Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Edison International's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -0.7% to 1.5% 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 56, DPO 82, DIO 19). At a 5.0% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $359.45 per share, suggesting EIX is undervalued by 406.9% at the current price of $70.91.
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 | 5,063 | 5,216 | 5,422 | 5,774 | 5,862 | 6,009 |
| (−) Net Interest | 1,591 | 1,639 | 1,704 | 1,814 | 1,842 | 1,888 |
| (+) D&A | 5,791 | 5,994 | 6,183 | 6,491 | 6,837 | 7,008 |
| EBITDA | 12,444 | 12,850 | 13,309 | 14,078 | 14,541 | 14,905 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 6,524 | 6,721 | 6,987 | 7,439 | 7,553 | — |
| (−) ΔWC | 157 | 32 | 43 | 73 | 18 | — |
| Free Cash Flow (FCF) | 5,764 | 6,096 | 6,280 | 6,566 | 6,969 | — |
| Peers' EBITDA Multiple | 13.1x | |||||
| Terminal Value | 195,103 | |||||
| WACC / Discount Rate | 5.00% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,625 | 5,666 | 5,559 | 5,535 | 5,596 | 152,868 |
| Enterprise Value | 180,849 | |||||
| Projection Period | 27,981 | 15.5% | ||||
| Terminal Value | 152,868 | 84.5% | ||||
| (−) Current Net Debt | 42,432 | |||||
| Equity Value | 138,417 | |||||
| (÷) Outstanding Shares | 385M | |||||
| Fair Price | $360 | +407.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.1x | 11.1x | 13.1x | 15.1x | 17.1x |
|---|---|---|---|---|---|
| 3.0% | $270 | $336 | $403 | $470 | $537 |
| 4.0% | $253 | $317 | $381 | $444 | $508 |
| 5.0% | $238 | $299 | $359 | $420 | $481 |
| 6.0% | $224 | $282 | $339 | $397 | $455 |
| 7.0% | $210 | $265 | $320 | $376 | $431 |
Current price: $70.91. 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.