Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Oracle Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 17.1% to 22.0% 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 52, DPO 58, DIO 9). At a 8.6% WACC with mid-year discounting, the terminal value (92% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $566.85 per share, suggesting ORCL is undervalued by 295.5% at the current price of $143.33.
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 | 20,980 | 27,592 | 40,525 | 57,207 | 69,795 | 71,540 |
| (−) Net Interest | 4,374 | 5,752 | 8,448 | 11,926 | 14,550 | 14,914 |
| (+) D&A | 8,684 | 10,495 | 12,535 | 15,118 | 19,845 | 20,341 |
| EBITDA | 34,038 | 43,839 | 61,508 | 84,250 | 104,190 | 106,795 |
| (−) Tax | 1,521 | 2,000 | 2,937 | 4,146 | 5,059 | — |
| (−) CapEx | 11,187 | 14,712 | 21,608 | 30,503 | 37,215 | — |
| (−) ΔWC | 3,863 | 2,303 | 4,505 | 5,811 | 4,385 | — |
| Free Cash Flow (FCF) | 17,467 | 24,824 | 32,458 | 43,790 | 57,531 | — |
| Peers' EBITDA Multiple | 22.4x | |||||
| Terminal Value | 2,392,204 | |||||
| WACC / Discount Rate | 8.64% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 16,758 | 21,921 | 26,383 | 32,763 | 39,620 | 1,580,559 |
| Enterprise Value | 1,718,004 | |||||
| Projection Period | 137,445 | 8.0% | ||||
| Terminal Value | 1,580,559 | 92.0% | ||||
| (−) Current Net Debt | 93,318 | |||||
| Equity Value | 1,624,686 | |||||
| (÷) Outstanding Shares | 2866M | |||||
| Fair Price | $567 | +295.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.4x | 20.4x | 22.4x | 24.4x | 26.4x |
|---|---|---|---|---|---|
| 6.6% | $515 | $569 | $623 | $677 | $731 |
| 7.6% | $491 | $543 | $594 | $646 | $697 |
| 8.6% | $468 | $518 | $567 | $616 | $665 |
| 9.6% | $447 | $494 | $541 | $588 | $635 |
| 10.6% | $426 | $471 | $516 | $561 | $606 |
Current price: $143.33. 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.