At today's price, Prologis's stock is pricing in about 14.4% annual free-cash-flow growth for the next ten years. The company's actual 5-year FCF growth was 13.3% a year — but that figure is inflated by a one-time 2022 acquisition; the more recent 3-year pace is just 4.8%.
At its current price, PLD implies ~14.4% annual FCF growth for the next 10 years, discounted at 9%.
Prologis's actual 5-year FCF growth averaged 13.3% a year — but the more recent 3-year pace is just 4.8%.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical CAGRs from 10-K FY2021–FY2025 cash flow statements. For reference, same-store cash NOI growth — a cleaner read on core warehouse-leasing demand — has decelerated for four straight years, from 9.1% (2022) to 5.7% (2025), widening the gap with the market's 14.4% ask even further.
Sensitivity: what if the discount rate moves?
| WACC | Required growth |
|---|---|
| 7% | 9.1% |
| 8% | 11.9% |
| 9% (base case) | 14.4% |
| 10% | 16.7% |
| 11% | 18.9% |
| 12% | 20.9% |
Only at the lowest discount rate tested (7%) does the required growth rate fall below the 5-year actual FCF pace (13.3%). At 10% or above, the required growth rate exceeds even the acquisition-inflated 5-year figure.
What would move this number
- Using 2025's standalone FCF ($4.12B) instead of trailing-twelve-month FCF ($4.37B) raises the required growth rate to 15.2% — a lower starting base requires faster growth to hit the same target.
- Lowering the terminal growth rate from 2.5% to 2.0% raises the required growth rate slightly, to 15.1%.
- Swapping the comparison benchmark from the 5-year FCF CAGR (13.3%) to the 3-year CAGR (4.8%) flips the read from "roughly in line" to "the market wants nearly triple the recent pace" — the single biggest judgment call in this whole analysis.
Show your work
Inputs, sources, model assumptions, and the calculation
- Share price$140.68 — stockanalysis.com, Aug 20, 2026 close
- Diluted shares outstanding957.884M — 10-Q Q2 FY2026, weighted-average diluted shares
- Market cap$134.8B — price × diluted shares (calculated)
- Total debt$36.44B — 10-Q Q2 FY2026 balance sheet (Jun 30, 2026)
- Cash$1.77B — 10-Q Q2 FY2026 balance sheet
- Net debt$34.68B — calculated
- Trailing-twelve-month FCF$4.37B — FY2025 FCF ($4.12B) − 1H2025 FCF ($2.02B) + 1H2026 FCF ($2.28B)
- 3-year average FCF (2023-2025)$4.28B — 10-K FY2025/FY2023 cash flow statements
- Discount rate (WACC)9% base case (7-12% tested)
- Terminal growth rate2.5% — long-run GDP-level assumption
Normalization check: TTM FCF ($4.37B) is +2.3% above the three-year average ($4.28B) — within the ±40% threshold, so used as-is without adjustment.
Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate thereafter, solved by bisection for the value of g that equates present value to today's enterprise value (market cap + net debt, $169.4B).
Historical CAGR check: 5-yr FCF CAGR = (2025 FCF ÷ 2021 FCF)^(1/4) − 1 = ($4.119B ÷ $2.497B)^(1/4) − 1 = 13.3%. 3-yr FCF CAGR = (2025 FCF ÷ 2022 FCF)^(1/3) − 1 = ($4.119B ÷ $3.576B)^(1/3) − 1 = 4.8%.
The fine print
- Change the discount rate, the FCF base, the projection window, or the terminal growth rate, and the answer moves — see the sensitivity table above.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Whether 14.4% growth is realistic depends heavily on whether the data-center business scales the way management projects — not on this math alone.
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does PLD's stock price assume?
At today's price, Prologis's stock is pricing in about 14.4% annual free-cash-flow growth for the next ten years, at a 9% discount rate.
How does that compare to Prologis's actual growth?
Prologis's 5-year FCF growth (2021-2025) was 13.3% a year, close to the market's ask — but that figure includes a one-time boost from the 2022 Duke Realty acquisition. The more recent 3-year pace (2022-2025) is just 4.8%, well below what the price requires.
What share price was used for this analysis?
This analysis used $140.68, as of the Aug 20, 2026 close.