Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Target Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -0.3% to 2.8% 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 5, DPO 63, DIO 61). At a 6.9% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.6x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $324.75 per share, suggesting TGT is undervalued by 178.2% at the current price of $116.72.
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 | 7,687 | 7,856 | 8,072 | 8,329 | 8,560 | 8,774 |
| (−) Net Interest | 442 | 451 | 464 | 478 | 492 | 504 |
| (+) D&A | 4,099 | 4,191 | 3,903 | 3,782 | 4,072 | 4,173 |
| EBITDA | 12,228 | 12,498 | 12,438 | 12,590 | 13,123 | 13,451 |
| (−) Tax | 1,646 | 1,682 | 1,729 | 1,784 | 1,833 | — |
| (−) CapEx | 4,002 | 4,090 | 4,202 | 4,337 | 4,457 | — |
| (−) ΔWC | 1,334 | 22 | 29 | 34 | 31 | — |
| Free Cash Flow (FCF) | 5,245 | 6,703 | 6,479 | 6,436 | 6,803 | — |
| Peers' EBITDA Multiple | 12.6x | |||||
| Terminal Value | 169,622 | |||||
| WACC / Discount Rate | 6.94% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 5,072 | 6,062 | 5,479 | 5,090 | 5,031 | 121,306 |
| Enterprise Value | 148,039 | |||||
| Projection Period | 26,733 | 18.1% | ||||
| Terminal Value | 121,306 | 81.9% | ||||
| (−) Current Net Debt | 104 | |||||
| Equity Value | 147,935 | |||||
| (÷) Outstanding Shares | 456M | |||||
| Fair Price | $325 | +178.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.6x | 10.6x | 12.6x | 14.6x | 16.6x |
|---|---|---|---|---|---|
| 4.9% | $261 | $308 | $354 | $400 | $447 |
| 5.9% | $250 | $295 | $339 | $383 | $427 |
| 6.9% | $240 | $283 | $325 | $367 | $409 |
| 7.9% | $231 | $271 | $311 | $352 | $392 |
| 8.9% | $222 | $260 | $299 | $337 | $376 |
Current price: $116.72. 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.