Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Coherent, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 19.7% to 16.9% 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 70, DPO 66, DIO 143). At a 8.9% WACC with mid-year discounting, the terminal value (94% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 18.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $307.81 per share, suggesting COHR is undervalued by 24.9% at the current price of $246.53.
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 | 1,243 | 1,564 | 1,850 | 2,164 | 2,530 | 2,594 |
| (−) Net Interest | 299 | 375 | 444 | 520 | 608 | 623 |
| (+) D&A | 337 | 412 | 481 | 549 | 662 | 679 |
| EBITDA | 1,878 | 2,351 | 2,775 | 3,232 | 3,800 | 3,895 |
| (−) Tax | 416 | 523 | 619 | 724 | 847 | — |
| (−) CapEx | 523 | 658 | 778 | 910 | 1,064 | — |
| (−) ΔWC | 671 | 588 | 526 | 576 | 673 | — |
| Free Cash Flow (FCF) | 268 | 582 | 852 | 1,023 | 1,216 | — |
| Peers' EBITDA Multiple | 18.8x | |||||
| Terminal Value | 73,030 | |||||
| WACC / Discount Rate | 8.94% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 257 | 512 | 688 | 758 | 827 | 47,589 |
| Enterprise Value | 50,630 | |||||
| Projection Period | 3,041 | 6.0% | ||||
| Terminal Value | 47,589 | 94.0% | ||||
| (−) Current Net Debt | 2,984 | |||||
| Equity Value | 47,646 | |||||
| (÷) Outstanding Shares | 155M | |||||
| Fair Price | $308 | +24.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 14.8x | 16.8x | 18.8x | 20.8x | 22.8x |
|---|---|---|---|---|---|
| 6.9% | $267 | $303 | $339 | $375 | $411 |
| 7.9% | $254 | $289 | $323 | $357 | $392 |
| 8.9% | $242 | $275 | $308 | $341 | $373 |
| 9.9% | $231 | $262 | $294 | $325 | $356 |
| 10.9% | $220 | $250 | $280 | $310 | $340 |
Current price: $246.53. 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.