What is AGK.L's DCF valuation?

Aggreko PLC (AGK.L) DCF Valuation Analysis

Executive Summary

As of July 2, 2025, Aggreko PLC has a Discounted Cash Flow (DCF) derived fair value of $218.98 per share. With the current market price at $869.50, this represents a potential upside of -74.8%.

Key Metrics Value
DCF Fair Value (5-year) $447.02
DCF Fair Value (10-year) $218.98
Potential Upside (5-year) -48.6%
Potential Upside (10-year) -74.8%
Discount Rate (WACC) 6.9% - 9.6%

Financial Performance & Projections

Revenue Trends

Revenue is projected to grow from $1365 million in 12-2020 to $0 million by 12-2030, representing a compound annual growth rate of approximately -100.0%.

Fiscal Year Revenue (USD millions) Growth
12-2020 1365 15%
12-2021 0 -100%
12-2022 (0) -144%
12-2023 0 -190%
12-2024 0 7%
12-2025 0 3%
12-2026 0 2%
12-2027 0 2%
12-2028 0 2%
12-2029 0 2%
12-2030 0 4%

Profitability Projections

Net profit margin is expected to improve from -8% in 12-2020 to 0% by 12-2030, driven by operational efficiency and economies of scale.

Fiscal Year Net Profit (USD millions) Profit Margin
12-2020 (111) -8%
12-2021 (0) 0%
12-2022 0 0%
12-2023 (0) 0%
12-2024 (0) 0%
12-2025 (0) 0%
12-2026 (0) 0%
12-2027 (0) 0%
12-2028 (0) 0%
12-2029 (0) 0%
12-2030 (0) 0%

DCF Model Components

1. Capital Expenditures (CapEx)

with a 5-year average of $244 million. Projected CapEx is expected to maintain at approximately 15% of revenue.

2. Depreciation & Amortization

Depreciation is based on an average useful life of 5 years for capital assets.

Fiscal Year D&A (USD millions)
12-2021 190
12-2022 135
12-2023 90
12-2024 42
12-2025 0
12-2026 0

3. Working Capital Requirements

Net working capital is expected to increase gradually, with projected changes affecting free cash flow.

Components Average Days
Days Receivables 134
Days Inventory 112
Days Payables 59

4. Free Cash Flow Projections

Fiscal Year EBITDA Tax CapEx Change in NWC FCF
2021 190 (0) 0 (554) 744
2022 135 0 (0) (0) 135
2023 90 (0) 0 0 90
2024 42 (0) 0 0 42
2025 0 (0) 0 0 (0)

DCF Valuation Parameters

Key Assumptions

  • Discount Rate (WACC): WACC / Discount Rate (selected: 6.9% - 9.6%)
  • Long-Term Growth Rate: Long-term Growth Rate (selected: 2.0% - 4.0%)
  • Terminal EV/EBITDA Multiple: 3.8x (based on peer average)

Valuation Summary

Valuation Method Fair Price (USD) Potential Upside
5-Year DCF (Growth) 447.02 -48.6%
10-Year DCF (Growth) 218.98 -74.8%
5-Year DCF (EBITDA) 262.86 -69.8%
10-Year DCF (EBITDA) 218.98 -74.8%

Enterprise Value Breakdown

  • 5-Year Model: $1,524M
  • 10-Year Model: $941M

Investment Conclusion

Is Aggreko PLC (AGK.L) a buy or a sell? Aggreko PLC is definitely a sell. Based on our DCF analysis, Aggreko PLC (AGK.L) appears to be overvalued with upside potential of -74.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.

Key investment drivers include:

  • Expanding profit margins (from -8% to 0%)

Investors should consider reducing exposure at the current market price of $869.50.