Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Solventum Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -2.0% to 0.5% 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 53, DPO 50, DIO 94). At a 7.9% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $118.84 per share, suggesting SOLV is undervalued by 83.5% at the current price of $64.76.
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 | 1,239 | 1,285 | 1,338 | 1,372 | 1,379 | 1,413 |
| (−) Net Interest | 140 | 146 | 152 | 156 | 156 | 160 |
| (+) D&A | 315 | 323 | 337 | 347 | 340 | 348 |
| EBITDA | 1,695 | 1,753 | 1,827 | 1,874 | 1,875 | 1,922 |
| (−) Tax | 229 | 238 | 247 | 254 | 255 | — |
| (−) CapEx | 313 | 324 | 338 | 346 | 348 | — |
| (−) ΔWC | 195 | 59 | 70 | 44 | 8 | — |
| Free Cash Flow (FCF) | 958 | 1,132 | 1,172 | 1,231 | 1,264 | — |
| Peers' EBITDA Multiple | 15.4x | |||||
| Terminal Value | 29,595 | |||||
| WACC / Discount Rate | 7.89% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 923 | 1,011 | 970 | 943 | 898 | 20,247 |
| Enterprise Value | 24,992 | |||||
| Projection Period | 4,744 | 19.0% | ||||
| Terminal Value | 20,247 | 81.0% | ||||
| (−) Current Net Debt | 4,157 | |||||
| Equity Value | 20,835 | |||||
| (÷) Outstanding Shares | 175M | |||||
| Fair Price | $119 | +83.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.4x | 13.4x | 15.4x | 17.4x | 19.4x |
|---|---|---|---|---|---|
| 5.9% | $99 | $115 | $131 | $148 | $164 |
| 6.9% | $94 | $109 | $125 | $141 | $156 |
| 7.9% | $89 | $104 | $119 | $134 | $149 |
| 8.9% | $84 | $99 | $113 | $127 | $142 |
| 9.9% | $80 | $94 | $108 | $121 | $135 |
Current price: $64.76. 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.