Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Fifth Third Bancorp's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.4% to 12.8% 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 863, DPO 14043, DIO 60). At a 9.8% WACC with mid-year discounting, the terminal value (42% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $238.05 per share, suggesting FITB is undervalued by 423.8% at the current price of $45.45.
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 | 2,718 | 2,912 | 3,060 | 3,452 | 3,893 | 3,991 |
| (−) Net Interest | 2,980 | 3,194 | 3,356 | 3,785 | 4,270 | 4,376 |
| (+) D&A | 527 | 590 | 588 | 626 | 702 | 720 |
| EBITDA | 6,225 | 6,696 | 7,003 | 7,863 | 8,866 | 9,087 |
| (−) Tax | 574 | 615 | 646 | 729 | 822 | — |
| (−) CapEx | 627 | 672 | 706 | 797 | 899 | — |
| (−) ΔWC | -45,987 | -6,970 | -5,297 | -14,039 | -15,836 | — |
| Free Cash Flow (FCF) | 51,011 | 12,379 | 10,948 | 20,376 | 22,980 | — |
| Peers' EBITDA Multiple | 12.7x | |||||
| Terminal Value | 115,316 | |||||
| WACC / Discount Rate | 9.76% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 48,690 | 10,765 | 8,673 | 14,708 | 15,112 | 72,385 |
| Enterprise Value | 170,332 | |||||
| Projection Period | 97,948 | 57.5% | ||||
| Terminal Value | 72,385 | 42.5% | ||||
| (−) Current Net Debt | 11,016 | |||||
| Equity Value | 159,316 | |||||
| (÷) Outstanding Shares | 669M | |||||
| Fair Price | $238 | +423.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.7x | 10.7x | 12.7x | 14.7x | 16.7x |
|---|---|---|---|---|---|
| 7.8% | $216 | $235 | $254 | $272 | $291 |
| 8.8% | $210 | $228 | $246 | $263 | $281 |
| 9.8% | $204 | $221 | $238 | $255 | $272 |
| 10.8% | $198 | $215 | $231 | $247 | $263 |
| 11.8% | $193 | $208 | $224 | $240 | $255 |
Current price: $45.45. 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.