Are Investors Undervaluing TechnipFMC Plc (NYSE:FTI) By 35%?
Are Investors Undervaluing TechnipFMC Plc (NYSE:FTI) By 35%?
Key Insights
- The projected fair value for TechnipFMC is US$38.33 based on 2 Stage Free Cash Flow to Equity
- Current share price of US$24.88 suggests TechnipFMC is potentially 35% undervalued
- Our fair value estimate is 53% higher than TechnipFMC's analyst price target of US$25.13
Today we will run through one way of estimating the intrinsic value of TechnipFMC plc (NYSE:FTI) by estimating the company's future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. It may sound complicated, but actually it is quite simple!
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you.
The Calculation
We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
10-year free cash flow (FCF) estimate
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF ($, Millions) | US$473.3m | US$725.5m | US$908.6m | US$971.3m | US$1.12b | US$1.22b | US$1.31b | US$1.39b | US$1.45b | US$1.51b |
Growth Rate Estimate Source | Analyst x8 | Analyst x9 | Analyst x5 | Analyst x3 | Analyst x1 | Est @ 9.54% | Est @ 7.36% | Est @ 5.84% | Est @ 4.78% | Est @ 4.03% |
Present Value ($, Millions) Discounted @ 8.9% | US$435 | US$612 | US$704 | US$692 | US$730 | US$734 | US$724 | US$704 | US$678 | US$648 |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$6.7b
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.3%. We discount the terminal cash flows to today's value at a cost of equity of 8.9%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$1.5b× (1 + 2.3%) ÷ (8.9%– 2.3%) = US$24b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$24b÷ ( 1 + 8.9%)10= US$10b
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$17b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of US$24.9, the company appears quite good value at a 35% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
The Assumptions
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at TechnipFMC as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.9%, which is based on a levered beta of 1.427. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for TechnipFMC
- Debt is not viewed as a risk.
- Balance sheet summary for FTI.
- Dividend is low compared to the top 25% of dividend payers in the Energy Services market.
- Annual earnings are forecast to grow faster than the American market.
- Trading below our estimate of fair value by more than 20%.
- Dividends are not covered by earnings.
- Revenue is forecast to grow slower than 20% per year.
- See FTI's dividend history.
Next Steps:
Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Why is the intrinsic value higher than the current share price? For TechnipFMC, we've put together three additional factors you should explore:
- Risks: As an example, we've found 1 warning sign for TechnipFMC that you need to consider before investing here.
- Management:Have insiders been ramping up their shares to take advantage of the market's sentiment for FTI's future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
- Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
關鍵見解
- 根據兩階段股本自由現金流,TechnipFMC的預計公允價值爲38.33美元
- 目前24.88美元的股價表明TechnipFMC可能被低估了35%
- 我們的公允價值估計比TechnipFMC的分析師目標股價25.13美元高出53%
今天,我們將介紹一種估算TechnipFMC plc(紐約證券交易所代碼:FTI)內在價值的方法,即估算公司的未來現金流並將其折現爲現值。折扣現金流(DCF)模型是我們將應用的工具。聽起來可能很複雜,但實際上很簡單!
但請記住,估算公司價值的方法有很多,而差價合約只是一種方法。對於那些熱衷於股票分析的人來說,你可能會對這裏的Simply Wall St分析模型感興趣。
計算結果
我們將使用兩階段的DCF模型,顧名思義,該模型考慮了兩個增長階段。第一階段通常是較高的增長期,在第二個 “穩步增長” 時期逐漸趨於平穩,最終值是第二個 “穩定增長” 時期。首先,我們必須估算出未來十年的現金流。在可能的情況下,我們會使用分析師的估計值,但是當這些估計值不可用時,我們會從最新的估計值或報告的價值中推斷出之前的自由現金流(FCF)。我們假設自由現金流萎縮的公司將減緩其萎縮速度,而自由現金流不斷增長的公司在此期間的增長率將放緩。我們這樣做是爲了反映早期增長的放緩幅度往往比後來的幾年更大。
通常,我們假設今天的一美元比未來一美元更有價值,因此我們需要對這些未來現金流的總和進行折價才能得出現值估計:
10 年自由現金流 (FCF) 估計
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF(美元,百萬) | 473.3 億美元 | 725.5 億美元 | 908.6 億美元 | 971.3 億美元 | 11.2 億美元 | 12.2 億美元 | 13.1 億美元 | 13.9 億美元 | 14.5 億美元 | 151 億美元 |
增長率估算來源 | 分析師 x8 | 分析師 x9 | 分析師 x5 | 分析師 x3 | 分析師 x1 | Est @ 9.54% | Est @ 7.36% | Est @ 5.84% | Est @ 4.78% | Est @ 4.03% |
現值(美元,百萬)折扣 @ 8.9% | 435 美元 | 612 美元 | 704 美元 | 692 美元 | 730 美元 | 734 美元 | 724 美元 | 704 美元 | 678 美元 | 648 美元 |
(“Est” = Simply Wall St估計的FCF增長率)
10 年期現金流 (PVCF) 的現值 = 67 億美元
第二階段也稱爲終值,這是企業在第一階段之後的現金流。戈登增長公式用於計算終值,其未來年增長率等於10年期國債收益率2.3%的5年平均水平。我們將終端現金流折現爲今天的價值,股本成本爲8.9%。
終端價值 (TV) = FCF2033 × (1 + g) ÷ (r — g) = 15億美元× (1 + 2.3%) ÷ (8.9% — 2.3%) = 240 億美元
終端價值的現值 (PVTV) = 電視/ (1 + r)10= 240億美元÷ (1 + 8.9%)10= 100 億美元
因此,總價值或權益價值是未來現金流現值的總和,在本例中爲170億美元。爲了得出每股內在價值,我們將其除以已發行股票總數。與目前的24.9美元股價相比,該公司看起來物有所值,比目前的股價折扣了35%。但是,估值是不精確的工具,就像望遠鏡一樣——移動幾度,最終進入另一個星系。請記住這一點。
假設
現在,貼現現金流的最重要輸入是貼現率,當然還有實際現金流。你不必同意這些輸入,我建議你自己重做計算然後試一試。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將TechnipFMC視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了8.9%,這是基於1.427的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
TechnipFMC 的 SWOT 分析
- 債務不被視爲風險。
- FTI 的資產負債表摘要。
- 與能源服務市場前25%的股息支付者相比,股息很低。
- 預計年收入的增長速度將快於美國市場。
- 交易價格比我們估計的公允價值低20%以上。
- 股息不包括在收益中。
- 預計收入每年增長將低於20%。
- 查看 FTI 的股息歷史記錄。
後續步驟:
儘管公司的估值很重要,但它不應該是你在研究公司時唯一考慮的指標。DCF模型並不是投資估值的萬能藥。取而代之的是,DCF模型的最佳用途是測試某些假設和理論,看看它們是否會導致公司被低估或高估。例如,公司權益成本或無風險利率的變化會對估值產生重大影響。爲什麼內在價值高於當前股價?對於TechnipFMC,我們彙總了您應該探索的另外三個因素:
- 風險:舉個例子,我們發現了TechnipFMC的1個警告信號,在這裏投資之前,你需要考慮這個信號。
- 管理層:內部人士是否一直在增加股價以利用市場對FTI未來前景的情緒?查看我們的管理層和董事會分析,了解首席執行官薪酬和治理因素。
- 其他高質量的替代品:你喜歡一個優秀的全能選手嗎?瀏覽我們的高品質股票互動清單,了解您可能還會錯過什麼!
PS。Simply Wall St每天都會更新每隻美國股票的差價合約計算結果,因此,如果您想找到任何其他股票的內在價值,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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