Using an unlevered Free Cash Flow to Firm (FCFF) model, we project United Parcel Service, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.7% to 6.1% 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 46, DPO 33, DIO 4). At a 7.8% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $237.36 per share, suggesting UPS is undervalued by 142.8% at the current price of $97.75.
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 | 9,066 | 9,460 | 9,696 | 10,336 | 10,966 | 11,240 |
| (−) Net Interest | 774 | 808 | 828 | 883 | 937 | 960 |
| (+) D&A | 4,343 | 4,333 | 4,245 | 4,100 | 4,263 | 4,370 |
| EBITDA | 14,184 | 14,601 | 14,769 | 15,319 | 16,166 | 16,570 |
| (−) Tax | 2,008 | 2,095 | 2,147 | 2,289 | 2,428 | — |
| (−) CapEx | 4,146 | 4,326 | 4,433 | 4,726 | 5,014 | — |
| (−) ΔWC | 926 | 239 | 143 | 389 | 382 | — |
| Free Cash Flow (FCF) | 7,105 | 7,942 | 8,045 | 7,915 | 8,342 | — |
| Peers' EBITDA Multiple | 17.1x | |||||
| Terminal Value | 284,008 | |||||
| WACC / Discount Rate | 7.75% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 6,844 | 7,101 | 6,675 | 6,095 | 5,961 | 195,523 |
| Enterprise Value | 228,199 | |||||
| Projection Period | 32,676 | 14.3% | ||||
| Terminal Value | 195,523 | 85.7% | ||||
| (−) Current Net Debt | 26,403 | |||||
| Equity Value | 201,796 | |||||
| (÷) Outstanding Shares | 850M | |||||
| Fair Price | $237 | +142.9% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.1x | 15.1x | 17.1x | 19.1x | 21.1x |
|---|---|---|---|---|---|
| 5.8% | $203 | $232 | $262 | $291 | $321 |
| 6.8% | $193 | $221 | $249 | $277 | $305 |
| 7.8% | $184 | $211 | $237 | $264 | $291 |
| 8.8% | $175 | $201 | $226 | $252 | $277 |
| 9.8% | $167 | $191 | $215 | $240 | $264 |
Current price: $97.75. 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.