Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Moody's Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 7.5% to 6.5% 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 102, DPO 8, DIO 60). At a 7.6% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 18.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $374.09 per share, suggesting MCO is fairly valued by 13.7% at the current price of $433.55.
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 | 3,150 | 3,388 | 3,646 | 3,764 | 4,010 | 4,110 |
| (−) Net Interest | 277 | 298 | 320 | 331 | 352 | 361 |
| (+) D&A | 267 | 308 | 325 | 351 | 369 | 378 |
| EBITDA | 3,694 | 3,994 | 4,291 | 4,446 | 4,731 | 4,850 |
| (−) Tax | 652 | 701 | 755 | 779 | 830 | — |
| (−) CapEx | 343 | 369 | 397 | 410 | 437 | — |
| (−) ΔWC | 688 | 205 | 222 | 102 | 211 | — |
| Free Cash Flow (FCF) | 2,011 | 2,718 | 2,917 | 3,154 | 3,253 | — |
| Peers' EBITDA Multiple | 18.1x | |||||
| Terminal Value | 87,632 | |||||
| WACC / Discount Rate | 7.63% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,938 | 2,434 | 2,428 | 2,439 | 2,337 | 60,686 |
| Enterprise Value | 72,263 | |||||
| Projection Period | 11,576 | 16.0% | ||||
| Terminal Value | 60,686 | 84.0% | ||||
| (−) Current Net Debt | 4,967 | |||||
| Equity Value | 67,296 | |||||
| (÷) Outstanding Shares | 180M | |||||
| Fair Price | $374 | -13.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 14.1x | 16.1x | 18.1x | 20.1x | 22.1x |
|---|---|---|---|---|---|
| 5.6% | $328 | $369 | $410 | $451 | $492 |
| 6.6% | $314 | $353 | $392 | $431 | $470 |
| 7.6% | $299 | $337 | $374 | $411 | $449 |
| 8.6% | $286 | $322 | $357 | $393 | $429 |
| 9.6% | $273 | $307 | $341 | $376 | $410 |
Current price: $433.55. 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.