Using an unlevered Free Cash Flow to Firm (FCFF) model, we project 3M Company's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.9% to 3.0% 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 51, DPO 64, DIO 95). At a 8.6% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $194.81 per share, suggesting MMM is undervalued by 34.2% at the current price of $145.14.
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 | 3,746 | 3,871 | 3,999 | 4,133 | 4,257 | 4,364 |
| (−) Net Interest | 717 | 740 | 765 | 791 | 814 | 835 |
| (+) D&A | 1,412 | 1,339 | 1,246 | 1,188 | 1,226 | 1,257 |
| EBITDA | 5,874 | 5,950 | 6,010 | 6,112 | 6,298 | 6,455 |
| (−) Tax | 635 | 656 | 678 | 701 | 722 | — |
| (−) CapEx | 1,242 | 1,283 | 1,326 | 1,370 | 1,411 | — |
| (−) ΔWC | 266 | 158 | 163 | 170 | 157 | — |
| Free Cash Flow (FCF) | 3,732 | 3,853 | 3,843 | 3,871 | 4,007 | — |
| Peers' EBITDA Multiple | 22.6x | |||||
| Terminal Value | 146,212 | |||||
| WACC / Discount Rate | 8.57% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,581 | 3,406 | 3,129 | 2,903 | 2,768 | 96,928 |
| Enterprise Value | 112,715 | |||||
| Projection Period | 15,787 | 14.0% | ||||
| Terminal Value | 96,928 | 86.0% | ||||
| (−) Current Net Debt | 7,701 | |||||
| Equity Value | 105,014 | |||||
| (÷) Outstanding Shares | 539M | |||||
| Fair Price | $195 | +34.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.6x | 20.6x | 22.6x | 24.6x | 26.6x |
|---|---|---|---|---|---|
| 6.6% | $179 | $196 | $214 | $231 | $249 |
| 7.6% | $171 | $187 | $204 | $221 | $237 |
| 8.6% | $163 | $179 | $195 | $211 | $227 |
| 9.6% | $156 | $171 | $186 | $201 | $216 |
| 10.6% | $149 | $163 | $178 | $192 | $207 |
Current price: $145.14. 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.