Prologis, Inc.PLDNYSE

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

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $117.30 per share(market-calibrated)

-17.8%

Upside to Fair Value

Current

$142.72

Pure Model

$114.98

Fair Value

$117.30

Bull Case

$147.87

Bear Case

$84.66

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

4.93%

Calibrated Growth

2.86%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $114.98.

What's Driving This Ratingfor PLD

✓

CapEx already efficient

CapEx at 2.39% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 61.01% 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 -1.19% revenue growth, fading to 2.50% by Year 10. Revenue reaches $13.1B (vs $8.8B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $96.23/share (15.7x terminal FCF) while exit multiple gives $133.73/share (23.6x terminal FCF). The 22x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.50% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $142.72, the market implies 4.93% perpetual growth — 243bps above the model's 2.50%. 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 93.12% indicates efficient cash generation. FCF reaches $10.5B by Year 10 (80.29% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.44

Market Risk Premium4.50%

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

Cost of Equity (Re)10.98%

Cost of Debt

Pre-tax Cost of Debt1.73%

Tax Rate5.41%

After-tax Cost of Debt1.64%

Equity Weight (E/V)79.26%

Debt Weight (D/V)20.74%

WACC Calculation

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

WACC = (79.26% × 10.98%) + (20.74% × 1.64%)

= 9.04%

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	$8.7B	$9.9B	$10.8B	$11.9B	$13.1B
EBIT	$5.3B	$6.0B	$6.6B	$7.3B	$8.0B
Tax	$287M	$325M	$357M	$393M	$432M
NOPAT	$5.0B	$5.7B	$6.2B	$6.9B	$7.6B
+ Depreciation	$2.2B	$2.5B	$2.7B	$3.0B	$3.3B
- Capex	$207M	$235M	$258M	$285M	$313M
- Δ NWC	-$11M	$64M	$61M	$52M	$32M
Free Cash Flow	$7.0B	$7.9B	$8.7B	$9.5B	$10.5B
Discount Factor	0.917	0.771	0.649	0.546	0.421
Present Value	$6.4B	$6.1B	$5.6B	$5.2B	$4.4B

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 Rate2.50%

WACC9.04%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$164.8B

PV of Terminal Value$69.4B

Exit Multiple Method

Year 10 EBITDA$11.3B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$248.4B

PV of Terminal Value$104.6B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$54.8B

PV of Terminal Value$69.4B

Enterprise Value$124.2B

(-) Net Debt$33.9B

Equity Value$90.3B

Shares Outstanding938M

Price per Share$96.23

Exit Multiple Method

PV of Projected FCFs$54.8B

PV of Terminal Value$104.6B

Enterprise Value$159.4B

(-) Net Debt$33.9B

Equity Value$125.5B

Shares Outstanding938M

Price per Share$133.73

Pure Model Fair Value

$114.98

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%
7.04%	$147.31	$152.75	$159.39	$167.67	$178.30
8.04%	$126.40	$129.94	$134.12	$139.12	$145.23
9.04%	$109.77	$112.19	$114.98	$118.24	$122.08
10.04%	$96.07	$97.79	$99.75	$101.98	$104.55
11.04%	$84.51	$85.78	$87.19	$88.78	$90.58

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

$84.66

-40.7% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.80

Base Case

$114.98

-19.4% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 1.44

Bull Case

$147.87

3.6% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 1.22

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-1.19%

Year 3 Revenue Growth6.96%

Year 5 Revenue Growth6.01%

Year 7 Revenue Growth4.60%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin61.01%

Tax Rate5.41%

Historical Capex / Rev2.39%

NWC / Revenue10.00%

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: 22x EV/EBITDA (Real Estate 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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