Ameren CorporationAEENYSE

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DCF Valuation

⚠️Model Warnings

•Terminal value represents 86% of enterprise value. Valuation highly sensitive to long-term assumptions.

DCF Valuation Summary

Strong Buy

Fair Value: $149.18 per share(market-calibrated)

+32.1%

Upside to Fair Value

Current

$112.90

Pure Model

$161.01

Fair Value

$149.18

Bull Case

$195.93

Bear Case

$135.02

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.63%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $161.01.

What's Driving This Ratingfor AEE

↓

CapEx normalizing toward maintenance

Historical CapEx is 43.67% of revenue (heavy investment phase). Model fades this to 5.00% by Year 10, freeing up ~$4.3B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 23.79% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 2.86% in Year 1 to 0.25% by Year 5 (per analyst consensus). That's below the 2.00% 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.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $200.67/share (29.1x terminal FCF) while exit multiple gives $121.34/share (19.4x terminal FCF). The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 150bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 82.64% indicates efficient cash generation. FCF reaches $3.7B by Year 10 (33.72% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.59

Market Risk Premium4.50%

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

Cost of Equity (Re)7.14%

Cost of Debt

Pre-tax Cost of Debt2.90%

Tax Rate8.52%

After-tax Cost of Debt2.65%

Equity Weight (E/V)60.63%

Debt Weight (D/V)39.37%

WACC Calculation

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

WACC = (60.63% × 7.14%) + (39.37% × 2.65%)

= 5.50%

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	$9.1B	$10.1B	$10.4B	$10.6B	$11.1B
EBIT	$2.2B	$2.4B	$2.5B	$2.5B	$2.6B
Tax	$183M	$204M	$211M	$214M	$225M
NOPAT	$2.0B	$2.2B	$2.3B	$2.3B	$2.4B
+ Depreciation	$1.5B	$1.7B	$1.8B	$1.8B	$1.9B
- Capex	$4.0B	$3.5B	$2.8B	$1.9B	$556M
- Δ NWC	$8M	$13M	$794,704.062	$3M	$7M
Free Cash Flow	-$450M	$360M	$1.3B	$2.2B	$3.7B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	-$427M	$306M	$980M	$1.5B	$2.2B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.7B

Terminal Growth Rate2.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$109.2B

PV of Terminal Value$63.9B

Exit Multiple Method

Year 10 EBITDA$4.5B

Exit Multiple (EV/EBITDA)16.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$72.6B

PV of Terminal Value$42.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$10.2B

PV of Terminal Value$63.9B

Enterprise Value$74.1B

(-) Net Debt$19.8B

Equity Value$54.3B

Shares Outstanding271M

Price per Share$200.67

Exit Multiple Method

PV of Projected FCFs$10.2B

PV of Terminal Value$42.5B

Enterprise Value$52.6B

(-) Net Debt$19.8B

Equity Value$32.8B

Shares Outstanding271M

Price per Share$121.34

Pure Model Fair Value

$161.01

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

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.50%	$263.90	$314.72	$298.06	$282.19	$267.08
4.50%	$182.31	$204.51	$235.58	$282.19	$267.08
5.50%	$133.84	$145.73	$161.01	$181.38	$209.90
6.50%	$100.84	$107.99	$116.72	$127.64	$141.67
7.50%	$76.46	$81.09	$86.57	$93.14	$101.17

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

$135.02

19.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.73

Base Case

$161.01

42.6% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.59

Bull Case

$195.93

73.5% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.50

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Utilities Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth2.86%

Year 3 Revenue Growth4.30%

Year 5 Revenue Growth0.25%

Year 7 Revenue Growth0.95%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin23.79%

Tax Rate8.52%

Historical Capex / Rev43.67%

Terminal Capex / Rev5.00%

NWC / Revenue3.03%

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: 16x EV/EBITDA (Utilities 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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