The Full Nike DCF
A start-to-finish unlevered DCF on Nike: five years of UFCF, an 8.3% WACC, a perpetuity terminal value, and an implied share price.
- ✓Trace a complete DCF from projections to share price
- ✓See how terminal value dominates enterprise value
- ✓Interpret a DCF result against the market price
Time to assemble everything. We'll value Nike with a standard unlevered DCF, following the five steps from Module 4. The numbers below are illustrative but realistic.
Step 1 - Project UFCF
Building revenue, margins, taxes, , , and working capital out five years gives annual of roughly **$3.4bn–$4.7bn**, rising over time as the business grows.
Step 2 - WACC
Nike's works out to 8.3%, built from a 3.1% , a 21% tax rate, and an 8.9% cost of equity (), under a target structure of ~10% debt / 90% equity.
Step 3 - Terminal value
Using the with a 4.5% perpetual growth rate, the in the final year (FY24) is ~**$132bn. Discounted to today that's a present value of ~$89bn**.
Steps 4–5 - Discount, sum, and bridge
| Component | |
|---|---|
| of 5 years of | ~$16bn |
| of | ~$89bn |
| = | ~$104bn |
Of ~$104bn of , ~$89bn - about 85% - is . The five years you carefully projected are only ~15% of the answer. This is normal, and it's exactly why Module 6 hammered on terminal-value discipline.
Bridging to (subtract ) and dividing by fully diluted shares implies a price of about **$64–$70 per share - roughly 24% below** Nike's then-current market price. The DCF is saying: on these assumptions, the stock looks expensive.
That perpetuity implies an exit multiple of ~13.2x . Versus where Nike and peers trade, that's on the conservative side - a hint that the growth assumption, not the multiple, is doing the heavy lifting. Hold that thought.
Nike's DCF gives ~$104bn EV, of which ~$89bn is the PV of terminal value. The main lesson is:
Lock it in by building it yourself in a live, graded spreadsheet.