Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Analog Devices, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 26.5% to 10.8% 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 54, DPO 50, DIO 142). At a 9.1% WACC with mid-year discounting, the terminal value (91% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 35.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $423.42 per share, suggesting ADI is undervalued by 34.1% at the current price of $315.66.
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 | 4,676 | 5,125 | 5,606 | 6,211 | 6,880 | 7,052 |
| (−) Net Interest | 352 | 386 | 423 | 468 | 519 | 532 |
| (+) D&A | 714 | 831 | 895 | 866 | 966 | 991 |
| EBITDA | 5,742 | 6,342 | 6,924 | 7,544 | 8,365 | 8,574 |
| (−) Tax | 366 | 402 | 439 | 487 | 539 | — |
| (−) CapEx | 930 | 1,019 | 1,115 | 1,235 | 1,368 | — |
| (−) ΔWC | 821 | 323 | 347 | 435 | 482 | — |
| Free Cash Flow (FCF) | 3,625 | 4,598 | 5,023 | 5,387 | 5,975 | — |
| Peers' EBITDA Multiple | 35.5x | |||||
| Terminal Value | 304,717 | |||||
| WACC / Discount Rate | 9.13% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,470 | 4,033 | 4,038 | 3,969 | 4,034 | 196,912 |
| Enterprise Value | 216,455 | |||||
| Projection Period | 19,543 | 9.0% | ||||
| Terminal Value | 196,912 | 91.0% | ||||
| (−) Current Net Debt | 6,165 | |||||
| Equity Value | 210,290 | |||||
| (÷) Outstanding Shares | 497M | |||||
| Fair Price | $423 | +34.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 31.5x | 33.5x | 35.5x | 37.5x | 39.5x |
|---|---|---|---|---|---|
| 7.1% | $415 | $439 | $464 | $488 | $513 |
| 8.1% | $396 | $420 | $443 | $466 | $490 |
| 9.1% | $379 | $401 | $423 | $446 | $468 |
| 10.1% | $362 | $384 | $405 | $426 | $447 |
| 11.1% | $346 | $367 | $387 | $408 | $428 |
Current price: $315.66. 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.