Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Otis Worldwide Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.2% to 0.2% 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 106, DPO 67, DIO 22). At a 7.8% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 20.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $106.87 per share, suggesting OTIS is undervalued by 37.4% at the current price of $77.76.
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 | 2,202 | 2,311 | 2,422 | 2,582 | 2,588 | 2,653 |
| (−) Net Interest | 127 | 134 | 140 | 149 | 150 | 153 |
| (+) D&A | 137 | 136 | 143 | 148 | 157 | 161 |
| EBITDA | 2,467 | 2,580 | 2,705 | 2,880 | 2,895 | 2,967 |
| (−) Tax | 533 | 559 | 586 | 625 | 627 | — |
| (−) CapEx | 147 | 154 | 162 | 172 | 173 | — |
| (−) ΔWC | 230 | 153 | 155 | 225 | 8 | — |
| Free Cash Flow (FCF) | 1,556 | 1,714 | 1,802 | 1,857 | 2,088 | — |
| Peers' EBITDA Multiple | 20.7x | |||||
| Terminal Value | 61,546 | |||||
| WACC / Discount Rate | 7.80% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,499 | 1,531 | 1,493 | 1,428 | 1,489 | 42,278 |
| Enterprise Value | 49,718 | |||||
| Projection Period | 7,440 | 15.0% | ||||
| Terminal Value | 42,278 | 85.0% | ||||
| (−) Current Net Debt | 7,654 | |||||
| Equity Value | 42,064 | |||||
| (÷) Outstanding Shares | 394M | |||||
| Fair Price | $107 | +37.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 16.7x | 18.7x | 20.7x | 22.7x | 24.7x |
|---|---|---|---|---|---|
| 5.8% | $96 | $107 | $118 | $130 | $141 |
| 6.8% | $91 | $102 | $112 | $123 | $134 |
| 7.8% | $86 | $97 | $107 | $117 | $128 |
| 8.8% | $82 | $92 | $102 | $111 | $121 |
| 9.8% | $78 | $87 | $97 | $106 | $115 |
Current price: $77.76. 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.