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Gildan Activewear Inc. (GIL) Intrinsic Value

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

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Gildan Activewear Inc. (GIL)

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Intrinsic Value (DCF)

Current$63.81
→
Intrinsic$39.53
-38%
$23.96$39.53$69.11
Market implies 24% growth for 5 years
Current price reflects execution expectations above 14% growth — not unreasonable for quality businesses.
At $64, the market prices in continued strong cash flow growth (24%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $24 → Bull $69. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →10%12%14%16%
8%$49$55$60$66
10%$32$36$40$44
12%$23$25$28$31
14%$17$19$21$23

Bull Case

  • Bull case ($69) offers 8% upside at 16% growth, 9% discount
  • Conservative 14% growth assumption is achievable based on track record

Bear Case

  • Bear case ($24) implies 62% downside at 11% growth, 12% discount
  • Price reflects 24% growth expectations vs 14% historical — high bar to clear
  • Trading 38% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$398.80M
Year 2$453.05M
Year 3$514.69M
Year 4$584.72M
Year 5$664.27M
Terminal$9.77B

📐 Model Inputs

Growth Rate13.6%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$351.04MTTM 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 GIL stock undervalued or overvalued?
🔴 OVERVALUED

GIL trades at $63.81 vs. our DCF-derived intrinsic value of $39.53, implying -38% downside. Using a 10.0% WACC and 13.6% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($60.86) suggests limited upside.

What is GIL's intrinsic value?

Using a 5-year DCF model: Base FCF of $351M, projected at 13.6% 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 $1.55B net debt and dividing by 0.16B shares: Bear $24.33 | Base $39.53 | Bull $60.86. Current price $63.81 implies -38% to base case.

How is GIL's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.6% 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 ($8.00B).

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: 22.8x.