Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Howmet Aerospace Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 12.3% to 10.8% 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 35, DPO 68, DIO 128). At a 8.8% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 16.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $99.22 per share, suggesting HWM is overvalued by 57.3% at the current price of $232.10.
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 | 1,589 | 1,782 | 1,956 | 2,116 | 2,346 | 2,405 |
| (−) Net Interest | 312 | 349 | 384 | 415 | 460 | 472 |
| (+) D&A | 277 | 313 | 360 | 410 | 447 | 458 |
| EBITDA | 2,178 | 2,444 | 2,700 | 2,941 | 3,253 | 3,335 |
| (−) Tax | 315 | 353 | 388 | 419 | 465 | — |
| (−) CapEx | 380 | 426 | 468 | 507 | 562 | — |
| (−) ΔWC | 218 | 245 | 222 | 203 | 292 | — |
| Free Cash Flow (FCF) | 1,265 | 1,420 | 1,622 | 1,812 | 1,935 | — |
| Peers' EBITDA Multiple | 16.6x | |||||
| Terminal Value | 55,188 | |||||
| WACC / Discount Rate | 8.84% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,212 | 1,251 | 1,313 | 1,347 | 1,322 | 36,136 |
| Enterprise Value | 42,581 | |||||
| Projection Period | 6,445 | 15.1% | ||||
| Terminal Value | 36,136 | 84.9% | ||||
| (−) Current Net Debt | 2,308 | |||||
| Equity Value | 40,273 | |||||
| (÷) Outstanding Shares | 406M | |||||
| Fair Price | $99 | -57.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 12.6x | 14.6x | 16.6x | 18.6x | 20.6x |
|---|---|---|---|---|---|
| 6.8% | $85 | $97 | $109 | $120 | $132 |
| 7.8% | $81 | $93 | $104 | $115 | $126 |
| 8.8% | $78 | $88 | $99 | $110 | $121 |
| 9.8% | $74 | $85 | $95 | $105 | $115 |
| 10.8% | $71 | $81 | $91 | $101 | $110 |
Current price: $232.10. 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.