PSKYPSKY
Loading
DCF Valuation
⚠️Model Warnings
- •Terminal value represents 101% of enterprise value. Valuation highly sensitive to long-term assumptions.
DCF Valuation Summary
Strong Buy
Fair Value: $73.48 per share(market-calibrated)
+559.1%
Upside to Fair Value
Current
$11.15
Pure Model
$85.82
Fair Value
$73.48
Bull Case
$115.13
Bear Case
$63.35
Market Reality Check
Model Terminal Growth
3.00%
Market-Implied Growth
0.50%
Calibrated Growth
2.13%
Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $85.82.
What's Driving This Ratingfor PSKY
✓
CapEx already efficient
CapEx at 1.01% 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 -9.66% — below the sector mature average of 22.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $5.1B (13.70% margin).
→
Moderate revenue growth
Analyst consensus projects 2.35% revenue growth, fading to 3.00% by Year 10. Revenue reaches $37.5B (vs $29.2B today).
🎯
Market pricing in lower growth than model
The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.
✓
Strong cash flow conversion
Year 10 FCF/EBITDA conversion of 73.77% indicates efficient cash generation. FCF reaches $4.2B by Year 10 (11.13% FCF margin).
Weighted Average Cost of Capital (WACC)
Cost of Equity (CAPM)
Risk-Free Rate (Rf)4.50%
Beta (β)1.21
Market Risk Premium4.50%
*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)
Cost of Equity (Re)9.93%
Cost of Debt
Pre-tax Cost of Debt5.62%
Tax Rate21.00%
After-tax Cost of Debt4.44%
Equity Weight (E/V)31.86%
Debt Weight (D/V)68.14%
WACC Calculation
WACC = (E/V × Re) + (D/V × Rd × (1-Tc))
WACC = (31.86% × 9.93%) + (68.14% × 4.44%)
= 6.19%
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 | $29.9B | $30.9B | $32.3B | $34.3B | $37.5B |
| EBIT | -$2.9B | -$3.0B | -$1.1B | $2.0B | $5.1B |
| Tax | -$607M | -$627M | -$226M | $417M | $1.1B |
| NOPAT | -$2.3B | -$2.4B | -$850M | $1.6B | $4.1B |
| + Depreciation | $415M | $428M | $448M | $475M | $519M |
| - Capex | $302M | $313M | $327M | $347M | $379M |
| - Δ NWC | $16M | $12M | $22M | $23M | $26M |
| Free Cash Flow | -$2.2B | -$2.3B | -$751M | $1.7B | $4.2B |
| Discount Factor | 0.942 | 0.835 | 0.741 | 0.657 | 0.548 |
| Present Value | -$2.1B | -$1.9B | -$556M | $1.1B | $2.3B |
FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital
Terminal Value Calculation
Perpetuity Growth Method
Year 10 FCF$4.2B
Terminal Growth Rate3.00%
WACC6.19%
TV = FCF₁₀ × (1+g) / (WACC-g)
Terminal Value$134.6B
PV of Terminal Value$73.8B
Exit Multiple Method
Year 10 EBITDA$5.7B
Exit Multiple (EV/EBITDA)22.0x
TV = EBITDA₁₀ × Exit Multiple
Terminal Value$124.3B
PV of Terminal Value$68.2B
Valuation Summary
Perpetuity Growth Method
PV of Projected FCFs-$854M
PV of Terminal Value$73.8B
Enterprise Value$73.0B
(-) Net Debt$13.2B
Equity Value$59.8B
Shares Outstanding664M
Price per Share$90.07
Exit Multiple Method
PV of Projected FCFs-$854M
PV of Terminal Value$68.2B
Enterprise Value$67.3B
(-) Net Debt$13.2B
Equity Value$54.2B
Shares Outstanding664M
Price per Share$81.57
Pure Model Fair Value
$85.82
Average of perpetuity growth and exit multiple methods (before market calibration)
Sensitivity AnalysisPrice per Share
| WACC ↓ / Growth → | 2.00% | 2.50% | 3.00% | 3.50% | 4.00% |
|---|---|---|---|---|---|
| 4.19% | $139.32 | $143.89 | $136.37 | $129.23 | $122.42 |
| 5.19% | $96.48 | $108.08 | $124.98 | $129.23 | $122.42 |
| 6.19% | $72.14 | $78.05 | $85.82 | $96.47 | $111.99 |
| 7.19% | $55.88 | $59.33 | $63.60 | $69.04 | $76.18 |
| 8.19% | $43.96 | $46.15 | $48.77 | $51.95 | $55.88 |
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
$63.35
468.2% vs current
- • -25% vs analyst consensus
- • Terminal growth: 2.5%
- • Beta: 1.51
Base Case
$85.82
669.8% vs current
- • Analyst consensus
- • Terminal growth: 3.0%
- • Beta: 1.21
Bull Case
$115.13
932.6% vs current
- • +25% vs analyst consensus
- • Terminal growth: 3.5%
- • Beta: 1.03
Key Assumptions & Drivers• Communication Services Sector
Growth Assumptions (Select Years)
Year 1 Revenue Growth2.35%
Year 3 Revenue Growth1.66%
Year 5 Revenue Growth3.00%
Year 7 Revenue Growth3.00%
Year 10 Revenue Growth3.00%
Terminal Growth Rate3.00%
Margin & Efficiency
Current EBIT Margin-9.66%
Terminal EBIT Margin22.00%
Tax Rate21.00%
Historical Capex / Rev1.01%
NWC / Revenue2.34%
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 (Communication 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.