Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Baker Hughes Company's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.7% to 3.6% 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 97, DPO 82, DIO 90). At a 7.3% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $37.45 per share, suggesting BKR is overvalued by 40.0% at the current price of $62.46.
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 | 2,373 | 2,522 | 2,586 | 2,513 | 2,603 | 2,668 |
| (−) Net Interest | 280 | 297 | 305 | 296 | 307 | 314 |
| (+) D&A | 1,018 | 1,136 | 1,222 | 1,224 | 1,208 | 1,238 |
| EBITDA | 3,670 | 3,955 | 4,113 | 4,033 | 4,117 | 4,220 |
| (−) Tax | 1,187 | 1,261 | 1,293 | 1,257 | 1,301 | — |
| (−) CapEx | 1,132 | 1,203 | 1,233 | 1,198 | 1,241 | — |
| (−) ΔWC | 885 | 496 | 214 | -244 | 298 | — |
| Free Cash Flow (FCF) | 467 | 996 | 1,372 | 1,822 | 1,276 | — |
| Peers' EBITDA Multiple | 12.1x | |||||
| Terminal Value | 50,853 | |||||
| WACC / Discount Rate | 7.27% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 451 | 896 | 1,151 | 1,425 | 931 | 35,796 |
| Enterprise Value | 40,651 | |||||
| Projection Period | 4,855 | 11.9% | ||||
| Terminal Value | 35,796 | 88.1% | ||||
| (−) Current Net Debt | 3,429 | |||||
| Equity Value | 37,222 | |||||
| (÷) Outstanding Shares | 994M | |||||
| Fair Price | $37 | -40.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.1x | 10.1x | 12.1x | 14.1x | 16.1x |
|---|---|---|---|---|---|
| 5.3% | $28 | $35 | $41 | $48 | $54 |
| 6.3% | $27 | $33 | $39 | $46 | $52 |
| 7.3% | $25 | $31 | $37 | $43 | $49 |
| 8.3% | $24 | $30 | $36 | $41 | $47 |
| 9.3% | $23 | $29 | $34 | $39 | $45 |
Current price: $62.46. 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.