Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Tapestry, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 11.4% to 5.1% 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 26, DPO 92, DIO 173). At a 8.1% WACC with mid-year discounting, the terminal value (78% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $86.17 per share, suggesting TPR is overvalued by 39.8% at the current price of $143.19.
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 | 1,275 | 1,344 | 1,413 | 1,485 | 1,560 | 1,599 |
| (−) Net Interest | 88 | 93 | 97 | 102 | 108 | 110 |
| (+) D&A | 125 | 132 | 145 | 141 | 154 | 158 |
| EBITDA | 1,488 | 1,568 | 1,655 | 1,728 | 1,822 | 1,867 |
| (−) Tax | 199 | 209 | 220 | 231 | 243 | — |
| (−) CapEx | 150 | 158 | 166 | 174 | 183 | — |
| (−) ΔWC | 120 | 56 | 56 | 59 | 62 | — |
| Free Cash Flow (FCF) | 1,020 | 1,145 | 1,212 | 1,263 | 1,334 | — |
| Peers' EBITDA Multiple | 13.5x | |||||
| Terminal Value | 25,172 | |||||
| WACC / Discount Rate | 8.08% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 981 | 1,019 | 998 | 963 | 940 | 17,068 |
| Enterprise Value | 21,968 | |||||
| Projection Period | 4,901 | 22.3% | ||||
| Terminal Value | 17,068 | 77.7% | ||||
| (−) Current Net Debt | 2,799 | |||||
| Equity Value | 19,169 | |||||
| (÷) Outstanding Shares | 223M | |||||
| Fair Price | $86 | -39.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.5x | 11.5x | 13.5x | 15.5x | 17.5x |
|---|---|---|---|---|---|
| 6.1% | $70 | $82 | $95 | $107 | $120 |
| 7.1% | $66 | $78 | $90 | $102 | $114 |
| 8.1% | $63 | $75 | $86 | $98 | $109 |
| 9.1% | $60 | $71 | $82 | $93 | $104 |
| 10.1% | $58 | $68 | $78 | $89 | $99 |
Current price: $143.19. 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.