Equifax Inc.EFXNYSE
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DCF Valuation
DCF Valuation Summary
Sell
Fair Value: $177.43 per share(market-calibrated)
-15.1%
Upside to Fair Value
Current
$209.02
Pure Model
$173.94
Fair Value
$177.43
Bull Case
$229.09
Bear Case
$124.80
Market Reality Check
Model Terminal Growth
2.25%
Market-Implied Growth
5.64%
Calibrated Growth
2.76%
Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $173.94.
What's Driving This Ratingfor EFX
↓
CapEx normalizing toward maintenance
Historical CapEx is 8.85% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$562M in annual FCF. This is the biggest driver of long-term cash flow improvement.
↑
Strong near-term revenue growth
Analyst consensus projects 11.21% revenue growth in Year 1, fading to 4.36% by Year 5 and 2.25% by Year 10. Revenue reaches $10.5B by Year 10 (vs $6.1B today).
↔
Perpetuity and exit methods disagree
Perpetuity growth gives $131.64/share (13.2x terminal FCF) while exit multiple gives $216.23/share (25.3x terminal FCF). The 18x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.25% growth is more conservative. The base case averages both methods.
🎯
Market pricing in higher long-term growth
To justify $209.02, the market implies 5.64% perpetual growth — 339bps 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 71.19% indicates efficient cash generation. FCF reaches $2.2B by Year 10 (21.29% FCF margin).
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)1.53
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)11.39%
Cost of Debt
Pre-tax Cost of Debt3.97%
Tax Rate25.77%
After-tax Cost of Debt2.95%
Equity Weight (E/V)83.49%
Debt Weight (D/V)16.51%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (83.49% × 11.39%) + (16.51% × 2.95%)
= 10.00%
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 | $6.8B | $8.1B | $9.0B | $9.7B | $10.5B |
| EBIT | $1.3B | $1.6B | $1.8B | $1.9B | $2.1B |
| Tax | $344M | $412M | $459M | $494M | $534M |
| NOPAT | $990M | $1.2B | $1.3B | $1.4B | $1.5B |
| + Depreciation | $686M | $822M | $916M | $986M | $1.1B |
| - Capex | $598M | $620M | $584M | $513M | $368M |
| - Δ NWC | $8M | $8M | $4M | $4M | $3M |
| Free Cash Flow | $1.1B | $1.4B | $1.6B | $1.9B | $2.2B |
| Discount Factor | 0.909 | 0.751 | 0.621 | 0.513 | 0.386 |
| Present Value | $973M | $1.0B | $1.0B | $971M | $862M |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$2.2B
Terminal Growth Rate2.25%
WACC10.00%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$29.5B
PV of Terminal Value$11.4B
Exit Multiple Method
Year 10 EBITDA$3.1B
Exit Multiple (EV/EBITDA)18.0x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$56.5B
PV of Terminal Value$21.8B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs$9.8B
PV of Terminal Value$11.4B
Enterprise Value$21.1B
(-) Net Debt$4.9B
Equity Value$16.2B
Shares Outstanding123M
Price per Share$131.64
Exit Multiple Method
PV of Projected FCFs$9.8B
PV of Terminal Value$21.8B
Enterprise Value$31.6B
(-) Net Debt$4.9B
Equity Value$26.6B
Shares Outstanding123M
Price per Share$216.23
Pure Model Fair Value
$173.94
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% |
|---|---|---|---|---|---|
| 8.00% | $216.97 | $222.35 | $228.67 | $236.19 | $245.29 |
| 9.00% | $190.33 | $194.04 | $198.31 | $203.27 | $209.08 |
| 10.00% | $168.26 | $170.93 | $173.94 | $177.36 | $181.29 |
| 11.00% | $149.57 | $151.54 | $153.73 | $156.19 | $158.97 |
| 12.00% | $133.49 | $134.98 | $136.61 | $138.43 | $140.45 |
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
$124.80
-40.3% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.0%
- • Beta: 1.92
Base Case
$173.94
-16.8% vs current
- • Analyst consensus
- • Terminal growth: 2.3%
- • Beta: 1.53
Bull Case
$229.09
9.6% vs current
- • +25% vs analyst consensus
- • Terminal growth: 2.8%
- • Beta: 1.30
Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Industrials Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth11.21%
Year 3 Revenue Growth9.47%
Year 5 Revenue Growth4.36%
Year 7 Revenue Growth3.52%
Year 10 Revenue Growth2.25%
Terminal Growth Rate2.25%
Margin & Efficiency
Current EBIT Margin19.74%
Tax Rate25.77%
Historical Capex / Rev8.85%
Terminal Capex / Rev3.50%
NWC / Revenue1.18%
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 (Industrials 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.