Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Ciena Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 28.3% to 7.1% 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 100, DPO 66, DIO 120). At a 9.3% WACC with mid-year discounting, the terminal value (100% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $91.38 per share, suggesting CIEN is overvalued by 76.7% at the current price of $392.00.
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 | 407 | 489 | 592 | 635 | 680 | 697 |
| (−) Net Interest | 103 | 124 | 150 | 161 | 173 | 177 |
| (+) D&A | 111 | 128 | 149 | 176 | 200 | 205 |
| EBITDA | 621 | 741 | 892 | 972 | 1,053 | 1,079 |
| (−) Tax | 65 | 79 | 95 | 102 | 109 | — |
| (−) CapEx | 165 | 198 | 240 | 257 | 275 | — |
| (−) ΔWC | 951 | 446 | 561 | 230 | 246 | — |
| Free Cash Flow (FCF) | -560 | 18 | -5 | 383 | 422 | — |
| Peers' EBITDA Multiple | 19.8x | |||||
| Terminal Value | 21,354 | |||||
| WACC / Discount Rate | 9.25% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -536 | 16 | -4 | 281 | 283 | 13,723 |
| Enterprise Value | 13,764 | |||||
| Projection Period | 41 | 0.3% | ||||
| Terminal Value | 13,723 | 99.7% | ||||
| (−) Current Net Debt | 490 | |||||
| Equity Value | 13,273 | |||||
| (÷) Outstanding Shares | 145M | |||||
| Fair Price | $91 | -76.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.8x | 17.8x | 19.8x | 21.8x | 23.8x |
|---|---|---|---|---|---|
| 7.2% | $80 | $90 | $101 | $111 | $122 |
| 8.2% | $76 | $86 | $96 | $106 | $116 |
| 9.2% | $72 | $82 | $91 | $101 | $110 |
| 10.2% | $69 | $78 | $87 | $96 | $105 |
| 11.2% | $66 | $74 | $83 | $92 | $100 |
Current price: $392.00. 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.