Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Brown-Forman Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -2.0% to 3.8% 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 74, DPO 55, DIO 501). At a 6.5% WACC with mid-year discounting, the terminal value (73% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $29.37 per share, suggesting BF-B is fairly valued by 13.5% at the current price of $25.88.
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 | 1,048 | 1,062 | 1,091 | 1,138 | 1,181 | 1,210 |
| (−) Net Interest | 99 | 100 | 103 | 107 | 111 | 114 |
| (+) D&A | 156 | 173 | 176 | 171 | 158 | 162 |
| EBITDA | 1,302 | 1,335 | 1,370 | 1,416 | 1,450 | 1,486 |
| (−) Tax | 220 | 223 | 229 | 239 | 248 | — |
| (−) CapEx | 150 | 152 | 156 | 163 | 169 | — |
| (−) ΔWC | -402 | 35 | 76 | 120 | 110 | — |
| Free Cash Flow (FCF) | 1,334 | 925 | 909 | 894 | 922 | — |
| Peers' EBITDA Multiple | 10.9x | |||||
| Terminal Value | 16,226 | |||||
| WACC / Discount Rate | 6.47% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,293 | 842 | 777 | 718 | 696 | 11,861 |
| Enterprise Value | 16,186 | |||||
| Projection Period | 4,325 | 26.7% | ||||
| Terminal Value | 11,861 | 73.3% | ||||
| (−) Current Net Debt | 2,289 | |||||
| Equity Value | 13,897 | |||||
| (÷) Outstanding Shares | 473M | |||||
| Fair Price | $29 | +13.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.9x | 8.9x | 10.9x | 12.9x | 14.9x |
|---|---|---|---|---|---|
| 4.5% | $22 | $27 | $32 | $37 | $42 |
| 5.5% | $21 | $26 | $31 | $36 | $40 |
| 6.5% | $20 | $25 | $29 | $34 | $39 |
| 7.5% | $19 | $24 | $28 | $32 | $37 |
| 8.5% | $18 | $23 | $27 | $31 | $35 |
Current price: $25.88. 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.