Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Northern Trust Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -40.0% to 21.8% 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 30, DIO 60). At a 9.8% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $610.01 per share, suggesting NTRS is undervalued by 341.9% at the current price of $138.03.
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 | 1,050 | 1,095 | 1,156 | 1,160 | 1,414 | 1,449 |
| (−) Net Interest | 2,547 | 2,657 | 2,807 | 2,816 | 3,431 | 3,517 |
| (+) D&A | 547 | 540 | 496 | 467 | 424 | 435 |
| EBITDA | 4,144 | 4,291 | 4,459 | 4,443 | 5,269 | 5,401 |
| (−) Tax | 255 | 265 | 280 | 281 | 343 | — |
| (−) CapEx | 481 | 502 | 530 | 532 | 649 | — |
| (−) ΔWC | 1,360 | 58 | 80 | 5 | 328 | — |
| Free Cash Flow (FCF) | 2,048 | 3,465 | 3,568 | 3,624 | 3,949 | — |
| Peers' EBITDA Multiple | 17.0x | |||||
| Terminal Value | 91,702 | |||||
| WACC / Discount Rate | 9.83% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,954 | 3,010 | 2,822 | 2,610 | 2,589 | 57,369 |
| Enterprise Value | 70,354 | |||||
| Projection Period | 12,986 | 18.5% | ||||
| Terminal Value | 57,369 | 81.5% | ||||
| (−) Current Net Debt | (44,700) | |||||
| Equity Value | 115,054 | |||||
| (÷) Outstanding Shares | 189M | |||||
| Fair Price | $610 | +342.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.0x | 15.0x | 17.0x | 19.0x | 21.0x |
|---|---|---|---|---|---|
| 7.8% | $564 | $603 | $643 | $682 | $721 |
| 8.8% | $551 | $588 | $626 | $663 | $701 |
| 9.8% | $538 | $574 | $610 | $646 | $682 |
| 10.8% | $526 | $561 | $595 | $629 | $663 |
| 11.8% | $515 | $548 | $581 | $613 | $646 |
Current price: $138.03. 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.