Ball CorporationBALLNYSE

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DCF Valuation

DCF Valuation Summary

Buy

Fair Value: $84.97 per share(market-calibrated)

+27.6%

Upside to Fair Value

Current

$66.57

Pure Model

$84.80

Fair Value

$84.97

Bull Case

$107.60

Bear Case

$64.34

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

3.10%

Calibrated Growth

3.03%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $84.80.

What's Driving This Ratingfor BALL

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.18% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$765M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 8.81% — below the sector mature average of 12.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.1B (11.33% margin).

→

Moderate revenue growth

Analyst consensus projects 5.71% revenue growth, fading to 3.00% by Year 10. Revenue reaches $18.3B (vs $13.2B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $65.19/share (20.7x terminal FCF) while exit multiple gives $104.41/share (33.7x 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.

✓

Model and market roughly agree

Market-implied terminal growth of 3.10% is close to the model's 3.00% (only 10bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 59.34% — 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)1.14

Market Risk Premium4.50%

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

Cost of Equity (Re)9.62%

Cost of Debt

Pre-tax Cost of Debt4.71%

Tax Rate20.78%

After-tax Cost of Debt3.73%

Equity Weight (E/V)72.25%

Debt Weight (D/V)27.75%

WACC Calculation

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

WACC = (72.25% × 9.62%) + (27.75% × 3.73%)

= 7.99%

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	$13.9B	$14.9B	$15.8B	$16.8B	$18.3B
EBIT	$1.2B	$1.3B	$1.6B	$1.8B	$2.1B
Tax	$255M	$272M	$327M	$373M	$432M
NOPAT	$971M	$1.0B	$1.2B	$1.4B	$1.6B
+ Depreciation	$698M	$746M	$793M	$841M	$919M
- Capex	$1.1B	$1.1B	$999M	$904M	$733M
- Δ NWC	$75M	$50M	$46M	$49M	$53M
Free Cash Flow	$457M	$656M	$995M	$1.3B	$1.8B
Discount Factor	0.926	0.794	0.681	0.584	0.464
Present Value	$423M	$521M	$678M	$765M	$825M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.8B

Terminal Growth Rate3.00%

WACC7.99%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$36.7B

PV of Terminal Value$17.0B

Exit Multiple Method

Year 10 EBITDA$3.0B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$59.9B

PV of Terminal Value$27.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$6.6B

PV of Terminal Value$17.0B

Enterprise Value$23.7B

(-) Net Debt$5.8B

Equity Value$17.9B

Shares Outstanding$274M

Price per Share$65.19

Exit Multiple Method

PV of Projected FCFs$6.6B

PV of Terminal Value$27.8B

Enterprise Value$34.4B

(-) Net Debt$5.8B

Equity Value$28.6B

Shares Outstanding$274M

Price per Share$104.41

Pure Model Fair Value

$84.80

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%
5.99%	$95.84	$109.67	$128.12	$154.01	$191.32
6.99%	$70.58	$78.48	$88.35	$101.06	$118.02
7.99%	$54.31	$59.25	$65.19	$72.45	$81.53
8.99%	$43.11	$46.40	$50.25	$54.80	$60.27
9.99%	$35.03	$37.34	$39.97	$43.01	$46.55

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

$64.34

-3.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.42

Base Case

$84.80

27.4% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.14

Bull Case

$107.60

61.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.97

Key Assumptions & Drivers• Consumer Cyclical Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.71%

Year 3 Revenue Growth3.51%

Year 5 Revenue Growth3.00%

Year 7 Revenue Growth3.00%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin8.81%

Terminal EBIT Margin12.00%

Tax Rate20.78%

Historical Capex / Rev8.18%

Terminal Capex / Rev4.00%

NWC / Revenue10.00%

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: 18x EV/EBITDA (S&P 500: 22x P/E)

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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