Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Packaging Corporation of America's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 13.6% 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 50, DPO 24, DIO 60). At a 7.6% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 10.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $225.94 per share, suggesting PKG is fairly valued by 6.4% at the current price of $212.31.
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 | 1,463 | 1,527 | 1,546 | 1,610 | 1,671 | 1,713 |
| (−) Net Interest | 99 | 103 | 105 | 109 | 113 | 116 |
| (+) D&A | 680 | 725 | 734 | 816 | 865 | 887 |
| EBITDA | 2,242 | 2,355 | 2,385 | 2,535 | 2,650 | 2,716 |
| (−) Tax | 358 | 373 | 378 | 394 | 409 | — |
| (−) CapEx | 833 | 869 | 880 | 916 | 951 | — |
| (−) ΔWC | 72 | 94 | 29 | 94 | 92 | — |
| Free Cash Flow (FCF) | 980 | 1,019 | 1,098 | 1,131 | 1,198 | — |
| Peers' EBITDA Multiple | 10.4x | |||||
| Terminal Value | 28,274 | |||||
| WACC / Discount Rate | 7.64% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 944 | 913 | 913 | 874 | 860 | 19,569 |
| Enterprise Value | 24,074 | |||||
| Projection Period | 4,505 | 18.7% | ||||
| Terminal Value | 19,569 | 81.3% | ||||
| (−) Current Net Debt | 3,836 | |||||
| Equity Value | 20,238 | |||||
| (÷) Outstanding Shares | 90M | |||||
| Fair Price | $226 | +6.4% | ||||
| WACC \ EV/EBITDA Exit Multiple | 6.4x | 8.4x | 10.4x | 12.4x | 14.4x |
|---|---|---|---|---|---|
| 5.6% | $158 | $204 | $250 | $296 | $342 |
| 6.6% | $150 | $194 | $238 | $282 | $325 |
| 7.6% | $142 | $184 | $226 | $268 | $310 |
| 8.6% | $135 | $175 | $215 | $255 | $295 |
| 9.6% | $128 | $166 | $205 | $243 | $281 |
Current price: $212.31. 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.