Archer-Daniels-Midland CompanyADMNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $272.35 per share(market-calibrated)

+298.6%

Upside to Fair Value

Current

$68.32

Pure Model

$286.95

Fair Value

$272.35

Bull Case

$334.15

Bear Case

$242.82

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $286.95.

What's Driving This Ratingfor ADM

✓

CapEx already efficient

CapEx at 1.69% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 4.16% — below the sector mature average of 16.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $11.5B (12.12% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 6.37% in Year 1 to 1.20% by Year 5 (per analyst consensus). That's below the 2.50% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 72.25% indicates efficient cash generation. FCF reaches $9.3B by Year 10 (9.73% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.68

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.57%

Cost of Debt

Pre-tax Cost of Debt6.33%

Tax Rate14.50%

After-tax Cost of Debt5.41%

Equity Weight (E/V)79.72%

Debt Weight (D/V)20.28%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (79.72% × 7.57%) + (20.28% × 5.41%)

= 7.13%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$85.4B	$83.2B	$86.3B	$89.1B	$95.2B
EBIT	$3.5B	$3.5B	$3.6B	$7.5B	$11.5B
Tax	$515M	$502M	$520M	$1.1B	$1.7B
NOPAT	$3.0B	$3.0B	$3.1B	$6.4B	$9.9B
+ Depreciation	$1.1B	$1.1B	$1.2B	$1.2B	$1.3B
- Capex	$1.4B	$1.4B	$1.5B	$1.5B	$1.6B
- Δ NWC	$600M	-$617M	$120M	$177M	$272M
Free Cash Flow	$2.1B	$3.3B	$2.6B	$5.9B	$9.3B
Discount Factor	0.933	0.813	0.709	0.617	0.502
Present Value	$2.0B	$2.7B	$1.9B	$3.7B	$4.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$9.3B

Terminal Growth Rate2.50%

WACC7.13%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$205.0B

PV of Terminal Value$102.9B

Exit Multiple Method

Year 10 EBITDA$12.8B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$256.3B

PV of Terminal Value$128.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$30.5B

PV of Terminal Value$102.9B

Enterprise Value$133.4B

(-) Net Debt$7.4B

Equity Value$126.0B

Shares Outstanding484M

Price per Share$260.30

Exit Multiple Method

PV of Projected FCFs$30.5B

PV of Terminal Value$128.7B

Enterprise Value$159.2B

(-) Net Debt$7.4B

Equity Value$151.8B

Shares Outstanding484M

Price per Share$313.59

Pure Model Fair Value

$286.95

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
5.13%	$378.48	$405.30	$442.31	$496.70	$499.03
6.13%	$313.24	$327.88	$346.54	$371.17	$405.17
7.13%	$267.21	$276.12	$286.95	$300.40	$317.55
8.13%	$232.23	$238.05	$244.90	$253.10	$263.06
9.13%	$204.34	$208.34	$212.95	$218.31	$224.62

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$242.82

255.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.85

Base Case

$286.95

320.0% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.68

Bull Case

$334.15

389.1% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.58

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth6.37%

Year 3 Revenue Growth-5.95%

Year 5 Revenue Growth1.20%

Year 7 Revenue Growth1.72%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin4.16%

Terminal EBIT Margin16.00%

Tax Rate14.50%

Historical Capex / Rev1.69%

NWC / Revenue11.74%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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