Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Dollar Tree, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -7.3% to 2.8% 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 45, DPO 50, DIO 107). At a 6.1% WACC with mid-year discounting, the terminal value (95% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $196.21 per share, suggesting DLTR is undervalued by 85.4% at the current price of $105.81.
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 | 1,597 | 1,832 | 1,940 | 2,051 | 2,109 | 2,161 |
| (−) Net Interest | 116 | 133 | 141 | 149 | 153 | 157 |
| (+) D&A | 1,363 | 1,431 | 1,492 | 1,401 | 1,490 | 1,528 |
| EBITDA | 3,077 | 3,396 | 3,573 | 3,601 | 3,752 | 3,846 |
| (−) Tax | 370 | 425 | 450 | 475 | 489 | — |
| (−) CapEx | 1,360 | 1,560 | 1,652 | 1,746 | 1,796 | — |
| (−) ΔWC | 3,079 | 595 | 273 | 281 | 146 | — |
| Free Cash Flow (FCF) | -1,733 | 816 | 1,199 | 1,099 | 1,322 | — |
| Peers' EBITDA Multiple | 14.8x | |||||
| Terminal Value | 56,884 | |||||
| WACC / Discount Rate | 6.07% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -1,682 | 747 | 1,035 | 894 | 1,014 | 42,364 |
| Enterprise Value | 44,372 | |||||
| Projection Period | 2,008 | 4.5% | ||||
| Terminal Value | 42,364 | 95.5% | ||||
| (−) Current Net Debt | 3,906 | |||||
| Equity Value | 40,466 | |||||
| (÷) Outstanding Shares | 206M | |||||
| Fair Price | $196 | +85.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.8x | 12.8x | 14.8x | 16.8x | 18.8x |
|---|---|---|---|---|---|
| 4.1% | $157 | $187 | $218 | $248 | $279 |
| 5.1% | $148 | $178 | $207 | $236 | $265 |
| 6.1% | $141 | $168 | $196 | $224 | $252 |
| 7.1% | $133 | $160 | $186 | $213 | $239 |
| 8.1% | $126 | $152 | $177 | $202 | $228 |
Current price: $105.81. 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.