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Ferrovial SE (FER) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Ferrovial SE (FER)

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Intrinsic Value (DCF)

Current$67.34
→
Intrinsic$42.49
-37%
$25.99$42.49$73.80
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $26 → Bull $74. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
8%$54$60$65$71
10%$35$39$42$46
12%$25$27$30$33
14%$18$20$22$25

Bull Case

  • Bull case ($74) offers 10% upside at 30% growth, 9% discount

Bear Case

  • Bear case ($26) implies 61% downside at 20% growth, 12% discount
  • Trading 37% above base case — execution must exceed assumptions to justify
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.33B
Year 2$1.67B
Year 3$2.08B
Year 4$2.60B
Year 5$3.26B
Terminal$47.91B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.07BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is FER stock undervalued or overvalued?
🔴 OVERVALUED

FER trades at $67.34 vs. our DCF-derived intrinsic value of $33.61, implying -50% downside. Using a 10.0% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($55.32) suggests limited upside.

What is FER's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.07B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $6.72B net debt and dividing by 0.73B shares: Bear $18.88 | Base $33.61 | Bull $55.32. Current price $67.34 implies -50% to base case.

How is FER's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($31.24B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.