Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Estée Lauder Companies Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.9% to 5.2% 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 37, DPO 143, DIO 221). At a 6.2% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $102.08 per share, suggesting EL is undervalued by 46.4% at the current price of $69.73.
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 | 1,680 | 1,749 | 1,829 | 1,931 | 2,031 | 2,082 |
| (−) Net Interest | 266 | 277 | 289 | 305 | 321 | 329 |
| (+) D&A | 1,297 | 1,413 | 1,458 | 1,065 | 1,161 | 1,190 |
| EBITDA | 3,243 | 3,439 | 3,577 | 3,302 | 3,513 | 3,601 |
| (−) Tax | 458 | 477 | 499 | 527 | 554 | — |
| (−) CapEx | 1,216 | 1,266 | 1,324 | 1,398 | 1,470 | — |
| (−) ΔWC | 252 | 97 | 113 | 143 | 140 | — |
| Free Cash Flow (FCF) | 1,317 | 1,598 | 1,641 | 1,234 | 1,349 | — |
| Peers' EBITDA Multiple | 13.9x | |||||
| Terminal Value | 50,057 | |||||
| WACC / Discount Rate | 6.18% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,278 | 1,461 | 1,412 | 1,001 | 1,030 | 37,086 |
| Enterprise Value | 43,267 | |||||
| Projection Period | 6,181 | 14.3% | ||||
| Terminal Value | 37,086 | 85.7% | ||||
| (−) Current Net Debt | 6,518 | |||||
| Equity Value | 36,749 | |||||
| (÷) Outstanding Shares | 360M | |||||
| Fair Price | $102 | +46.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.9x | 11.9x | 13.9x | 15.9x | 17.9x |
|---|---|---|---|---|---|
| 4.2% | $81 | $97 | $113 | $129 | $146 |
| 5.2% | $76 | $92 | $107 | $123 | $139 |
| 6.2% | $72 | $87 | $102 | $117 | $132 |
| 7.2% | $69 | $83 | $97 | $111 | $125 |
| 8.2% | $65 | $79 | $92 | $106 | $119 |
Current price: $69.73. 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.