Using an unlevered Free Cash Flow to Firm (FCFF) model, we project KeyCorp's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -28.1% to 11.1% 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 809, DPO 12860, DIO 60). At a 9.9% WACC with mid-year discounting, the terminal value (33% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $64.88 per share, suggesting KEY is undervalued by 225.9% at the current price of $19.91.
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 | 742 | 787 | 813 | 903 | 1,004 | 1,029 |
| (−) Net Interest | 2,242 | 2,378 | 2,456 | 2,729 | 3,033 | 3,109 |
| (+) D&A | 98 | 102 | 98 | 88 | 96 | 99 |
| EBITDA | 3,082 | 3,267 | 3,367 | 3,721 | 4,133 | 4,237 |
| (−) Tax | 140 | 148 | 153 | 170 | 189 | — |
| (−) CapEx | 86 | 91 | 94 | 104 | 116 | — |
| (−) ΔWC | -24,737 | -4,146 | -2,356 | -8,334 | -9,262 | — |
| Free Cash Flow (FCF) | 27,594 | 7,174 | 5,475 | 11,780 | 13,090 | — |
| Peers' EBITDA Multiple | 10.2x | |||||
| Terminal Value | 43,001 | |||||
| WACC / Discount Rate | 9.88% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 26,324 | 6,229 | 4,326 | 8,471 | 8,567 | 26,848 |
| Enterprise Value | 80,766 | |||||
| Projection Period | 53,918 | 66.8% | ||||
| Terminal Value | 26,848 | 33.2% | ||||
| (−) Current Net Debt | 9,714 | |||||
| Equity Value | 71,052 | |||||
| (÷) Outstanding Shares | 1095M | |||||
| Fair Price | $65 | +225.9% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.2x | 8.2x | 10.2x | 12.2x | 14.2x |
|---|---|---|---|---|---|
| 7.9% | $58 | $64 | $69 | $74 | $80 |
| 8.9% | $57 | $62 | $67 | $72 | $77 |
| 9.9% | $55 | $60 | $65 | $70 | $75 |
| 10.9% | $54 | $58 | $63 | $68 | $72 |
| 11.9% | $52 | $57 | $61 | $66 | $70 |
Current price: $19.91. 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.