Using an unlevered Free Cash Flow to Firm (FCFF) model, we project West Pharmaceutical Services, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 5.7% to 2.4% 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 66, DPO 48, DIO 82). At a 7.7% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 15.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $235.34 per share, suggesting WST is fairly valued by 6.2% at the current price of $250.88.
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 | 764 | 811 | 868 | 924 | 947 | 970 |
| (−) Net Interest | 6 | 7 | 7 | 8 | 8 | 8 |
| (+) D&A | 313 | 331 | 348 | 355 | 363 | 372 |
| EBITDA | 1,083 | 1,149 | 1,223 | 1,286 | 1,318 | 1,351 |
| (−) Tax | 130 | 138 | 148 | 157 | 161 | — |
| (−) CapEx | 347 | 368 | 394 | 420 | 430 | — |
| (−) ΔWC | 11 | 48 | 58 | 57 | 23 | — |
| Free Cash Flow (FCF) | 595 | 595 | 624 | 652 | 704 | — |
| Peers' EBITDA Multiple | 15.1x | |||||
| Terminal Value | 20,423 | |||||
| WACC / Discount Rate | 7.69% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 574 | 533 | 518 | 503 | 504 | 14,099 |
| Enterprise Value | 16,732 | |||||
| Projection Period | 2,632 | 15.7% | ||||
| Terminal Value | 14,099 | 84.3% | ||||
| (−) Current Net Debt | (375) | |||||
| Equity Value | 17,106 | |||||
| (÷) Outstanding Shares | 73M | |||||
| Fair Price | $235 | -6.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 11.1x | 13.1x | 15.1x | 17.1x | 19.1x |
|---|---|---|---|---|---|
| 5.7% | $200 | $228 | $256 | $284 | $312 |
| 6.7% | $192 | $219 | $245 | $272 | $299 |
| 7.7% | $184 | $210 | $235 | $261 | $287 |
| 8.7% | $177 | $201 | $226 | $250 | $275 |
| 9.7% | $170 | $193 | $217 | $240 | $264 |
Current price: $250.88. 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.