Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Masco Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.8% to -2.5% 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 49, DPO 60, DIO 75). At a 8.0% WACC with mid-year discounting, the terminal value (84% 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 $113.20 per share, suggesting MAS is undervalued by 88.2% at the current price of $60.14.
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 | 1,157 | 1,196 | 1,238 | 1,263 | 1,231 | 1,262 |
| (−) Net Interest | 131 | 135 | 140 | 143 | 139 | 143 |
| (+) D&A | 184 | 193 | 185 | 173 | 178 | 182 |
| EBITDA | 1,471 | 1,524 | 1,562 | 1,579 | 1,548 | 1,587 |
| (−) Tax | 292 | 302 | 313 | 319 | 311 | — |
| (−) CapEx | 175 | 181 | 187 | 191 | 186 | — |
| (−) ΔWC | -24 | 42 | 45 | 27 | -34 | — |
| Free Cash Flow (FCF) | 1,028 | 1,000 | 1,018 | 1,042 | 1,085 | — |
| Peers' EBITDA Multiple | 20.6x | |||||
| Terminal Value | 32,647 | |||||
| WACC / Discount Rate | 7.95% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 990 | 891 | 841 | 798 | 769 | 22,275 |
| Enterprise Value | 26,563 | |||||
| Projection Period | 4,289 | 16.1% | ||||
| Terminal Value | 22,275 | 83.9% | ||||
| (−) Current Net Debt | 2,789 | |||||
| Equity Value | 23,774 | |||||
| (÷) Outstanding Shares | 210M | |||||
| Fair Price | $113 | +88.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 16.6x | 18.6x | 20.6x | 22.6x | 24.6x |
|---|---|---|---|---|---|
| 5.9% | $102 | $113 | $125 | $136 | $147 |
| 6.9% | $97 | $108 | $119 | $130 | $140 |
| 7.9% | $93 | $103 | $113 | $124 | $134 |
| 8.9% | $88 | $98 | $108 | $118 | $128 |
| 9.9% | $84 | $94 | $103 | $112 | $122 |
Current price: $60.14. 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.