Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Synopsys, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 36.5% to 13.8% 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 61, DPO 36, DIO 97). At a 8.8% WACC with mid-year discounting, the terminal value (89% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 28.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $401.34 per share, suggesting SNPS is fairly valued by 0.6% at the current price of $403.80.
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 | 1,936 | 2,144 | 2,387 | 2,685 | 3,056 | 3,132 |
| (−) Net Interest | 137 | 151 | 169 | 190 | 216 | 221 |
| (+) D&A | 144 | 176 | 205 | 230 | 276 | 283 |
| EBITDA | 2,217 | 2,471 | 2,760 | 3,104 | 3,548 | 3,636 |
| (−) Tax | 140 | 155 | 173 | 195 | 222 | — |
| (−) CapEx | 256 | 284 | 316 | 355 | 404 | — |
| (−) ΔWC | 233 | 208 | 243 | 299 | 371 | — |
| Free Cash Flow (FCF) | 1,587 | 1,824 | 2,028 | 2,255 | 2,550 | — |
| Peers' EBITDA Multiple | 28.6x | |||||
| Terminal Value | 103,928 | |||||
| WACC / Discount Rate | 8.82% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,521 | 1,607 | 1,642 | 1,678 | 1,743 | 68,100 |
| Enterprise Value | 76,291 | |||||
| Projection Period | 8,190 | 10.7% | ||||
| Terminal Value | 68,100 | 89.3% | ||||
| (−) Current Net Debt | 11,405 | |||||
| Equity Value | 64,885 | |||||
| (÷) Outstanding Shares | 162M | |||||
| Fair Price | $401 | -0.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 24.6x | 26.6x | 28.6x | 30.6x | 32.6x |
|---|---|---|---|---|---|
| 6.8% | $380 | $412 | $445 | $477 | $509 |
| 7.8% | $361 | $392 | $422 | $453 | $484 |
| 8.8% | $342 | $372 | $401 | $431 | $460 |
| 9.8% | $325 | $353 | $381 | $409 | $438 |
| 10.8% | $309 | $335 | $362 | $389 | $416 |
Current price: $403.80. 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.