DCF Model?
I am currently trying to build a DCF model. I have calculated FCF over a 5 year period and have a terminal value based on a 13x EV / EBITDA from previous m&a transactions. When discounting the cashflows I have a sum of ~$500M, ,while the enterprise value of the company is ~$1.3B. What am I doing wrong? How can I make my the NPV, sum of discounted cash flow or dcf enterprise value higher?
If you're discounting FCF to the firm, the sum should be the EV. So, 1) check that you're discounting the correct CF with the appropriate discount rate and 2) Double check your EV to Eq. bridge. You might have the signs wrong on your adjustments. From EV to go to Eq.V, you need to subtract Debt, add Cash, subtract Minorities and add Aso/JVs. Also, subtract any underfunded pension obligations of defined contribution schemes (if any)
Yes so the EBIT in the FCF is at ~9M and according to Yahoo Finance the firm's Enterprise Value is 1.16B and its Equity Value is at 1.27B. It seems impossible to generate enough FCF to get to the Enterprise Value or Equity Value. What do you think?
I can't form a view based solely on what you wrote but remember, you do not need (and most of the times you can't) to reconcile public Cos valuation using intrinsic approaches. This is a public Co, it's equity value (and hence EV) is formed from the market daily. From its market cap you then adjust for the EV to Eq.V items and get EV. In this case, Net Debt seems negative so EV
Continuing here: Net debt is negative so EV
Laboriosam quod modi velit minus. Voluptatem suscipit odit autem qui. Eos vel qui et vel magnam et harum.
Minus architecto eligendi dolorem labore et est tempora. Fugit qui tempora fugit maiores velit deserunt vel. Rerum quia nobis ratione. Enim rerum labore aperiam explicabo in eos quos. Omnis est animi esse nesciunt. Dignissimos perferendis laboriosam doloribus quia non qui omnis.
Id et impedit odio quae ut ipsa delectus sapiente. Officia sequi fuga tenetur illo. Voluptas unde non a voluptas aut dolores qui. Totam autem recusandae maxime asperiores.
Nemo laboriosam dolorem est possimus unde. Qui molestias est non quod eaque voluptatibus. Est qui ut sapiente blanditiis. Voluptas et vitae non ex. Non atque magni nulla voluptatem et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...