Using an unlevered Free Cash Flow to Firm (FCFF) model, we project PPL Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.5% to 5.2% 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 66, DPO 88, DIO 36). At a 5.9% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $104.44 per share, suggesting PPL is undervalued by 178.7% at the current price of $37.48.
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 | 2,993 | 3,147 | 3,308 | 3,656 | 3,848 | 3,944 |
| (−) Net Interest | 925 | 973 | 1,023 | 1,130 | 1,189 | 1,219 |
| (+) D&A | 2,671 | 2,922 | 3,171 | 3,408 | 3,637 | 3,727 |
| EBITDA | 6,588 | 7,042 | 7,502 | 8,194 | 8,673 | 8,890 |
| (−) Tax | 1,069 | 1,124 | 1,182 | 1,306 | 1,375 | — |
| (−) CapEx | 3,232 | 3,399 | 3,573 | 3,949 | 4,156 | — |
| (−) ΔWC | 148 | 47 | 50 | 107 | 59 | — |
| Free Cash Flow (FCF) | 2,138 | 2,471 | 2,697 | 2,832 | 3,084 | — |
| Peers' EBITDA Multiple | 12.7x | |||||
| Terminal Value | 112,638 | |||||
| WACC / Discount Rate | 5.88% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,078 | 2,269 | 2,338 | 2,319 | 2,385 | 84,662 |
| Enterprise Value | 96,051 | |||||
| Projection Period | 11,389 | 11.9% | ||||
| Terminal Value | 84,662 | 88.1% | ||||
| (−) Current Net Debt | 18,264 | |||||
| Equity Value | 77,787 | |||||
| (÷) Outstanding Shares | 745M | |||||
| Fair Price | $104 | +178.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.7x | 10.7x | 12.7x | 14.7x | 16.7x |
|---|---|---|---|---|---|
| 3.9% | $77 | $97 | $117 | $136 | $156 |
| 4.9% | $73 | $92 | $110 | $129 | $148 |
| 5.9% | $69 | $87 | $104 | $122 | $140 |
| 6.9% | $65 | $82 | $99 | $116 | $133 |
| 7.9% | $61 | $77 | $94 | $110 | $126 |
Current price: $37.48. 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.