Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Emerson Electric Co.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.2% to 8.6% 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 66, DPO 69, DIO 94). At a 8.2% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $134.45 per share, suggesting EMR is fairly valued by 5.1% at the current price of $127.87.
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 | 3,616 | 3,813 | 4,008 | 4,324 | 4,698 | 4,815 |
| (−) Net Interest | 328 | 346 | 363 | 392 | 426 | 437 |
| (+) D&A | 465 | 466 | 484 | 542 | 599 | 614 |
| EBITDA | 4,409 | 4,625 | 4,855 | 5,258 | 5,723 | 5,866 |
| (−) Tax | 785 | 828 | 870 | 939 | 1,020 | — |
| (−) CapEx | 588 | 620 | 652 | 703 | 764 | — |
| (−) ΔWC | 164 | 223 | 221 | 358 | 423 | — |
| Free Cash Flow (FCF) | 2,871 | 2,954 | 3,112 | 3,258 | 3,515 | — |
| Peers' EBITDA Multiple | 19.1x | |||||
| Terminal Value | 111,979 | |||||
| WACC / Discount Rate | 8.19% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,760 | 2,625 | 2,556 | 2,473 | 2,466 | 75,532 |
| Enterprise Value | 88,413 | |||||
| Projection Period | 12,880 | 14.6% | ||||
| Terminal Value | 75,532 | 85.4% | ||||
| (−) Current Net Debt | 12,215 | |||||
| Equity Value | 76,198 | |||||
| (÷) Outstanding Shares | 567M | |||||
| Fair Price | $134 | +5.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.1x | 17.1x | 19.1x | 21.1x | 23.1x |
|---|---|---|---|---|---|
| 6.2% | $118 | $133 | $149 | $164 | $179 |
| 7.2% | $112 | $127 | $141 | $156 | $171 |
| 8.2% | $107 | $120 | $134 | $148 | $162 |
| 9.2% | $101 | $115 | $128 | $141 | $155 |
| 10.2% | $96 | $109 | $122 | $135 | $147 |
Current price: $127.87. 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.