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Reynolds Consumer Products Inc. (REYN) Intrinsic Value

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

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Reynolds Consumer Products Inc. (REYN)

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Intrinsic Value (DCF)

Current$24.31
→
Intrinsic$25.74
+6%
$15.11$25.74$45.94
Market implies 8% growth for 5 years
REYN appears fairly valued — current price aligns with our DCF estimate.
At $24, the market prices in 8% annual cash flow growth — a moderate expectation aligned with historical trends (9%).
Range: Bear $15 → Bull $46. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →5%7%9%11%
8%$32$36$40$44
10%$21$23$26$29
12%$14$16$18$20
14%$10$12$13$15

Bull Case

  • Bull case ($46) offers 89% upside at 11% growth, 9% discount
  • 6% margin of safety vs. base case estimate
  • Market-implied growth (8%) ≤ historical CAGR (9%)

Bear Case

  • Bear case ($15) implies 38% downside at 7% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$403.36M
Year 2$440.92M
Year 3$481.98M
Year 4$526.86M
Year 5$575.92M
Terminal$8.47B

📐 Model Inputs

Growth Rate9.3%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$369.00MTTM 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 REYN stock undervalued or overvalued?
🟡 FAIRLY VALUED

REYN trades at $24.31, within 10% of our $25.74 intrinsic value estimate. At 10.0% WACC and 9.3% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $16.19 (bear) to $38.66 (bull).

What is REYN's intrinsic value?

Using a 5-year DCF model: Base FCF of $369M, projected at 9.3% 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 $1.66B net debt and dividing by 0.21B shares: Bear $16.19 | Base $25.74 | Bull $38.66. Current price $24.31 implies +12% to base case.

How is REYN's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 9.3% 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 ($7.07B).

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: 19.2x.