Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Omnicom Group Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 43.9% to 4.2% 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 246, DPO 388, DIO 41). At a 6.2% WACC with mid-year discounting, the terminal value (78% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $200.01 per share, suggesting OMC is undervalued by 169.3% at the current price of $74.28.
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 | 3,337 | 3,363 | 3,494 | 3,509 | 3,657 | 3,749 |
| (−) Net Interest | 374 | 377 | 391 | 393 | 410 | 420 |
| (+) D&A | 223 | 164 | 224 | 286 | 336 | 345 |
| EBITDA | 3,934 | 3,903 | 4,109 | 4,188 | 4,403 | 4,513 |
| (−) Tax | 1,267 | 1,276 | 1,326 | 1,332 | 1,388 | — |
| (−) CapEx | 373 | 376 | 390 | 392 | 409 | — |
| (−) ΔWC | 108 | -21 | -108 | -12 | -122 | — |
| Free Cash Flow (FCF) | 2,186 | 2,272 | 2,500 | 2,476 | 2,728 | — |
| Peers' EBITDA Multiple | 10.9x | |||||
| Terminal Value | 49,238 | |||||
| WACC / Discount Rate | 6.19% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,121 | 2,076 | 2,151 | 2,007 | 2,082 | 36,459 |
| Enterprise Value | 46,897 | |||||
| Projection Period | 10,438 | 22.3% | ||||
| Terminal Value | 36,459 | 77.7% | ||||
| (−) Current Net Debt | 5,900 | |||||
| Equity Value | 40,997 | |||||
| (÷) Outstanding Shares | 205M | |||||
| Fair Price | $200 | +169.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.9x | 8.9x | 10.9x | 12.9x | 14.9x |
|---|---|---|---|---|---|
| 4.2% | $148 | $184 | $220 | $256 | $292 |
| 5.2% | $141 | $176 | $210 | $244 | $278 |
| 6.2% | $135 | $167 | $200 | $233 | $265 |
| 7.2% | $128 | $160 | $191 | $222 | $253 |
| 8.2% | $122 | $152 | $182 | $212 | $241 |
Current price: $74.28. 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.