Using an unlevered Free Cash Flow to Firm (FCFF) model, we project ResMed Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 9.7% to 11.7% 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 65, DPO 39, DIO 160). At a 7.7% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $224.04 per share, suggesting RMD is fairly valued by 0.6% at the current price of $222.80.
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 | 1,660 | 1,784 | 1,908 | 2,052 | 2,292 | 2,349 |
| (−) Net Interest | 42 | 45 | 48 | 52 | 58 | 59 |
| (+) D&A | 122 | 134 | 140 | 153 | 173 | 177 |
| EBITDA | 1,825 | 1,963 | 2,096 | 2,256 | 2,522 | 2,585 |
| (−) Tax | 397 | 426 | 456 | 490 | 548 | — |
| (−) CapEx | 174 | 187 | 200 | 215 | 240 | — |
| (−) ΔWC | 166 | 135 | 134 | 157 | 261 | — |
| Free Cash Flow (FCF) | 1,088 | 1,215 | 1,306 | 1,395 | 1,474 | — |
| Peers' EBITDA Multiple | 15.3x | |||||
| Terminal Value | 39,556 | |||||
| WACC / Discount Rate | 7.70% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,049 | 1,087 | 1,085 | 1,076 | 1,056 | 27,293 |
| Enterprise Value | 32,645 | |||||
| Projection Period | 5,352 | 16.4% | ||||
| Terminal Value | 27,293 | 83.6% | ||||
| (−) Current Net Debt | (358) | |||||
| Equity Value | 33,003 | |||||
| (÷) Outstanding Shares | 147M | |||||
| Fair Price | $224 | +0.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.3x | 13.3x | 15.3x | 17.3x | 19.3x |
|---|---|---|---|---|---|
| 5.7% | $191 | $217 | $244 | $271 | $297 |
| 6.7% | $183 | $208 | $234 | $259 | $284 |
| 7.7% | $176 | $200 | $224 | $248 | $272 |
| 8.7% | $169 | $192 | $215 | $238 | $261 |
| 9.7% | $162 | $184 | $206 | $228 | $250 |
Current price: $222.80. 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.