Using an unlevered Free Cash Flow to Firm (FCFF) model, we project U.S. Bancorp's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -29.1% to 15.9% 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 118, DPO 30, DIO 60). At a 10.8% WACC with mid-year discounting, the terminal value (81% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $99.22 per share, suggesting USB is undervalued by 91.6% at the current price of $51.77.
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 | 5,719 | 6,047 | 6,315 | 7,322 | 8,489 | 8,701 |
| (−) Net Interest | 7,074 | 7,481 | 7,811 | 9,057 | 10,501 | 10,764 |
| (+) D&A | 0 | 304 | 625 | 961 | 1,350 | 1,384 |
| EBITDA | 12,792 | 13,832 | 14,751 | 17,339 | 20,341 | 20,849 |
| (−) Tax | 1,168 | 1,235 | 1,290 | 1,496 | 1,734 | — |
| (−) CapEx | 1,520 | 1,607 | 1,678 | 1,945 | 2,256 | — |
| (−) ΔWC | 10,490 | 603 | 490 | 1,847 | 2,142 | — |
| Free Cash Flow (FCF) | -386 | 10,386 | 11,293 | 12,051 | 14,208 | — |
| Peers' EBITDA Multiple | 12.1x | |||||
| Terminal Value | 251,648 | |||||
| WACC / Discount Rate | 10.78% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | -367 | 8,907 | 8,742 | 8,420 | 8,962 | 150,799 |
| Enterprise Value | 185,464 | |||||
| Projection Period | 34,665 | 18.7% | ||||
| Terminal Value | 150,799 | 81.3% | ||||
| (−) Current Net Debt | 31,036 | |||||
| Equity Value | 154,428 | |||||
| (÷) Outstanding Shares | 1556M | |||||
| Fair Price | $99 | +91.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.1x | 10.1x | 12.1x | 14.1x | 16.1x |
|---|---|---|---|---|---|
| 8.8% | $75 | $92 | $110 | $127 | $145 |
| 9.8% | $71 | $88 | $104 | $121 | $138 |
| 10.8% | $67 | $83 | $99 | $115 | $131 |
| 11.8% | $64 | $79 | $94 | $110 | $125 |
| 12.8% | $60 | $75 | $90 | $104 | $119 |
Current price: $51.77. 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.