Using an unlevered Free Cash Flow to Firm (FCFF) model, we project PulteGroup, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -4.9% to 6.0% 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 5, DPO 21, DIO 381). At a 8.0% WACC with mid-year discounting, the terminal value (73% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $198.49 per share, suggesting PHM is undervalued by 69.2% at the current price of $117.34.
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 | 3,610 | 3,791 | 4,086 | 4,329 | 4,587 | 4,701 |
| (−) Net Interest | 0 | 1 | 1 | 1 | 1 | 1 |
| (+) D&A | 104 | 110 | 110 | 115 | 116 | 119 |
| EBITDA | 3,715 | 3,902 | 4,196 | 4,444 | 4,704 | 4,821 |
| (−) Tax | 850 | 893 | 962 | 1,019 | 1,080 | — |
| (−) CapEx | 105 | 110 | 118 | 125 | 133 | — |
| (−) ΔWC | -635 | 593 | 965 | 797 | 845 | — |
| Free Cash Flow (FCF) | 3,395 | 2,306 | 2,150 | 2,503 | 2,646 | — |
| Peers' EBITDA Multiple | 8.9x | |||||
| Terminal Value | 42,716 | |||||
| WACC / Discount Rate | 7.98% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,267 | 2,055 | 1,775 | 1,913 | 1,873 | 29,101 |
| Enterprise Value | 39,984 | |||||
| Projection Period | 10,883 | 27.2% | ||||
| Terminal Value | 29,101 | 72.8% | ||||
| (−) Current Net Debt | 394 | |||||
| Equity Value | 39,590 | |||||
| (÷) Outstanding Shares | 200M | |||||
| Fair Price | $198 | +69.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 4.9x | 6.9x | 8.9x | 10.9x | 12.9x |
|---|---|---|---|---|---|
| 6.0% | $143 | $179 | $215 | $251 | $287 |
| 7.0% | $138 | $172 | $207 | $241 | $276 |
| 8.0% | $133 | $166 | $198 | $231 | $264 |
| 9.0% | $128 | $159 | $191 | $222 | $254 |
| 10.0% | $123 | $153 | $184 | $214 | $244 |
Current price: $117.34. 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.