Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Bank of New York Mellon Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -46.1% to 25.4% 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 236, DPO 876, DIO 60). At a 9.6% WACC with mid-year discounting, the terminal value (55% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $447.05 per share, suggesting BK is undervalued by 281.5% at the current price of $117.17.
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 | 1,068 | 1,115 | 1,159 | 1,231 | 1,544 | 1,583 |
| (−) Net Interest | 7,385 | 7,710 | 8,014 | 8,513 | 10,677 | 10,944 |
| (+) D&A | 1,361 | 1,335 | 1,294 | 1,286 | 1,244 | 1,275 |
| EBITDA | 9,813 | 10,160 | 10,467 | 11,030 | 13,465 | 13,801 |
| (−) Tax | 239 | 249 | 259 | 275 | 345 | — |
| (−) CapEx | 1,089 | 1,137 | 1,182 | 1,256 | 1,575 | — |
| (−) ΔWC | -62,376 | -108 | -101 | -165 | -716 | — |
| Free Cash Flow (FCF) | 70,860 | 8,881 | 9,126 | 9,664 | 12,260 | — |
| Peers' EBITDA Multiple | 13.7x | |||||
| Terminal Value | 189,355 | |||||
| WACC / Discount Rate | 9.62% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 67,679 | 7,738 | 7,253 | 7,007 | 8,109 | 119,618 |
| Enterprise Value | 217,404 | |||||
| Projection Period | 97,786 | 45.0% | ||||
| Terminal Value | 119,618 | 55.0% | ||||
| (−) Current Net Debt | (97,641) | |||||
| Equity Value | 315,045 | |||||
| (÷) Outstanding Shares | 705M | |||||
| Fair Price | $447 | +281.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.7x | 11.7x | 13.7x | 15.7x | 17.7x |
|---|---|---|---|---|---|
| 7.6% | $412 | $440 | $467 | $494 | $521 |
| 8.6% | $405 | $431 | $457 | $483 | $508 |
| 9.6% | $398 | $422 | $447 | $472 | $497 |
| 10.6% | $391 | $414 | $438 | $462 | $485 |
| 11.6% | $384 | $407 | $429 | $452 | $474 |
Current price: $117.17. 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.