ARLO
Arlo Technologies, Inc.
$12.94
Platform & Compounding FCF
70%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 71.8% above fair value
You pay
$12.94
Bear
$6.47
Fair
$7.53
Bull
$8.51
Bear
$6.47
-50.0%
5% stage 1 growth, 12% discount
Fair
$7.53
-41.8%
8% stage 1 growth, 12% discount
Bull
$8.51
-34.2%
11% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
33%
Implied Market Multiple
61.8x
Market is pricing in (growth)
26.2%
vs 8.2% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $19.50 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $7.53 per share.
Warnings
Stock-based employee pay equals 418% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $19.50 (from 10 analysts). Our estimate is 77% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions