Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Waters Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 103.2% to 4.0% 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 88, DPO 29, DIO 141). At a 7.6% WACC with mid-year discounting, the terminal value (85% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 16.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $611.70 per share, suggesting WAT is undervalued by 101.8% at the current price of $303.14.
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 | 1,743 | 1,924 | 2,038 | 2,174 | 2,262 | 2,318 |
| (−) Net Interest | 145 | 160 | 169 | 180 | 187 | 192 |
| (+) D&A | 154 | 187 | 224 | 270 | 325 | 333 |
| EBITDA | 2,041 | 2,271 | 2,431 | 2,624 | 2,774 | 2,844 |
| (−) Tax | 254 | 280 | 296 | 316 | 329 | — |
| (−) CapEx | 335 | 370 | 391 | 417 | 434 | — |
| (−) ΔWC | 965 | 246 | 154 | 184 | 119 | — |
| Free Cash Flow (FCF) | 488 | 1,375 | 1,589 | 1,706 | 1,892 | — |
| Peers' EBITDA Multiple | 16.1x | |||||
| Terminal Value | 45,639 | |||||
| WACC / Discount Rate | 7.61% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 470 | 1,232 | 1,323 | 1,320 | 1,360 | 31,634 |
| Enterprise Value | 37,340 | |||||
| Projection Period | 5,705 | 15.3% | ||||
| Terminal Value | 31,634 | 84.7% | ||||
| (−) Current Net Debt | 820 | |||||
| Equity Value | 36,520 | |||||
| (÷) Outstanding Shares | 60M | |||||
| Fair Price | $612 | +101.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 12.1x | 14.1x | 16.1x | 18.1x | 20.1x |
|---|---|---|---|---|---|
| 5.6% | $524 | $597 | $669 | $742 | $814 |
| 6.6% | $501 | $570 | $640 | $709 | $778 |
| 7.6% | $480 | $546 | $612 | $678 | $744 |
| 8.6% | $459 | $522 | $585 | $648 | $711 |
| 9.6% | $440 | $500 | $560 | $620 | $681 |
Current price: $303.14. 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.