Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Generac Holdings Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 15.2% to 5.5% 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 50, DPO 66, DIO 163). At a 8.7% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 20.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $292.40 per share, suggesting GNRC is undervalued by 44.8% at the current price of $201.88.
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 | 619 | 693 | 774 | 825 | 870 | 892 |
| (−) Net Interest | 80 | 90 | 100 | 107 | 113 | 116 |
| (+) D&A | 126 | 134 | 150 | 161 | 173 | 177 |
| EBITDA | 826 | 917 | 1,025 | 1,093 | 1,156 | 1,185 |
| (−) Tax | 131 | 147 | 164 | 175 | 184 | — |
| (−) CapEx | 148 | 166 | 185 | 197 | 208 | — |
| (−) ΔWC | 72 | 177 | 196 | 121 | 109 | — |
| Free Cash Flow (FCF) | 474 | 428 | 480 | 600 | 655 | — |
| Peers' EBITDA Multiple | 20.7x | |||||
| Terminal Value | 24,577 | |||||
| WACC / Discount Rate | 8.69% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 455 | 377 | 390 | 448 | 450 | 16,200 |
| Enterprise Value | 18,320 | |||||
| Projection Period | 2,120 | 11.6% | ||||
| Terminal Value | 16,200 | 88.4% | ||||
| (−) Current Net Debt | 992 | |||||
| Equity Value | 17,329 | |||||
| (÷) Outstanding Shares | 59M | |||||
| Fair Price | $292 | +44.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 16.7x | 18.7x | 20.7x | 22.7x | 24.7x |
|---|---|---|---|---|---|
| 6.7% | $263 | $292 | $321 | $350 | $379 |
| 7.7% | $251 | $279 | $306 | $334 | $361 |
| 8.7% | $240 | $266 | $292 | $319 | $345 |
| 9.7% | $229 | $254 | $279 | $305 | $330 |
| 10.7% | $219 | $243 | $267 | $291 | $315 |
Current price: $201.88. 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.