Exelon CorporationEXCNASDAQ

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $130.46 per share(market-calibrated)

+164.9%

Upside to Fair Value

Current

$49.26

Pure Model

$142.42

Fair Value

$130.46

Bull Case

$170.51

Bear Case

$131.27

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.48%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $142.42.

What's Driving This Ratingfor EXC

↓

CapEx normalizing toward maintenance

Historical CapEx is 31.46% of revenue (heavy investment phase). Model fades this to 5.00% by Year 10, freeing up ~$8.3B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 25.60% 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.

→

Moderate revenue growth

Analyst consensus projects 3.55% revenue growth, fading to 2.00% by Year 10. Revenue reaches $31.5B (vs $24.3B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $169.05/share (29.1x terminal FCF) while exit multiple gives $115.79/share (20.4x terminal FCF). The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 150bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 78.47% indicates efficient cash generation. FCF reaches $10.5B by Year 10 (33.32% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.57

Market Risk Premium4.50%

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

Cost of Equity (Re)7.05%

Cost of Debt

Pre-tax Cost of Debt3.37%

Tax Rate15.89%

After-tax Cost of Debt2.83%

Equity Weight (E/V)49.62%

Debt Weight (D/V)50.38%

WACC Calculation

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

WACC = (49.62% × 7.05%) + (50.38% × 2.83%)

= 5.50%

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	$25.1B	$26.7B	$28.0B	$29.6B	$31.5B
EBIT	$6.4B	$6.8B	$7.2B	$7.6B	$8.1B
Tax	$1.0B	$1.1B	$1.1B	$1.2B	$1.3B
NOPAT	$5.4B	$5.8B	$6.0B	$6.4B	$6.8B
+ Depreciation	$4.2B	$4.5B	$4.7B	$5.0B	$5.3B
- Capex	$7.9B	$6.8B	$5.5B	$4.1B	$1.6B
- Δ NWC	$32M	$32M	$30M	$27M	$23M
Free Cash Flow	$1.7B	$3.4B	$5.2B	$7.2B	$10.5B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$1.6B	$2.9B	$4.0B	$5.0B	$6.2B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$10.5B

Terminal Growth Rate2.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$306.2B

PV of Terminal Value$179.3B

Exit Multiple Method

Year 10 EBITDA$13.4B

Exit Multiple (EV/EBITDA)16.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$214.2B

PV of Terminal Value$125.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$41.0B

PV of Terminal Value$179.3B

Enterprise Value$220.3B

(-) Net Debt$49.4B

Equity Value$170.9B

Shares Outstanding1.0B

Price per Share$169.05

Exit Multiple Method

PV of Projected FCFs$41.0B

PV of Terminal Value$125.4B

Enterprise Value$166.5B

(-) Net Debt$49.4B

Equity Value$117.1B

Shares Outstanding1.0B

Price per Share$115.79

Pure Model Fair Value

$142.42

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

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.50%	$221.13	$259.26	$246.36	$234.07	$222.36
4.50%	$159.13	$175.79	$199.10	$234.07	$222.36
5.50%	$122.04	$130.96	$142.42	$157.70	$179.10
6.50%	$96.61	$101.97	$108.52	$116.71	$127.24
7.50%	$77.69	$81.16	$85.27	$90.20	$96.22

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

$131.27

166.5% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.71

Base Case

$142.42

189.1% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.57

Bull Case

$170.51

246.2% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.48

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Utilities Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth3.55%

Year 3 Revenue Growth3.36%

Year 5 Revenue Growth2.95%

Year 7 Revenue Growth2.57%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin25.60%

Tax Rate15.89%

Historical Capex / Rev31.46%

Terminal Capex / Rev5.00%

NWC / Revenue3.70%

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: 16x EV/EBITDA (Utilities 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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