Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Mastercard Incorporated's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 12.8% to 11.0% 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 58, DPO 59, DIO 60). At a 7.9% WACC with mid-year discounting, the terminal value (79% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $484.36 per share, suggesting MA is fairly valued by 3.5% at the current price of $501.92.
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 | 21,584 | 24,244 | 27,199 | 30,049 | 33,354 | 34,188 |
| (−) Net Interest | 828 | 930 | 1,043 | 1,153 | 1,279 | 1,311 |
| (+) D&A | 649 | 692 | 703 | 888 | 1,080 | 1,107 |
| EBITDA | 23,061 | 25,866 | 28,946 | 32,090 | 35,714 | 36,607 |
| (−) Tax | 3,627 | 4,075 | 4,571 | 5,050 | 5,606 | — |
| (−) CapEx | 1,028 | 1,155 | 1,296 | 1,432 | 1,589 | — |
| (−) ΔWC | 666 | 727 | 808 | 779 | 904 | — |
| Free Cash Flow (FCF) | 17,739 | 19,909 | 22,271 | 24,829 | 27,615 | — |
| Peers' EBITDA Multiple | 14.0x | |||||
| Terminal Value | 512,492 | |||||
| WACC / Discount Rate | 7.87% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 17,079 | 17,770 | 18,428 | 19,046 | 19,637 | 350,885 |
| Enterprise Value | 442,845 | |||||
| Projection Period | 91,960 | 20.8% | ||||
| Terminal Value | 350,885 | 79.2% | ||||
| (−) Current Net Debt | 7,873 | |||||
| Equity Value | 434,972 | |||||
| (÷) Outstanding Shares | 898M | |||||
| Fair Price | $484 | -3.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x |
|---|---|---|---|---|---|
| 5.9% | $405 | $466 | $528 | $589 | $650 |
| 6.9% | $389 | $447 | $505 | $564 | $622 |
| 7.9% | $373 | $429 | $484 | $540 | $596 |
| 8.9% | $358 | $411 | $464 | $518 | $571 |
| 9.9% | $344 | $394 | $445 | $496 | $547 |
Current price: $501.92. 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.