BlackRock, Inc.BLKNYSE

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DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $822.73 per share(market-calibrated)

-23.0%

Upside to Fair Value

Current

$1,068.31

Pure Model

$798.72

Fair Value

$822.73

Bull Case

$987.98

Bear Case

$627.12

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

6.81%

Calibrated Growth

3.58%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $798.72.

What's Driving This Ratingfor BLK

↓

CapEx normalizing toward maintenance

Historical CapEx is 1.53% of revenue (heavy investment phase). Model fades this to 1.50% by Year 10, freeing up ~$12M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 36.06% 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 17.42% in Year 1 to 2.50% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

🎯

Market pricing in higher long-term growth

To justify $1,068.31, the market implies 6.81% perpetual growth — 431bps above the model's 2.50%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 72.91% indicates efficient cash generation. FCF reaches $12.0B by Year 10 (27.37% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.49

Market Risk Premium4.50%

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

Cost of Equity (Re)11.20%

Cost of Debt

Pre-tax Cost of Debt17.53%

Tax Rate22.01%

After-tax Cost of Debt13.67%

Equity Weight (E/V)98.67%

Debt Weight (D/V)1.33%

WACC Calculation

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

WACC = (98.67% × 11.20%) + (1.33% × 13.67%)

= 11.23%

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	$28.4B	$35.4B	$38.8B	$40.8B	$44.0B
EBIT	$10.3B	$12.8B	$14.0B	$14.7B	$15.8B
Tax	$2.3B	$2.8B	$3.1B	$3.2B	$3.5B
NOPAT	$8.0B	$10.0B	$10.9B	$11.5B	$12.4B
+ Depreciation	$420M	$524M	$574M	$603M	$649M
- Capex	$434M	$539M	$588M	$616M	$659M
- Δ NWC	$1.3B	$1.2B	$284M	$299M	$322M
Free Cash Flow	$6.7B	$8.8B	$10.6B	$11.2B	$12.0B
Discount Factor	0.899	0.727	0.587	0.475	0.345
Present Value	$6.0B	$6.4B	$6.2B	$5.3B	$4.1B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$12.0B

Terminal Growth Rate2.50%

WACC11.23%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$141.2B

PV of Terminal Value$48.7B

Exit Multiple Method

Year 10 EBITDA$16.5B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$198.0B

PV of Terminal Value$68.3B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$56.1B

PV of Terminal Value$48.7B

Enterprise Value$104.9B

(-) Net Debt-$9.2B

Equity Value$114.1B

Shares Outstanding155M

Price per Share$735.63

Exit Multiple Method

PV of Projected FCFs$56.1B

PV of Terminal Value$68.3B

Enterprise Value$124.4B

(-) Net Debt-$9.2B

Equity Value$133.7B

Shares Outstanding155M

Price per Share$861.81

Pure Model Fair Value

$798.72

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%
9.23%	$931.86	$947.54	$965.54	$986.44	$1,010.99
10.23%	$849.97	$861.20	$873.89	$888.34	$904.93
11.23%	$781.19	$789.48	$798.72	$809.07	$820.77
12.23%	$722.37	$728.63	$735.53	$743.17	$751.69
13.23%	$671.36	$676.17	$681.43	$687.20	$693.57

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

$627.12

-41.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.86

Base Case

$798.72

-25.2% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.49

Bull Case

$987.98

-7.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 1.26

Key Assumptions & Drivers• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth17.42%

Year 3 Revenue Growth12.36%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin36.06%

Tax Rate22.01%

Historical Capex / Rev1.53%

Terminal Capex / Rev1.50%

NWC / Revenue30.00%

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: 12x EV/EBITDA (Financial Services 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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