Tool · 10

DCF Sandbox

A five-year discounted cash flow on real filed numbers. Change any assumption and watch the share price move, with the terminal value's share of the answer called out because it is usually most of it.

Assumptions

Base year revenue is $104,780M, from Target Corporation's Fiscal 2025 Form 10-K. Everything below is yours to argue with.

Revenue growth by year (%)

Y1Y2Y3Y4Y5

EBIT margin

Was 4.9% last year

Tax rate

Effective rate was 22.3%

D&A, % of revenue

Capex, % of revenue

Working capital, % of revenue change

WACC

Terminal value method

Perpetuity growth

Mid-year conventionDiscounts each year from its midpoint, because cash arrives through the year rather than on 31 December. Worth roughly half a year of the discount rate.

Free cash flow build

Unlevered free cash flow$ millions

	Y1	Y2	Y3	Y4	Y5
Revenue	107,923	111,161	113,940	116,789	119,124
EBIT	5,612	5,780	5,925	6,073	6,194
Tax on EBIT	negative 1,291	negative 1,329	negative 1,363	negative 1,397	negative 1,425
NOPAT	4,321	4,451	4,562	4,676	4,770
Plus D&A	3,238	3,335	3,418	3,504	3,574
Less capex	negative 3,669	negative 3,779	negative 3,874	negative 3,971	negative 4,050
Less change in working capital	negative 157	negative 162	negative 139	negative 142	negative 117
Free cash flow to the firm	3,732	3,844	3,967	4,067	4,176
Discount factor	0.964	0.897	0.835	0.776	0.722
Present value	3,600	3,449	3,311	3,157	3,016

Value

Sensitivity

Implied share price. WACC down the side, perpetuity growth across the top. Range: $99.82 to $243.88.

Implied share price by WACC and terminal assumption
WACC	1.50%	2.00%	2.50%	3.00%	3.50%
6.50%	$148.87	$164.70	$184.50	$209.95	$243.88
7.00%	$133.24	$145.96	$161.50	$180.93	$205.90
7.50%	$120.23	$130.63	$143.12	$158.37	$177.44
8.00%	$109.24	$117.87	$128.08	$140.33	$155.31
8.50%	$99.82	$107.08	$115.57	$125.59	$137.61

Cells marked n/a are where the perpetuity growth rate reaches the discount rate. There is no value there, so the grid says so instead of printing a negative number.

The same grid as a plain table

WACC	1.50%	2.00%	2.50%	3.00%	3.50%
6.50%	$148.87	$164.70	$184.50	$209.95	$243.88
7.00%	$133.24	$145.96	$161.50	$180.93	$205.90
7.50%	$120.23	$130.63	$143.12	$158.37	$177.44
8.00%	$109.24	$117.87	$128.08	$140.33	$155.31
8.50%	$99.82	$107.08	$115.57	$125.59	$137.61

Read the topic

Read how a DCF gets built →