Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Procter & Gamble Company's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 2.8% to 3.8% 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 25, DPO 132, DIO 62). At a 6.5% WACC with mid-year discounting, the terminal value (79% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $133.94 per share, suggesting PG is fairly valued by 6.1% at the current price of $142.68.
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 | 19,342 | 19,879 | 20,558 | 21,470 | 22,279 | 22,836 |
| (−) Net Interest | 746 | 767 | 793 | 829 | 860 | 881 |
| (+) D&A | 3,220 | 3,348 | 3,421 | 3,536 | 3,632 | 3,723 |
| EBITDA | 23,309 | 23,994 | 24,772 | 25,835 | 26,772 | 27,441 |
| (−) Tax | 3,735 | 3,838 | 3,969 | 4,146 | 4,302 | — |
| (−) CapEx | 3,426 | 3,521 | 3,641 | 3,802 | 3,946 | — |
| (−) ΔWC | -914 | -67 | -84 | -113 | -101 | — |
| Free Cash Flow (FCF) | 17,063 | 16,702 | 17,246 | 18,001 | 18,625 | — |
| Peers' EBITDA Multiple | 14.0x | |||||
| Terminal Value | 383,900 | |||||
| WACC / Discount Rate | 6.54% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 16,531 | 15,188 | 14,721 | 14,422 | 14,006 | 279,698 |
| Enterprise Value | 354,565 | |||||
| Projection Period | 74,867 | 21.1% | ||||
| Terminal Value | 279,698 | 78.9% | ||||
| (−) Current Net Debt | 25,907 | |||||
| Equity Value | 328,658 | |||||
| (÷) Outstanding Shares | 2454M | |||||
| Fair Price | $134 | -6.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.0x | 12.0x | 14.0x | 16.0x | 18.0x |
|---|---|---|---|---|---|
| 4.5% | $111 | $129 | $147 | $165 | $183 |
| 5.5% | $106 | $123 | $140 | $157 | $174 |
| 6.5% | $101 | $118 | $134 | $150 | $167 |
| 7.5% | $97 | $113 | $128 | $144 | $159 |
| 8.5% | $93 | $108 | $122 | $137 | $152 |
Current price: $142.68. 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.