Using an unlevered Free Cash Flow to Firm (FCFF) model, we project STERIS plc's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 8.8% to 15.1% 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 70, DPO 34, DIO 79). At a 7.5% WACC with mid-year discounting, the terminal value (90% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 16.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $231.30 per share, suggesting STE is fairly valued by 3.0% at the current price of $224.63.
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 | 838 | 889 | 951 | 1,094 | 1,260 | 1,292 |
| (−) Net Interest | 121 | 128 | 137 | 157 | 181 | 186 |
| (+) D&A | 324 | 362 | 396 | 422 | 462 | 474 |
| EBITDA | 1,283 | 1,379 | 1,484 | 1,673 | 1,903 | 1,951 |
| (−) Tax | 182 | 193 | 206 | 237 | 273 | — |
| (−) CapEx | 431 | 457 | 489 | 563 | 648 | — |
| (−) ΔWC | 207 | 94 | 114 | 266 | 306 | — |
| Free Cash Flow (FCF) | 463 | 635 | 675 | 607 | 676 | — |
| Peers' EBITDA Multiple | 16.5x | |||||
| Terminal Value | 32,209 | |||||
| WACC / Discount Rate | 7.53% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 446 | 569 | 563 | 471 | 487 | 22,407 |
| Enterprise Value | 24,943 | |||||
| Projection Period | 2,536 | 10.2% | ||||
| Terminal Value | 22,407 | 89.8% | ||||
| (−) Current Net Debt | 2,031 | |||||
| Equity Value | 22,912 | |||||
| (÷) Outstanding Shares | 99M | |||||
| Fair Price | $231 | +3.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 12.5x | 14.5x | 16.5x | 18.5x | 20.5x |
|---|---|---|---|---|---|
| 5.5% | $195 | $225 | $255 | $285 | $315 |
| 6.5% | $185 | $214 | $243 | $271 | $300 |
| 7.5% | $177 | $204 | $231 | $259 | $286 |
| 8.5% | $168 | $194 | $220 | $247 | $273 |
| 9.5% | $160 | $185 | $210 | $235 | $260 |
Current price: $224.63. 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.