Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Williams-Sonoma, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.8% to -1.4% 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 6, DPO 50, DIO 110). At a 8.5% WACC with mid-year discounting, the terminal value (76% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $149.14 per share, suggesting WSM is overvalued by 17.5% at the current price of $180.68.
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 | 1,378 | 1,428 | 1,495 | 1,572 | 1,551 | 1,590 |
| (−) Net Interest | 0 | 0 | 0 | 0 | 0 | 0 |
| (+) D&A | 250 | 253 | 233 | 248 | 259 | 266 |
| EBITDA | 1,629 | 1,682 | 1,728 | 1,821 | 1,810 | 1,856 |
| (−) Tax | 336 | 348 | 365 | 384 | 378 | — |
| (−) CapEx | 243 | 252 | 264 | 277 | 274 | — |
| (−) ΔWC | -103 | 31 | 41 | 48 | -13 | — |
| Free Cash Flow (FCF) | 1,152 | 1,051 | 1,059 | 1,112 | 1,172 | — |
| Peers' EBITDA Multiple | 11.5x | |||||
| Terminal Value | 21,396 | |||||
| WACC / Discount Rate | 8.47% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,106 | 930 | 864 | 837 | 813 | 14,249 |
| Enterprise Value | 18,798 | |||||
| Projection Period | 4,549 | 24.2% | ||||
| Terminal Value | 14,249 | 75.8% | ||||
| (−) Current Net Debt | 437 | |||||
| Equity Value | 18,361 | |||||
| (÷) Outstanding Shares | 123M | |||||
| Fair Price | $149 | -17.5% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.5x | 9.5x | 11.5x | 13.5x | 15.5x |
|---|---|---|---|---|---|
| 6.5% | $118 | $140 | $162 | $184 | $206 |
| 7.5% | $113 | $134 | $155 | $176 | $197 |
| 8.5% | $109 | $129 | $149 | $169 | $189 |
| 9.5% | $105 | $124 | $143 | $162 | $182 |
| 10.5% | $101 | $119 | $137 | $156 | $174 |
Current price: $180.68. 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.