Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Altria Group, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.7% to -1.2% 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 11, DPO 46, DIO 82). At a 6.4% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 19.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $115.14 per share, suggesting MO is undervalued by 80.5% at the current price of $63.78.
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 | 11,003 | 11,037 | 10,986 | 11,039 | 10,910 | 11,182 |
| (−) Net Interest | 1,137 | 1,140 | 1,135 | 1,140 | 1,127 | 1,155 |
| (+) D&A | 186 | 188 | 184 | 182 | 190 | 195 |
| EBITDA | 12,325 | 12,365 | 12,305 | 12,361 | 12,226 | 12,532 |
| (−) Tax | 2,782 | 2,790 | 2,778 | 2,791 | 2,758 | — |
| (−) CapEx | 183 | 184 | 183 | 184 | 182 | — |
| (−) ΔWC | 581 | 4 | -5 | 6 | -14 | — |
| Free Cash Flow (FCF) | 8,779 | 9,388 | 9,350 | 9,380 | 9,300 | — |
| Peers' EBITDA Multiple | 19.0x | |||||
| Terminal Value | 238,106 | |||||
| WACC / Discount Rate | 6.39% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 8,511 | 8,555 | 8,009 | 7,552 | 7,038 | 174,681 |
| Enterprise Value | 214,345 | |||||
| Projection Period | 39,664 | 18.5% | ||||
| Terminal Value | 174,681 | 81.5% | ||||
| (−) Current Net Debt | 21,228 | |||||
| Equity Value | 193,117 | |||||
| (÷) Outstanding Shares | 1677M | |||||
| Fair Price | $115 | +80.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 15.0x | 17.0x | 19.0x | 21.0x | 23.0x |
|---|---|---|---|---|---|
| 4.4% | $103 | $115 | $127 | $139 | $151 |
| 5.4% | $98 | $109 | $121 | $132 | $144 |
| 6.4% | $93 | $104 | $115 | $126 | $137 |
| 7.4% | $89 | $99 | $110 | $120 | $131 |
| 8.4% | $85 | $95 | $105 | $115 | $125 |
Current price: $63.78. 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.