Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Wells Fargo & Company's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -28.5% to 10.4% 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 146, DPO 30, DIO 60). At a 9.1% WACC with mid-year discounting, the terminal value (78% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 12.2x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $86.58 per share, suggesting WFC is fairly valued by 9.3% at the current price of $79.24.
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 | 15,881 | 16,606 | 17,480 | 19,302 | 21,314 | 21,847 |
| (−) Net Interest | 19,546 | 20,438 | 21,513 | 23,756 | 26,233 | 26,888 |
| (+) D&A | 0 | 884 | 1,808 | 2,780 | 3,854 | 3,951 |
| EBITDA | 35,427 | 37,928 | 40,801 | 45,838 | 51,401 | 52,686 |
| (−) Tax | 2,406 | 2,516 | 2,648 | 2,924 | 3,229 | — |
| (−) CapEx | 4,419 | 4,620 | 4,863 | 5,370 | 5,930 | — |
| (−) ΔWC | 14,089 | 1,693 | 2,039 | 4,254 | 4,697 | — |
| Free Cash Flow (FCF) | 14,514 | 29,100 | 31,251 | 33,291 | 37,546 | — |
| Peers' EBITDA Multiple | 12.2x | |||||
| Terminal Value | 641,719 | |||||
| WACC / Discount Rate | 9.09% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 13,896 | 25,540 | 25,144 | 24,554 | 25,385 | 415,414 |
| Enterprise Value | 529,934 | |||||
| Projection Period | 114,519 | 21.6% | ||||
| Terminal Value | 415,414 | 78.4% | ||||
| (−) Current Net Debt | 251,512 | |||||
| Equity Value | 278,422 | |||||
| (÷) Outstanding Shares | 3217M | |||||
| Fair Price | $87 | +9.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 8.2x | 10.2x | 12.2x | 14.2x | 16.2x |
|---|---|---|---|---|---|
| 7.1% | $54 | $78 | $101 | $124 | $147 |
| 8.1% | $49 | $71 | $94 | $116 | $138 |
| 9.1% | $44 | $65 | $87 | $108 | $129 |
| 10.1% | $39 | $60 | $80 | $100 | $120 |
| 11.1% | $35 | $54 | $74 | $93 | $112 |
Current price: $79.24. 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.