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Smith & Nephew plc (SNN)
Intrinsic Value (DCF)
Current$31.90
→
Intrinsic$18.94
-41%
$11.01$18.94$34.01
Market implies 18% growth for 5 years
Current price reflects execution expectations above 8% growth — not unreasonable for quality businesses.
At $32, the market prices in continued high-teens cash flow growth (18%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $11 → Bull $34. Current price implies expectations above the base case, closer to bull expectations.
| Discount ↓Growth → | 4% | 6% | 8% | 10% |
|---|---|---|---|---|
| 8% | $24 | $26 | $29 | $32 |
| 10% | $15 | $17 | $19 | $21 |
| 12% | $10 | $12 | $13 | $15 |
| 14% | $7 | $8 | $10 | $11 |
Bull Case
- Bull case ($34) offers 7% upside at 10% growth, 9% discount
- Conservative 8% growth assumption is achievable based on track record
Bear Case
- Bear case ($11) implies 65% downside at 6% growth, 12% discount
- Price reflects 18% growth expectations vs 8% historical — high bar to clear
- Trading 41% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection
Year 1$654.48M
Year 2$706.84M
Year 3$763.39M
Year 4$824.46M
Year 5$890.41M
Terminal$13.10B
📐 Model Inputs
Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$606.00MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.