Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Digital Realty Trust, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 9.5% to 4.7% 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 111, DPO 321, DIO 60). At a 6.8% WACC with mid-year discounting, the terminal value (95% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $299.54 per share, suggesting DLR is undervalued by 70.3% at the current price of $175.94.
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 | 2,665 | 2,952 | 3,236 | 3,636 | 3,807 | 3,903 |
| (−) Net Interest | 486 | 539 | 590 | 663 | 695 | 712 |
| (+) D&A | 2,304 | 2,565 | 2,884 | 3,108 | 3,586 | 3,675 |
| EBITDA | 5,455 | 6,055 | 6,710 | 7,407 | 8,088 | 8,290 |
| (−) Tax | 159 | 177 | 194 | 218 | 228 | — |
| (−) CapEx | 3,826 | 4,237 | 4,645 | 5,219 | 5,465 | — |
| (−) ΔWC | 1,166 | -8 | -8 | -11 | -5 | — |
| Free Cash Flow (FCF) | 304 | 1,650 | 1,880 | 1,982 | 2,399 | — |
| Peers' EBITDA Multiple | 19.9x | |||||
| Terminal Value | 165,380 | |||||
| WACC / Discount Rate | 6.76% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 294 | 1,496 | 1,596 | 1,576 | 1,788 | 119,265 |
| Enterprise Value | 126,015 | |||||
| Projection Period | 6,750 | 5.4% | ||||
| Terminal Value | 119,265 | 94.6% | ||||
| (−) Current Net Debt | 20,731 | |||||
| Equity Value | 105,284 | |||||
| (÷) Outstanding Shares | 352M | |||||
| Fair Price | $299 | +70.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 16.0x | 18.0x | 20.0x | 22.0x | 24.0x |
|---|---|---|---|---|---|
| 4.8% | $260 | $297 | $334 | $372 | $409 |
| 5.8% | $245 | $281 | $316 | $352 | $388 |
| 6.8% | $232 | $266 | $300 | $334 | $368 |
| 7.8% | $219 | $251 | $284 | $316 | $348 |
| 8.8% | $206 | $237 | $268 | $299 | $330 |
Current price: $175.94. 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.