUSD -71.8m-2.3%
    Less increase in working capitalUSD -52.7mUSD -51.5mUSD -50.4mUSD -49.2mUSD -48.1m-2.3%
    Free cashflow to firmUSD 712.3mUSD 696.1mUSD 680.3mUSD 664.9mUSD 649.8m-2.3%
    Discount factor0.94690.84900.76120.68250.6120-
    Present valueUSD 674.5mUSD 591.0mUSD 517.9mUSD 453.8mUSD 397.6m-12.4%
    Present Value Of The ForecastUSD 2.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta1.407Reported 1.607, pulled toward 1.0 (Blume)
    Cost of equity12.73%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 16.4bn85.9% of capital
    Total debtUSD 2.7bn14.1% of capital, book value as a proxy
    Tax rate15.9%Effective, capped at statutory
    WACC11.53%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 74.27

    59% of EV

    Forecast FCFF, final year
    USD 649.8m
    Capex at depreciation, working capital in reinvestment
    USD 687.6m
    Less reinvestment at g/ROIC (21.7% of NOPAT)
    USD -149.1m
    Capitalised
    USD 538.5m
    ROIC (WACC floor)
    11.5%
    Terminal value, undiscounted
    USD 6.1bn
    Terminal value, discounted
    USD 3.7bn
    Enterprise value
    USD 6.4bn
    Less net debt
    USD 2.6bn
    Equity value
    USD 3.8bn

    Exit at 19.3x EBITDA

    Value per shareUSD 204.35

    80% of EV

    Terminal value, undiscounted
    USD 17.0bn
    Terminal value, discounted
    USD 10.4bn
    Enterprise value
    USD 13.0bn
    Less net debt
    USD 2.6bn
    Equity value
    USD 10.5bn

    Spread between methods: 93%.

    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%
    9.53%100.83102.38104.10106.02108.19
    10.53%85.4786.1886.9387.7388.58
    11.53%73.5673.9174.2774.6274.98
    12.53%64.1564.4664.7865.0965.41
    13.53%56.1456.4256.7056.9857.26

    Outlined: this model. Green text: above today's price of 346.63. 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-2.3%22.8%+25.0pp
    EBIT margin14.8%51.1%+36.3pp
    Discount rate11.5%5.0%-6.5pp
    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.