Using an unlevered Free Cash Flow to Firm (FCFF) model, we project AT&T Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 2.3% to 3.4% 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 31, DPO 249, DIO 20). At a 7.0% WACC with mid-year discounting, the terminal value (73% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.3x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $54.97 per share, suggesting T is undervalued by 89.2% at the current price of $29.05.
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 | 34,708 | 35,461 | 36,220 | 36,870 | 38,117 | 39,069 |
| (−) Net Interest | 6,806 | 6,954 | 7,103 | 7,230 | 7,475 | 7,662 |
| (+) D&A | 19,022 | 19,641 | 19,725 | 20,249 | 20,365 | 20,874 |
| EBITDA | 60,536 | 62,055 | 63,048 | 64,349 | 65,956 | 67,605 |
| (−) Tax | 6,925 | 7,075 | 7,227 | 7,356 | 7,605 | — |
| (−) CapEx | 19,620 | 20,046 | 20,475 | 20,842 | 21,547 | — |
| (−) ΔWC | 2,563 | -536 | -540 | -462 | -887 | — |
| Free Cash Flow (FCF) | 31,428 | 35,470 | 35,886 | 36,612 | 37,691 | — |
| Peers' EBITDA Multiple | 8.3x | |||||
| Terminal Value | 561,124 | |||||
| WACC / Discount Rate | 6.96% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 30,389 | 32,067 | 30,333 | 28,934 | 27,850 | 400,902 |
| Enterprise Value | 550,475 | |||||
| Projection Period | 149,573 | 27.2% | ||||
| Terminal Value | 400,902 | 72.8% | ||||
| (−) Current Net Debt | 155,752 | |||||
| Equity Value | 394,723 | |||||
| (÷) Outstanding Shares | 7179M | |||||
| Fair Price | $55 | +89.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 4.3x | 6.3x | 8.3x | 10.3x | 12.3x |
|---|---|---|---|---|---|
| 5.0% | $32 | $47 | $61 | $76 | $91 |
| 6.0% | $30 | $44 | $58 | $72 | $86 |
| 7.0% | $28 | $42 | $55 | $68 | $82 |
| 8.0% | $26 | $39 | $52 | $65 | $78 |
| 9.0% | $25 | $37 | $49 | $61 | $74 |
Current price: $29.05. 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.