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Rolls-Royce Holdings PLC (LSE:RR)

73.92 GBX -0.55 GBX ( -0.74% )
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Rolls-Royce Holdings PLC Logo
Rolls-Royce Holdings PLC
LSE:RR
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DCF Value

This DCF valuation model was created by Alpha Spread and was last updated on Oct 5, 2022.

Estimated DCF Value of one RR stock is 88.45 GBX. Compared to the current market price of 73.92 GBX, the stock is Undervalued by 16%.

RR DCF Value
Base Case
88.45 GBX
Undervaluation 16%
DCF Value
Price
Worst Case
Base Case
Best Case
88.45
DCF Value
Worst Case
Base Case
Best Case
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DCF Value: 88.45 GBX
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Present Value Calculation

The first step in the DCF calculation process is to estimate the company's future free cash flow. Once free cash flow is forecasted, it is discounted at a risk-appropriate discount rate. The resulting value is the present value of the company's free cash flow. You can change any model inputs below.

Available Valuation Models
1 valuation model available
Alpha Spread
Updated on Oct 5, 2022
Default Valuation
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Other investors haven't shared any valuation models for Rolls-Royce Holdings PLC.
Model Settings
Discount Rate
10.14%
Forecast Period
5 Years
Terminal Growth
0%
Discount Rate
10.14%
Terminal Growth
0%
Growth Period
5 Years
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DCF Model
Base Case Scenario

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To view the process of deriving the DCF Value of one share from the estimated Present Value, see the DCF Value Calculation block.

DCF Value Calculation

Depending on which type of operating model is chosen (equity or whole firm valuation model), the resulting value is either the value of equity or the value of the entire firm. In the case of the latter, to move from the value of the firm to the value of equity, liabilities are subtracted and assets are added.

Capital Structure
From Present Value to DCF Value

Present Value 7.4B GBP
Equity Value 7.4B GBP
/ Shares Outstanding 8.4B
Value per Share 0.88 GBP
GBP / GBX Exchange Rate 100
RR DCF Value 88.45 GBX
Undervalued by 16%

To view the process of calculating the Present Value of Rolls-Royce Holdings PLC' future free cash flow, see the Present Value Calculation block.

Valuation Analysis

After the valuation process, in order to gain a deeper understanding of the relationship between risk and opportunity, it is useful to study the dynamic of company's valuation under various inputs to the DCF model in use.

DCF Financials
Financials used in DCF Calculation

Revenue
11.8B 16.3B
Net Income
156M 886M
FCFE
156M 886M

Sensitivity Analysis
DCF Value Sensitivity Analysis

See Also

Similar Stocks
What is the DCF value of one RR stock?

Estimated DCF Value of one RR stock is 88.45 GBX. Compared to the current market price of 73.92 GBX, the stock is Undervalued by 16%.

The true DCF Value lies somewhere between the worst-case and best-case scenario values. This is because the future is not predetermined, and the stock's DCF Value is based almost entirely on the future of the company. Knowing the full range of possible stock DCF values gives a complete picture of the investment risks and opportunities.

How was the DCF Value calculated?

1. Present Value Calculation. Using the DCF Operating Model we project Rolls-Royce Holdings PLC's future free cash flow and discount it at a selected discount rate to calculate its Present Value (7.4B GBP).

2. DCF Value Calculation. We use the company's capital structure to calculate the total Equity Value based on the previously computed Present Value of the free cash flow. Dividing the Equity Value by the number of shares outstanding gives us the DCF Value of 88.45 GBX per one RR share.