Expeditors International of Washington, Inc.EXPDNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $133.60 per share(market-calibrated)

-8.3%

Upside to Fair Value

Current

$145.63

Pure Model

$131.82

Fair Value

$133.60

Bull Case

$153.40

Bear Case

$110.78

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

4.68%

Calibrated Growth

2.61%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $131.82.

What's Driving This Ratingfor EXPD

✓

CapEx already efficient

CapEx at 0.46% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 10.43% — below the sector mature average of 13.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.8B (12.46% margin).

→

Moderate revenue growth

Analyst consensus projects 0.82% revenue growth, fading to 2.25% by Year 10. Revenue reaches $14.1B (vs $11.1B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $110.81/share (14.9x terminal FCF) while exit multiple gives $152.83/share (25.4x 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 $145.63, the market implies 4.68% perpetual growth — 243bps 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 70.99% indicates efficient cash generation. FCF reaches $1.3B by Year 10 (9.22% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.13

Market Risk Premium4.50%

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

Cost of Equity (Re)9.58%

Cost of Debt

Pre-tax Cost of Debt0.55%

Tax Rate25.78%

After-tax Cost of Debt0.41%

Equity Weight (E/V)95.05%

Debt Weight (D/V)4.95%

WACC Calculation

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

WACC = (95.05% × 9.58%) + (4.95% × 0.41%)

= 9.12%

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	$11.2B	$12.0B	$12.6B	$13.2B	$14.1B
EBIT	$1.2B	$1.3B	$1.4B	$1.6B	$1.8B
Tax	$300M	$323M	$370M	$407M	$454M
NOPAT	$864M	$930M	$1.1B	$1.2B	$1.3B
+ Depreciation	$59M	$64M	$67M	$70M	$75M
- Capex	$52M	$56M	$59M	$61M	$65M
- Δ NWC	$4M	$18M	$12M	$13M	$13M
Free Cash Flow	$868M	$920M	$1.1B	$1.2B	$1.3B
Discount Factor	0.916	0.770	0.646	0.543	0.418
Present Value	$795M	$708M	$687M	$635M	$545M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.3B

Terminal Growth Rate2.25%

WACC9.12%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$19.4B

PV of Terminal Value$8.1B

Exit Multiple Method

Year 10 EBITDA$1.8B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$33.1B

PV of Terminal Value$13.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$6.7B

PV of Terminal Value$8.1B

Enterprise Value$14.8B

(-) Net Debt-$284M

Equity Value$15.0B

Shares Outstanding136M

Price per Share$110.81

Exit Multiple Method

PV of Projected FCFs$6.7B

PV of Terminal Value$13.8B

Enterprise Value$20.5B

(-) Net Debt-$284M

Equity Value$20.8B

Shares Outstanding136M

Price per Share$152.83

Pure Model Fair Value

$131.82

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%
7.12%	$158.93	$163.03	$167.96	$174.03	$181.66
8.12%	$141.70	$144.41	$147.59	$151.35	$155.90
9.12%	$127.77	$129.66	$131.82	$134.32	$137.24
10.12%	$116.19	$117.55	$119.07	$120.81	$122.80
11.12%	$106.34	$107.34	$108.46	$109.71	$111.12

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

$110.78

-23.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.41

Base Case

$131.82

-9.5% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.13

Bull Case

$153.40

5.3% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.96

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth0.82%

Year 3 Revenue Growth3.68%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin10.43%

Terminal EBIT Margin13.00%

Tax Rate25.78%

Historical Capex / Rev0.46%

NWC / Revenue4.33%

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.

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