Aptiv PLCAPTVNYSE

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DCF Valuation

⚠️Model Warnings

•Revenue projections show 22% decline from peak. Analyst estimates may reflect secular headwinds or transition period.

DCF Valuation Summary

Hold

Fair Value: $78.85 per share(market-calibrated)

+8.8%

Upside to Fair Value

Current

$72.47

Pure Model

$77.93

Fair Value

$78.85

Bull Case

$81.11

Bear Case

$71.42

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

4.34%

Calibrated Growth

3.20%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $77.93.

What's Driving This Ratingfor APTV

✓

CapEx already efficient

CapEx at 3.77% 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 8.33% — below the sector mature average of 12.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.5B (10.80% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 5.11% in Year 1 to -22.39% by Year 5 (per analyst consensus). That's below the 3.00% 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 $56.63/share (19.6x terminal FCF) while exit multiple gives $99.23/share (38.5x terminal FCF). The 20x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $72.47, the market implies 4.34% perpetual growth — 134bps above the model's 3.00%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 51.90% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.50

Market Risk Premium4.50%

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

Cost of Equity (Re)11.25%

Cost of Debt

Pre-tax Cost of Debt3.34%

Tax Rate30.00%

After-tax Cost of Debt2.34%

Equity Weight (E/V)66.40%

Debt Weight (D/V)33.60%

WACC Calculation

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

WACC = (66.40% × 11.25%) + (33.60% × 2.34%)

= 8.26%

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	$21.4B	$23.6B	$20.6B	$14.9B	$14.0B
EBIT	$1.8B	$2.0B	$1.7B	$1.4B	$1.5B
Tax	$536M	$591M	$515M	$433M	$453M
NOPAT	$1.3B	$1.4B	$1.2B	$1.0B	$1.1B
+ Depreciation	$925M	$1.0B	$889M	$645M	$604M
- Capex	$809M	$891M	$777M	$564M	$528M
- Δ NWC	$93M	$100M	-$529M	-$185M	$36M
Free Cash Flow	$1.3B	$1.4B	$1.8B	$1.3B	$1.1B
Discount Factor	0.924	0.788	0.673	0.574	0.452
Present Value	$1.2B	$1.1B	$1.2B	$732M	$496M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.1B

Terminal Growth Rate3.00%

WACC8.26%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$21.5B

PV of Terminal Value$9.7B

Exit Multiple Method

Year 10 EBITDA$2.1B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$42.3B

PV of Terminal Value$19.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$9.0B

PV of Terminal Value$9.7B

Enterprise Value$18.7B

(-) Net Debt$6.2B

Equity Value$12.5B

Shares Outstanding221M

Price per Share$56.63

Exit Multiple Method

PV of Projected FCFs$9.0B

PV of Terminal Value$19.1B

Enterprise Value$28.1B

(-) Net Debt$6.2B

Equity Value$21.9B

Shares Outstanding221M

Price per Share$99.23

Pure Model Fair Value

$77.93

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

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
6.26%	$101.06	$105.57	$111.45	$119.47	$131.05
7.26%	$85.89	$88.54	$91.81	$95.95	$101.36
8.26%	$74.23	$75.92	$77.93	$80.36	$83.37
9.26%	$64.78	$65.93	$67.25	$68.81	$70.66
10.26%	$56.88	$57.69	$58.60	$59.66	$60.88

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

$71.42

-1.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.88

Base Case

$77.93

7.5% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.50

Bull Case

$81.11

11.9% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.27

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

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.11%

Year 3 Revenue Growth4.97%

Year 5 Revenue Growth-22.39%

Year 7 Revenue Growth-12.23%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin8.33%

Terminal EBIT Margin12.00%

Tax Rate30.00%

Historical Capex / Rev3.77%

NWC / Revenue8.90%

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 Cyclical 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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