Using an unlevered Free Cash Flow to Firm (FCFF) model, we project TE Connectivity Ltd.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 13.5% to 3.5% 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 69, DPO 60, DIO 88). At a 8.7% WACC with mid-year discounting, the terminal value (87% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.7x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $299.50 per share, suggesting TEL is undervalued by 46.3% at the current price of $204.77.
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 | 3,393 | 3,658 | 3,923 | 4,147 | 4,290 | 4,397 |
| (−) Net Interest | 84 | 91 | 97 | 103 | 106 | 109 |
| (+) D&A | 761 | 807 | 851 | 917 | 1,006 | 1,031 |
| EBITDA | 4,238 | 4,556 | 4,871 | 5,167 | 5,402 | 5,537 |
| (−) Tax | 412 | 444 | 476 | 503 | 521 | — |
| (−) CapEx | 918 | 990 | 1,061 | 1,122 | 1,161 | — |
| (−) ΔWC | 587 | 365 | 364 | 308 | 197 | — |
| Free Cash Flow (FCF) | 2,322 | 2,757 | 2,970 | 3,233 | 3,523 | — |
| Peers' EBITDA Multiple | 22.7x | |||||
| Terminal Value | 125,570 | |||||
| WACC / Discount Rate | 8.65% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,227 | 2,435 | 2,413 | 2,418 | 2,426 | 82,937 |
| Enterprise Value | 94,856 | |||||
| Projection Period | 11,919 | 12.6% | ||||
| Terminal Value | 82,937 | 87.4% | ||||
| (−) Current Net Debt | 5,295 | |||||
| Equity Value | 89,561 | |||||
| (÷) Outstanding Shares | 299M | |||||
| Fair Price | $300 | +46.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.7x | 20.7x | 22.7x | 24.7x | 26.7x |
|---|---|---|---|---|---|
| 6.6% | $275 | $302 | $328 | $355 | $382 |
| 7.6% | $262 | $288 | $314 | $339 | $365 |
| 8.6% | $251 | $275 | $300 | $324 | $348 |
| 9.6% | $239 | $263 | $286 | $310 | $333 |
| 10.6% | $229 | $251 | $274 | $296 | $318 |
Current price: $204.77. 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.