Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Dow Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 2.4% to -7.7% 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 57, DPO 42, DIO 59). At a 7.4% WACC with mid-year discounting, the terminal value (89% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 29.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $139.55 per share, suggesting DOW is undervalued by 253.9% at the current price of $39.44.
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 | 2,195 | 2,264 | 2,290 | 2,114 | 1,952 | 2,001 |
| (−) Net Interest | 653 | 673 | 681 | 628 | 580 | 595 |
| (+) D&A | 2,481 | 2,453 | 2,493 | 2,453 | 2,262 | 2,318 |
| EBITDA | 5,329 | 5,390 | 5,463 | 5,196 | 4,794 | 4,914 |
| (−) Tax | 381 | 393 | 398 | 367 | 339 | — |
| (−) CapEx | 2,187 | 2,255 | 2,281 | 2,106 | 1,945 | — |
| (−) ΔWC | -1,018 | 251 | 95 | -644 | -595 | — |
| Free Cash Flow (FCF) | 3,777 | 2,490 | 2,689 | 3,367 | 3,105 | — |
| Peers' EBITDA Multiple | 29.7x | |||||
| Terminal Value | 145,758 | |||||
| WACC / Discount Rate | 7.38% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,645 | 2,238 | 2,251 | 2,624 | 2,253 | 102,084 |
| Enterprise Value | 115,094 | |||||
| Projection Period | 13,011 | 11.3% | ||||
| Terminal Value | 102,084 | 88.7% | ||||
| (−) Current Net Debt | 15,782 | |||||
| Equity Value | 99,312 | |||||
| (÷) Outstanding Shares | 712M | |||||
| Fair Price | $140 | +253.9% | ||||
| WACC \ EV/EBITDA Exit Multiple | 25.7x | 27.7x | 29.7x | 31.7x | 33.7x |
|---|---|---|---|---|---|
| 5.4% | $133 | $144 | $155 | $165 | $176 |
| 6.4% | $127 | $137 | $147 | $157 | $167 |
| 7.4% | $120 | $130 | $140 | $149 | $159 |
| 8.4% | $114 | $123 | $133 | $142 | $151 |
| 9.4% | $109 | $117 | $126 | $135 | $144 |
Current price: $39.44. 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.