Using an unlevered Free Cash Flow to Firm (FCFF) model, we project McCormick & Company, Incorporated's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 14.6% to 0.9% 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 32, DPO 104, DIO 110). At a 6.5% WACC with mid-year discounting, the terminal value (72% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $41.34 per share, suggesting MKC is overvalued by 20.2% at the current price of $51.83.
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 | 1,003 | 1,043 | 1,082 | 1,121 | 1,131 | 1,159 |
| (−) Net Interest | 214 | 222 | 230 | 239 | 241 | 247 |
| (+) D&A | 260 | 267 | 279 | 293 | 308 | 315 |
| EBITDA | 1,477 | 1,532 | 1,592 | 1,653 | 1,679 | 1,721 |
| (−) Tax | 199 | 207 | 215 | 223 | 225 | — |
| (−) CapEx | 311 | 323 | 335 | 347 | 350 | — |
| (−) ΔWC | 126 | 31 | 30 | 30 | 8 | — |
| Free Cash Flow (FCF) | 840 | 971 | 1,011 | 1,053 | 1,097 | — |
| Peers' EBITDA Multiple | 8.6x | |||||
| Terminal Value | 14,750 | |||||
| WACC / Discount Rate | 6.45% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 815 | 884 | 865 | 846 | 828 | 10,794 |
| Enterprise Value | 15,032 | |||||
| Projection Period | 4,238 | 28.2% | ||||
| Terminal Value | 10,794 | 71.8% | ||||
| (−) Current Net Debt | 3,900 | |||||
| Equity Value | 11,132 | |||||
| (÷) Outstanding Shares | 269M | |||||
| Fair Price | $41 | -20.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 4.6x | 6.6x | 8.6x | 10.6x | 12.6x |
|---|---|---|---|---|---|
| 4.4% | $26 | $36 | $46 | $56 | $67 |
| 5.4% | $24 | $34 | $44 | $53 | $63 |
| 6.4% | $23 | $32 | $41 | $51 | $60 |
| 7.4% | $21 | $30 | $39 | $48 | $57 |
| 8.4% | $20 | $29 | $37 | $46 | $54 |
Current price: $51.83. 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.