Tapestry, Inc.TPRNYSE

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

DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $89.52 per share(market-calibrated)

-41.8%

Upside to Fair Value

Current

$153.85

Pure Model

$68.08

Fair Value

$89.52

Bull Case

$86.42

Bear Case

$50.77

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

Unreachable

Calibrated Growth

75/25 blend

Market price implies assumptions beyond model range. Fair value blends 75% model / 25% market price.

What's Driving This Ratingfor TPR

✓

CapEx already efficient

CapEx at 1.78% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 11.03% in Year 1 to 3.00% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $52.48/share (13.4x terminal FCF) while exit multiple gives $83.68/share (26.4x terminal FCF). The 20x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.

⚠

Market price exceeds model's maximum

Even with the most optimistic terminal growth the model allows, it can't reach $153.85. The market is pricing in factors beyond the DCF framework — possibly optionality, brand premium, or expectations of margin/growth inflection not yet in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 75.79% indicates efficient cash generation. FCF reaches $1.4B by Year 10 (13.35% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.61

Market Risk Premium4.50%

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

Cost of Equity (Re)11.74%

Cost of Debt

Pre-tax Cost of Debt1.89%

Tax Rate15.22%

After-tax Cost of Debt1.60%

Equity Weight (E/V)89.53%

Debt Weight (D/V)10.47%

WACC Calculation

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

WACC = (89.53% × 11.74%) + (10.47% × 1.60%)

= 10.68%

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	$7.8B	$8.7B	$9.3B	$9.9B	$10.8B
EBIT	$1.1B	$1.3B	$1.3B	$1.4B	$1.6B
Tax	$171M	$191M	$205M	$217M	$237M
NOPAT	$954M	$1.1B	$1.1B	$1.2B	$1.3B
+ Depreciation	$245M	$272M	$292M	$310M	$339M
- Capex	$139M	$154M	$166M	$176M	$192M
- Δ NWC	$73M	$43M	$26M	$27M	$30M
Free Cash Flow	$987M	$1.1B	$1.2B	$1.3B	$1.4B
Discount Factor	0.904	0.738	0.602	0.492	0.363
Present Value	$892M	$838M	$747M	$647M	$521M

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 Rate3.00%

WACC10.68%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$19.3B

PV of Terminal Value$7.0B

Exit Multiple Method

Year 10 EBITDA$1.9B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$37.9B

PV of Terminal Value$13.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$7.2B

PV of Terminal Value$7.0B

Enterprise Value$14.2B

(-) Net Debt$2.8B

Equity Value$11.4B

Shares Outstanding217M

Price per Share$52.48

Exit Multiple Method

PV of Projected FCFs$7.2B

PV of Terminal Value$13.8B

Enterprise Value$20.9B

(-) Net Debt$2.8B

Equity Value$18.1B

Shares Outstanding217M

Price per Share$83.68

Pure Model Fair Value

$68.08

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%
8.68%	$83.55	$85.45	$87.69	$90.36	$93.60
9.68%	$74.00	$75.31	$76.82	$78.57	$80.63
10.68%	$66.08	$67.02	$68.08	$69.29	$70.68
11.68%	$59.35	$60.04	$60.81	$61.68	$62.66
12.68%	$53.55	$54.07	$54.64	$55.28	$55.99

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

$50.77

-67.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 2.01

Base Case

$68.08

-55.8% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.61

Bull Case

$86.42

-43.8% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.37

Key Assumptions & Drivers• Consumer Cyclical Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth11.03%

Year 3 Revenue Growth5.53%

Year 5 Revenue Growth3.00%

Year 7 Revenue Growth3.00%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin14.46%

Tax Rate15.22%

Historical Capex / Rev1.78%

NWC / Revenue9.50%

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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