Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Adobe Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 9.6% to 8.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 40, DPO 57, DIO 60). At a 9.1% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 27.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $669.45 per share, suggesting ADBE is undervalued by 178.5% at the current price of $240.39.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 9,286 | 10,107 | 10,996 | 11,984 | 13,014 | 13,340 |
| (−) Net Interest | 198 | 216 | 235 | 256 | 278 | 285 |
| (+) D&A | 309 | 329 | 335 | 365 | 430 | 441 |
| EBITDA | 9,793 | 10,652 | 11,566 | 12,605 | 13,722 | 14,065 |
| (−) Tax | 1,757 | 1,913 | 2,081 | 2,268 | 2,463 | — |
| (−) CapEx | 432 | 470 | 511 | 557 | 605 | — |
| (−) ΔWC | 954 | 255 | 276 | 307 | 320 | — |
| Free Cash Flow (FCF) | 6,650 | 8,014 | 8,697 | 9,473 | 10,334 | — |
| Peers' EBITDA Multiple | 27.8x | |||||
| Terminal Value | 390,588 | |||||
| WACC / Discount Rate | 9.10% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,366 | 7,033 | 6,996 | 6,984 | 6,984 | 252,723 |
| Enterprise Value | 287,087 | |||||
| Projection Period | 34,364 | 12.0% | ||||
| Terminal Value | 252,723 | 88.0% | ||||
| (−) Current Net Debt | 1,217 | |||||
| Equity Value | 285,870 | |||||
| (÷) Outstanding Shares | 427M | |||||
| Fair Price | $669 | +178.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 23.8x | 25.8x | 27.8x | 29.8x | 31.8x |
|---|---|---|---|---|---|
| 7.1% | $637 | $684 | $731 | $777 | $824 |
| 8.1% | $610 | $655 | $699 | $744 | $789 |
| 9.1% | $584 | $627 | $669 | $712 | $755 |
| 10.1% | $560 | $600 | $641 | $682 | $723 |
| 11.1% | $537 | $576 | $614 | $653 | $692 |
Current price: $240.39. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.