Smurfit Westrock PlcSWNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $162.84 per share(market-calibrated)

+247.8%

Upside to Fair Value

Current

$46.82

Pure Model

$175.56

Fair Value

$162.84

Bull Case

$244.77

Bear Case

$123.78

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: $175.56.

What's Driving This Ratingfor SW

↓

CapEx normalizing toward maintenance

Historical CapEx is 4.17% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$99M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 9.37% — below the sector mature average of 12.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $6.5B (11.14% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 31.75% in Year 1 to 7.48% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

🎯

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.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 52.41% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.01

Market Risk Premium4.50%

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

Cost of Equity (Re)9.03%

Cost of Debt

Pre-tax Cost of Debt2.80%

Tax Rate26.29%

After-tax Cost of Debt2.06%

Equity Weight (E/V)67.10%

Debt Weight (D/V)32.90%

WACC Calculation

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

WACC = (67.10% × 9.03%) + (32.90% × 2.06%)

= 6.73%

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	$37.2B	$39.5B	$46.3B	$52.2B	$58.5B
EBIT	$3.5B	$3.7B	$4.3B	$5.4B	$6.5B
Tax	$918M	$972M	$1.1B	$1.4B	$1.7B
NOPAT	$2.6B	$2.7B	$3.2B	$4.0B	$4.8B
+ Depreciation	$1.4B	$1.5B	$1.8B	$2.0B	$2.2B
- Capex	$1.6B	$1.6B	$1.9B	$2.1B	$2.3B
- Δ NWC	$619M	$73M	$222M	$193M	$117M
Free Cash Flow	$1.8B	$2.5B	$2.9B	$3.7B	$4.6B
Discount Factor	0.937	0.822	0.722	0.634	0.521
Present Value	$1.7B	$2.1B	$2.1B	$2.3B	$2.4B

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$4.6B

Terminal Growth Rate3.00%

WACC6.73%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$126.7B

PV of Terminal Value$66.0B

Exit Multiple Method

Year 10 EBITDA$8.8B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$175.3B

PV of Terminal Value$91.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$21.8B

PV of Terminal Value$66.0B

Enterprise Value$87.8B

(-) Net Debt$10.8B

Equity Value$77.0B

Shares Outstanding511M

Price per Share$150.75

Exit Multiple Method

PV of Projected FCFs$21.8B

PV of Terminal Value$91.4B

Enterprise Value$113.1B

(-) Net Debt$10.8B

Equity Value$102.3B

Shares Outstanding511M

Price per Share$200.38

Pure Model Fair Value

$175.56

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%
4.73%	$240.16	$264.44	$273.36	$261.24	$249.69
5.73%	$192.47	$203.75	$219.15	$241.43	$249.69
6.73%	$161.41	$167.65	$175.56	$185.92	$200.07
7.73%	$138.71	$142.55	$147.19	$152.93	$160.20
8.73%	$120.97	$123.50	$126.46	$129.99	$134.26

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

$123.78

164.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.26

Base Case

$175.56

275.0% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.01

Bull Case

$244.77

422.8% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 0.86

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Cyclical Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth31.75%

Year 3 Revenue Growth2.76%

Year 5 Revenue Growth7.48%

Year 7 Revenue Growth5.69%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin9.37%

Terminal EBIT Margin12.00%

Tax Rate26.29%

Historical Capex / Rev4.17%

Terminal Capex / Rev4.00%

NWC / Revenue6.89%

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: 20x EV/EBITDA (Consumer Cyclical 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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