Invesco Ltd.IVZNYSE

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

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $28.99 per share(market-calibrated)

+10.9%

Upside to Fair Value

Current

$26.13

Pure Model

$30.01

Fair Value

$28.99

Bull Case

$41.19

Bear Case

$20.63

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

1.07%

Calibrated Growth

2.29%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $30.01.

What's Driving This Ratingfor IVZ

↓

CapEx normalizing toward maintenance

Historical CapEx is 1.68% of revenue (heavy investment phase). Model fades this to 1.50% by Year 10, freeing up ~$13M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 13.14% — below the sector mature average of 28.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.8B (24.10% margin).

→

Moderate revenue growth

Analyst consensus projects -17.28% revenue growth, fading to 2.50% by Year 10. Revenue reaches $7.3B (vs $6.4B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $36.81/share (24.3x terminal FCF) while exit multiple gives $23.21/share (16.1x terminal FCF). The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 1.07% perpetual growth — 143bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 74.38% indicates efficient cash generation. FCF reaches $1.4B by Year 10 (19.71% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.66

Market Risk Premium4.50%

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

Cost of Equity (Re)11.97%

Cost of Debt

Pre-tax Cost of Debt0.77%

Tax Rate21.00%

After-tax Cost of Debt0.61%

Equity Weight (E/V)53.80%

Debt Weight (D/V)46.20%

WACC Calculation

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

WACC = (53.80% × 11.97%) + (46.20% × 0.61%)

= 6.72%

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	$5.3B	$5.9B	$6.5B	$6.8B	$7.3B
EBIT	$693M	$780M	$1.0B	$1.4B	$1.8B
Tax	$146M	$164M	$219M	$291M	$371M
NOPAT	$548M	$616M	$824M	$1.1B	$1.4B
+ Depreciation	$126M	$142M	$155M	$163M	$175M
- Capex	$89M	$97M	$103M	$106M	$110M
- Δ NWC	-$102M	$31M	$15M	$15M	$17M
Free Cash Flow	$687M	$631M	$860M	$1.1B	$1.4B
Discount Factor	0.937	0.823	0.722	0.634	0.522
Present Value	$644M	$519M	$622M	$721M	$753M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.4B

Terminal Growth Rate2.50%

WACC6.72%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$35.0B

PV of Terminal Value$18.3B

Exit Multiple Method

Year 10 EBITDA$1.9B

Exit Multiple (EV/EBITDA)12.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$23.3B

PV of Terminal Value$12.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$6.5B

PV of Terminal Value$18.3B

Enterprise Value$24.8B

(-) Net Debt$8.1B

Equity Value$16.6B

Shares Outstanding451M

Price per Share$36.81

Exit Multiple Method

PV of Projected FCFs$6.5B

PV of Terminal Value$12.1B

Enterprise Value$18.6B

(-) Net Debt$8.1B

Equity Value$10.5B

Shares Outstanding451M

Price per Share$23.21

Pure Model Fair Value

$30.01

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%
4.72%	$46.02	$52.04	$60.77	$64.13	$60.85
5.72%	$33.94	$37.02	$41.06	$46.59	$54.60
6.72%	$25.97	$27.78	$30.01	$32.84	$36.56
7.72%	$20.20	$21.35	$22.72	$24.38	$26.43
8.72%	$15.76	$16.53	$17.43	$18.49	$19.75

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

$20.63

-21.1% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 2.07

Base Case

$30.01

14.8% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.66

Bull Case

$41.19

57.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 1.41

Key Assumptions & Drivers• Financial Services Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-17.28%

Year 3 Revenue Growth5.87%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin13.14%

Terminal EBIT Margin28.00%

Tax Rate21.00%

Historical Capex / Rev1.68%

Terminal Capex / Rev1.50%

NWC / Revenue9.27%

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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