Using an unlevered Free Cash Flow to Firm (FCFF) model, we project CMS Energy Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.4% to 3.9% 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 54, DPO 88, DIO 70). At a 5.8% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $201.89 per share, suggesting CMS is undervalued by 164.3% at the current price of $76.38.
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 | 2,241 | 2,344 | 2,434 | 2,571 | 2,673 | 2,739 |
| (−) Net Interest | 695 | 727 | 755 | 797 | 829 | 850 |
| (+) D&A | 2,902 | 3,124 | 3,316 | 3,365 | 3,492 | 3,580 |
| EBITDA | 5,838 | 6,196 | 6,505 | 6,733 | 6,994 | 7,169 |
| (−) Tax | 326 | 341 | 354 | 374 | 388 | — |
| (−) CapEx | 3,187 | 3,334 | 3,461 | 3,656 | 3,800 | — |
| (−) ΔWC | 324 | 48 | 41 | 63 | 47 | — |
| Free Cash Flow (FCF) | 2,002 | 2,474 | 2,649 | 2,640 | 2,758 | — |
| Peers' EBITDA Multiple | 12.6x | |||||
| Terminal Value | 90,182 | |||||
| WACC / Discount Rate | 5.76% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,947 | 2,275 | 2,303 | 2,170 | 2,144 | 68,148 |
| Enterprise Value | 78,987 | |||||
| Projection Period | 10,839 | 13.7% | ||||
| Terminal Value | 68,148 | 86.3% | ||||
| (−) Current Net Debt | 18,324 | |||||
| Equity Value | 60,663 | |||||
| (÷) Outstanding Shares | 301M | |||||
| Fair Price | $202 | +164.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.6x | 10.6x | 12.6x | 14.6x | 16.6x |
|---|---|---|---|---|---|
| 3.8% | $147 | $187 | $226 | $266 | $306 |
| 4.8% | $138 | $176 | $214 | $252 | $289 |
| 5.8% | $130 | $166 | $202 | $238 | $274 |
| 6.8% | $122 | $156 | $191 | $225 | $259 |
| 7.8% | $114 | $147 | $180 | $213 | $246 |
Current price: $76.38. 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.