Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Williams Companies, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.7% to 22.5% 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 68, DPO 128, DIO 22). At a 7.0% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $89.15 per share, suggesting WMB is undervalued by 20.3% at the current price of $74.13.
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 | 4,358 | 4,795 | 5,363 | 5,815 | 7,123 | 7,301 |
| (−) Net Interest | 1,477 | 1,625 | 1,818 | 1,971 | 2,414 | 2,475 |
| (+) D&A | 2,713 | 3,083 | 3,308 | 3,557 | 3,869 | 3,966 |
| EBITDA | 8,548 | 9,503 | 10,488 | 11,343 | 13,407 | 13,742 |
| (−) Tax | 952 | 1,048 | 1,172 | 1,271 | 1,556 | — |
| (−) CapEx | 3,099 | 3,409 | 3,813 | 4,134 | 5,064 | — |
| (−) ΔWC | 415 | 59 | 77 | 61 | 177 | — |
| Free Cash Flow (FCF) | 4,082 | 4,987 | 5,427 | 5,877 | 6,609 | — |
| Peers' EBITDA Multiple | 11.8x | |||||
| Terminal Value | 162,018 | |||||
| WACC / Discount Rate | 6.98% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,947 | 4,507 | 4,585 | 4,641 | 4,878 | 115,616 |
| Enterprise Value | 138,173 | |||||
| Projection Period | 22,557 | 16.3% | ||||
| Terminal Value | 115,616 | 83.7% | ||||
| (−) Current Net Debt | 29,298 | |||||
| Equity Value | 108,875 | |||||
| (÷) Outstanding Shares | 1221M | |||||
| Fair Price | $89 | +20.3% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.8x | 9.8x | 11.8x | 13.8x | 15.8x |
|---|---|---|---|---|---|
| 5.0% | $64 | $82 | $99 | $117 | $135 |
| 6.0% | $60 | $77 | $94 | $111 | $128 |
| 7.0% | $57 | $73 | $89 | $105 | $121 |
| 8.0% | $54 | $69 | $84 | $100 | $115 |
| 9.0% | $51 | $65 | $80 | $95 | $109 |
Current price: $74.13. 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.