DuPont de Nemours, Inc.DDNYSE

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DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $43.19 per share(market-calibrated)

-10.5%

Upside to Fair Value

Current

$48.25

Pure Model

$42.60

Fair Value

$43.19

Bull Case

$50.31

Bear Case

$35.10

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

4.36%

Calibrated Growth

2.57%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $42.60.

What's Driving This Ratingfor DD

↓

CapEx normalizing toward maintenance

Historical CapEx is 9.24% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$473M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 11.62% — below the sector mature average of 13.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.1B (12.71% margin).

→

Moderate revenue growth

Analyst consensus projects 3.83% revenue growth, fading to 2.25% by Year 10. Revenue reaches $9.0B (vs $6.8B today).

🎯

Market pricing in higher long-term growth

To justify $48.25, the market implies 4.36% perpetual growth — 211bps above the model's 2.25%. 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 69.74% indicates efficient cash generation. FCF reaches $1.8B by Year 10 (19.52% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.11

Market Risk Premium4.50%

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

Cost of Equity (Re)9.52%

Cost of Debt

Pre-tax Cost of Debt13.10%

Tax Rate30.00%

After-tax Cost of Debt9.17%

Equity Weight (E/V)86.31%

Debt Weight (D/V)13.69%

WACC Calculation

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

WACC = (86.31% × 9.52%) + (13.69% × 9.17%)

= 9.47%

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	$7.1B	$7.7B	$8.1B	$8.4B	$9.0B
EBIT	$826M	$891M	$979M	$1.1B	$1.1B
Tax	$248M	$267M	$294M	$315M	$344M
NOPAT	$578M	$624M	$685M	$735M	$803M
+ Depreciation	$1.1B	$1.2B	$1.2B	$1.3B	$1.4B
- Capex	$657M	$619M	$559M	$486M	$361M
- Δ NWC	$79M	$85M	$53M	$56M	$60M
Free Cash Flow	$930M	$1.1B	$1.3B	$1.5B	$1.8B
Discount Factor	0.913	0.762	0.636	0.531	0.405
Present Value	$849M	$832M	$832M	$788M	$713M

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 Rate2.25%

WACC9.47%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$25.0B

PV of Terminal Value$10.1B

Exit Multiple Method

Year 10 EBITDA$2.5B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$35.4B

PV of Terminal Value$14.3B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$8.0B

PV of Terminal Value$10.1B

Enterprise Value$18.1B

(-) Net Debt$2.4B

Equity Value$15.7B

Shares Outstanding418M

Price per Share$37.55

Exit Multiple Method

PV of Projected FCFs$8.0B

PV of Terminal Value$14.3B

Enterprise Value$22.3B

(-) Net Debt$2.4B

Equity Value$19.9B

Shares Outstanding418M

Price per Share$47.65

Pure Model Fair Value

$42.60

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

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
7.47%	$52.71	$54.27	$56.11	$58.36	$61.13
8.47%	$46.25	$47.30	$48.51	$49.94	$51.64
9.47%	$41.02	$41.76	$42.60	$43.56	$44.68
10.47%	$36.67	$37.21	$37.81	$38.49	$39.26
11.47%	$32.97	$33.37	$33.82	$34.31	$34.87

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

$35.10

-27.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.39

Base Case

$42.60

-11.7% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.11

Bull Case

$50.31

4.3% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.95

Key Assumptions & Drivers• Basic Materials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth3.83%

Year 3 Revenue Growth3.86%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin11.62%

Terminal EBIT Margin13.00%

Tax Rate30.00%

Historical Capex / Rev9.24%

Terminal Capex / Rev4.00%

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: 14x EV/EBITDA (Basic Materials 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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