Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Keysight Technologies, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 22.9% to 2.1% 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 63, DPO 60, DIO 177). At a 9.1% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 20.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $162.15 per share, suggesting KEYS is overvalued by 42.6% at the current price of $282.65.
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 | 1,273 | 1,372 | 1,452 | 1,451 | 1,482 | 1,519 |
| (−) Net Interest | 105 | 113 | 120 | 120 | 122 | 125 |
| (+) D&A | 167 | 175 | 183 | 192 | 210 | 215 |
| EBITDA | 1,546 | 1,660 | 1,755 | 1,764 | 1,814 | 1,860 |
| (−) Tax | 241 | 260 | 275 | 275 | 281 | — |
| (−) CapEx | 211 | 228 | 241 | 241 | 246 | — |
| (−) ΔWC | 289 | 148 | 121 | -0 | 47 | — |
| Free Cash Flow (FCF) | 805 | 1,024 | 1,118 | 1,248 | 1,241 | — |
| Peers' EBITDA Multiple | 20.6x | |||||
| Terminal Value | 38,331 | |||||
| WACC / Discount Rate | 9.08% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 770 | 899 | 900 | 921 | 839 | 24,826 |
| Enterprise Value | 29,154 | |||||
| Projection Period | 4,328 | 14.8% | ||||
| Terminal Value | 24,826 | 85.2% | ||||
| (−) Current Net Debt | 1,098 | |||||
| Equity Value | 28,056 | |||||
| (÷) Outstanding Shares | 173M | |||||
| Fair Price | $162 | -42.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 16.6x | 18.6x | 20.6x | 22.6x | 24.6x |
|---|---|---|---|---|---|
| 7.1% | $147 | $162 | $177 | $193 | $208 |
| 8.1% | $140 | $155 | $170 | $184 | $199 |
| 9.1% | $134 | $148 | $162 | $176 | $190 |
| 10.1% | $129 | $142 | $155 | $168 | $182 |
| 11.1% | $123 | $136 | $149 | $161 | $174 |
Current price: $282.65. 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.