As of June 18, 2025, Morneau Shepell Inc has a Discounted Cash Flow (DCF) derived fair value of $9.21 per share. With the current market price at $33.58, this represents a potential upside of -72.6%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $7.00 |
| DCF Fair Value (10-year) | $9.21 |
| Potential Upside (5-year) | -79.1% |
| Potential Upside (10-year) | -72.6% |
| Discount Rate (WACC) | 7.2% - 9.7% |
Revenue is projected to grow from $979 million in 12-2020 to $2023 million by 12-2030, representing a compound annual growth rate of approximately 7.5%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2020 | 979 | 10% |
| 12-2021 | 1075 | 10% |
| 12-2022 | 1175 | 9% |
| 12-2023 | 1269 | 8% |
| 12-2024 | 1346 | 6% |
| 12-2025 | 1436 | 7% |
| 12-2026 | 1542 | 7% |
| 12-2027 | 1640 | 6% |
| 12-2028 | 1709 | 4% |
| 12-2029 | 1877 | 10% |
| 12-2030 | 2023 | 8% |
Net profit margin is expected to improve from 6% in 12-2020 to 5% by 12-2030, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2020 | 56 | 6% |
| 12-2021 | 53 | 5% |
| 12-2022 | 58 | 5% |
| 12-2023 | 62 | 5% |
| 12-2024 | 66 | 5% |
| 12-2025 | 70 | 5% |
| 12-2026 | 76 | 5% |
| 12-2027 | 80 | 5% |
| 12-2028 | 84 | 5% |
| 12-2029 | 92 | 5% |
| 12-2030 | 99 | 5% |
with a 5-year average of $43 million. Projected CapEx is expected to maintain at approximately 5% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2021 | 51 |
| 12-2022 | 57 |
| 12-2023 | 64 |
| 12-2024 | 68 |
| 12-2025 | 69 |
| 12-2026 | 74 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 82 |
| Days Inventory | 0 |
| Days Payables | 0 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2021 | 115 | 18 | 44 | 35 | 18 |
| 2022 | 169 | 27 | 64 | 19 | 59 |
| 2023 | 185 | 29 | 69 | 12 | 74 |
| 2024 | 196 | 31 | 74 | 24 | 69 |
| 2025 | 206 | 33 | 79 | 18 | 77 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 7.00 | -79.1% |
| 10-Year DCF (Growth) | 9.21 | -72.6% |
| 5-Year DCF (EBITDA) | 23.71 | -29.4% |
| 10-Year DCF (EBITDA) | 24.98 | -25.6% |
Is Morneau Shepell Inc (MSI.TO) a buy or a sell? Morneau Shepell Inc is definitely a sell. Based on our DCF analysis, Morneau Shepell Inc (MSI.TO) appears to be overvalued with upside potential of -72.6%. 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 reducing exposure at the current market price of $33.58.