Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Albemarle Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 12.7% to 17.1% 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 69, DPO 102, DIO 120). At a 8.4% WACC with mid-year discounting, the terminal value (98% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $256.33 per share, suggesting ALB is undervalued by 46.3% at the current price of $175.26.
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 | 357 | 374 | 383 | 463 | 542 | 555 |
| (−) Net Interest | 137 | 144 | 147 | 178 | 208 | 213 |
| (+) D&A | 1,328 | 1,395 | 1,412 | 1,257 | 1,254 | 1,286 |
| EBITDA | 1,823 | 1,913 | 1,942 | 1,898 | 2,004 | 2,054 |
| (−) Tax | 54 | 57 | 58 | 70 | 82 | — |
| (−) CapEx | 1,287 | 1,348 | 1,380 | 1,666 | 1,951 | — |
| (−) ΔWC | 295 | 63 | 32 | 295 | 293 | — |
| Free Cash Flow (FCF) | 187 | 446 | 472 | -134 | -321 | — |
| Peers' EBITDA Multiple | 22.7x | |||||
| Terminal Value | 46,712 | |||||
| WACC / Discount Rate | 8.40% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 179 | 395 | 386 | -101 | -224 | 31,212 |
| Enterprise Value | 31,848 | |||||
| Projection Period | 636 | 2.0% | ||||
| Terminal Value | 31,212 | 98.0% | ||||
| (−) Current Net Debt | 1,679 | |||||
| Equity Value | 30,170 | |||||
| (÷) Outstanding Shares | 118M | |||||
| Fair Price | $256 | +46.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.7x | 20.7x | 22.7x | 24.7x | 26.7x |
|---|---|---|---|---|---|
| 6.4% | $231 | $257 | $282 | $308 | $333 |
| 7.4% | $220 | $245 | $269 | $293 | $318 |
| 8.4% | $210 | $233 | $256 | $280 | $303 |
| 9.4% | $200 | $222 | $244 | $267 | $289 |
| 10.4% | $191 | $212 | $233 | $254 | $276 |
Current price: $175.26. 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.