As of June 12, 2025, Heroux Devtek Inc has a Discounted Cash Flow (DCF) derived fair value of $76.23 per share. With the current market price at $32.48, this represents a potential upside of 134.7%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $56.37 |
| DCF Fair Value (10-year) | $76.23 |
| Potential Upside (5-year) | 73.6% |
| Potential Upside (10-year) | 134.7% |
| Discount Rate (WACC) | 5.7% - 8.0% |
Revenue is projected to grow from $630 million in 03-2024 to $1167 million by 03-2034, representing a compound annual growth rate of approximately 6.4%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 03-2024 | 630 | 16% |
| 03-2025 | 713 | 13% |
| 03-2026 | 765 | 7% |
| 03-2027 | 816 | 7% |
| 03-2028 | 867 | 6% |
| 03-2029 | 951 | 10% |
| 03-2030 | 1011 | 6% |
| 03-2031 | 1031 | 2% |
| 03-2032 | 1088 | 6% |
| 03-2033 | 1118 | 3% |
| 03-2034 | 1167 | 4% |
Net profit margin is expected to improve from 6% in 03-2024 to 12% by 03-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 03-2024 | 38 | 6% |
| 03-2025 | 48 | 7% |
| 03-2026 | 61 | 8% |
| 03-2027 | 75 | 9% |
| 03-2028 | 90 | 10% |
| 03-2029 | 110 | 12% |
| 03-2030 | 117 | 12% |
| 03-2031 | 119 | 12% |
| 03-2032 | 126 | 12% |
| 03-2033 | 129 | 12% |
| 03-2034 | 135 | 12% |
with a 5-year average of $20 million. Projected CapEx is expected to maintain at approximately 3% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 03-2025 | 20 |
| 03-2026 | 21 |
| 03-2027 | 23 |
| 03-2028 | 26 |
| 03-2029 | 28 |
| 03-2030 | 30 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 79 |
| Days Inventory | 199 |
| Days Payables | 63 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 6M/2025 | 50 | 7 | 12 | (7) | 37 |
| 2026 | 118 | 19 | 26 | 44 | 29 |
| 2027 | 139 | 23 | 28 | 29 | 59 |
| 2028 | 162 | 28 | 30 | 10 | 96 |
| 2029 | 193 | 34 | 32 | 45 | 82 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 56.37 | 73.6% |
| 10-Year DCF (Growth) | 76.23 | 134.7% |
| 5-Year DCF (EBITDA) | 44.10 | 35.8% |
| 10-Year DCF (EBITDA) | 55.49 | 70.8% |
Is Heroux Devtek Inc (HRX.TO) a buy or a sell? Heroux Devtek Inc is definitely a buy. Based on our DCF analysis, Heroux Devtek Inc (HRX.TO) appears to be significantly undervalued with upside potential of 134.7%. 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:
Investors should consider a strong buy at the current market price of $32.48.